Copyright Amendment Bill: deliberations

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Trade and Industry

15 August 2018
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Portfolio Committee on Trade and Industry met to hear the completion of the report back by the Department of Trade and Industry on its responses to the public submissions on additional clauses in the Copyright Amendment Bill. In addition, the parliamentary Legal Advisor would be responding to the public submissions on the Copyright Amendment Bill from a legal perspective.

The responses to the penalties imposed for offences in the Copyright Bill varied from harsh and draconian to fully supported. 50% of the responses were against the penalties and, equally, 50% were in favour the penalties. Of particular concern was the penalty of a minimum of 10% of the entire company’s annual turnover for juristic persons for each copyright contravention. A concern was raised that criminal law, company law and copyright law were overlapping. In its response, the Department was confident that the fine was appropriate as turnover-based fines had been benchmarked against other legislation and would act as a deterrent against the infringement of copyright.

Members asked whether the unintended consequences of the penalties would kill the industry and whether the punishment fitted the crime. Other Members questioned whether anything would change if there were not harsh penalties. Members noted that the prison sentence for natural persons had only increased by two years since 1978 and therefore most Members accepted that penalty as reasonable.

The public was largely supportive of the strengthening of the Copyright Tribunal and inputs tended to focus on the detail in an effort to ensure that it would function well. The Department did not accept that experts other than judges would be appropriate to sit on the Tribunal. Recommendations for a Deputy Chairperson of the Tribunal were inappropriate in the light of the fact that the Tribunal would not sit on a permanent basis.

The Committee discussed the process of consultation with the Minister of Justice about the re-structuring of the Tribunal. The Minister had directed the Committee to consult with the Chief Justice. He had been approached and a response was awaited.

Members asked whether the Tribunal would issue the fines previously discussed. If a performer were ‘ripped off’ could he go to the Tribunal and would it would fine the person who had ‘ripped him off’? Could the Tribunal be the first censure and only repeat offenders be referred to court? As the Tribunal fell under the auspices of the Companies and Intellectual Property Commission, the Commission was asked to explain how the Tribunal process would work.

The clause dealing with the transitional provisions included a reference to the Intellectual Property Laws Amendment Act of 2013. Some submissions stated that the Act should be repealed in its entirety. The Act was unworkable and would derogate hugely from the commercial usage of traditional South African works, throughout the world. Traditional communities could not be considered a collecting society. The Department informed the meeting that the Act would not be repealed as indigenous knowledge was very important to the country, although it admitted that certain amendments were required.

The Commissioner of the Companies and Intellectual Properties Commission addressed the Committee on the collecting societies that were currently registered with the Commission. Following publication of the Bill, collecting societies would have to be accredited by the Commission, which would allow the Commission to set minimum standards and requirements for accreditation. The Commission was adamant that the only way to administer collection societies was to limit the societies to one collection society per right. Generally, the Commission found that the collecting societies had collected huge amounts of money and they had used exorbitant amounts under the guise of administrative fees. There were questions about the profits made by the societies that were registered as not-for-profit companies. The Commission would be scrutinizing their books to see how the distribution worked. The Commission admitted that its relationship with the collecting societies was somewhat acrimonious as it had been involved in many court cases with the societies.

The Department of Trade and Industry made a presentation on proposed clauses in the Copyright Amendment Bill. The proposals related to the definition of visual artistic works and royalties for literary or musical works. The proposals raised many questions. One of the points of discussion was the removal of the word ‘assignment’ in relation to royalties based on the public inputs. However, it was clarified in the meeting that ‘assignment’ was a specific technical term that referred to the sale and transfer of copyright from one person to another and therefore had a specific meaning in the clause on royalties. The remainder of the presentation by the Department was held over to the following meeting to allow the Department time to consult more fully with the Companies and Intellectual Properties Commission, the Department of Arts and Culture and the Parliamentary Legal Advisor.

The Parliamentary Legal Advisor presented a legal perspective on the public submissions. She identified aspects of the submissions that could improve the definition of visual artistic works. It was not necessary to rewrite the clause. Making a distinction between aesthetic and functional would resolve the problem of lists of types of work. The Legal Advisor referred to concerns that the clause on the ‘minimum content royalty percentage agreement’ undermined contractual arrangements and might be unconstitutional. The clause was not unconstitutional because it did not prescribe a specific contract but presented guidance about determinations that should be included in the contracts. However, the underlying concern was about concept of the copyright and royalties being paid to the creator of a work. That was a policy question and the Committee had made a policy decision that the creator would receive a share of the royalties. The different requirements for different artistic forms concerned some Members who felt that one approach could not accommodate the entire field of artistic works.

The clauses dealing with retrospective action addressed paying creators for past usage of their works, possibly going back as far as 1910. It was deprivation of property, but it was a law of general application and there was sufficient reason for the law as creators had not been adequately rewarded for their work. The Legal Advisor suggested that the clause could pass constitutional muster, but because there was not a clear way for the clause to be applied in practical terms, it would not pass the rule of law. While some Members of the Committee shared the Legal Advisor’s concerns, other Members did not believe that the clause was not implementable. If the retrospective payment to the poor people of South Africa was excluded, the Committee had not achieved anything. The Sub-Committee should go back to the drawing board and consult experts until the practicalities could be thrashed out. Another suggestion was that the Minister could call for affected persons, although that would be an administratively challenging task.

Other clauses did not pose the same challenges although the clauses on collecting societies were carefully scrutinised and the Committee asked the legal team to ensure that the Bill made it an offence for collecting societies not to be registered and accredited. A decision was taken to meet with the drafters of the Cybercrimes Bill to consider any overlaps in the legislation.

The matter of the log sheets to be used by all radio stations, restaurants, and other businesses to record the use of an artist’s work received much attention. The Committee posed wide-ranging questions in an effort to understand the concept and practicalities of the log sheets. It was determined that the practicalities in implementing a system of log sheets would be addressed in detail in the regulations. The matter of the SABC’s delayed payment of royalties was discussed and it was decided that a copy of the court judgement in the matter would be requested and scrutinised.

 

Meeting report

DTI Response to public submissions on Copyright Amendment Bill
Dr Evelyn Masotja, DTI DDG for the Consumer and Corporate Regulation Division, continued with the presentation from the previous day.

Increased penalties for infringement. Provision for fines when the convicted person is not a natural person
Clause 27: Section 27(6)

Input suggested that the copyright protection was welcome, but the fines imposed were draconian. Another input suggested that corporate entities should either pay 10% of annual turnover for each offense, or 25% of Profit After Tax, whichever was the greater. Others recommended a fixed fine. It was suggested that the complainant in such criminal proceedings should be the collecting societies. The discord between the punishment of juristic and natural persons was raised. Criminal law, company law and copyright law were overlapping. The penalties should be limited to legal persons and not natural persons. There were concerns that DTI did not have the resources to administer the legislation. Stakeholders linked the clause to the problem of piracy with the hopes that it would deter piracy.
DTI responded that the clause did not prevent civil action which was included in the principal Act and that the National Consumer Tribunal (NCT) could be approached with civil claims. The Counterfeit Act could be used to address issues of online piracy. Turnover-based fines had been benchmarked against other legislation and should act as a deterrent to the infringement of copyright. The penalties should apply to both legal persons and not natural persons.

Mr G Cachalia (DA) stated that the Members wanted appropriate sanctions but as he read responses from the public, he was concerned because the punishment should fit the crime. He was concerned about a company fine being a Group fine instead of a fine of the Division. He believed that the Committee was not being sensible and used the example of how a large company that had a turn-over of $10 billion would be fined an extreme amount of money. The term of imprisonment was also unreasonable. All those issues could have unintended consequences on the industry and could kill it. The Committee could not continue with the draconian measures.

Mr A Williams (ANC) agreed that the penalties were harsh, but the artists had never received what was due to them. Severe penalties would incentivise people and companies to obey the law. If there were not harsh penalties, nothing would change. Nothing had been done to improve the situation by the private sector. If the private sector was not going to do what was fair, then harsh penalties were necessary.

Mr B Radebe (ANC) agreed with the harsh penalties as the livelihood of people was being stolen. If only one Division was fined, the company would not ensure that all Divisions did not steal. The Chairperson of the Board had to see that none of the Divisions stole. The offences had to apply to natural as well as juristic persons. The people who were affected by the theft of their works did not have the money to go to court, but the large companies were always prepared to litigate. Artists had to be protected.

Mr J Esterhuizen (IFP) recalled that artists and penalties had made very emotive presentations that the punishments should be harsh. However, the conditions should not be such that people were reluctant to sign up artists or play their music.

Mr Cachalia stated that he had consulted the original submissions and that the use of the word “draconian” had not come from industry players, but from expert practitioners who had institutional knowledge that far surpassed the knowledge of the Member and needed to be taken into consideration. The criticism had not come from the industries.

The Chairperson noted that it was important to go to the detail of the comments and to take into particular account the views of experts. She referred to the presentation, quoting the point made that:
“The overlap between criminal law and company law (in the case where the infringer is a juristic person) will certainly bring about more legal uncertainty where the implementation of this Bill is concerned, and arguably blurs the lines between the copyright law, company law and criminal law respectively.”
It was a very serious statement. She wanted that clarified by the DDG and Adv Rory Voller, Commissioner of the Companies and Intellectual Properties Commission (CIPC). She was concerned about the statement and wanted to know why such a statement had been made.

The Chairperson also referred to the point indicating that a submitter: “has reservations about unlimited fines on individuals and fines determined as a measure of turnover. Instead, recommends an increased fixed maximum fine.’
The Chairperson noted that an individual should not have a turnover, but she did not believe that it was unduly harsh to impose a fine that was a percentage of turnover.
The DDG said that the point raised about the three types of law could be looked at. It would be necessary to check who had said it. The issue about the turnover referred only to companies and related to company law but DTI had actually benchmarked against company law. She agreed to revisit the clause to give it the serious attention that it deserved but she did not see the clause as a challenge. Copyright was a specialised business, but companies had to conform to company law and criminal law, if necessary, as well as copyright law. The alignment was there, and she did not see a concern.

She responded to Mr Cachalia about the draconian punishments, noting that it was for the Committee to decide on the harshness of the penalties. She acknowledged that they were harsh penalties, but the Department knew that there were issues out there. She agreed with Mr Esterhuizen that the issues were emotive, and the injustices of the past had to be addressed. The Bill was not intended to chase people away, but an infringement was an infringement and people should not violate the rights of the artists. She noted that Mr Williams had acknowledged the need for harsh penalties.

Adv Voller confirmed that the Companies Act also had penalties of 10% of turn-over. Recently, CIPC had taken a few companies to court because they had failed to lodge their financial statements. In court, the judge had been scathing, stating that full compliance was necessary and that a company could not choose not to comply with certain aspects of the law. The judgement had instructed that 10% of the annual turnover had to be paid. The judge had acknowledged the harshness of the penalty, but compliance was essential, and a message had to be sent. So, when looking at copyright and people’s rights were taken into account, 10% of annual turnover seemed a good deterrent.

On company law and criminal law, as well as harsher penalties for individuals and companies, who would be prosecuted, etc., Adv Voller stated that one had to bear in mind that similar procedures were applicable in company law. When a company, under the guise of limited responsibility, did not follow the law, the CIPC went after those who were responsible, such as the directors. That meant that there was no difference between the way in which corporates and individuals were dealt with.

Ms Mantashe said that the ANC would stand by the so-called harsh sentences because no one had stood up for artists in the past when artists were victimized and yet there was a concern for the companies. If the penalty was good enough for the Companies Act, it was good enough for the Copyright Act.

Mr Radebe responded to the perspective of those who did not want to invest in the country because the sentences were too harsh. When China had opened up to international companies, those companies were only allowed to buy land for 30 years. They had built the necessary infrastructure, even though after 30 years, their land would revert to the government. Many companies had simply complied with the law because they wanted to do business in China. The country did not want companies that would be deterred by the penalties and did not want to adhere to the country’s laws. Had DTI consulted the legal clinics? He encouraged the Committee to stick to the harsh penalties.

Mr Cachalia believed that the disclosure of financial statements was a fundamental requirement and not to do so was clear intent of covering up a multitude of sins and offended the basis of company law. However, the comparison with copyright infringement was a jump too far. He was not suggesting that people should not get their just desserts. Of course, one went after directors if they were complicit as it was law, but they had to be clear that the directors at Group level had had sight of the malfeasance and if they had not had sight thereof, one could question whether they had been derelict in their duties. The specific details needed to be addressed before the Committee rushed ahead with such decisions.

The DDG responded to the input by Mr Radebe, acknowledging that DTI had not consulted legal clinics. She stated that the focus had been on the Tribunal. The proposal was that the Tribunal would deal with civil matters.

Ms Meshendri Padayachy, DTI Deputy Director for Intellectual Property Law and Policy, stated that the Copyright Act, passed in 1978, currently legislated a three-year imprisonment sentence. The Amendment would be updating what was already in the principal Act. She thought that adding two years, when the update was taking place 20 years later, was nothing. The input had also suggested that the penalties would deal with the piracy issues. It could have a ripple effect and dealing with piracy was important.

The Chairperson stated that there was a need to deal with piracy and, as an example, she referred to pirated DVDs being sold outside schools. The matter had been addressed extensively in the previous term of Parliament. Artists earned their living from the sale of their work, so the piracy issue was important. She invited DAC and other departments to give input. The Chairperson informed the Committee that she had had a request from SAMRO to address the Committee and had explained that the matter under discussion was in relation to the second round of public inputs. She noted that the Committee had received the extensive inputs from SAMRO, and she could not give SAMRO an additional opportunity that was not available to other stakeholders. SAMRO could give input when the Committee dealt with the next Bill on performers.

The Chairperson noted that only 50% of the submissions had considered the penalties too harsh. She asked who had stated that the offences were too harsh. She was waiting for that information but considering the comparison between the 1978 penalties and inflation, she believed that the prison sentence was reasonable. The original proposal had been ten years’ imprisonment, and not five years. In three jurisdictions, including the United States, the prison sentences had gone up five times and there was no option of a fine. South Africa had been more measured. She did not believe that a prison sentence of five years was unreasonable. Were inputs referring to the fine or the prison sentence? Two questions had to be addressed. Firstly, was it too harsh on companies? Secondly, was it too harsh on individuals?

Mr Williams believed that it was necessary to ask why the Committee had decided on the penalties. He did not believe that they were unreasonable. The Committee had to look at how effective the penalties were as a deterrent. His opinion was that the fines should go up, but the prison sentence should stay the same.

Mr Cachalia had given his opinion that, on both counts, the penalties were too harsh. He stated that it was more important for the Committee Members to apply their minds to ensure that the artists received the money that they were entitled to plus an additional stipend because of any fees that had not been paid or where they had been defrauded. That should not be conflated with a sledgehammer approach. The draconian measures were unnecessary.

Mr Radebe supported the penalty of five years’ imprisonment.

Mr Esterhuizen said that the Committee wanted to create jobs and reduce unemployment and look after the artists. While it was necessary to protect artists, the heavy penalties would mean that a lot of shops and bars would just refuse to play music with a copyright. It was going to be a problem if one had a blanket approach.

The Chairperson thought that it was necessary to look at it differently. If the penalties were seen as a deterrent, they had to ask how effective the current law had been in identifying abuses and having offenders arrested? If only a few people had been affected, then there was a problem of implementation. She addressed her question to the DTI and also the Department of Arts and Culture (DAC) that learnt about the abuse and copyright infringement of people’s work.

The DDG said that she would check with DAC over lunch.

Mr Williams said that the film ‘Finding Sugarman’ was an example of the exploitation of artists. Mr Rodrigues had not known of his popularity in South Africa and had not been paid any royalties. He had gone to number one on the hit parade in the country, but he had not received a cent. The people who had exploited him have never been prosecuted. Mr Rodrigues had still not received any royalties. He could clearly say that the lack of adherence to the law by the private sector was rampant and that the Committee should go with the harsh penalties.

The Chairperson commented that ‘Sugarman’ was one of her favourite songs but she was not aware that the singer had not received any royalties. She suggested that if the law was not adhered to and the record was abysmal, perhaps the Committee should put the penalty up to ten years. Catching offenders would be based on ransom checks.

The DDG stated that Slide 23 dealt largely with the turnover penalty. She informed the Committee that the presentation had focussed on the advertised clauses, but DTI had taken all inputs into account.

The Chairperson noted that the inputs of SAMRO had been included.

Copyright Tribunal
Clauses 29 and 30

Dr Masotja explained that the Copyright Tribunal was being strengthened in the Bill. Submissions queried why the Tribunal should be involved in receiving fines. More definitions and descriptions were required around the Copyright Tribunal. No provision had been made for the resignation of the Deputy Chairperson. Judges did not exhaust the available pool of experts that might be suitable candidates to serve on the Tribunal. Industry practitioners and academics might well be as suited, if not more so, due to their knowledge of particular industries. Section 36, the appeals section, should not have been deleted. The absence of a criminal record should be an additional requirement for eligibility for the judges to serve in the Tribunal.
DTI adhered to the belief that the Tribunal should be empowered to impose fines. There might not be a need for a deputy in the Tribunal. Judges were best placed to hear matters and would be empowered and capacitated on copyright matters. Section 36 would be re-instated. The additional criteria could be included although the criminal court criteria had been used.

The Chairperson informed Members that whatever Bill was being brought to Parliament, one had to ascertain the relationship and alignment with other Bills and whether that Portfolio Committee and Department had jurisdiction over the matter. When it came to the Copyright Tribunal, firstly, the Minister of Justice had to be consulted and, subsequently at the direction of the Minister, the Chief Justice Mogoeng had to be consulted in accordance with Section 3 of the Superior Courts Act:

Introduction of legislation dealing with court structures
3.The Minister must be consulted prior to the introduction in Parliament, by a person other than the Minister, of any bill— (a) providing for the establishment of any court of law; (b) providing for the establishment of any tribunal contemplated in section 34 of the Constitution; (c) that amends the structure or functions of any court of law or tribunal referred to in paragraph (a) or (b); or (d) that assigns functions to judicial officers, other than in terms of this Act.


The letter informed the Chief Justice that the Committee was considering the retention of the Copyright Tribunal and strengthening its provisions. The proposed amendments, Clause 30 and 31, had been attached to the letter. The letter asked the Chief Justice to provide his input by 22 August 2018. He had also been informed that he was welcome to address the Committee should he wish to do so. The letter was dated 6 August 2018 but because of the public holiday on 9 August 2018, there had been a delay in sending the letter. As of 14 August 2018, there had not been a response. The Chairperson was, therefore, informing the Committee of the progress in regard to the consultation in compliance with the legislation.

Mr Williams had a question of clarity. He assumed that the Tribunal would be approached if there was a contravention of copyright, it would be established, and a decision taken, and fines imposed. Did the Tribunal issue the fines previously discussed? If he were a performer and he had been ‘ripped off’ could he go to the Tribunal which would fine the person who had ‘ripped him off’. Was he correct?

The DDG agreed that the Tribunal would issue the fines.

Mr Kadi Petje, CIPC Senior Manager: Copyright, said that the intention in strengthening the Tribunal was to allow it to deal with civil matters.

Mr Williams supported the option because the concern about the huge penalties and criminality could be a last resort. The Tribunal could be the first censure and then a repeat offender could be referred to court.

The Chairperson asked the CIPC if that was how the process was intended to work.

Mr Petje stated that currently the Tribunal could only deal with licence issues, but it was being expanded to include any other matters in the Bill, including issues of copyright, etc. He agreed that the Tribunal was the first resort.

The Chairperson stated that the CIPC was an essential support of the economy.

Ms Mantashe wanted to appreciate that CIPC had been in the Committee day-in and day-out. She gave them a clean audit.

The Chairperson recalled that the entity had had a different name – CIPRO.

Adv Voller stated that the entity had changed its name as it had moved from being a Registrar to becoming a Regulator.

The Chairperson was aware that there were much bigger and more fundamental reasons for the change. When she had first chaired the Trade and Industry Portfolio Committee, the entire body had to be changed before it had been a very dirty body where everyone had been doing the wrong thing. With CIPC, a number of checks and balances had been put in place to prevent that. It was important to support companies but also South Africa had lost a lot of money owing to copyright issues, such as with Rooibos tea, wines, herbs, services. She understood that all companies had to register with CIPC. She also noted that when she was overseas, she was pleased to be informed that CIPC could be relied upon to provide accurate information.

Transitional provision
Clause 37
The DDG presented some of the comments around the Intellectual Property Laws Amendment Act of 2013. Some submissions stated that it should be repealed in its entirety. The Act was unworkable and would derogate hugely from the commercial usage of traditional South African works, throughout the world. Traditional communities could not be considered a collecting society.

DTI was engaging with the Department of Science and Technology. The Science and Technology Act was currently in NCOP processes. DTI believed that the IPLAA had to be retained as indigenous knowledge was very important to the country, but with certain amendments, such as some of the cultural descriptions. The principle and policy should remain.

The Chairperson noted that even the traditional house of leaders had supported IPLAA. It was a problem that it had not yet been implemented, although it had been passed in the previous term of Parliament, and she was pleased that DTI was moving forward with the Act and working with other departments. It was important to implement legislation that had been passed by Parliament.

Other comments in submissions from the public
The DDG presented some of the comments relating to broader issues than the advertised clauses. It was worth the Committee’s while to note some of the points made.

DTI had removed the computer programmes because of all the exceptions, but several submissions had called for computer programmes to be included in the Bill. The Committee would have to give guidance as it was in the Committee that it had been removed from the Bill.

The Chairperson noted that the submissions had stated that the computer programmes had not been properly considered. Another issue was the support for the introduction of a private copy levy. Some submissions raised concerns with the principle of one collecting society per set or rights. She asked Members if they wished to add anything or make any comments about the collecting societies.

Ms Mantashe noted that the Chairperson and other Members of the Sub-Committee were not in attendance, except for Mr Cachalia. She did not want to contradict a Sub-Committee Member’s point of view. She requested that that particular point be held over until the next meeting.

The Chairperson agreed that it would be best to wait as the Sub-Committee had discussed collecting societies in detail.

The DDG asked that CIPC be permitted to speak to collecting societies and the SABC, and to explain about the outstanding monies.

The Chairperson asked if the Commissioner if he was aware of the huge amounts of money that the collecting societies managed and that they even shipped money out of the country for investments. That was illegal for a non-profit organisation.

Adv Voller responded that collecting societies were a law unto themselves and had collected huge amounts of money. They had used exorbitant amounts under the guise of administrative fees. Until the Copyright Act had been amended, CIPC had only a limited role and there was only so much that the Commission could do. CIPC had engaged auditors to audit the distribution plan. CIPC had had multiple meetings with the collecting societies for them to understand that, as a Regulator, CIPC would be scrutinizing their books because the Commission wanted to see how the distribution worked. They were given a mandate to deal with the issues of distribution and show what monies had been paid out. The Commission had wanted to find out what gaps there were in distribution and what types of recommendations it could make with regard to the legislation. The reports had been received and could be made available to the Committee. CIPC had started putting together guidelines to strengthen the practice of collecting societies dealing with the law and practice. That could also be made available. However, CIPC had an acrimonious relationship with the collecting societies, and had been involved in many court cases with the societies. CIPC was playing an active but meaningful role.

The Chairperson noted that the collecting societies were NPOs and asked for clarity about extra money or profits that the societies had.

Adv Voller explained that, legally, as far as non-profit companies were concerned, whatever money was made had to be plugged back in for the advancement of the non-profit memorandum. Many churches were non-profit companies and they should plough money back into the church, although someone had mentioned that the ministers’ home seemed to receive some of the profits. CIPC was proposing that the societies should set up schemes for artists, such as burial schemes, educational schemes and so on.

The Chairperson was pleased to hear that there would be regulations. She would pursue her enquiries about the repatriation of funds from Dubai.

Mr Cachalia was pleased that rubber stamping would stop. When was it stopped, and who was responsible for rubber stamping in the past?

Ms Mantashe appreciated the information supplied by the advocate. If the SABC had done a retrospective distribution of payment, then it was not illegal for other societies to pay retrospectively as it broke her heart when she heard that retrospective payment was not legal. The Committee should ask how far back the SABC was going in paying royalties.

Mr Esterhuizen agreed. The intention was to get the law to protect artists and to stop the monopolies from abusing them, so that they could get their money.

The Chairperson did not think anyone on the Committee was opposed to imposing strict regulations on the collecting societies. There had been complaints across the board. SAMRO had even come to get another bite at it. The issues had been raised under President Zuma, nine years previously. At last the Committee was trying to do something about it. The Committee would not be able to address all concerns with the Bill, but at least most of the concerns would be addressed.

Adv Voller said that for about last eight or nine years, CIPC had been dealing with the societies. Mr Petje had been abused for asking about distribution matters.

Mr Petje had not received any information from SABC to date, but on 6 June 2018, it was said in the media that SABC had paid over an amount of R16 million. SAMPRO was claiming 75% of the money but SABC had apportioned 25% to SAMPRO and 75% to IMPRA. The issue was about how many people belonged to the different societies. It was confusing as some artists belonged to both societies. There was no distribution plan from IMPRA.

One collection society per right would ensure that no one could belong to two societies. It would also be more practical for administration. He understood that the majority of the submissions had supported that view.

The Chairperson asked for clarification. A person who wrote music would belong to one collecting society. If he also sang, he would belong to another collecting society for that right, and so on. Was that correct?

Mr Petje explained that he was only referring to needle time rights. The record companies belonged to one society and performers belonged to another. One collecting society had been formed by the record companies and the other by the performers. He added that the SABC had not paid retrospectively: it was just that they had had a backlog of more than ten years as the regulations had been promulgated in 2006.

The DDG added that there had been an omission in Clause 25 as it made no provision for companies. The legislation had to make provision for that. The DDG had some proposals following matters raised the previous day that she wished to present after the lunch break.

The Chairperson noted that the DDG had concluded comments on public input and the DTI responses to the advertised clauses. She reminded the Committee that issues had arisen from the presentation by Dr Masotja. She added that she had been unsuccessful in trying to get hold of the DDG from National Treasury, but she would try again as she wanted to tell him that officials from Treasury who attended the Committee meetings had to be briefed before attending. It was clear to her the officials who had attended the previous day, had not been fully briefed.

DDG explained that DTI had a number of proposals following comments by the Committee and DTI responses to some of the public submissions.

Proposed Clauses in Copyright Amendment Bill - DTI
Dr Ria Nonyana-Mokabane, DTI Chief Director, Legislative Drafting: Consumer and Corporate Regulation Division, made a presentation on proposed clauses for inclusion in the Copyright Amendment Bill. DTI would be making some specific proposals for the Committee to deliberate on.

Definitions
Clause 1

DTI proposed a definition for visual artistic work which included a painting, a sculpture, a drawing, an engraving and a photograph as artists who produced such works did not benefit from downstream benefits. The definition excluded industrial design, works of architecture, engineering drawings, etc. The essential change from the advertised clause was the exclusion of the word ‘commercialized’. The motivation for the definition was that visual artists such as painters and sculptors did not directly benefit from downstream payments when their works changed hands or from reproduction and communication rights. The artistic resale right sought to correct the imbalance by ensuring that artists received a small percentage of the sale price of a work when it was resold.

Mr Williams asked if the excluded artists were protected elsewhere. If one designed an item did one only get paid the first time and not if the design was used elsewhere?

Mr Macpherson enquired whether jewellery design was considered fashion design.

The Chief Director stated that there were other legal prescripts that protected other artists.

The Chairperson explained that the clause was specifically about visual art.

Ms Padayachy explained that the clause related to fine arts and stemmed from definitions used in the European Union and France. The Designs Act protected jewellery because it was more of an industrial process.

The Chairperson asked the presenters not to use abbreviations without explaining what the abbreviation stood for.

The Chief Director apologised and explained that ARRR stood for Artistic Resale Rights Royalties

Royalties
Clause 5: Section 6(a) – royalties regarding literary or musical works

The clause set out what was covered under copyright, that a written agreement was necessary and that if the parties could not agree on the royalty, they could approach the Copyright Tribunal.
Sub-section 4 defined the minimum requirements for a contractual agreement, two of which had to be included in an agreement:
(a)  the rights and obligations of the author and the publisher,
(b)  the agreed amount of royalty payable, and
(c)  a dispute resolution mechanism.
 
The Chairperson asked all Members to consult the principal Act as they went through the presentation.

Mr Esterhuizen asked for clarity. For example, if he had an advertising company and had a graphic designer working for him that person would not receive any royalties for his or her work. Why was a graphic designer excluded when someone who did normal drawings was paid royalties? He did not understand.

The DDG explained that the definition referred only to the specialized field of fine arts. Graphic art was excluded in the definition.

Mr Cachalia asked if the presentation was dealing only with definitions and was the Chief Director just explaining the rationale behind the definitions?

The Chief Director explained that only the first clause dealt with a definition. The clauses thereafter did not deal with definitions.

Mr Cachalia was not clear about the purpose of the presentation. Firstly, there was a definition, but what was the purpose of the second clause being discussed?

The DDG explained that the previous day she had gone through the advertised clauses, highlighting areas where changes were required. One was around a change to the definition and another was around a minimum contract and the use of the word ‘assignment’. Clause 5 in the presentation was a proposed clause to replace the original clause in the Bill. For example, the term ‘assignment’ had been removed. The ‘cooling off period’ was another term that was not applicable to literary and musical works. The previous day the DTI had presented the problem areas; that day they were proposing solutions to deal with the problem areas. The term ‘assignment’ had also been removed from Clause 9(a).

The Chairperson question the heading attached to Clause 5 ‘Royalties regarding literary or musical works’. She proposed that the wording should be ‘and’ not ‘or’.
The Chief Director said that the word ‘or’ was used in the principal Act.

Mr Petje agreed with the Chief Director.

The Chairperson asked Adv van der Merwe for a legal opinion.

Adv van der Merwe stated that she understood why the DTI had used ‘or’. Section 6 in the principal Act determined the use of ‘or’.

Mr Cachalia suggested using ‘and/or’ so that it covered both.

Adv van der Merwe stated that ‘or’ was the safer word to use in drafting as ‘or’ could also mean ‘and’ but ‘and’ could not be ‘or’. ‘Or’ could refer to either or both.

The Chairperson decided that the Committee should err on the side of safety and keep ‘or’.

The DDG added that another issue with the clause was that some people had wanted to add other forms of remuneration but that had other implications, whereas the clause was specifically about royalties.

The Chief Director stated that remuneration fell within the scope of the Labour Act.

Mr Williams was concerned about actors who were remunerated for their work once it was complete. Were they covered in a different section?

The Chairperson suggested that actors would fall under the protection of the Performers Act. She asked whether literary and musical work was different from the performers.

Ms Mantashe shared the sentiments of the Chairperson as she would also think that actors would fall under the Performers Act.

Ms Padayachy stated that Clause 8 covered audio-visual work. It would be covered in both Acts. DTI wanted to plug it into the Copyright Act according to the Beijing Treaty and then they would break down the economic rights in the Performers Act.

Adv van der Merwe asked whether she should engage during the slide by slide presentation when she had concerns about a proposed clause or whether she should discuss her concerns at a later stage when she presented.

The Chairperson suggested that it would be useful for everyone to get involved.

Adv van der Merwe explained that her concern was about using the wording of Section 9(a). Section 9(a) dealt with royalties being paid to a copyright owner which was a very different royalty from the one being addressed, and it was one that everyone knew and understood. If one paid a royalty, it was paid to the copyright owner. Section 6(a) was trying to address a situation where an author had assigned his or her work to another person who became the copyright owner and received royalties for the work, but the author did not receive anything. It was a different situation from that in Section 9(a).

She understood the problem with the word ‘assignment’ but the word had to be used because the principal Act used that word for the sale of a work. It was something that had been established at a previous meeting when the discussion had been around the use of the word ‘transfer’ and ‘sale’, etc. However, CIPC had explained that every single transfer of copyright was an assignment of copyright. That was why the word ‘assignment’ had been used.

What the proposed Section 6(a) was saying was that for a literary work, if one assigned one’s copyright to a publisher, whatever the publisher did with the work, I, as the author, would get full royalties. In other words, Section 6 removed the right of the copyright owner to get royalties. The clause said no one (i.e. including the copyright owner) could do anything with the work without paying royalties to the author even though the author had transferred or sold the rights to the publisher. If in an Act one said one thing and did not say the other thing, by implication, one was saying that it was not possible.

The Chairperson stated that what Adv van der Merwe had said was very, very important and it had to be resolved. She noted that CIPC had informed the Committee that the sale of copyright was known as an ‘assignment’. How did Adv Voller understand the use of the word ‘assignment’?

Mr Petje explained that when something was assigned, it meant the transfer of copyright ownership. But the assignment had to be in writing and was a contractual arrangement, so it did not go through CIPC.

Mr Williams asked if that meant that selling a copyright was meaningless to the buyer until the copyright was assigned.

Mr Petje stated that selling was exactly the same as assignment because the artist was left with nothing.

The Chairperson attempted to clarify the matter. When something was assigned, it became a transfer of ownership. Did the transfer of ownership have to go through CIPC?

Mr Petje explained that it was a contractual arrangement between two parties, so it did not go through CIPC. The assignment had to be in writing for it to be valid.

Ms Mantashe suggested that if it was a contractual arrangement, people had to be educated about the meaning of ‘assignment’.

Mr Williams stated that if the owner of the copyright could not benefit from the copyright, the entire Bill fell apart on that clause. He understood from Adv van der Merwe that only the creator would benefit from Clause 5 and the owner of the copyright would get nothing.

The Chairperson stated one of her concerns was that the creators of artistic work did not get any benefit. She had understood that the Committee was writing the legislation to ensure that the creator could sell the copyright but retain some benefit.

Mr Cachalia suggested that by trying to get the creator to benefit the Bill was subsuming the separate and discreet rights of the contract. Ordinarily he would contract with a publisher and they would agree on percentages and, if not, he would not sign the contract. Now when the publisher sold the copyright on, that was a separate contractual agreement. If the Bill tried to take royalties for the creator when the work was sold onwards, the whole system would collapse. The Committee was in heavy waters.

The Chairperson suggested that the Committee got down to basics. What was the intention of the legislation? It was trying to redress things for the creator. The creator sold the copyright to a publisher and a
contract was entered into and the creator got 30% and the publisher got 70%. If the publisher got a second offer, how could he sell 100% if he only owned 70% as the artist had 30%? That was her understanding of the situation.

Mr Esterhuizen recalled that the Committee had talked about the state getting full ownership if a work had been state-funded. If one worked for a company, did one not get any royalties, even if one had written a big hit.

Ms Mantashe said that the Bill was intended to ensure that no creator was left empty handed at the end of the day. She did not want to do anything that took people back to square one under a democratic government. That was not the mandate of the government.

Mr Cachalia stated that in his understanding, the publisher purchased the rights from the creator for a consideration of x percent. The ownership of the work rested with the publisher. The publisher could then on-sell the right and those proceeds had to accrue to the owner, not to the creator. The right was being traded, not the creation. That seemed clear in his head. Perhaps the advocate could clarify.

The Chairperson asked Adv van der Merwe to clarify. If one owned the right to something, what one stopped someone from putting one’s own name of it? One owned it.

Adv van der Merwe began with the question of assignment. Section 22 of the Act read as follows:
Subject to the provisions of this section, copyright shall be transmissible as movable property by assignment, testamentary disposition or operation of law.
 
In her mind, assignment had more to do with rights and delegations and so on. The Act made it clear that assignment equalled transfer of copyright. Even if one sold the full work, different sections of the Act detailed what it meant to have copyright. Different art forms had different rights, but one could not call it one’s own as one could not take away the moral right of the creator. The work could be reproduced, etc. but one could not claim it as one’s own because another clause dealt with the moral rights of the creator.

The original Clause 6(a) stated that, notwithstanding the fact that one might have transferred copyright, the creator had the right to a percentage of any royalty received by the copyright owner, subject to the provisions of the Act. If that copyright owner executed or authorised any activity that he was permitted to exercise, a percentage of the royalty that the owner got as the copyright holder had to go to the creator. The Act gave the copyright owner rights to the work, but it created an additional right for the creator.

Adv van der Merwe did not believe that there was anything wrong with the original clause. The only concern was about undermining contractual arrangements, and it was suggested that guidance be given to the Tribunal. If the copyright owner received royalties, did one talk about licence to use or profit? If he sold it on, that was profit. The royalty was the licence to use. She recommended that the wording of the Bill be retained. The comments, as she read them, did not attack the wording but asked for more explanation. The problem was the confusion between royalties as commonly understood and the new right that the bill wanted to create for the author.

The Chairperson asked Members and departments as well as CIPC to consider the original comments. Why had the changes been made? She drew Members’ attention to slide 6 of the DDG’s presentation: ‘Assignment is not applicable to literary works.’ Thereafter the DDG made some comments, followed up by the Chief Director’s proposal.

The DDG said that the previous day, she had referred to the word ‘assignment’ as the stakeholders had believed that it did not apply to literary works. DTI believed that it could consider the comment. The intention was to ensure that royalties were payable and to redress the depravation of the past. Contractual rights had to be taken into consideration. Section 9 had never been challenged so that had been used as a template. She believed that the newly drafted clause was workable because contractual rights were protected, royalties were payable, and the Tribunal could be used to resolve disputes. DTI had gone back to the assignment debate. She would be happy to redraft but did not believe that ‘assignment’ should be used.

She asked that her colleagues be permitted to present arguments in favour of the DTI position.

The Chairperson noted the request and said that her colleagues would get an opportunity, but everyone had to look at facts. CIPC had been very clear that the meaning of ‘assignment’ was the transfer of copyright ownership. That was a basic fact. Everyone should keep in mind what the Members had intended with the Bill. She called on the DDG’s team for input.

Mr Petje said that the policy intervention stemmed from the fact that, in the industry, authors transferred their copyrights to a publisher. The intention was to come up with a right for the author, even in instances where the author had transferred copyright. The wording could be looked at in the light of the policy intervention. The intention was to allow the author to continue to benefit from his or her work. It did not matter which word they used.

The Chairperson stated that Mr Petje was very clear. She saw a reservation on the faces of officials who were reluctant to use the microphone and commit themselves. She believed that DDG should engage with officials before coming back on the matter.

Mr Radebe believed that the parties on the other side of the table should go away and consult amongst themselves. He also thought that the Advocate should have presented on the issues that had been raised by the submissions.

Ms Mantashe aligned herself with her whip but asked that the proposal put money into the hands of the people. As the ANC, they could not support a Bill that did not put the money in the hands of the people.

Mr Cachalia understood what Mr Petje had said about intention but, in order to give meaning to that intention, the Committee needed to address ‘assignment’. When the Committee had addressed the word ‘assignment’, alarm bells had rung in his head and it had made him question the way in which they were addressing the matter and whether it was fundamentally flawed in respect of legality and logic.

The Committee was saying that a creator needed to be advised and be well-looked after but then the creator sold his or her rights to the publisher and they had a contract which said how much would be paid. The question was whether one could give purpose to a future contract that was not envisioned, and so that some royalty came back to the creator even though the creator had not created something new. That was a flaw in logic. He did not think that the law worked like that, but the advocate would have to advise. The Committee had to think it through very carefully

Mr Esterhuizen said he did not understand exactly what Adv van der Merwe was saying but it seemed that the creator would have to pay a fee to use their own work, which made the Bill unconstitutional.

Mr Williams spoke of contractual assignment of copyright. His concern was the artists who were not literate and who could get ripped off. Could there not be at a minimum of 10% of royalties that had to be retained by the artists.

The Chairperson suggested that the Committee was going to pause on Dr Nonyana-Mokabane’s presentation and the Committee would turn to Adv van der Merwe to provide her responses to the comments. The Department dealt with policy, but the advocate dealt with legal and drafting aspects of policy. When the Department did not agree with Adv van der Merwe, the officials would add to the list that DTI wanted to discuss. All members of the policy team should come through seamlessly as a team and all had to
be on the same page, even if certain issues were held over until the next meeting.

Parliamentary Legal Advisor response to public submissions
Adv van der Merwe indicated that she could not comment on policy, but she could speak on constitutional matters and say where the words did not match the policy intentions. When she had read through the submissions, she had been uncomfortable, but she felt more encouraged following the DTI’s responses to the comments. She could not respond to all of the submissions but would only speak to advertised clauses and then deal with a few comments.

Definitions
Clause 1 - visual artistic work

Adv van der Merwe identified aspects of the submissions that could improve Clause 1. It was not necessary to rewrite the clause. Making a distinction between aesthetic and functional would resolve the problem of lists of types of work.

The Chairperson asked what was meant by audio-visual in the Bill.

Adv van der Merwe explained that cinematic works, or films, had become small portion of audio-visual works which dealt with moving pictures. Audio-visual works were automatically excluded because the definition applied to one type of work only. Among the proposals to improve the definition was a request for more detail.

Minimum content royalty percentage agreement
Clause 5 sections 7 to 9
.
It was about a minimum content in a royalty agreement. Only the minimum content was advertised. One of the concerns was that when the author transferred his/her copyright of the work, there had to be an agreement which had to include rights and obligations of the author, the royalties or percentage agreed by, period for payment, cooling off period and dispute resolution mechanism.

Concerns included that the clause undermined contractual arrangements and might be unconstitutional because it was talking about deprivation of property. However, guidance as to what had to be in a contract did not constitute deprivation of property and did not limit the contract but said that it had to include specific decisions. The clause was not unconstitutional. She believed that the submissions were actually addressing the policy issue of paying copyright to the author. It was not about the actual clause but referred to the concept of the copyright and royalties.

There were some questions to be considered but not a concern with clause itself. One concern was looking at practicalities. The Bill did not take into account collective agreements and multiple forms of remuneration, such as share of profits. There was no right for performers to have a share in the commercial exploitation of their performances and that could not be retrospective. The cooling off period was a concern.

She noted that DTI had dealt fully with the unintended consequences raised by the submissions. Another loophole was where the author remained the copyright owner, but the work was exploited by someone else.
The Committee had reached a policy decision about the creator receiving a share of the royalties, so she would not address those concerns. Submissions had, however, raised questions about the fact that different works were assigned and used differently which meant that a single solution would not work. In the Bill Sections 6a, 7a, 8a read very similarly. It might be necessary to check that each clause worked for the rights that the Bill was protecting in that clause.

Mr Macpherson agreed that minimal contractual arrangements did not constitute deprivation, and similarly minimum content for royalties. He was concerned about putting it in a Bill as it would apply to audio-visual as a collective. There might be sub-categories within a category. He suggested that the wording be changed so that the Minister could look at the specific industries to which copyright applied so that there could be minimal content standards for each industry. That would allow for an engagement with the specific industries to work out was best for each industry for minimum content and royalties. He was worried that it might be a law of general application, so to speak, that advantaged some industries and disadvantaged others. The prescriptive minimum requirements could be misplaced as each category was not hegemonic or homogeneous and he suggestion would allow each industry to determine appropriate requirements rather than the Committee determining them.

Mr Williams stated emphatically that he would not support anything that did not take into account collective bargaining agreements. He could not understand how that could be the case.

Mr Esterhuizen said if the author got a cut of the profits and not a royalty, there would be no control, especially if the work was used over and over again.

Mr Cachalia looked carefully at comments about constitutionality, as all Members should. He noted the concern about the Bill undermining contractual agreements. Whether or not it was unconstitutional, might be determined by constitutional courts. Why were constitutional matters raised? There was a logic that caused people to raise such serious questions. The Committee had to address those concerns. It was about the freedom to sign a contract. People should be schooled about how to draft and read a contract. There could even be a clause that said, “pay x percentage of any future assignments”. It was about the freedom to take the contract somewhere else if someone did not agree to terms of a contract. That was the nature of competition. It spoke to the fundamental principle of caveat emptor (let the buyer beware) and caveat venditor (the seller of goods is responsible for defects or deficiencies).

The Chairperson was concerned about setting minimum standards.

Adv van der Merwe responded to Mr Cachalia’s question about whether there should be a requirement for a contract. Setting minimum requirements was constitutional. The fact of limiting the use of a person’s royalty by saying that one had to pay a percentage to the author was a policy question, but she believed that it was part of regulating the trade and that it would be constitutional if it were added.

Mr Macpherson’s concern that there were different requirements for different artistic forms was one raised by the submissions. The content of the contract could be moved into regulations as the regulations already stated that the Minister “may” make recommendations. That would have to be changed to ‘must’.

As far as Mr Williams’ comments about collective bargaining agreements were concerned, she did not know whether it took collective bargaining agreements into account. She would have to look at the different works. Where and how would collective bargaining agreements apply to a literary work? If there were collective agreements, the artists would not be able to fulfil the contractual requirements.

Adv van der Merwe informed Mr Esterhuizen that the Act only provided for royalties and if someone paid shares etc., it was loophole and there would be no control. The loophole would have to be closed.

The Chairperson asked if the Bill took into account multiple forms of remunerations

Adv van der Merwe explained that was what she had explained. For example, an author sold copyright to a publisher who allowed someone else to publish the book, but the contract would agree on a cut of profits so that there were no royalties paid. The author would lose out because no royalties would be paid. That could be another loophole.

The Chairperson understood that each publisher had its own contract. There was no standard contract. As she understood it, the publisher could have its own contract as long as the contract incorporated the minimum requirements. Was that correct?

Adv van der Merwe agreed. The minimum standards were, in fact, normal essential parts of a contract. Each person would have a contract, but the details and amounts to be paid could be very different.

The Chairperson asked Mr Radebe to act as Chairperson for a while.

Mr Macpherson stated that the e-legislation came to mind where there were minimum requirements but there were sectoral applications. He was alive to the fact that, in the Copyright Bill, so many sectors existed, and he did not think that one brush stroke was sufficient to cover all industries. The uniqueness of all sectors should be catered for.

The Acting Chairperson asked for the Legal Advisor’s response.

Adv van der Merwe stated that it could be moved to regulations but that would be a decision of the Committee. It would be important to ensure the Minister did make regulations and so the word ‘must’ had to be used instead of ‘may’ or.

The Acting Chairperson stated that the ANC would be sceptical about putting those details in the regulations as ANC felt they should be in main Bill. The policy decision would be discussed the following week.

Retrospective Action
Clauses 5: Section 6A (5), Clause 7: Section 7A (5), Clause 9: Section 8A (5)

The clauses dealt with retrospective action. The right being enacted for authors was a brand-new right and if the Act were published without indicating retrospective applications, it would not apply to works currently out there but going forward. The question of deprivation of property was minimal if it was going forward so there would only be future payments. She would not advise that people paid for past usage as that would be serious deprivation. It would be only for forward-going processes on payment but would apply to current works. It was a law of general application and there was sufficient reason as authors were getting insufficient payment.

She was worried about constitutionality. Input raised concern that when copyright was obtained, the budget would only take into account initial expenses. There might be projects that went insolvent because of future payments. She believed that it should be retrospective, but she was worried about the practical application of the retrospectively because copyright could go back 90 years and how would anyone even know how many and what works were out there to enforce it? If authors were not famous, it might be possible to trace the author. Some works might belong to NPOs, some might have a business plan that would collapse. Some royalties were already shared 50-50 so how would the legislation affect that arrangement?

Adv van der Merwe was not concerned about deprivation, but the Bill had to comply with the rule of law which meant that it had to be practically implemented. If there was not a clear way for the clause to be applied in practical terms, it would not pass the rule of law.

The Acting Chairperson noted that that was one of the most contested aspects of the Bill, so he would allow Members to give their opinions.

Mr Esterhuizen stated that he understood that the advocate had said that if the copyright still existed and the owner could not be found, there was a problem. He asked about the introduction of state custody for orphan works. Couldn’t the children be contacted?

Mr Cachalia had heard the advocate on her views about deprivation of property. There was one caveat: it was a policy matter and she did not need to feel bad about it. She could leave that to the politicians. She had mentioned that parties had to renegotiate. Could she explain what she meant? He agreed with her concern about the implementation and the expenses that could be occurred. He also concurred with her view of the rule of law being problematic.

Mr Williams did not believe that the clause was not implementable. The same problems would apply in other cases which had led to the clause about orphan work. It was not unconstitutional, and the advocate’s reasons were not sufficient to remove the clause from the Bill.

Ms Mantashe asked why the Bill had been put on the table. The former president of the ANC had put it on the table after he had consulted many artists over many years. She asked what the Committee had achieved if the retrospective payment to poor people of South Africa was excluded. The matter had been addressed in a State of the Nation Address and could not be ignored. The Bill was about addressing an imbalance. The Sub-Committee should go back to the drawing board and experts should be consulted because it would not appease poor South Africans.

Mr Macpherson thought that it was about opening Pandora’s Box. Unintended consequences was an inadequate phrase for describing what it could do. He asked how long the retrospectively would go back. What if the company no longer existed? Would an individual be liable? What if the person was deceased? It could cause a massive hangover for the Bill and was not in the best interest of the Bill. Ms Mantashe assumed that those who produced work before the Bill had received nothing, and that was not true.

The Acting Chairperson was pleased to hear that the clause was not unconstitutional. The Land Reform Act had gone back in time and allocated land as per an earlier time. The Land Reform Act had not resolved all issues at once, and the Act was being addressed for the third time, so it was not necessary to do it all at once. Perhaps 1910 should be the starting point as there had been a government for the country from that time and it had no longer been a colonial power. The Minister could advertise for the next five years and alert communities all over the country. He agreed with Mr Williams. It could be done; it had been done; it was still being done.

The Chairperson returned and asked Adv van der Merwe to respond.

Adv van der Merwe stated that there were practical implementation problems and they had to be rectified or addressed. She and DTI would go through all possibilities. Orphan works did apply if the author could not be found. There was no provision for copyright holders who could not be found, companies not in existence or deceased persons. It was possible to have the Minister call for affected persons but would be administratively challenging. She proposed that she and the DTI came back to the practical implementation problems and talking about it in the meeting would only be piecemeal.

The Chairperson asked if it was correct that retrospectively only kicked in when the Bill was enacted and from then onwards or when the Bill kicked in, did it go back to 1910 or whatever year was decided upon.

Mr Cachalia thanked the advocate for explaining the re-negotiation aspect. He was clear but not happy. It made it forward-looking by sleight of hand and, in fact, made it open-ended.

The Chairperson remembered someone asking whether van Rebuke had had a passport in 1652. She suggested that the meeting should move on. She thought that the DTI officials should comment when they could. It was not only the DDG and Chief Director who could comment. Team members were in the meeting and should comment, otherwise it was very boring to sit for five hours.

Reciprocal application of the resale royalty right
Clause 7: Section 7B(3)(a)(I); Clause 7: Section 7B (5)
Adv van der Merwe explained that the submissions referred to some confusion or vagueness, but she believed that it was possible to clarify and to add a couple of words to avoid vagueness. DTI had responded that the seller was liable for the payment and that the sections referred to visual arts only which clarified some of the main queries.

The Chairperson asked how she would address the vagueness in the clause. Input from DALRO suggested the amendment of Section 37 of the principal Act.

Adv van der Merwe noted, firstly, that DALRO had proposed an amendment of Section 37 because Section 37 actually dealt with reciprocal payments. However, the Committee was not amending Section 37 and would have to request the House for permission to amend it. Permission was also required for a number of other clauses, so that was one possibility.

With respect to the vagueness in the clause, DTI had said that it was the seller who was liable for paying the commission and that could be corrected. If the seller gave the responsibility for his debt for payment to an art market, that was in order, but if there was a dispute, the author would take the seller to court. Placing all reciprocal clauses together could be good or the clause could be placed, as it was currently, with all clauses relating to resale rights. She would prefer to leave it where it was and correct it.

The Chairperson noted that a number of changes had to be made to the clause and so if the Committee changed its position, it would have to look at all of those.

Retrospective application of an artist’s resale right
Clause 7: Section 7B (6)

Adv van der Merwe stated that the resale rights did not seem to have created much concern, but it had to be made clear. DTI had said that retrospectively would apply to future sales. She explained the concern that it was not clear was only about the future and DALRO had suggested additional wording, which she was happy to add.

There was also a drafting error in that Section 7B(3)(d)(I) incorrectly referred to Section 9. That would be corrected.

Log sheets
Clause 11: Section 9A (1) (as)

There were concerns raised about log sheets being cumbersome and costly. Other inputs had suggested its application should apply to all copyrighted works. If log sheets were extended to all works, it might mean publishing again for public comment. Alternative wording had been suggested, but the DTI had already agreed to look at the proposals.

Failure to record/report constituting an offence plus penalty
Clause 11: Section 9A (4)
Clause 11 was about the failure to report via log sheets, which was mostly supported. Some comments said that the penalties were too harsh, and others suggested they were too lenient. She reminded the Committee that the five-year imprisonment was a maximum term but could be much less, even as little as a single day. The comments about the harshness of penalties applied to the fact that it was a minimum of 10% of turn-over, but that had been a policy decision. It was different to the Companies Act and the National Credit Amendment Bill in other legislation had 10% as a maximum fine. A policy decision had been taken about the offences.

The Chairperson wondered if administrative fines would be more enforceable on collecting societies. She asked if all CIPC fines were administrative.

Adv Voller confirmed that they were.

The Chairperson asked if that was effective.

Adv Voller agreed that it was but there were other offences like fraudulent activities that could be punished by a criminal offence.

The Chairperson noted that one of the reasons for the Bill was to regulate collecting societies. Everyone had supported that proposal.

Nature of copyright in programme carrying signals
Clause 12: Section 11

Broadcasters owned the signal and not the content, so only changes in wording were required.

Panorama Rights and Incidental Use
Clause 15: Section 15

Adv van der Merwe noted that the concern raised was that there might be a disincentive to create public works. That was supported by many of the comments. The Committee had considered it, but one also had to consider how many people were breaking copyright on a daily basis. Proposals suggested different wording. One suggestion was that it should apply to permanent works only. However, incidental use would ensure that no one could take a picture for future sale of that picture. Restaurants had works of art for sale but that would be allowed in the background. DTI had to advise on the wording.

The Chairperson agreed that incidental use made the clause acceptable. The people were the focus of the photograph. The matter had been thrashed out the previous day.

The Chairperson interrupted the presentation to note that certain decisions had to be taken and she wished to do that before one of the Members left. The space industry fell under Trade and Industry and the Committee always sent a mini delegation to the space fair. The space fair would be held in Bremen, Germany on 1 - 5 October 2018. She would be making an application for Members of the Committee to attend. She would probably not be attending as the European Union was sending a delegation to South Africa at the same time. She wanted a decision.

Ms Mantashe proposed that the Committee send a small delegation. Mr Macpherson seconded it.

The Chairperson noted that Mr Macpherson was leaving, but in the Committee was another DA member plus an IFP Member.

New process for commissioned works
Clause 22: Section 21(3)
The Act allowed one to commission only certain acts of copyright. When one commissioned works, there could be two copyright owners and so talking about copyright owners would cause confusion. One of the submissions suggested that the term ‘commissioner’ should be used instead of ‘copyright holder’. It should be a suggested. There were policy decisions, but the Committee had made a decision.

The Chairperson person agreed with the use of the word ‘commission’. She suggested that Members should be very familiar with all of the abbreviations before the debate and taking the Bill to their constituencies.

Collecting Societies
Clause 25: Section 22B (7)- Transitional provisions to provide for existing Collecting Societies

Adv van der Merwe stated that the DTI had addressed most of the submissions. She added that submissions generally agreed with perpetual or long-term licences but heightened the fact that when one was getting to the end of the licence period, the collecting society might not be able to collect. Therefore, provision had to be made for licence to be suspended or removed if a collecting society was not performing.

The Chairperson asked which clause stated that all collecting societies had to be registered. She did not want illegal collecting societies in the same way that there had been illegal money lenders.

Adv van der Merwe responded that Clause 31 required accreditation. The original clause had required registration, but as some collecting societies were already registered and there was little control over them, CIPC had suggested that all needed to be accredited.

The Chairperson asked if it was stated that it was an offence not to register. She believed that the Committee was getting a sharper focus on things and trying to be one step ahead

Adv van der Merwe agreed to check that point.

Clause 25: Section 22C(3)(c) Reciprocity: pay-outs to foreign countries
The clause dealt with reciprocity and where a collecting society would enter into an agreement with another society. Submissions said that it was a breach of obligations, others disagreed. The clause did not deal with agreements between countries. The clause might not even be necessary, but DTI had decided to keep it for clarity.

Clause 25: Section 22D(2)(b) and Section 22D (3)- Collecting societies and paying of royalties
The DTI had addressed most of the issues as they were policy issues. There were some proposals that where the artists could not be found, and the artists did not know about it, they could come any time in the future to claim the money. Adv van der Merwe suggested that the money be utilized, but government guarantee the funds as the artist’s rights extended a long way into the future.

The Chairperson noted that the Committee had clarified those issues.

Penalties
Clause 27: Section 27(6)

There were conflicting views about the severity of the penalties. Some comments said that there was a need for other remedies as well as penalties, but DTI had said that there were other measures. Turnover was a benchmark which was why it was being used. When looking at turnover, the Bill referred to a penalty for the financial year before, but it could take years for the matters to get to court. The wording should indicate that the penalty was a percentage of turnover of the year in which the offence was committed or the previous year if that year was not yet complete.

Similar technological offences were provided for in Electronics and Communications Transactions Act, but there was a difference as it applied to a transaction, and the Copyright Bill was broader. However, the Cyber Crimes Bill addressed the same crimes as the Copyright Bill. The Committee could not legislate on another Bill. Adv van der Merwe suggested that the Committee communicated with either the Portfolio Committee on Justice and Correctional Services or the Department of Justice and Constitutional Development to present to the Committee. The Cybercrime Bill could repeal the clauses that were currently covered by the Copyright Bill.

The Chairperson agreed that it was necessary to share information but stated that the clauses would not be removed from the Copyright Bill as the Cybercrimes Bill had not yet been enacted.

Copyright Tribunal
Clauses 30 and 31

The clauses on the Copyright Tribunal were welcomed. DTI had addressed most of the issues raised in the submissions. However, in response to one comment, she and DTI needed to check whether the clauses referring to the establishment of the Tribunal had been removed and, if so, they had to be re-instated. There was a suggestion that the proceedings should be adversarial rather than inquisitorial, but the latter gave the Tribunal a much more active role, but that was a policy decision. Where clarity could be added, it would be done.

The Chairperson agreed that proceedings should remain inquisitorial.

Transitional provision
Clause 37

The DTI had already indicated that it wanted to keep IPLAA. DTI had recommended re-defining terminology but Adv van der Merwe said there was no precedent of amending another Act, that had not been implemented, by a new Amendment. It would be problematic to make changes. Another concern was the deletion of Section 28(q). If the Committee decided to amend the Act, in terms of the exclusive right to broadcast, the proposed amendment would have to be advertised. If, in terms of consequential amendments, a clause not currently being amended, but had to be amended, the Committee would have to approach the House for permission.

The Chairperson noted that the Committee would have to go back to the House on a number of clauses that the Committee wished to amend.

Ms Mantashe suggested that the Research Section be given an opportunity to assist the Committee.

The Chairperson stated that the Committee Researcher was on study leave until the end of the month. Other researchers were tied up. A request could be made to the Research Unit, should they have an opportunity to assist. She requested Adv van der Merwe to draw up a list of issues, from a legal point of view, that had to go back to the House.

The meeting would return to the presentation by DTI.

DDG liked the proposal by the Chairperson that the DTI should look at things more thoroughly. She needed to discuss certain matters with Adv van der Merwe but there was alignment. There were very few points where they differed. She requested permission to revise the presentation and present it on the following week. She wanted CIPC to give clarity on collecting societies.

The Chairperson directed that the meeting would go back to Dr Nonyana-Mokabane’s presentation. However, the DTI would have to discuss some of the points as a team and come back to the Committee.
Overall, she saw alignment with the advocate’s presentation.

The Chairperson added that arrangements had been made for a late meeting and she did not want to waste time, so the DTI could present the sections where the Committee could discuss some of the issues.

Proposed Clauses for the Copyright Amendment Bill - DTI
Dr Ria Nonyana-Mokabane continued with the presentation begun earlier in the day.

Royalties regarding Sound Recording
Clause 9A
The clause dealt with royalties to be paid for sound recordings. It stated that “In the absent of an agreement to the contrary or unless otherwise authorised by law, no person may, without payment of a royalty to the owner of the relevant copyright…(iv) make the sound recording available to the public as contemplated in section 9(f).”
DTI had attempted to align the clause to the International legal instruments and that would include the economic rights of performers as contained in the WIPO Performance and Phonograph Treaty (WPPT). The clause would align national provisions to the international treaties.

A separate page giving clarity was handed out to Members and the Chairperson noted that it spoke specifically to log sheets for the royalties from sound recordings.

The DDG noted that the previous day one of the Members had raised a query about the minimum contract for commissioned work. DTI would be presenting responses to issues raised, but one of the responses related to log sheets and so she had thought that it would be a good idea to hand out the sheet that DTI had on hand about contracts.

The Chairperson read extracts from the information sheet, noting that the log sheet had to be a complete and accurate report. As she understood it, the collecting agency might be involved in collecting the log sheets. Would the log sheet be sent to the performer and the copyright holder or only to the performer, and what about the collecting society?

Ms Mabaso-Muvhango, Director: Legislative Drafting, Consumer and Corporate Regulation Division at DTI, stated that the intention of the clause was not about the information per se, but it was about the accuracy of the information to ensure that rights could be paid. It was paid to either the performer or the collecting society.

The DDG explained that collecting was mainly by the collecting societies and so there would be regulations about how the log sheets would be managed amongst the role players. The collecting societies were responsible for the management of recording sheet collection.

The Chairperson asked what the case was where a radio programme played a recording for a few seconds, as in a quiz. Would the regulations state that the royalty was played for the full song or for even a few seconds? What would the requirement be? Would the radio station have to indicate for how the song had been played? As everyone was concerned about the collecting societies, her second concern was that if only collecting societies received the log sheet, how would the performer know what was due? Or was it too onerous to send it to both parties? As she understood it, the purpose of the log sheet was to ensure that the artist was paid what was rightfully due to the artists.

The DDG explained that the regulations clause would ensure that regulations were put in place. The practicalities would be addressed in the regulations because a wide range of organisations and businesses would have to complete log sheets, such as restaurants and malls. Artists did not get paid because even when payments were made, the artists’ names etc. were incorrect.

Mr Williams suggested that if a radio station played a song, surely, they had to pay royalties to the record companies, and surely those companies would be likely to keep close check on the log sheets. There should be two logs, so they could be compared – the one for the record companies and the one for the performers. He was quite sure that record companies would keep track of records played.

The Chairperson wondered why the log sheet could not be produced in triplicate.

Mr Petje explained that collecting societies collected royalties for recording companies as well as artists. They had to be licensed and, thereafter, the could collect. In the light of Section 9, the licence agreements would include the requirements for log sheets. Technology was available to create a report for the collecting societies.

The Chairperson came back to the artists. Mr Petje had said that SABC had decided of its own accord to backpay royalties. Did that mean that the producer/record label had not been paid as well? Were they also only paid recently? Most companies would be very quick to institute legal proceedings for their money. She asked if anyone knew how long the backlog had been?

Mr Williams explained that the SABC payments were not retrospective but was payment of a backlog.

Ms Padayachy stated that, in terms of needle time rights, the recording labels got 50% and performers got 50%. Both received payment from the SABC via the collecting societies. There had been court battles to force the SABC to pay. Regulations had been promulgated in 2006 and so DTI had said that they should pay from 2006. But the users had said that they would only pay from the date of judgement, which was in 2014. That was where the dispute lay.

The Chairperson asked Adv van der Merwe to assist as she understood when something was promulgated, it became law. Why did the judiciary have powers to change the date of implementation from 2006 to 2014. She was very concerned if the judiciary had that kind of licence.

Adv van der Merwe stated that a Bill became operational from the date of publication in the gazette unless it stated in the commencement clause that it would only become operational on a date to be proclaimed by the President. The court did not decide on the commencement date. She recalled that there had been a problem with the promulgation and that the court could have made a decision based on what the Bill said. Only the Constitutional Court could find a law invalid.

The Chairperson noted that it flew in the face of the separation of powers. She wanted a copy of the court case, including the judgement. She could not simply rely on the media.

Mr Petje asked for clarity. Was she asking for the Supreme Court judgement between SABC and SAMPRO?

The Chairperson wanted the judgement that had been made as she could not see a judge taking on the role on the Constitutional Court. She wanted to know the exact terms. She wanted to know from what date the judgement stated that the SABC had to pay. She and the Committee had to apply their minds. She did not want to rely on colloquialism.

Mr Petje said that the court had been silent on the date from which the SABC had to pay. CIPC had a copy of the judgment and would make it available.

The Chairperson referred to (i) on the additional sheet of paper that explained about the log sheets. It read: “to specify accompanying data of the recording, the copyright owner and the author.” Was the author the same as the performer?

The DDG stated that it also covered the name of the song.

Closing remarks
The Chairperson announced that caucuses would be held on Thursday morning. She had decided that it was not constructive to hold a meeting if not every Member was available. Furthermore, stakeholders such as the Department and CIPC needed more time and the Chairperson of the Sub-Committee on Copyright was away on business. Two other members of the Sub-Committee were ill. However, the following week everyone from Sub-Committee had to be present. In addition, DTI, CIPC and other departments would have to be on same page. They would have been able to communicate with Adv van der Merwe in the interim.

Parliament was looking at a tri-partite agreement meeting at 10:00 on Tuesday 21 August so the meeting could start later, at about 11:00 in Room V119. The Committee had to address the National Credit Amendment Bill first and then turn to the Copyright Bill. She was aware that there would be sittings of the House the following week.

Mr Radebe agreed with the arrangements and suggested that secretariat make an application to for the Committee to meet during the sitting.

The Chairperson responded that the application had been made but no decision had been made as yet.

Mr Williams asked about the clause-by-clause discussion of Credit Amendment Bill.

The Chairperson indicated that would be managed on the Tuesday morning. She would ask whips to ensure that all Members were in attendance. She would write to the whips. The Committee might not finish on the Tuesday, in which case it would sit on Wednesday 22 August. On Thursday 23 August there would be caucus meetings in the morning and a House sitting so there could be no meetings that day. She reminded everyone that the meeting for 16 August had been cancelled.

She added that the Steinhoff matter was a joint Committee matter and there would be clarity from Mr Frolick, the Chair of Chairs, on that matter the following day.

The Chairperson thanked everyone for their contribution to the meeting.

The meeting was adjourned
 

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