Copyright Amendment Bill: deliberations

Meeting report

Opening remarks
The Chairperson informed the Committee that the programme had changed. It would not be possible for her to cede to the request by Members not to meet on Fridays. The Committee would meet on Fridays instead of during plenaries in the House owing to the request of certain Members to attend plenaries. However, there were certain Thursday afternoons when the Committee would have to meet because things had been previously arranged. Every Friday was a working day in Parliament and she would have to get people off buses if she was short of Members.

Mr D Macpherson (DA) informed the Chairperson that he and Mr G Cachalia (DA) would be leaving at 18:30 as they had been unaware that the time of the meetings had been changed.

The Chairperson stated that the briefing had been on the agenda for some time but she had been forced to adapt the programme for Members who had insisted on going to the plenary. She would continue with four Members in the absence of the DA as she could not keep changing the programme.

Mr Mahlobo stated that he understood that she did not want to change the programme but sometimes minor adjustments were necessary. He hoped that the Committee could get as much work done as possible.

The Chairperson apologised for the fact that she would be unable to hold the briefing on the Performers’ Protection Bill that evening.

Copyright Bill: flagged clauses
Adv Charmaine van der Merwe, Senior Parliamentary Legal Advisor, stated that she had worked with the technical team on a number of clauses where the wording was not 100% and Members had asked the team to find suitable wording. She had checked that the clauses were all correct. The first three clauses repeated the wording so she would give detail in the first clause and indicate the repeats in the following clauses.

Clause 5 :Section 6A Share in royalties regarding literary or musical works
The word ’gross’ had been added in front of the word ‘profit’ at the request of Adv Alberts who had concerns about the word ‘profit’ on its own. It did not have to be defined in the Bill.

Section 6A(2): Mr Cachalia had been concerned about the word ‘any’. The word had been deleted while ‘the’ had been inserted to make the sentence read well.

Section 6A(7): The Committee was concerned about the clause being retrospective in nature. It was not due to a problem of deprivation of property as the Bill would qualify constitutionally. The concern was that the process was not clearly described and there were so many uncertainties and questions that could not be answered. The technical team proposed to make it retrospective but that aspect of the nitty gritty, i.e. how it would work, would be left to the Minister who would prescribe regulations about the retrospectivity. Section 6A(7) would be linked to changes to the short title and commencement clause in Clause 38 which would state that section 6A(7) would commence only on a date fixed by the President which would be when the Minister had issued regulations. That addressed the concerns about who would benefit and the process required. It would be applicable retrospectively but delayed until the Minister had undertaken research and prepared the regulations. That would pass constitutional muster because the regulations would ensure a full and proper process for implementing.

Section 6A(7)(c): This dealt with the sharing of royalties received after the commencement date of the Copyright Amendment Act, 2019. That was known as ‘weak retrospectivity’ which meant that a work could have been assigned in the past but royalties applied only to profit made in the future. No one had to pay a share of profit that had been made in the past.

She asked if Members approved the proposed wording.

Discussion
Mr D Macpherson (DA) stated that he was not completely clear on weak retrospectivity. He asked her to explain it in simple terms.

Mr A Williams (ANC) was also a little confused. It seemed that there was no retrospective payment for work done in the past. Why would artists be paid only for future use? Where was the retrospectivity in that? It seemed to be confusing. The Bill looked to the past but payments were only made in the future. Did the artists get any money from the past. If not, what was the point of having that clause?

Mr G Cachalia (DA) asked for the difference between ‘weak retrospectivity’ and ‘retrospectivity’. It was so weak that it did not seem worth putting in the Bill.

Ms C Theko (ANC) asked why the clause was there if the artists were not being paid for royalties earned in the past? What was the Bill ‘retrospecting after’? That was what the Members needed to know.

Mr D Mahlobo (ANC) understood the narrative and the legal wording. The issue was the ‘how’. He wanted to know about the instruments. She wanted the implementation date to be in 2019 and he did not think that there was enough time or capacity to research the matter by 2019. What was reasonable? More like two to three years. 2019 was open-ended. Adv van der Merwe should be more specific and say perhaps 2020, but she could fill it in later when she had more detail.

The Chairperson reminded the Committee that it was an executive Bill and therefore some of the questions should be put to the Department. She asked Adv Strydom if he could assist with the questions.

Adv Johan Strydom, DTI Legal Advisor, agreed with the proposed period of three years. The example that he had used in the previous meeting was the Companies Act which had had a definite date for the staggered implementation. The Copyright Act was different. He quoted from Section 32: ‘which date may not proceed the date relevant to the regulations’. That meant that it could not be implemented until the regulations were in place. It could be any date; or it could never take place. The only definite thing was that it could not be implemented until the regulations had been written.

Mr Mahlobo said that it was clear to him that Section 6A(7) had to be read in conjunction with Clause 38. He had checked the effective date as Members had been seeking comfort that it would not be arbitrarily done. He was satisfied with the changes.

Mr Macpherson suggested that they go back to why Members had wanted the retrospective clause. They had wanted an undefined period for people to claim royalties for work done. That could not happen under the suggested change of ‘weak retrospectivity’. The idea was to create a soft landing for retrospectivity although people could not claim royalties for the past. That was his reading of it. The proposed clause caused more problems than solutions. What Members had originally wanted could not be done so his recommendation was that the clause should be removed and that the focus should be on development going forward.

Ms Theko stated that the emphasis was to address redress and to deal with those issues raised by the former President and the Farlam Commission. Today she wanted a clear answer. Were those people going to be addressed or was the Committee extending the plight of those people who were living in poverty while they complicated the Bill more, by putting clause 38 in the Bill. Was it going to provide redress? Going forward was fine but what was the meaning of ‘weak retrospectivity’?

Adv van der Merwe explained how a Bill worked. When a Bill was promulgated, it applied to things from the date of being operational, i.e. forward. In the National Credit Amendment Bill, the Committee had to say that the Bill applied to agreements entered into before the Bill was promulgated because if the Bill had not said that, any credit agreements that had come into operation before the Bill came into operation could not apply. The assumption was always that an Act was not retrospective. If a Committee wanted an Act to be retrospective, the Act had to say that.

There were two types of retrospectivity:
• Strong retrospectivity changed the law for what had happened before the Act was promulgated. Strong retrospectivity was changing the law in the past. For example, Mr Shuttleworth claimed that the Income Tax Act was unconstitutional because on the date that the Act came into operation, it stated that one had to pay tax on money that one had earned in the past.
• Weak retrospectivity applies to actions that happened in the past but only for consequences in the future. For example, if she had sold copyright on a book in 1970, or 2016, and profit was being made, she could not get any money from it. However, if someone is still making a profit on the book that she had sold in 1970, she could get a share of the profit from the date of promulgation of the Bill, probably in 2019. The practical problems included locating writers and artists and copyright owners and issues around how the process would work. Due to those unknowns, there could not be specifics in the Bill about the process. The lack of specifics about how the legislation would work meant that the Bill did not meet the requirements for the rule of law and would probably have been declared unconstitutional.

The technical team decision was to ask DTI to do comprehensive research into those details and work out how far back in the past the Act should recognise works, the best mechanism for finding authors, artists, copyright owners and how processes should work. The study would inform regulations that would provide the practical application.

The Chairperson appreciated the explanation.
 
Mr Williams understood what she had said.

Mr Macpherson asked how it would apply to agreements that had previously been reached for a once-off payment. Would those agreements be rendered null and void by the Act? If that was the case, what were the consequences?

Mr Cachalia saw two concerns: one was practicality which was complex and could not provide the certainty required by the law and could open the Bill to challenge; the other was the research required to establish the consequences for events which had taken place in the past, so there was a presumption against that. The two taken together opened the Bills to issues that concerned him.

Ms Theko asked how one could ensure that when reading 6A(7)(c), the reader also consulted clause 38? How did one ensure the two were read together? Could clause 38 be put next to 6A(7)(c)?

Mr Mahlobo said Mr Macpherson was asking about contract law where contracts did exist. The most important issue was that they were placing reliance on the regulations being made and that was where the question of practicality lay, as raised by Mr Cachalia. Firstly, the Committee did not want to pass legislation that could never be implemented. But, at the same time, the Constitution provided for redress for those who were vulnerable. He hoped that those people would be considered in the Performers’ Protection Bill because that clause was not going to be implementable in all instances. There was not going to be practicability in all instances. It was going to be very important how meticulous and how concise the regulations were. DTI should have some data lying somewhere that could be used to develop regulations or they might never be developed at all. In some cases where redress was supposed to happen, people were perishing due to old age. He was happy that there was not a definitive date, such as in the Companies Act, but the Committee wanted it to happen as of yesterday. DTI should already have a sense of who was to be included so that the Department could begin with practical regulations.

The Chairperson reminded Members that the Copyright Bill was directly linked to the Performers’ Protection Bill. That had to be kept in mind. Her understanding was that no Committee Member, and she wanted Mr Macpherson and Mr Cachalia to take note, wanted the current situation to endure where those who had received no remuneration or benefits, continued to face that situation. In the past, some South Africans had not benefited, either because of the law or because they had never known about it. She did not believe, now that the Committee could change the law, that it was the intention of anyone to make that task incredibly difficult. The intention was to do it as far as practically possible, but as Mr Mahlobo had pointed out, there was no guarantee that the regulations would be made available as soon as the Committee wanted it to be.

The Chairperson posed a question to all Members: What did Members of the Committee want to achieve?

Mr Williams stated that Members wanted people who had copyright on their work previously but had sold the copyright and that copyright was still generating income, to get a share of that income.

Mr Mahlobo did not want to hold the matter up any longer. The principle of law was much clearer. He wanted the DTI to give the Committee a framework of how the Department was going to manage the process. He knew that the main beneficiaries would be addressed in the Performers Protection Bill but the Department should start working on this. He wanted a sense of what the protection of the performers would offer and he wanted to be sure that those that the Farlam Commission had identified as vulnerable, should be addressed. It was a “soft landing” but the Committee should, at least, create an enabling instrument. There had to be a rational manner for implementing the Bill.

The Chairperson thanked the ANC Members for their views. She asked DA Members what they wished to achieve.

Mr Cachalia said that all Committee Members could agree on intent. The issues lay in the scope and boundaries of that intent, such as time and extent. It could not go back forever and one had to be practical about it. The assumption was that enacted law trumped common law, but was inferior. The Committee had to ensure that the enacted law was not open to contestation on the scope and extent, such as whether it applied to completed works in adjacent areas. Members did not want to open the legislation to the courts. Intent notwithstanding, the Committee had to apply its mind to scope to ensure there was no contestation.

The Chairperson noted an element of convergence. There was an understanding that it had to be practical.
She told Adv van der Merwe that her explanation had been better received and there was a fuller understanding.

Clause 7: Section 7A Royalties regarding visual artistic works
Adv van der Merwe said this clause applied exactly the same principles but to visual artistic works. The word ’gross’ had been added before ‘profit’. The word ‘any’ had been deleted and the ‘the’ had been inserted to make the sentence read well. The exact same clause and the exact same principles applied.

The Chairperson asked if everyone was on board. There was agreement.

[The Chairperson offered her apologies to the departments, entities and members of the public who had come to attend the Performers’ Protection Bill briefing as it would have to be postponed due to time constraints.]

Mr Cachalia suggested that perhaps, instead of saying ‘gross profit’, the Committee should referr to a ‘share of the gross profit’.

The Chairperson indicated that that was a proposal.

Adv van der Merwe reminded the Committee that there was no such thing as a royalty in literary works or artistic works. However, in trying to find a word to explain what they had a share in, the Bill was calling it a royalty. Authors and artists had to share in the whole profit, so it was a technicality. She was trying to say a share in the gross profit and that was what was meant by ‘royalty’.

Mr Mahlobo said that he agreed because ‘gross’ was an accounting term and he could not agree with Mr Cachalia because he was using accounting terminology.

Clause 7 Section 7B Resale royalty right regarding visual artistic works
Adv van der Merwe explained that not much had changed in section 7B. The section dealt with a visual artistic work that the owner was selling onwards, and was making a profit, and so the artist was entitled to a share of the profit. The concern raised by the public was the question of who should be paying the royalty. The artist might hear of the sale but struggle to find the owner and to get that share of the profit. The task team had looked at the Australian and UK legislation. In that legislation, both the seller and art professional were fully and jointly liable for paying the artist who could claim fully from either one.

In 7B(4)(a), the word ‘legally’ had been deleted because Members were concerned that one did not ask for that status in other areas.

The Chairperson asked if everyone was in agreement as the Members had requested those changes.

Mr Macpherson asked why the art market professional and seller became jointly and severally liable to pay royalties. He asked for clarity about the art market professionals. Was it the correct terminology to use? He had never heard that terminology for an art dealer, if it was, indeed, the same person being referred to.

Dr Evelyn Masotja, DTI DDG: Consumer and Corporate Regulation, explained that art market professionals were institutions such as galleries, that were responsible for dealing with artwork and operated from a commercial point of view. Even in Australia and the UK, those deals were done by the art market professionals and the seller worked through them.

Mr Macpherson appreciated the clarity. What he did not understand was if he were selling an art work why did the seller become responsible if the art market professional was responsible for the royalties and withheld those funds.

Dr Masotja explained that it was a model that worked well for artists and sellers. It was an agreement so there might be issues but there would be an agreement between them.

Mr Cachalia differed. The object of defining the art market professional was to differentiate him from the ordinary, private person selling works. He accepted that definition. However, it was problematic for the two to be made jointly responsible. He could sell an artwork himself or he could go to the art market professional to sell it. They were conflating the two by making them jointly and severally responsible.

He was concerned about lumping the two together. It seemed as if one were obligated to use an art market professional. He did not think that one should be responsible for the other. If one went into liquidation, that was an unfair burden on the parties. He would prefer it to read: ‘the seller, and the art market professional concerned, are liable to make the relevant payments’.

The DDG thought that the model worked very well in the UK and Australian model but she would look at the proposal. She would not say that the model was not working.

Mr Mbiba, Deputy Director: Cultural Development for Arts and Culture (DAC), apologised for missing previous sessions. His colleague, the Chief Director for International Relations, Ms Louise Graham, was in attendance this evening. In its previous submission, DAC had addressed the coordinating of the royalties for resale rights. DAC had researched the Senegal model and the German model. It was clear that in those countries, the responsibility was not shared. In the African model it was only the seller who took responsibility for paying the artist. The artwork could be sold by an individual or gallery but one person had to be responsible for paying the artist.

The Chairperson thanked him for another perspective.

The DDG asked if it could be flagged for the moment.

Adv Strydom stated that he could not comment as it was a matter of policy.

Clause 9: Section 8A Royalties regarding audio visual works
Adv van der Merwe stated royalties for audio visual works had been addressed, so there was no need to address gross profit. The word ‘any’ was not in the clause but ‘ the’ would be added for consistency. In subsection (5), retrospectivity was introduced. It was the same as the previous clauses.

Clause 25: Chapter 1A Collecting Societies
The clause related to a person or an organisation presenting itself as a collecting society when it was not accredited as such. The Committee had requested to take out ‘intentionally’ but that was a necessary criteria for it to be an offence. The offence had to be intentional for it to be an offence. It could not occur negligently. She understood the problems of the burden of proof but an offence was being created and a person could go to jail for five years. That clause would have to be advertised for comment.

The Chairperson referred in section 22 to ‘a representative collecting society’. Was that the description for the collecting society or was it meant to be a ‘representative of a collecting society’?

Adv van der Merwe explained that ‘representative collecting society’ had been used throughout the Bill.

The Chairperson asked her to check that point. The word ‘intentionally’ had been in the clause and intent was at the heart of the law. She asked the lawyers to respond.

Adv Strydom, DTI  Legal Advisor, informed the Chairperson that he had discussed the matter with the State Law Advisor and that the act of portraying oneself as something one was not could not be done negligently. There were two basic premises in law: one was negligence and the other was guilt. The only way that the offence could be committed was with intent so he suggested the inclusion of the word ‘intentionally’.

Mr Williams asked if the Committee would be creating loopholes if it left out ’intentionally’. What would happen if the word was left out –  was there any consequence other than uncertainty?

Ms Theko said that the Bill had to be completed as soon as possible. She asked if the clause could be advertised by the following day. If the Committee did not put ‘intentionally’ back in, would the clause still have to be advertised?

Adv van der Merwe responded that it was a new subclause and had to be advertised, with or without the word ‘intentionally’. Her only fear was that a court might not be able to find someone guilty as the guilt form was not indicated in the law. Most likely a court would say that it clearly meant ‘intentionally’ but it would be better if the law was clear. She would recommend the reinsertion of ‘intentionally’.

The Chairperson explained that the act could only be committed ‘intentionally’ and asked for input. One could not negligently forget that one was an MP.

Mr Williams suggested that the Committee put ‘intentionally’ in again. Ms Theko agreed.

Adv van der Merwe explained that that was the only clause to be advertised and that it was possible to advertise from the following day on the parliamentary website and it would also be sent to those who had commented on the Bill previously. It could be advertised at the same time as the Bill went to the technical panel on legislation.

That Chairperson made it clear that if clauses were added, they had to be advertised. Further, the regulation of collecting societies was crucial to the Bill.

Ms Theko asked that it be advertised the following day as a matter of urgency.

Clause 30: Section 29 Establishment of Tribunal
The Chairperson noted that the next clause dealt with the Tribunal. She had spoken informally to the Minister about the many judges that would be tied up with the Tribunal. He had said that the courts were barely coping with the judges that they had, without removing some from the courts to the Tribunal. The Minister of Justice would be pleased with the proposal to reduce the number of judges required from 15 to five. He had had pointed out certain technicalities, such as the fact that there was no such thing as a ‘retired judge’. The proposals to be made by Adv van der Merwe were issues relating to the technicalities of judges.

Adv van der Merwe proposed that the Committee remove ‘acting judges’ as they were appointed for short, specific periods and that made it difficult for the Tribunal. She proposed that the Committee bring it down from 15 judges to five judges ‘who had been discharged from active service’ which was the wording proposed by the Minister of Justice. The Minister had indicated that it could work better if there were a Chairperson and a Deputy Chairperson so those clauses should be brought back. That was the proposal before the Committee.

The Chairperson reminded the Committee that the technical clarification requested from the Minister of Justice had been received and had to be implemented.

The amendments were accepted.

Clause 31: Section 29B Qualifications for appointment
Adv van der Merwe explained that the Minister of Justice had suggested that the whole of 29B be deleted as the Judicial Commission had its own qualifications for appointment and the Tribunal judges could not be appointed differently. There would be consequential renumbering in the Bill of section 29C to I and an amendment to the heading of the clause to reflect the correct numbering.

Clause 31: Section 29C Removal or suspension of members of Tribunal
The Minister of Justice had indicated that any removal or dismissal of a judge had to happen ‘in consultation’ with the Chief Justice and the Minister of Justice.

The Chairperson stated that the Committee accepted the recommendations of the Minister of Justice.

Clause 31: Section 29E Proceedings of Tribunal
This clause stated that the Minister must, ‘in consultation’ with the Minister of Justice, prescribe the proceedings. The Minister of Justice had suggested that it could be the Chairperson or Minister. Adv van der Merwe suggested the clause remain with the Minister of Justice as he could request the Tribunal Chairperson to do the work but the Chairperson could not request the Minister to do so.

Mr Williams agreed with the proposal.

Clause 38: Short title and commencement
The redrafted clause was presented:
(l)This Act is called the Copyright Amendment Act, 2019, and subject to subsection (2),
comes into operation on a date fixed by the President by proclamation in the Gazette.
(2) The following comes onto operation on a date fixed by the President by proclamation
in the Gazette, which date may not precede the commencement of the regulations relevant to
each of the sections respectively:
(a) Section 5, in respect of the insertion of section 6A(7);
(b) section 7, in respect of the insertion of section 7A(7); and
(c) section 9, in respect of the insertion of section 8A(5).

Adv van der Merwe explained that Clause 38(2) made it very clear that there would be a different date of implementation for Sections 5, 7 and 9.

The Chairperson noted that the Committee had come to the end of the process with one flagged clause. The Committee had already agreed what needed to be advertised.

Ms Theko asked for a reminder of how many clauses were being advertised and which ones.

Adv van der Merwe responded that, as previously agreed, it would be only the offence that would be advertised. It was necessary because a new offence was being created.

The Chairperson asked Members and officials to share anything that would cast light on flagged Clause 7.

Clause 7 Section 7B Resale royalty right regarding visual artistic works
Adv van der Merwe explained that it was about who would be liable to pay the royalties on visual artistic work commercially. It applied to artwork where that work had been sold before the commencement date of the Copyright Amendment Act, if that artwork had been sold commercially and exploited for profit. The Minister had to prescribe the process in regulations before the clause could be implemented. Shares in the royalty applied to royalties received only after the commencement date of the Copyright Amendment Act.
In international best practice, the artist was paid by the art market professional or, as in Australia and the UK, the seller and the art market professional were both liable. DAC had looked at Senegal and Germany and, in those countries, only the seller was responsible for the payment of royalties.

Mr Mbiba said that the individual and the art market professional could both sell. In Senegal, the argument was that if there was more than one person responsible, there could be disagreements about payment. Managing that relationship would be difficult.

Mr Cachalia was struggling with the process. For example, he bought an artwork at an art market. The person became famous and he sold the work privately and profited from it, but he did not need to share the profit with the creator. However, if he gave his painting to an art professional to sell, the artist received a royalty – not of his profit, but of the art market professional’s selling commission. The artist could not take a share of his profit because he had bought the work and could do what he liked with it. It was not always a case of deprivation because if it had been Picasso’s work, no one could say that the extremely wealthy Picasso had been deprived in any way.

The Chairperson said that it sounded like the opposite of the Senegal example where the seller paid. It was easier to identify the seller. An art market professional was identified because it was his trade and that was how he earned his living. Senegal assumed that it was a commercial sale. The difference was that in Mr Cachalia’s example, he was not selling commercially.

Mr Cachalia agreed but asked the Chairperson to note that he suggested that the art professional should pay the royalties out of his commission if the work sold belonged to a private individual.

The Chairperson noted that he was asking why he had to pay out of his profit, as well as the art market professional.

Mr Williams said that 7(b)(1) referred to copyright which subsisted in the commercial resale. Was it a percentage of the whole value of the work or a percentage of the commission? That section should specify the commission that should be paid.

Mr Cachalia asked if the art market professional bought and sold for himself as an individual, whether it would be considered a commercial activity.

The Chairperson noted the problem but understood that the application in a commercial environment was taken care of but private sales needed clarification.

Mr Mbiba asked Members to distinguish between the owner and the seller. The seller was the person who was doing the transaction, not necessarily the owner. That seller paid the royalty.

The Chairperson noted that the link to section 7(b)(1). She asked Mr Mbiba if the creator was the owner.

Mr Mbiba replied that the person who had bought the work, owned it.

Mr Williams asked if there was a definition of the seller. There had to be clarity on whether the owner and the seller was the same person, and what about the art market professional?

The Chairperson noted the time and determined that the discussion would have to end at that point.

Closing remarks
The Chairperson noted that on 3 September 2018, the Committee would convene for the formal consideration of the National Credit Amendment Bill and for discussions with the sugar industry, the South African Revenue Service and the International Trade Administration Commission (ITAC).

On 4 September 2018, the Committee would finalise the discussions on the Copyright Amendment Bill before the briefing and hearings on the Performers’ Protection Bill from 8:30 until 22:00. There might not be sufficient time for the completion of the Copyright Amendment Bill but that could be finalised in the following few days.

She noted that the Department of Arts and Culture had been needed for the Copyright Amendment Bill. She thanked all of the officials as she valued their time as well as all representatives from entities, and members of the public.

 The meeting was adjourned