Copyright Amendment Bill; Performers’ Protection Amendment Bill: briefing; National Credit Amendment Bill: Committee Report

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Trade and Industry

05 September 2018
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Committee continued with the consideration of the Committee Report on the National Credit Amendment Bill from the previous day. The discussion stalled once again on the minority view.

A comment had not been inserted as agreed to the previous day. There were exchanges between Members as to what could be included in a Committee Report. The majority party wanted the document to reveal the majority view with a reference to the minority position only and no discussion thereof. The minority party did not like references to decisions as “made by the Committee” when they were majority, but not unanimous, decisions as this assumed that the minority party had agreed with the majority view. However, the ruling of the Chairperson was that Parliament accepted that the Committee view was the view of the majority of Members in the Committee. At that point, having stated that the Democratic Alliance could not participate when the Committee would not accept the minority view, the DA left the chamber.

Consideration of the Committee Report continued and minority views were included in the relevant section for minority views. Some of the points previously proposed by the minority were removed as it was considered that the entire Committee had been in agreement with those particular points. The Committee Report on the National Credit Amendment Bill was adopted by the Committee.

On the Copyright Amendment Bill, the Department of Trade and Industry reported that it had reviewed who was responsible for resale royalties of visual art works and had determined that both the seller and the art market professional would be responsible.

Members asked if the seller and art market professional would be jointly and severally responsible. What did a commercial element mean? Did it mean that a profit was made, or did it refer to ‘someone in the business of art sales’? Was the royalty on the profit or the increment in profit? The DTI and Department of Arts and Culture were asked to come with a position on this question.

The Department made a presentation on collecting societies, recommending that collecting societies be restricted to a single society per right in order to facilitate management and administration of royalties. A decision could not be taken as the meeting was no longer quorate.

The Department briefed the Committee on the linkages between Copyright Amendment Bill and Performers’ Protection Amendment Bill. Performers faced an array of challenges and were often in a very weak bargaining position and forced to transfer all their economic rights to producers in perpetuity for little more than a symbolic payment. Copyright in a wider sense also included related rights, especially the rights of performers (actors, musicians and dancers), and producers of phonograms and broadcasting organisations. There was a need to cross-reference section 8 (cinematograph films) and section 9 (sound recordings) of the Copyright Act with section 5 of the Performers’ Protection Act, 1967. That would enable the Portfolio Committee to stipulate how performers would exercise the right to authorise fixation of their performances.
Members asked for a timeline for the provision of the first working draft of the tabled Bill that would show the linkages between the two Bills. Would it bring certainty to royalties? Would it specifically protect audio-visual work? If a work was commissioned, would neighbouring royalties not apply?

The Committee was informed that hearings on the Performers’ Protection Amendment Bill would be held the following week and that deliberations on the Bill would commence shortly thereafter.
 

Meeting report

Opening remarks
The Chairperson indicated that the meeting would begin with four Members but the discussion of the Bill would not start until there was a full quorum. The Chairperson presented a new Committee Programme because parties had requested that the Committee not meet during plenary.

Mr D Macpherson (DA) expressed his concern that the DA Chief Whip was telephoned when DA Members of the Committee were late so that he received a call from the DA Chief Whip but that ANC Members seemed to arrive late with impunity.

The Chairperson responded that she never called the DA Chief Whip but she always sent an email to the Chief Whip when a Member was more than 15 minutes late. The same applied to all Members, regardless of the party, and she also telephoned the Chief Whip of the ANC. If Members were not in the meeting when there was a Bill before the Committee, she would contact the Chief Whip and request that the Members be released to attend the Committee meetings. However, she wanted Mr Macpherson to know that she could not force anyone to attend, even if the Committee was discussing a Bill.

Mr A Williams (ANC) stated that when the plan had been for the meeting to end at 11:00, he had made other arrangements and, therefore, would be obliged to leave at 11:00.

The Chairperson noted that she had indicated the previous day that the earlier programme had not been approved. That meant all meetings after a certain time had been cancelled. Members now had a new programme before them, although it had not yet been signed off. The Committee was no longer using plenary sessions after complaints by all parties.

The briefing on the Performers’ Protection Amendment Bill and its linkages with the Copyright Amendment Bill would follow the deliberation on the Bill. She wanted to make it clear that there had already been two briefings to the Committee on the Performers’ Protection Amendment Bill. Many of the Members in the Committee had been present but some Members had not yet joined the Committee when the Committee had had the first briefing in 2016. It was pertinent to have another briefing as the Committee was two-thirds of the way through the Copyright Amendment Bill and could see the linkages more clearly.

Committee Report on National Credit Amendment Bill
The Committee Secretary explained that he had issued the Committee with a colour-coded document containing the original report, amendments and the DA and FF+ inputs. The Chairperson read through the document that had been handed to Members only. She commenced reading on page 6.

Mr Macpherson reminded the Chairperson that he had submitted a document and he had asked that the Secretary include an extract on page 6. It related to a document on the framework that he had submitted but had not been discussed by the Committee. The previous day it had been agreed that the additional information be included in the report.

The Chairperson asked the Secretary for a response. She confirmed, in response to a question from Ms Theko, that the framework document had been distributed as indicated by Mr Macpherson. She noted that the Committee simply distributed documents, from time to time, when there was no time to discuss a document.

Mr Macpherson added that he considered it a material point that he had submitted a document on the framework that had not been considered.

The Chairperson was concerned that that position meant that every document submitted, even those not discussed, had to be incorporated. The ANC had distributed three documents. The Committee was not going into such detail. However, she had allowed his point to be included.

Mr Macpherson said the Committee had been through the matter at length the previous day that the minority position could not be determined by the majority. It was a very important view of the minority but its view was not reflected. If that attitude was to continue, the DA would have to review its participation in the Bill.

The Chairperson noted that it had been agreed that a reference to the DA framework document be incorporated in the report on page 6. She did not want any further discussion as she had indicated the previous day that it would be done. It would be incorporated.

There were exchanges between Members as to what could be included in a Committee Report. The majority party wanted the document to reveal the majority view with a reference to the minority position only and no discussion thereof. The Chairperson asked all Members to note that it was not an ANC Bill or report. A Committee view could include any number of parties.


In the exchange, two positions were presented.
- One was that the decisions were the decisions of the Committee because that was the majority position. Parliament accepted that the Committee view was the view of the majority of Members in the Committee.

- The other view was that the minority party did not want it to be assumed that the minority party had agreed with the majority view. It was suggested that the term ‘the majority of the Committee’ be used instead of ‘the Committee’.

Ultimately, the Committee determined that there would be an introductory note that stated that the report indicated the Committee position, except where it stated that there was a minority view.

Mr Macpherson noted that the DA could not participate when the Committee would not accept the minority view. The DA left the chamber.

The Chairperson continued going through the Committee Report. Mr A Alberts (FF+) was present from one of the minority parties.

The report noted the financial implications of the Bill and that the Committee had accepted that the Department of Trade and Industry and the National Credit Regulator would include the costs of financial literacy training in the departmental budget proposals to National Treasury. Treasury had indicated to the Committee that it understood the importance of funding the training and Parliament had the power to direct the budget. It was proposed that no changes be made to the financial arrangements.

Point 7 dealt with the minority view. The Chairperson noted that it was regretted that the DA was not there to check that the view had been correctly captured. It was decided that 7.1.1 be deleted as it was incorporated in the report and was a position taken not only by the minority, but by all parties. It was also proposed that the section on the process under the minority view be deleted in its entirety but the Secretary pointed out that the point had been referenced in the main body of the report and therefore could not be deleted.

Point 7.3.1 dealt with the minority view on the financial situation. The point noted that the financial literacy training had not been adequately funded.

The Committee had accepted the Treasury position that all departments should include a request for funds to implement the Bill in the departmental budget. Point 7.3.1 had to be removed as the Committee had agreed with Treasury on the funding.

Point 7.3.2: The Committee was quite determined to exclude the opposition view that that there had not been a comprehensive SEIAS (socio-economic impact assessment study) as there had been numerous other studies which had informed the Bill, and the entire Committee had agreed that there needed to be a SEIAS. The Committee noted that the Department of Trade and Industry had begun the study but that it was not complete. Further, the fact that it was a Committee Bill meant that there was no obligation for a SEIAS.

Mr Alberts, however, indicated that the request had been for the study to be provided before Members approved the Bill. Ultimately, the Chairperson agreed that the point would be noted that SEIAS was not compulsory in a Committee Bill but the FF+ would have preferred to have such information in order to determine whether the party could support the Bill in its implementation. The opposition was concerned that there could be unintended consequences and there was no guarantee against those
unintended consequences. After an extensive debate, a revised version of the point was retained.

7.4.1 The Committee noted that debt counselling was not available to the lower income groups as they could not afford debt counselling. Mr Alberts agreed to the removal of 7.4.1 as it was not financially viable for debt counsellors to assist lower income consumers.

The Chairperson welcomed Ms D Tsotetsi (ANC) from the Portfolio Committee on Telecommunications as the Committee required a quorum. She also acknowledged Ms Saroj Naidoo who had been at DTI for 24 years that week, with 20 years’ service in the same position as parliamentary officer for the DTI.

7.4.3 The Committee recommended that the third bullet be removed as the status of illegal lenders had been addressed. It was not as if the DA had included that point in the Bill themselves. It was noted that the offence clause in the Bill outlawing illegal lenders was only as effective as its implementation but, without such an offence in the Bill, it would not be possible to act against the illegality of the action. Adv van der Merwe explained that Clause 25 in the Bill stated that registration as a credit provider did not apply if it was a once-off loan or if the credit loans were incidental to the main business. It seemed to Mr Alberts that the DA probably had an evidential problem. The point was removed.

The following point dealt with the possible unintended consequences and was removed because it had been captured more effectively in an earlier point.

The Chairperson called for any additional comments from the parties. She explained that initially the Committee had been obliged to have extensive discussions with Members of Parliament, various departments, and entities to ensure that everyone understood the intent and purpose of the Bill.

Mr B Radebe (ANC) requested that the report indicate that National Treasury was in total support of the Bill.

The Chairperson preferred not to single out National Treasury but to thank Treasury in the acknowledgements section.

The Secretary summarised the decisions made on the report that day.

The adoption of the Committee Report on the National Credit Amendment Bill [B 2018] was proposed by Mr Williams and seconded by Mr Radebe.

The Chairperson asked for guidance about the DA walk out. It was decided to indicate that the DA had walked out but the Committee had had a quorum and had, therefore, adopted the report. The report, after corrections, would be sent for inclusion in the parliamentary papers: Announcements, Tablings and Committee Reports.

Mr A Williams (ANC) expressed his gratitude to Adv van der Merwe for her hard work without which the Bill would never have been completed. He also appreciated the work of the Department and its entities.

The Chairperson noted that the Committee had to attend the joint committee meeting with the Portfolio Committee on Finance and the Standing Committee on Public Accounts (SCOPA) to hear the testimony of Markus Jooste, former CEO of Steinhoff. The Chairperson and one of the Secretaries would attend.

Copyright Amendment Bill
The Committee Secretary presented two technical issues that had to be addressed. The Committee had to agree formally that permission be requested from the House to amend additional sections in the Copyright Amendment Bill. The Committee had advertised certain clauses for public comment that were outside the scope of the Bill and those had to be sent to the House for approval according to the Rules of Parliament.

Mr Radebe proposed that permission be sought from the House to include the additional sections in the Copyright Amendment Bill. His proposal was seconded by Mr G Cachalia (DA) who had returned.

Secondly, the Secretary asked if the Bill could be sent to the technical panel prior to the public responses to the advertised clauses.

Ms Theko proposed that the Bill be sent to the technical panel in its current form. The proposal was seconded by Mr Cachalia.

The Chairperson left to attend the joint meeting. The Chairperson requested Mr S Mbuyane (ANC) to take the Chair. It was the first occasion that he had chaired a Committee.

Resale Royalties in Copyright Amendment Bill: DTI briefing
Dr Evelyn Masotja, Deputy Director-General: Consumer and Corporate Regulation, briefed the Committee on the flagged issue of whether both the art market professional and the seller of a work of art should be jointly responsible for the payment of resale royalties.

The DTI had examined the situation and determined that the art market professional and the seller would have joint responsibility for payment of the resale royalty. That did not apply to sales of private works. It would be easier to manage from a collecting society perspective if the art market professional as well as the seller were involved in the responsibility of the royalties.

Mr Alberts asked if it would be a joint and several liability so that either one could be held responsible and the other would have to sue the second person.

Mr Cachalia asked who was liable for the resale royalty if both the seller and the art market professional were jointly and severally liable. What did a commercial element mean? Did it mean that a profit was made, or did it refer to ‘someone in the business of art sales’? If a private person took a work to an art market professional, did the professional pay a portion of his commission but the private seller did not pay any royalties on his profit? To say both had to be liable was a problem for a private person and one could not lump a private seller with an art market professional. He suggested that only the art market professional be liable for paying the royalty.

Dr Masotja agreed with Mr Alberts that the seller and the art market professional were jointly and severally liable. She believed that there should be a contract between them. She assured Mr Cachalia that ‘commercial’ referred to commercial gain in a trade. What informed the royalty itself, was contained in the Bill which stated that the resale royalty ‘shall be payable at the rate prescribed by the Minister’. All sales should be through the art market professional. DTI was focussed on the protection of the author.

Mr Cachalia said that the Bill had to make it very clear that an individual who was privately engaging in selling a work, could not be held liable, with the art market professional, for a royalty. He also worried about the Minister prescribing the rate at which the royalty would be paid. It could not be left to the whim of a Minister. It needed to be determined on the basis of fairness and written into law as to how the Committee saw it going forward. Was the royalty on the profit or on the commission, or perhaps on the increment in profit? The Committee had to apply its mind to those issues and they could not be left to the discretion of a Minister.

Ms Theko recalled that, the previous week, the Committee had said that it needed advice from the advocate about how one could separate the seller and the art market specialist. Was the DDG presenting the opinion of the entire technical team? She referred to a recent article on tattoo art and asked how copyright would work in that case. Who owned the tattoo on one’s skin? She did not understand how it would work. Who would be jointly liable if the tattoo was in the market?

Mr Zwelakhe Mbiba, Deputy Director, Department of Art and Culture, clarified that in most instances, art galleries acted as sellers and as agents. In the first instance, when the art gallery and auctioneers acted as sellers, they took liability. In the second instance, where they acted as agents, they made their income based on commission. If they had to pay the royalty out of their commission, that was a legal problem because the commission was the payment for their work. However, if the seller were responsible, it would be a question of management where the agent could provide the data to the collecting society. The Committee needed to separate legal liability for the management of the payment and the actual payment.

Adv van der Merwe, Parliamentary Legal Advisor, noted that there were three parties involved in a transaction: Party 1 was the author who had a right to resale royalties; party 2 was the owner of the visual artwork who wanted to sell it; party 3 was the art house professional, i.e. art gallery, auctioneer etc. It was necessary to identify the three for there to be a commercial sale as defined in the Bill, in connection with a business or trade. The rationale for talking about jointly and severally liable was not about the seller or art market profession but to the benefit of the author so that that author was not sent from pillar to post to get his money. Whether art galleries and sellers should be liable was a policy decision. If the seller had to pay, the author might not be able to find him. If the art market was acting as an agent, there would be an agreement. If the agent was to pay the royalty, he would include the extra charge in the contract. She believed that because the Bill was addressing art professionals, they would understand it.

The intention, as the Bill currently read, was to pay royalties on the full amount but the Committee could decide whether to pay royalties on the difference between previous price paid and the price for which it had been sold. The question should be considered by the Committee.

Mr Williams asked about tattoos. A tattoo had been shown in a movie and the tattoo artist had sued the movie for copyright royalties. The Committee had to consider all such loopholes.

Mr Cachalia understood the three persons involved in a commercial sale. It was clear that the author was entitled to some sort of royalty. That much was clear. The owner was exempt from re-sale royalty rights if the owner was acting in his own right. He did not believe that someone who was selling professionally could be liable, jointly and severally, with a private seller. He asked who got to determine the rate: was it a ministerial responsibility or not?

Ms Masotja responded about tattoos, it was a copyright issue when the tattoo was original so there would be copyright of a tattoo. She did caution that the article in the magazine referred to a specific and unusual situation. However, the Department would come back to the Committee on that.

Ms Theko said that it should be flagged and that the DTI and DAC come back with a response that would address all the issues. The Committee would come back to it when the DTI had a position.

The DDG pointed out that it was not really a flag, but the DTI would determine whether there were loopholes in the Bill. The rates that would be prescribed by the Ministers would be the result of extensive consultation with the industry and the public. The issue of the amount that the commission was based on was very important. The regulations would tighten up some of the issues, such as the different works liable for royalties. She wondered if ‘profit’ would not be a better term to use as there were costs involved. The full amount might be liable to costs.

Mr Cachalia asked if there had there been submissions from art house professionals.

Ms Masotja replied that the team had received input from various people in the art professional world.

The Acting Chairperson agreed with Ms Theko that the two Departments had to reach agreement on the issue of the seller and the art market professional.

The DDG stated that CIPC was supposed to present on the collecting societies but that she would present.

Collecting Societies in Copyright Amendment Bill: DTI briefing
The collective management of rights was a well-known global system to monitor usage of copyright works on behalf of the rights holders as it was not practically possible for rights holders to monitor the usage of their copyright works on various commercial platforms, especially digital spaces. Collecting societies served as a mechanism to reciprocate royalties from other jurisdictions through reciprocal agreements with their counterparts.

DTI had recommended that there be one collecting society per right but the Portfolio Committee had decided that instead of one collecting society per right, the system should be opened up. The reasons included breaking monopolies and ensuring B-BBEE. However, the Companies and Intellectual Property Commission (CIPC), which would be responsible for managing the societies under the Bill, had stated that administratively it was unworkable to have more than one society per right. Those who paid out royalties did not know who belonged to which society, there were membership struggles between societies, and small societies were unworkable.

CIPC indicated that collecting societies had no need to comply with B-BBEE as a collecting society was a non-profit organisation that members chose to belong to.

Discussion
Mr Radebe proposed that the decision about collecting societies be postponed until the following week. The proposal was supported by Ms Theko. She noted that the Committee was not quorate and no decisions could be taken.

The Acting Chairperson asked how many collecting societies were currently registered.

The DDG explained that only two societies were registered with CIPC but once the Bill became operational all societies would be obliged to be accredited with the CIPC.

The DDG referred to the Supreme Court of Appeal case of the National Association of Broadcasters v South African Music Performance Rights Association where a judgement was made about the formula used to arrive at the royalty charged by SAMPRA to broadcasters for the playing of sound recordings or needle time.

The Acting Chairperson informed the Committee that the information was for noting.

Mr Mbiba from DAC raised a point about one collecting society per right. He asked that the Committee look into the smaller collecting societies which were unable to manage their business on their own. Some were under the umbrella of bigger societies for economies of scale. It was important to look into the small sectors where collecting societies would not be able to survive on their own.

The Acting Chairperson requested that the DDG move on to the presentation showing linkages between the Copyright Amendment Bill and the Performers’ Protection Amendment Bill.

The DDG indicated that she had a detailed presentation and a briefer presentation. She asked which presentation the Committee required.

The Acting Chairperson asked that she present the briefer document.

Performers Protection Amendment Bill: linkages to Copyright Amendment Bill: briefing
Dr Masotja stated that the Performers’ Protection Amendment Bill was a work-in-progress as there were inputs that had not yet been addressed. Some of the decisions on the Copyright Amendment Bill would impact on the Performers’ Protection Amendment Bill. She was also aware that treaties had not been ratified and yet the Bill spoke to treaties.

Dr Masotja referred to an array of challenges facing performers. Performers were often in a very weak bargaining position and forced to transfer all their economic rights to producers in perpetuity for little more than a symbolic payment. The lack of formalisation of the creative industry exposed it to abuse.
Copyright in a wider sense also included related rights, especially the rights of performers (actors, musicians and dancers), and producers of phonograms and broadcasting organisations. Once such performances were fixated in sound recordings or audio visual works, the owner of sound recording or films generally exercised the control over the work for commercial purposes.

There was a need to cross-reference section 8 (cinematograph films) and section 9 (sound recordings) of the Copyright Act with section 5 of the Performers’ Protection Act, 1967. That would enable the Portfolio Committee to stipulate how performers would exercise the right to authorise fixation of their performances. The Committee could pronounce on how owners of sound recordings and films had to share royalties for the use of sound recordings and films with performers. The Committee would introduce provisions establishing collecting societies for section 8 in the same manner as when needle-time rights had been introduced in 2002.

This Bill provided an opportunity to include provisions of World Intellectual Property Organisation (WIPO) treaties for ratification purposes and to deal with the growing appetite to grant rights to other role players in audio visual post-production such as designers, make-up stylists and editors.  

Discussion
Mr Alberts asked for a timeline for the provision of first working draft of the Bill that would show the linkages between the two Bills. He asked if it would bring certainty to royalties. The current Act did not specifically protect audio-visual work. If a work was commissioned, was he correct in assuming that neighbouring royalties would not apply?

Mr Radebe warned that the Fifth Parliament was coming to an end and he was worried that unless the Bill was ready soon, the Committee would run out of time. He reminded the Committee that actors were the ones that had approached the former President. He worried about artists who were not benefitting, especially from YouTube where there seemed to be serious exploitation of the artists.

Dr Masotja clarified that there was a Bill, although certain things needed to be addressed as the discussions progressed. She could not give a timeframe as she had assumed that the Committee would be addressing the Bill.

The Secretary informed Members that the hearings on the Performers’ Protection Amendment Bill would be held the following week and that the Members would return early from recess to work on the Bill. The intention was to complete the Bill by the end of October.

Mr Radebe asked about the treaties that South Africa had not yet signed.

Dr Ria Nonyana-Mokabane, DTI Chief Director: Legislative Drafting, Corporate and Consumer Regulation Division, stated that DTI was working on a parallel process to ratify the treaties and was trying to align the legislation and the treaties. Once both the proposed legislation was enacted, South Africa would accord with the international provisions. DTI was also looking at the Vienna Convention and it allowed South Africa to deposit an instrument with the Convention. The country could draw up its own legislation.

Dr Masotja said that commissioned works did not currently attract royalties, even in the Copyright Act. She was confident that the Amendment Bill would create more certainty for performers.

Mr Mbiba commented on the Performers’ Protection Amendment Bill. There were three issues. The first was the definition of a performer in relation to the Beijing Treaty. He had noted that the definition excluded an interpreter. He was not certain whether that was by accident or design, but he considered it problematic. Secondly, the implementation of needle time had been challenging as the artists had not had contracts. The focus had been on the major artist performing on a recording. There was no provision for background artists to be compensated. Thirdly, there was the question of ambiguity as the Act spoke of the royalties going to the producer but there was nothing to protect the performer. Performers had to accept what the producer provided.

The DDG stated that the definition issue had been noted and there was a need for alignment of definitions. She appreciated his suggestions on how to strengthen the legislation. On the technical issue, there were certain definitions not used in the Bill. The focus would be on how to strengthen the Bill.

The Acting Chairperson thanked the DTI and DAC for being part of the briefing.

The meeting was adjourned.
 

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