Performers’ Protection Amendment Bill & Copyright Amendment Bill: Department & Parliamentary Legal Advisor responses to submissions; BRRR

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Trade and Industry

09 October 2018
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Committee discussed the draft Budgetary Review and Recommendations report in detail, adding recommendations and making amendments where necessary, but was unable to conclude the matter in the time available. The Committee referred to the analysis of how many targets had been met and asked if the report gave reasons why certain targets had not been met. Members pointed out that the Department should be required to indicate the impediments to the achievement of the remaining targets. Members further asked why the National Empowerment Fund had not been re-capitalised, suggested that there had to be a renewed focus on the Programme for Black Industrialists, sought explanations as to why there had been underspending and overspending, voiced concern about the selling of expired foods in informal settlements and highlighted the benefits of BRICS to South Africa and its assistance in job creation. Members asked what happened to recommendations they proposed every year: were they implemented and who monitored this. The Committee Secretary was requested to obtain copies of the BRRR reports for the previous ten years.

The Department of Trade and Industry reported on the key issues raised in public submissions responding to those clauses from the Performers’ Protection Amendment Bill that had been advertised. The Department also indicated its response to those submissions. The 20 to 30 public submissions had been compiled in a 90-page document and each point had been responded to by the Department in another comprehensive document. A key issue for performers was the labour issue and the question of whether they were independent contractors or employees. The Portfolio Committee determined to request the Department of Labour to engage with the Committee on the labour-related issues. The Department informed the Committee that public concerns about the incorporation of aspects of international treaties into the Bill even though South Africa had not signed the treaties, were misplaced. The Department agreed with the view of many submissions that there were issues of alignment and drafting, as well as technical errors that had to be attended to.

Members asked if the Department of Trade and Industry was collaborating with the Department of Labour. Had the Department involved the South African Revenue Service in discussions about how performers were taxed? Was it right to incorporate selective bits and pieces from a treaty without including the checks and balances that were built into the treaties? Members noted that the Committee would have to address the question of a 50/50 split of royalties.

The Senior Parliamentary Legal Advisor presented a legal response to the input on the Performer’s Protection Amendment Bill. There had been no substantive concerns. The points made about alignment, the length of sentences and the links with the Intellectual Property Laws Amendment Act and the Copyright Amendment Bill would be addressed.

Members asked if there would be a problem in referencing other legislation, especially when that legislative was still in the drafting process.

The penalty clause contained in the Copyright Amendment Bill had been advertised but only two submissions had been received. The Department presented its response to the two submissions received. There were no major objections to the clause. Submissions contained comments and concerns about details but there was no argument against the clause per se. Regulations would take care of issues of governance and administration raised in the submissions. The Department asked the Committee to provide clarity on foreign collection management organisations and the implications of the World Trade Organisation requirements. The World Intellectual Property Organisation proposed one collecting society per right. The Department agreed with that position but the Committee would have to guide the Department in the matter of the number of collecting societies per right. The Department proposed that the advertised clause be retained without amendment.

Members were concerned that the principle of one collecting society per right would fly in the face of the Constitution. Had the Department considered whether the Regulations addressed public concerns?

The Legal Advisor noted that neither of the two submissions had dealt with the penalty per se and it could safely be stated that there were no objections to the penalty. It was necessary to clearly define a collecting society so people would know when they were falling foul of the law. It was also necessary to make it clear that a collecting society had to be a not-for-profit organisation, even though that that would mean that the definition would have to be advertised.

Meeting report


Opening remarks
The Chairperson congratulated Ms Theko on her recent marriage. On a more sombre note, the Chairperson noted that the late Ms Edna Molewa had been the first Chairperson of the Portfolio Committee on Trade and Industry. The meeting was asked to observe a few seconds of silence in her honour. Ms Molewa had recently been awarded one of France’s top honours, the Officier de ’Ordre National de la Légion d’Honneur, amongst many other recognitions.

The Chairperson discussed the changes in the programme for the week. She then welcomed everyone to the meeting.

Briefing by the Committee Researcher and Committee Content Advisor on the draft Budgetary Review and Recommendations Report (BRRR)
The Chairperson was pleased to see that most Members had read the draft report. Due to the timing of the BRRR Report, the Second Quarter Report was not available and that was a limitation. The report needed to indicate what percentage of the budget should be expended in the First Quarter and how the budget had been managed by the Department. The Chairperson requested the Committee Content Advisor to take the Committee through the draft BRRR.

Part A focused on the Department of Trade and Industry (DTI). Key issues included the economic impact of incentives on the economy, the status of mineral beneficiation, the role of DTI in the technical recession, the status of the African Growth and Opportunity Act (AGOA), the impact of the closure of some of the Tiger Brand facilities following the listeriosis crisis and South Africa’s benefits in respect of the Brazil, Russia, India, China and south Africa (BRICS) grouping.

Part B dealt with the National Regulator for Compulsory Specifications (NRCS). Key issues included the ICT modernisation, audit action plans, revenue issues and Auditor-General issues.

The Content Advisor noted that she awaited input from the Committee on the conclusion as well as the recommendations. The Committee had to complete the BRRR on 16 October 2018.

The Chairperson asked Members from all parties to engage with the report in their various structures so that they could contribute to the recommendations. She reminded Members that one thing that had come out of all the Commissions in the past 24 years was that the legislatures might be failing in holding departments and entities to account. She did not want any Member to tell her that his or her political entity was unable to contribute to a conclusion or a recommendation. That would be remiss. All Members had to assist in getting things back on track by ensuring good governance.

The Chairperson asked the staff to include the importance of the budget and the oversight of the budget, as well as the importance of the BRRR, in the report as it enabled the Committee to ask for more money, or less, depending on fiscal constraints. Nine years after the change from CIPRO (Companies and Intellectual Property Registration Office) to CIPC (Companies and Intellectual Properties Commission), following the debacle of CIPRO, the Committee had to assess progress in that area.

The funding of SABS was an important issue. The Committee had asked for additional money for SABS but the Chairperson had seen only a new building emanating from the additional funding. What about the machinery that SABS needed to replace?

Ms E Ntlangwini (EFF) asked if there was not a larger problem than just the problem relating to critical technologies and infrastructure in SABS. She asked if there had not been a problem with assessors. If so, that should be added to the report.

The Chairperson understood that the issue raised by Ms Ntlangwini was related to the South African National Accreditation System (SANAS) and not to SABS.

Ms Nontombi Matomela, Acting Group Chief Operating Officer, DTI, confirmed that it was SANAS that had had the problem with assessors and which had obtained a new building.

Mr A Williams (ANC) asked if the Committee was ever told whether the recommendations in the BRRR were accepted. How did the Committee know whether the recommendations were implemented, e.g. the issue of creating a demand for local goods? What mechanism did the Committee have to ensure that its recommendations were implemented or a reason given for non-implementation? Every year the Committee put in a recommendation about localisation, but was there a response?

The Chairperson assured Mr Williams that there had been a response from the DTI each year. Letters were sent to the Speaker and then sent on to the Committee. DTI was particularly helpful in responding to recommendations by the Committee. She thought it would be valuable to look at the responses in the Committee. She asked the Committee Secretary to email copies of the responses to the Members.

Ms P Mantashe (ANC) added that recommendations were made every year but, during the oversight monitoring, Members had noted that nothing was being implemented and legislation was continually flouted by the Department and its entities. 

Mr B Radebe (ANC) suggested that there had to be a focus on the Programme for Black Industrialists which had to get not only money, but also a stake in the various sectors. The building of locomotives could have done a lot for the Black Industrialists Programme but that had not happened as shortcuts had been taken. It was not only about incentives, but also about how much work was given to black industrialists. Money could not just be pumped out. Besides which, no one wanted to be dependent on someone else for help.

Mr Williams noted that the courts had recently legalised cannabis in South Africa for use in the home. Farms in the Western Cape had already been sold to international companies for the growing of cannabis. Was DTI aware of that? South Africa should not miss out on a transformed cannabis industry. DTI had missed out on the green economy which was controlled by white people in South Africa even though it had been established under the democracy. The industry could be worth billions and billions of Rand. If the Committee was not on top of that matter, the industry would be owned by a German company. He thought that the Committee should start looking at it.

The Chairperson agreed that it was worth keeping in mind and coming back to the issue.

Ms Ntlangwini added that a cannabis conference was to be held in Johannesburg soon so the Committee should investigate the cannabis farms.

Mr Radebe was wary of putting the cart before the horse. He said that the court had made a judgement about the use of cannabis for private purposes. However, it was not law. One could not trade in cannabis. There was a need to get input from the Department. It was too soon to put it in the recommendations.

The Chairperson said that cannabis had simply been decriminalised just as smoking had been decriminalised over the years. DTI had indicated that it was not the case that the incentives for Black Industrialists were not there, it was that the black industrialists were not getting tenders. The Committee should seek a clarification from DTI about the designations, localisation and the Black Industrialist Programme, and why the black industrialists who got incentives did not get tenders. The anecdotal evidence did not look positive.

Ms Ntlangwini suggested that the Committee ask for a table showing how many black industrialist companies had been funded and how many tenders they had received as well as how much business they had obtained from private companies.

The Chairperson referred to the analysis of how many targets had been met and asked if the report gave reasons why certain targets had not been met. She noted that there was an 88% achievement of targets. The Department should be required to indicate the impediments to the achievement of the remaining targets. She noted the large percentage of the DTI budget that went to transfers – 72.4%. DTI needed to indicate whether the funds paid out were being utilised effectively. The National Empowerment Fund (NEF) was still asking to be re-capitalised. Nine years ago there had been discussions about closing down the NEF but it was re-structured and, within two years, it had performed so well that the entity had needed more money. For five to six years, the NEF had asked to be re-capitalised and had been told that the recapitalisation would be done through various institutions, the last being the Industrial Development Corporation (IDC). What had happened? The Committee ought to ask what had delayed the re-capitalisation.

Ms Mantashe commented that during one of the oversight visits to an entity, Members had discovered that the salaries of the employees at the entity were far above those of the Public Service Commission’s salary grades. The Report contained details of an entity that was spending almost R 1 billion on compensation of employees. Why were they paid more than the amounts stipulated in the Public Service Act when government had said that everyone should tighten their belts? Who was supposed to tighten their belts, only public servants and not the entities? The entities said that they were paying market-related salaries but there was no money left for implementation after salaries had been paid.

The Chairperson agreed that it was a challenge but one could not cut someone’s salary. Government was tied to the ladder system of salary increases. She asked that Ms Mantashe take the matter up with the political structure and perhaps add a point in the conclusion of the BRRR.

Ms Mantashe wanted a space to discuss the issue. She indicated that she knew that salaries could not be reduced but suggested that there should be a ceiling on the salaries of those employed by entities as the situation was unfair.

The Chairperson agreed that all Members could consider her proposal in the light of closing the gap.

Mr S Mbuyane (ANC) referred to the challenge of the NRCS. Its allocation for personnel was a concern. Accountability was not forthcoming. He wanted clarity on why the incentives had been paid and the transfers had taken place, but the computer system was still not working?

Mr Radebe referred to the issue of re-capitalisation and structures like the NEF. He noted that the NEF provided development finance at a preferential rate to black businesses. With job losses and high unemployment, structures like the NEF had to be empowered and should get more money to promote entrepreneurship. People had to realise that it was not only government that was going to provide work. In Germany, the SMMEs provided more work than government. Part of the package should go to the empowerment of entities to support SMMEs so that the SMMEs could empower people and make people realise that small businesses should be supporting the economy. He was concerned that if the request for money went through the budgetary process, the entities would never get the money. However, he was sure that there was hard cash somewhere in government that was not being used and that could go to re-capitalising the various entities.

The Chairperson agreed that development finance had to be used to promote jobs. She pointed out that the NEF, along with the Black Industrialist Fund, were the only funds dedicated to funding Black businesses.

Ms Ntlangwini raised a concern about the National Metrology Institute of South Africa (NMISA) that had complained about their offices being dilapidated. That should also be mentioned in the report.

The Chairperson informed Ms Ntlangwini that the matter had been raised the previous year.  It would be instructive to read responses from previous recommendations.

Ms Ntlangwini agreed that the Committee needed the responses as the budget of NMISA had been decreased from 2016/17 to 2017/18.

The Chairperson reminded the Committee that NMISA was directly related to the health of the population.  Members should recall the overdose of medication suffered by babies in the Eastern Cape when the measures or weights were not exactly calibrated and there were problems with injection needles.

Ms Theko addressed the irrecoverable receivables noted by the Auditor-General. She recommended that the Committee require an explanation as to why there were irrecoverable funds. She wanted to know when the loss had been incurred.

Mr Lucky Phalamohlaka, Director: Finance, DTI, stated that the loss was from the old incentive scheme. The Department needed to write it off.

The Chairperson said that it was still on the budget and the Committee required a written explanation as to when it had happened and what was to be done.

Mr Radebe added that the Committee should ask the Department to explain what could be done to prevent a recurrence of such an issue.

Ms Mantashe requested that DTI inform the Committee as to whether there had been consequences for the officials involved in the loss of money. Government money could not be lost.

The Chairperson agreed but suggested that the Committee needed further information on the matter before taking up the issues.

Ms Theko referred Members to the job summit that had taken place recently and, while it was work-in-progress, it had to be taken into account.

Ms Ntlangwini drew the attention of the Committee to the total under-spend and proposed that the Committee request a report on under- and over-spending.

The Chairperson agreed and asked the Content Advisor to note that the Committee did not just want the figures but also required explanations as to why there had been underspending and overspending.

The Chairperson referred the Committee to the point on beneficiation of minerals in South Africa.

Mr Radebe asked that any department or entity that reported to the Committee be guided on what the Committee needed to know, especially in respect of the impact of electricity on the cost of industrialisation. The left hand might be affecting the right hand without being aware of the damage that it was causing to job creation programmes. Some people were running amok.

The Chairperson noted that Parliament filed reports which were then forgotten. She wanted the Secretary to provide the Committee with the reports on energy and related issues that the Committee had been dealing with for some years.

Ms Theko referred to the concerns raised about the selling of expired foods, etc. The selling of expired foods in spaza shops had to be included in the report as the food was dangerous to the health of the community.

The Chairperson agreed. She was concerned about what was being sold in informal settlements.  The Committee did not realise the impact of their work on the health of children and adults.

The Chairperson indicated that people were waiting to deal with the Performers’ Protection Amendment Bill. The Committee would have to move on. She asked Members to be prepared to continue the following day.

The Chairperson noted that the press had identified some of the copyright issues in South Africa. Maybe the media was having a transformation. She referred to pictures that someone had whitewashed and had then fraudulently claimed ownership of the pictures. 

Mr Radebe added that the media had also referred to the payment of royalties, which was a serious issue for people. There was, especially, a problem with pay-outs to the estates of artists.

DTI responses to public submissions on the Performers’ Protection Amendment Bill
Dr Evelyn Masotja, DDG: Consumer and Corporate Regulation Division, DTI, stated that the Department would present a concise account of the key issues raised by the submissions in response to those clauses from the Performers’ Protection Amendment Bill that had been advertised. She would also indicate the DTI’s response to those submissions. DTI had submitted 90-page document to the Committee which contained full details of the 20 to 30 submissions. A second document containing the detailed response of the DTI to those submissions had also been sent to the Members. The presentation was a summary of the key points raised in the submissions.

Dr Rea Nonyana-Mokabane, Chief Director: Legislative Drafting: Consumer and Corporate Regulation Division, DTI, presented the key points.

Submissions had proposed that the definition of broadcast needed to be aligned across both the Performers’ Protection Amendment Bill and the Copyright Amendment Bill. DTI had noted that and would attend to it.

Labour issues had been raised by all performers. A number of performers explained that they were treated differently according to the job that they were given and so they were treated both as employees and independent contractors.  DTI noted that the Bill was probably not the correct legislation to address labour issues. The Department of Labour had to be brought onboard to give advice on how to address the issues.

A number of submissions addressed the issue of the international treaties that had not yet been signed by South Africa. DTI was aware that the signing of the treaties would take time but there was no reason for the Department not to incorporate the principles included in the treaties.

DTI had to strike a balance between the companies that promoted the economy and the artists who stated that they were not being fairly compensated. Those making the industry were not benefitting from the vast sums of money being made in the industry.

The format of contracts concerned the public but there had been a misunderstanding as the Bill was not going to provide prescriptive contracts.

Moral rights was a matter that DTI would attend to, where possible. However, there had been misunderstanding, especially by performers, of the period of moral rights issue as it remained at 50 years. However, the paying of royalties for 25 years had worried the companies that had made submissions. They felt that the requirement would bankrupt companies.  DTI was adamant that the policy decision remained that artists would receive royalties for 25 years. The rights of actors had to be protected.

Various organisations found the mechanisms around recording performances, informing performers, and other administrative issues too onerous. DTI believed that there had to be accurate recording of performances as that was crucial to performers receiving payment for the use of their work.

Dr Nonyana-Mokabane added that DTI recognised that there were technical issues in the Bill that had to be addressed, such as the IP Tribunal which would be the Copyright Tribunal, and the communications to the public of a phonogram would be dealt with, and so on.

Discussion
Mr Radebe referred to performers workers’ rights. Was the DTI intending to meet its counterparts in the Department of Labour? One programme had almost gone off-air because of a labour dispute. Those things had to be regularised. Copyright relating to the performance of an artist via a recording was easier to record that the audio-visual representation of the same performance which attracted far more attention. Audio-visuals were watched more frequently. Would the Bill ensure that those royalties were properly tracked?

Mr G Cachalia (DA) looked at the conclusions presented by DTI which simply said that there were legal and technical issues to be addressed. What needed to be addressed? He understood that details needed to be addressed, but he needed a more detailed response, such as the minimum requirements for a contract. What needed to change should be stipulated in the conclusion.  He also wanted to know what would be prescribed by the Minister. Was it possible to incorporate selective bits and pieces from a treaty without considering the checks and balances that were built into the treaties? It was an incomplete document in his opinion.

Mr Mbuyane noted that the Department of Labour, SARS, and DTI had to work together. He asked about the number of collecting societies. Would there be one collecting society per right, would there be a collecting society for directors and those behind the scenes, or would there be one holistic collecting society?

Ms Ntlangwini said that the Committee had heard horrific stories from the performers about how they were being treated. That treatment would just get more severe. The industry could not treat the artists as it pleased. DTI had to explain about its engagement with Department of Labour. She asked if the requested research on collecting societies in other countries had been done so that the Committee could make an informed decision.

Ms Theko stated that alignment of the two Bills was necessary to avoid confusion. The issue of log sheets might be a concern as the administration required was seen as a nightmare by the industry. The proposed 50/50 split of royalties had to be addressed by the Committee. The collecting societies had to be finalised and the Committee had to address critical problems identified during the hearings.

The Chairperson reiterated the comment by the DDG that there was a large document containing the full submission and a full report of DTI responses. Members had to apprise themselves of the documents. DTI should indicate, in the responses, where the full details could be found.

Dr Masotja assured Mr Radebe that DTI wished to engage with Department of Labour but it could not independently engage with the Department of Labour now that the Bill was in Parliament and so the Committee would have to invite the Department of Labour to attend Committee meetings in the same way that National Treasury had attended National Credit Amendment Bill meetings.

The issue of log sheets or records had to be prioritised. After a performer had engaged in an audio-visual performance, the audio-visual had an extensive lifespan and continued to make money. Performers should benefit from the continuous playing of the audio-visual and the Bill had to ensure the payment of those royalties.

Dr Masotja informed Mr Cachalia that she had focussed on the public submissions and not on proposed changes to the Bill and therefore her responses were, indeed, responses and not proposals for changes to the Bill. DTI had worked with Adv van der Merwe and she had tried to avoid issues that would be raised by the Advocate from a legal point of view. The last slide was intended to create a link to the presentation to be made by the Advocate.

DTI agreed with Mr Mbuyane that SARS should be involved. Dr Masotja added that perhaps the unions should be brought onboard. There might be a vacuum and, while not a DTI vacuum, DTI might need to facilitate a process.

The DDG believed that there was a need for a collecting society for actors.  It would be important to look into international best practices of collecting societies for actors. She assured the Committee that alignment would be addressed, but that would be addressed in the comments on drafting.

In response to Ms Ntlangwini’s question, she explained that there had been some research into collecting societies, generally, in relation to the Copyright Bill, but there was a need to research collecting societies for actors, specifically, so that DTI could come up with a quality proposal.

Ms Meshendri  Padayachy, Deputy Director: IP Law and Policy, referred to the difference between sound recordings and audio-visuals, vis a vis the audio-visual performance of the actor. Mr Radebe was quite correct. DVDs did generate a lot of money but the royalties had to go to the performer as well as the company.

In terms of the Beijing Treaty of Audio-Visual Performances, one had to look at fixation. The Beijing Treaty did not cover a live performance but the Bill had to cater for the royalties from the minute that it was fixated into a DVD that had an income stream, including streaming of shows on Netflix and Showmax. The same applied to music DVDs but those fell under the World Intellectual Property Organisation (WIPO) Performance and Phonogram. The Committee had to keep the two performers in their heads – actors and musicians – when discussing audio-visual works. Actors and musicians had to be treated differently and the same applied to collecting societies for actors versus collecting societies for musicians.

Regarding repeat fees, which had been the reason for the Generations saga, every time the show was played as a repeat, actors had to be paid as the performance would not exist without the actors. Also, a lot of money was paid to organisations when audio-visual works were sold overseas, but actors did not receive anything. That was the commercial exploitation fees issue.

Collecting societies were to be brought under the auspices of the Companies and Intellectual Property Commission. Actors currently only had two rights: the repeat fees and the commercial exploitation fees. Only one person was currently collecting repeat fees, and he had an arrangement with the SABC. He was collecting for 30 people. There was no one collecting for the other actors in South Africa and that needed to change. DTI had already had discussions with WIPO about setting up a collecting society. DTI had also met with actors on 24 July 2018 and had been given a mandate to set up a collecting society for actors. Actors did not have many rights. There might be one collecting society for fixation rights while royalties for the other streams would have to be arranged via contracts. A second collecting society would be needed for artistic resale rights.

DTI was looking at both the Beijing and the WIPO Treaties holistically per category of performer. Moral rights were described in the comprehensive document on DTI responses handed out to the Committee earlier. The document indicated the consultation that had taken place. Core issues had been listed.

Mr Radebe wanted to formalise the issue of engagement with the Department of Labour, SARS, and other related departments.  The Committee Secretary should invite the Department to attend Committee meetings in the same way that the Department of Arts and Culture attended Committee meetings.

The DDG added that the Department of Communication had to come onboard for the broadcast issues.

The Chairperson noted that there was a need to work on a refinement of the Committee Programme. She reminded Members that Adv van der Merwe, who would be the next presenter, represented the Portfolio Committee.

Presentation by the Parliamentary Senior Legal Advisor of the response to the Performer’s Protection Bill
Adv Charmaine van der Merwe, Senior Legal Advisor: Constitutional and Legal Services Office, Parliament, presented a legal and constitutional perspective of the public comments. A good number of the submissions had asked about the reason for doing certain things. Those comments were policy issues and she had largely avoided those comments.

There were many questions in respect of the international treaties. A treaty was simply a sharing of best practice between a number of countries.  A country could follow aspects of a treaty, even if the country had not signed the treaty. The same process of referring to international treaties that had not yet been signed by South Africa had been utilised in the Intellectual Properties (IP) Amendment Bill.

Adv van der Merwe addressed specific parts of the Bill:
Long title: The Legal Advisor would adapt the long title to incorporate all the clauses.

Clause 1: Definitions: Certain definitions were contained in the Intellectual Properties Amendment Bill but, as a temporary measure, provisional definitions would be incorporated in the Performer’s Protection Bill.  The definition of performer might need amendment as the public had considered the current definition too broad. ‘Cinematic’ works should be changed to ‘audio-visual’ works in alignment with the Copyright Bill. Adv van der Merwe explained that the definition of ‘reproduction’ created confusion. The definition of fixation also confused people and had to be rewritten. All definitions had to be aligned with the Copyright Act or Copyright Amendment Bill.

Clause 2:
Changes were mostly technical and grammatical.

Clause 3: Section 3A and Section 3B
Adv van der Merwe recommended that section 3A be divided into sub-sections to make the process clearer. The section should also include what would happen if there was no contract. There had to be consequences for non-compliance. The principle of right-to-trade was acknowledged but that right could be regulated as in the period of 25 years during which royalties had to be paid.
Submissions in respect of section 3B had dealt mostly with policy proposals.

Clause 4
The clause contained various drafting errors that would be corrected. Rental rights had to refer to an original performance.  Cross-referencing had to be corrected. The Bill spoke of selling the performer. That had to be amended to ‘selling a performance’. The manner of recording performances would be simplified by the inclusion of log sheets as per in the Copyright Amendment Bill. The way in which ‘fixation’ was used was ambiguous.

Clause 5:
The reference to the Copyright Act should be defined as in the Intellectual Property Laws Amendment Act (IPLAA) and would need a transitional provision to apply the definition until IPLAA was made operational.

Public input had indicated that the Cybercrime and Cybersecurity Bill could be split into two Bills.  The Legal Advisor suggested that the Committee of Trade and Industry should go ahead with the necessary clauses as its work was ahead of that of the Justice Committee Bill. The Justice Committee would then have to take the Trade and Industry Bill into consideration

Clause 6
Clause 6 had to contain a reference to the new sections 28O, 28P, 28Q and 28R in the Copyright Bill, which was the reason that the Copyright Bill had been drafted first. A penalty had to be added in the clause to deal with the three offences identified in the Act.

Discussion
Ms Theko noted that Adv van der Merwe was representing the Committee but she was giving the Committee options. She wondered whether there would be problems in either option, i.e. copying the appropriate wording into the Bill or including a reference to the Copyright Act. She proposed that the Copyright Amendment Bill and the Performer’s Protection Amendment Bill be presented in the House separately in case one of the Bills was rejected by the National Council of Provinces.

Mr Cachalia understood that the Committee could incorporate clauses from a treaty but the Committee needed to be aware that clauses could not be selected at random without considering the consequences. The Committee needed to guard against selectivity as the inclusions had to be in line with the overall detail and the intent of the treaty. Otherwise, there would be discordance down the line. In terms of the Committee’s oversight role, Members had to be assured that that was not the case.

The Chairperson noted that the Committee had been alerted to the two very long sentences in section 3A. The sentence was almost a full page of handwriting and one could lose the thread of what was happening. She suggested separating the sentence into two parts. One could put a full stop after the word ‘licencee’ in the first sentence. DTI should work with the advocate to break the first sentence into two. DTI would take care of details such as commas.

She added that the Legal Advisor had noted that the definition of reproduction caused confusion. She asked the DTI to correct it for the Committee. She further noted the lack of clarity in respect of an expiry date in section 3(3). The Department and the advocate should insert an expiry date.  The use of ‘their’ should be limited and the appropriate noun used wherever possible.  What did one mean by ‘contractual freedom’? The Committee had discussed that issue and the notes on that discussion should inform amendments. Likewise, the clause referring to the Minister’s approval of ‘all’ contracts should be corrected by DTI. ’Shall’ and ‘should’ had to be cleaned up. The public had raised the need to talk about fair and equitable remuneration. That point had to be included.

The Chairperson noted that Adv van der Merwe had referred to a ‘dangling modifier’.  What was a dangling modifier?

Adv Van der Merwe explained that on page 5 lines 13 – 15, the Bill spoke of the audio-visual of a ‘performer’, which was the modifier, and it was dangling because it actually suggested that the performer was ‘being sold’. That was not the intention. Currently the word ‘performer’ could modify one or two things. It should only modify one noun.

She further informed Ms Theko that there was no risk in copying sections from another Act as both Acts were managed by the same Department. If the Department amended the Copyright Act, it would know that it had to amend the Performer’s Protection Act. Copying the wording from another Act might be a risk if the two Acts were managed by two different departments.  However, when a reference was made to another Act, that reference remained current no matter how many times the Act referred to was changed. The transitional provision was risky as the Act referred to might never be enacted.

The Chairperson thanked the advocate and members of the Department for their work.

Copyright Amendment Bill
The Chairperson reminded the Committee that the clause on penalties had been advertised.

DTI’s response to submissions received on the penalty clause contained in the Copyright Amendment Bill
The DDG noted that only two submissions had been received. The clause related to the criminalisation of collecting societies. She handed over to Dr Nonyana-Mokabane.

There were no major objections to the clause. Submissions contained comments and concerns about details but there was no argument against the clause itself. DTI agreed with the opinion in the submissions that the Regulations would take care of issues of governance and administration. The legislation would have to offer a definition of a Collection Management Organisation (CMO) before there could be a penalty for illegally acting as a CMO. The right to freedom of association would be upheld. 

A number of issues needed to be addressed. There had to be clarity concerning foreign CMOs and the implications of the World Trade Organisation (WTO) requirements. WIPO proposed one collecting society per right and DTI agreed with that position, but the Committee would have to guide DTI on the matter of the number of societies per right. Regulations in respect of accreditation were necessary.

Dr Masotja proposed that the advertised clause be retained without amendment. Some aspects of the clause would be strengthened. There was already a framework and an accreditation system but it needed to be strengthened. Accreditation was not a new thing. The clause about CMOs became critical when one read in the media about artists not receiving royalties.

The DDG indicated that there was an error on the PowerPoint presentation. It was not Clause 22B(8) but Clause 25 section 22B(8).

Discussion
The Chairperson referred to the public comment on accreditation that suggested that accreditation should not be too onerous. Another comment that had caught her eye stated that regulations should not usurp or decrease the rights that members had, except where competition considerations might demand that. The third comment was that the criminalisation of unaccredited licensing did not aid in increasing transparency to members and should not be part of the legislation. That was a serious concern. However, DTI had stated that regulation would ensure transparency. The Bill had to deal with governance issues.

The Chairperson noted that another criticism was that the unintended consequence of criminalisation would be that a member could be arrested for exercising his or her exclusive right. That was a serious allegation. However, she noted that DTI had responded that CMOs were non-profit organisations. Individuals had freedom of association and there were no criminal implications. That clarified the situation for the Committee. She believed that the DTI responses to the submissions were fair.

The Chairperson noted that there were only two submissions. However, the Committee had benefitted from a comparison with collecting societies in European and other international environments. The submission that the wording was unfit to deal with the current status quo as far as digital licensing was concerned, had a valid point. She asked DTI for a response to that point.

Ms Padayachy replied that the Bill was being amended precisely to take into account the digitalisation process, which was a new development. Those amendments were currently taking place. In respect of accreditation, she explained that accreditation only took place when a CMO had 50 members or more. That had allowed small societies to escape the law. Currently only large organisations had to register with the CIPC. The Copyright Bill would, however, strengthen the accreditation principles so that small societies could no longer escape the law.  An individual gave a collecting society the authority to manage his or her rights and to collect royalties on his or her behalf. DTI wanted all collecting societies to fall under the CIPC.

The Chairperson noted that the Portfolio Committee had been requested to give guidance on whether there would be one collecting society per right. That issue had been discussed at the end of the previous quarter.

Mr Cachalia noted that the Chairperson had earlier raised the issue of freedom of association but WIPO supported the principle of one collecting society per right. Surely that would fly in the face of the Constitution? He suggested that one could not be half of one and sixpence of the other.

Mr Mbuyane asked about the difference between a collecting society and a CMO. He believed that the number of members should not make a difference to setting up a society. Had DTI looked at the Regulations? One could not regulate for one society per right as that would not allow transformation.

The Chairperson agreed that it was a difficult situation.

Ms Theko asked whether the Committee was doing justice to the collecting societies. She suggested that Adv van der Merwe provide her input as that might assist Members.

Copyright Amendment Bill – Public Comments on Clause 25, Section 22B(8)
Adv van der Merwe presented a legal response to submissions from the public on Clause 25 of the Copyright Amendment Bill. Neither of the two submissions had dealt with the offence per se. The public clearly did not have a problem with the offence. However, the issue was that it was not clear who the clause would apply to. IPLAA defined a collecting society as a society created by the Act or a group of individuals who collected on behalf of the members of the society. She recommended that, until IPLAA was operational, the definition should be included in the Bill as a transitional measure.

The addition of the concept of a not-for-profit organisation was important.  The drafters could add non-profit to the definition but that would mean that the definition would have to be advertised. Another way was for the CIPC to manage the issue in practice. CIPC would be in a position to ask an organisation how collecting and distributing royalties could result in a profit to a society.

Why was criminalisation necessary? Adv van der Merwe explained that it was necessary for transparency. The converse was: what could be done if one operated without accreditation? Without an offence, nothing could be done.  She assured the Committee that individuals would not be affected by the criminalisation clause because an individual could not be a collecting society on his or her own.

In response to those who were concerned about international CMOs, Adv van der Merwe explained that a society had to be operational in South Africa if the society wanted to collect royalties in the country, and any society operational in South Africa would fall under the South African legislation. She recommended that the definition of a collecting society be included as a transitional arrangement. She added that an agent who collected for another person, and who had been given power of attorney, could collect without falling under the definition of a collecting society.

Discussion
Mr Williams referred to the mechanism for defining a collecting society. He suggested that the same mechanism be used as had been used in the National Credit Amendment Bill. He asked whether a person would be committing an offence if he/she derived an income from royalties.

Mr Cachalia gave an example of an artist representing himself and then wanting to expand into an organisation that collected royalties. How did that fit in with freedom of association?

Mr Mbuyane asked for a definition of an NPO because he was confused about the CMO getting 50% of the royalties. He asked for an explanation of accreditation vis a vis regulation of a collecting society. Surely, if one was accredited, one would be regulated by CIPC. He asked for a comparison between a collecting society and a CMO.

Ms Theko asked about the options for amending the definition of a collecting society. What if the Intellectual Properties Amendment Bill did not get passed? If the clause was to be advertised, how long would that take? Would that cause a delay in completing the Bill?

Mr Radebe stated that the principle of an NPO was important because previously collecting societies had invested money that had not belonged to them. The advertisement of the non-profit requirement for collecting societies was essential.

Ms Mantashe noted that SAMRO was confusing the Members as it had given so many definitions.  It was important to have a solid principle on which to base the definitions.

The Chairperson stated that the clarity sought was creating more confusion. She noted that the Committee could not cut corners, but she was wondering how many more times the Committee would need to advertise clauses. One submission had proposed a definition, but now there was an issue about non-profit. She wanted the definition clearly explained.

Mr Williams noted that the Committee would have to decide if there was to be only one collecting society per right. If there was to be only one collecting society per right, there would be no need for an advertisement.

Mr Radebe noted that one collecting society per right was the norm, but the point was that it had to be a non-profit society.

Mr Cachalia suggested that if a collecting society offered a valid, efficient service, there was no reason why it could not make a profit.

Mr Williams stated that the term ‘society’ implied that it was a collective of performers. So it was not necessary to state non-profit.

The Chairperson noted that the society would have a group of administrators as well as the utilities necessary to perform the service. Those administrators had to be paid for the services that they rendered. How were the administrators to be paid? An NPO paid out everything after basic costs, whereas a profit-based agent would take a percentage or make a small profit out of the business.

Ms Padayachy explained that a collecting society (CS) and a Collection Management Organisation (CMO) was the same thing. The international term was CMO and the South African term was CS. It was simply a matter of terminology.

The criminalisation of collecting societies was simply an attempt to regulate those who pretended to be a CS but they were not. Costs for the administration of a collecting society were capped at 20% by the Act. In addition, a percentage could be collected for development of the sector. It was implied in the Bill that the CSs were non-profit organisations.

Mr Cachalia noted that the flipside of regulation was loopholes and people found ways to increase salaries and expenses and so on to benefit from the monies flowing into a society. One had to find a way to incentivise people not to do that.  What if a person wanted to create his own society but there was a limitation of one society per right? There would be an issue relating to the constitutional right to freedom of association.

Adv van der Merwe stated that the current position of the Committee was not to limit the sector to one society per right. A single collecting society per right could prevent collaboration and radical transformation and would entrench the current monopoly. The Committee had previously suggested that the market would sort out the number of collecting societies per right.

Ms Padayachy stated that the musicians who were the members of a society should form the Board so that members were in charge, and not the administrators. She explained that the 50/50 split of the royalties was an equal split between the musicians and performers. Royalties were not split with societies, although the administration fees came out of the royalties prior to the split.

Dr Masotja explained that, because collecting societies were member-based societies, they ought to be NPOs but there was a need to make that clear so that enforcement could be managed. CIPC had written to the Committee asking for one society per right, stating that when there were too many societies, there were legal challenges etc. How did a member choose a collecting society and how did those paying the royalty know to which society a performer belonged, and consequently to which society the royalty payments should be made?

The Chairperson noted that there was no choice about the advertisement of the definition but she had to make it clear that the Committee could not advertise again. Before that clause was advertised, Members and the technical team needed to be sure that there were no other issues in the Bill that would have to be advertised.

The DDG suggested that the Committee needed to look at the reports from the experts before deciding on the advertisement. She suggested that a decision be taken on Thursday, after the Committee had determined whether other clauses had to be advertised.

The Chairperson requested the departments and the Legal Advisor to consult the reports from the experts and make a presentation two days later.
 
Deliberations on the draft Budgetary Review and Recommendations Report Revisited
The Committee continued the discussion on the draft Budgetary Review and Recommendations Report.

Members discussed the role that DTI could play in the technical recession and significant issues were noted. AGOA had been an initiative of the United States and South Africa was wholly dependent on the US for the concessions. The poultry issue was a major concern, especially as the entire quota was often sent in a single shipment. The Chairperson asked the Committee Researcher to investigate the impact of the poultry imports on South Africa.

Members discussed the issues of the National Regulator of Compulsory Specifications. What measures were in place to ensure that NRCS was currently more proactive in dealing with the issues? It was noted that the NRCS had had 12 indicators, of which seven had been achieved, four had not been achieved and one was not applicable. The Committee needed to find out what was happening, especially regarding the indicator that was not applicable.

The Committee discussed the benefits of BRICS to South Africa and its assistance in job creation. The interest rates charged by BRICS were a problem, but the benefits could assist the country. The Committee needed to monitor investment and ensure that critical skills were being transferred. The Committee noted that the NRSC IT system had been targeted for completion by the end of the financial year but the system had not been fully implemented. That process had been going on for nearly five years.

Employee costs had been noted by the Committee as a problem the previous year when 79% had been spent on employee costs. Members queried whether there had been any commitment or strategies in the NRCS for managing employee funding. 92 employees were paid above their pay grade but critical posts were still unfilled.

The NRCS had obtained a qualified audit because of the way in which the NRCS reported its income. The Committee assumed that the appointment of a Chief Operating Officer and the implementation of the ICT system would alleviate some of the problems.

Closing remarks
The Chairperson was pleased with the progress that the Committee had made that day. The Committee Secretary was requested to obtain copies of the BRRR reports for the previous ten years.

The technical team would present the proposed clauses for advertising on Thursday.

The Chairperson pointed out that the Committee had no option but to meet for three days that week as there were deadlines to be met.

The Chairperson thanked all the presenters and the teams that had prepared the work, as well as Members for their participation.

The meeting was adjourned.

 

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