Cosatu Submission on the Industrial Development Amendment Bill; Consumer Affairs(Unfair Business Practices)Amendment Bill: adopt

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Trade, Industry and Competition

21 August 2001
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Meeting Summary

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Meeting report

21 August 2001

Chairperson: Dr Rob Davies

Documents handed out

COSATU Submission on the Industrial Development Amendment Bill
Briefing Notes on the Merchandise Marks Act, 1941(see Appendix)
Consumer Affairs (Unfair Business Practices) Amendment Bill [B28B – 2001]
Industrial Development Amendment Bill [B32 – 2001]
Merchandise Marks Amendment Bill [B33 – 2001]

The Committee heard COSATU’s presentation on its proposed amendments to the Industrial Development Amendment Bill. Amongst these was the was the need to shift the IDC’s activities towards the promotion of more labour-intensive production and also to contribute towards the concept of black economic empowerment by financing more black-owned small and medium enterprises rather than focusing on export-oriented production.

The Committee unanimously adopted the Consumer Affairs(Unfair Business Practices) Amendment Bill. The Registrar of Patents gave a briefing on the Merchandise Marks Amendment Bill.

COSATU submission on Industrial Development Amendment Bill
Ms Fiona Tregenna, a COSATU representative, based her input on COSATU’s written submission. She stated that COSATU believes that the Industrial Development Corporation plays an important role in the industrial development of the country and in the improvement of the economy. The IDC should play a planning, co-ordinating and advising role both protectively in terms of maintaining the existing domestic production and employment, and proactively in identifying and dealing with blockages or opportunities for increasing production and moulding South Africa’s industrial structure into an appropriate form.

Commenting on the role that could be played by the IDC in economic development, she said that the capacity and experience of the IDC in project and investment management is crucial for South Africa. COSATU believes that the government needs to play a more direct role in the running of the IDC as a public sector development finance institution. She expressed dissatisfaction that the board members of the IDC are drawn overwhelmingly from the private sector. COSATU believes that the IDC itself needs to take a "hands-on" role in relation to its own investments to ensure that it meets the intended objectives.

It was noted that the workforce benefits relatively little from the IDC. A publicly owned development finance institution like the IDC is ideally positioned to actively promote more labour-intensive production both by promoting sectors which are labour intensive and promoting more labour-intensive production technology across all sectors. This would be a shift away from the IDC’s traditional activities which have been largely centralised on the mining industry. She expressed confidence that this would contribute toward job creation.

COSATU is concerned that IDC’s investments are largely export oriented. While COSATU agrees that expanding market opportunities for South African producers in generating foreign exchange is an important objective, this should not supplant a focus on expanding South Africa’s domestic market.

In terms of the IDC’s concept of black economic empowerment, IDC should focus more on the creation of new productive capacity rather than on takeovers or acquisition of existing productive capacity. She stressed that the IDC should be investing in black owned SMEs, co-operatives and large enterprises which would create jobs and contribute to the country’s economic development. This would be consistent with the approach of the Black Economic Empowerment Commission in its recent report.

These coments form the backdrop to the proposed amendments suggested by COSATU. The amendments fall into two categories – to the existing clauses of the Bill and additional amendments to the Act which COSATU would like to have included in the Bill:
The principal proposed amendments are to the Objects of the IDC as set out in Section 3 of the principal Act. COSATU proposes making employment retention and creation an explicit objective of the IDC and to extend the objective of promoting SMME development to include co-operatives. Amendments are advocated regarding the powers of the IDC set out in Section 4 of the principal Act. Other proposals were around the representivity and accountability of the Board of the IDC. It was felt that insufficient control was being exercised over the Board of the IDC. It was also problematic that a great majority of the Board members come from the private sector rather than representing the various stakeholder interests in a balanced way.

There were no questions put to COSATU by representatives from the IDC, DTI and committee members. Instead, a decision was taken to hear responses to the submission at a later meeting. Mr Strydom (Legal Services, DTI) said that the Department would have to revisit the Bill based on COSATU’s submission and asked that it be given time to do so.

The Chairperson noted that the Committee could meet later in the week if circumstances permit in order that this may be discussed.

Consumer Affairs (Unfair Business Practices) Amendment Bill [B 28B – 2001]
The Chairperson read the Motion of Desirability and asked Committee members if they desired to raise any objections to it. He thereafter read the Committee’s Report on this Bill. All the members unanimously agreed to the adoption of the Bill.

Merchandise Marks Amendment Bill [B33 – 2001]
Mr McDonald Netshitenzhe (Registrar of Patents) made brief remarks about the Bill. He read his presentation from the document entitled Briefing Notes – Merchandise Marks Act, 1941.

Ms F Mohamed (ANC) expressed her concern about the drafting of the Bill and asked if any thought had been given to the protection of the rights of intellectual property owners, and to how the entire process would be monitored.

Mr Netshitenzhe replied that there are safety mechanisms to monitor the whole process of the protection of intellectual property rights, such as the police, customs officials and inspectors from the department of Trade and Industry. Their duty is to ensure that the provisions of the Act are complied with.

Ms Mohamed asked how the Bill fits into protocols that South Africa has concluded with other SADC countries.

Mr Netshitenzhe replied that intellectual property law is territorial. However, South Africa would have to start to move towards the SADC region with the intent to ascertain whether other countries would want harmonization of regulations or the legislation in its entirety. He stressed that since intellectual property law is territorial this Act would have to be applied within South Africa. If a person, or juristic person, comes within the borders of South Africa, this Act would, for jurisdictional purposes, have to be applied.

The meeting was adjourned.



The Merchandise Marks Act, 1941, in general terms, does deal with intellectual property issues, rules of origin and prohibitions of unauthorized use of state emblems. The purported amendments need to cater for these wide ranging issues, and therefore approval or disapproval of a certain section, it is proposed, should not necessarily mean that everything should fail.

Amendments to Clause 1
Subclause (a)
South Africa is a member of the Paris Convention and in terms of section 63 of the Trade Marks Act, 1993, Convention Countries (members of the Convention) must be published in a Government Gazette thus, declaring member state(s) to be convention countries. This means that South Africa also expects convention countries to also effect the provisions of this Convention. South Africa should start to demand from Convention Countries to do likewise, otherwise, it (South Africa) would be unilaterally observing this convention on many issues. In view of the above, it is proposed that the proposed amendments be approved.

Subclause (b): "device"
The definition of a "device", it is proposed, should exclude a trademark.

Subclause (c): "mark"
The definition of a "mark", it is proposed, should exclude a trademark.

Subclause (d): "name"
The definition of a "name", it is proposed, should exclude a trademark.

Subclause (e) "trade description"
Names which describe trade should not be used as trade marks since they are of a generic nature.

Subclause (f): "trade mark"
The argument used for well-known/famous marks under the Counterfeit Goods Act, clause 1, applies. (Attached copy - Annexure A)

Subclause 8
The purported amendments want to introduce within South African trade regime the exact place where the goods are manufactured. An indication of origin should be borne by all imported goods bearing the name or make of South African manufacturer or trader. This is to curb falsification of source or origin of goods and it is contrary to the rules of trade as envisaged by the Paris Convention. Failure to have an indication of origin should be treated as a punishable offence.

In general terms, state emblems, (flags, coat of arms, effigy of state President) state heraldic signs and other hallmarks, may not be used by private individuals without permission from the Minister. This protection is catered for in terms of article 6ter of the Paris Convention. All member states of this Convention (180) are expected to incorporate this provision. Practically this means that trade marks offices of member states are forced not to register trademarks which bear state emblems of other member states.

Despite these provisions, many intellectual property offices are allowing trademark applications to graduate to trade marks proper although they bear state emblems of other member states.

A good example is where the name of the former State President, Mr Mandela, is registered as a trade mark in various countries, in particular the United States of America and Germany. Permission was not sought. In this regard South Africa should start to protest, through WIPO and WTO, that these trade marks should be cancelled.

South Africa should legislate in order to observe international obligations, and it is proposed that the proposed amendments be effected.



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