Performers Protection Copyright Amendment Draft Bills: briefing; Merchandise Marks Amendment Bill: voting

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Trade, Industry and Competition

18 September 2001
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Meeting Summary

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Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE
19 September 2001
PERFORMERS PROTECTION + COPYRIGHT AMENDMENT DRAFT BILLS: BRIEFING; MERCHANDISE MARKS AMENDMENT BILL: VOTING
 


Chairperson: Dr Rob Davies

Documents handed out

Merchandise Marks Amendment Bill [B33-2001]
Briefing Notes on Merchandise Marks Amendment Bill (Appendix 1)
South African Institute of Intellectual Property Law Submission on the Merchandise Marks Amendment Bill (Appendix 2)
Briefing Notes on Copyright and Performers Protection Acts (Appendix 3)
Performers Protection Amendment Draft Bill (Appendix 4)
Copyright Amendment Draft Bill (Appendix 5)
Performers Protection Act, 11 of 1967
Copyright Act, 98 of 1978

SUMMARY
The Committee unanimously adopted the Merchandise Marks Amendment Bill with one amendment to Clause 2 that stipulates that a person shall be deemed to have applied a false trade description if the trade description is proven to be false.

Briefings were given on the Draft Copyright Amendment Bill and Performers Protection Amendment Bill. They aim at providing greater protection to South African artists and performers, some of whom have been exploited by recording companies that do not pay an appropriate royalty for the use of recorded works. Collecting societies responsible for distributing royalties would need to be licensed and abide by regulations or risk the loss of their licence. Public hearings will be held from 8 to 12 October 2001. The closing date for receiving submissions is 5 October 2001.

The Committee adopted its Committee Report on its Study Visit to the World Trade Organization in Geneva.

MINUTES
Merchandise Marks Amendment Bill: submission, deliberations and voting
Dr Davies noted that the Committee had already been briefed on the Bill. He reminded the Committee that in that meeting, they had focused on Clause 6 of the Bill asking if the practice envisaged by that clause currently exists. If not, what were the cost implications of introducing it and further if it applied to all branded goods.

South African Institute of Intellectual Property submission
Ms Adheera Bodasing (Attorney, Spoor & Fisher Inc) read the Institute's submission [see document] which urged the Committee to support the Department and approve the Bill.

Discussion
Dr Davies invited the Department's response to the Institute's submission.

Ms Shalini Rajoo said that it was important to remember that Clause 6 of the Bill is existing law. It has not however been vigorously enforced to date. The question has always been why is it not used, and that it in fact should be used. She said that she understood that there are costs implications for the market. There are cost implications on both sides, i.e. for the marketplace as well as for government, which must ensure that there is enforcement.

She believed that the objectives of the provision are sound. It is important to identify the goods that come into the South African marketplace from other countries. One of the reasons behind this is consumer protection. It needs to be identified from where the consumer received the goods, from where the supplier received them and where they were manufactured. This is very important for product liability issues where there are usually class actions that are geared at removing problematic goods from the marketplace. This is the fundamental objective of this provision. Regarding the question of costs implications, the Department has not engaged in a proper cost benefit analysis in order to determine how much it will cost an importer of goods to display conspicuously the country of origin. However, this has to be taken into account.

Mr McDonald Nethsitenzhe (Registrar of Patents, SAPTO) concurred with both Ms Rajoo and Ms Bodasing. Since 1947, South Africa chose to apply Articles 9 and 10 of the Trips Agreement into its Merchandise Marks Act. He agreed that there may be cost implications, but South Africa has an obligation under the WTO Rules to demand to know the origin of goods. There is no standardization in the entire world. What is normally required are the manufacturer's certificates, the expiry dates of those goods, etc. Each jurisdiction has a choice which model to follow regarding the rest of the criteria. He conceded that there had been no costing done on the implications of Clause 6.

Dr Davies said that he appreciated both Ms Rajoo and Mr Netshitenzhe's input. He himself had approached traders to enquire about the cost implications of this clause. He had not found that any of them had major problems with this clause.

Proposed Amendment to Clause 2
Mr Johan Strydom (Legal Advisor, DTI) pointed out that there is an element missing from Clause 2. This is a deeming provision. At the very least, the application of a trade description has to be proven to be false - before a person cannot be deemed to have applied a false trade description to a product. Thus the proposed amendment to the clause would read:

(d) uses in connection with the goods a false trade description in such manner as to be likely to lead to the belief that the goods are designated or described by that description, if the trade description deemed to have been applied is proven to be false.

This would provide that in the event of the description being proven to be false, then a person would be deemed to have applied a false trade description.

Ms Rajoo commented that Mr Strydom's formulation was acceptable.

Voting
Dr Davies commented that the amendment would accordingly be inserted and suggested that the Bill be considered clause by clause:
Clause 1 - agreed without amendments.
Clause 2 - agreed with an amendment.
Clause 3 - agreed without amendments.
Clause 4 - agreed without amendments.
Clause 5 - agreed without amendments.
Clause 6 - agreed without amendments.
Clause 7 - agreed without amendments.
Clause 8 - agreed without amendments.

Dr Davies proceeded to read the Motion of Desirability and the Report. The Bill was accordingly reported with amendments and was adopted.

Draft Copyright Amendment Bill and Performers Protection Amendment Bill: briefing
In providing the rationale underlying the amendments, Mr Netshitenzhe commented that these two draft Bills are the same in intention.

South Africa has excellent copyright and performers' protection legislation - it abides with the WTO requirements and it is thus classified as a 'first world country' in terms of the World Trade Organization. South Africa is developed in the intellectual property arena and thus it has to compete with the United States and other developed countries. On the other hand, South Africa is not doing well with the management of intellectual property rights. Holders of intellectual property sometimes derive benefit from holding these rights and sometimes they do not! There is therefore a need for government intervention because copyright owners cede their rights to other people. The power balance is skewed, hence there is a need for legislative intervention to address these imbalances.

Performers and artists need to be assisted when concluding agreements with South African broadcasters and other agencies. Musicians need to be given royalties whenever broadcasters play a song or recorded work on the air. The Briefing Notes (see document) indicate that the Minister should be empowered to regulate how the collecting society should operate as they need to operate according to set rules. A minimum of 50% of the royalty should be paid to the performer. The collecting agent has an onus to show what administrative costs it wishes to retain from the royalty. It should also be clear how these collecting societies distribute the royalties and what members they have. If they do collections on behalf of foreign artists/musicians, they ought to indicate any reciprocal agreements that exist between themselves and other international collecting societies.

The Independent Communications Authority of South Africa (ICASA) needs to regulate the issue of local content. Local content should be raised to a fixed percentage otherwise the airwaves will be overloaded with international music. If there are no reciprocal agreements between local collecting societies and those from abroad, the money should remain in the country and be utilized for the training and development of musicians and performers. This is how other foreign jurisdictions work.

The Registrar of Patents should also be able to monitor what takes place in this field by demanding statements of account and information regarding how distribution is done. Likewise, this is done in other jurisdictions. In summary, the time has finally arrived to empower and protect local musicians and performers.

Mr Nethsitenzhe noted the fact that there are collecting societies currently operating. However once the Regulations have been enacted, all these societies would have to licenced. If the terms and conditions of the licence are not abided with, the licence would be withdrawn. Therefore, the current complaint that money does not reach the performers or that they do not benefit from their work, would be obliterated by the Regulations that would usher a new dispensation. There would be new monitoring mechanisms. ICASA would ensure that there is an even balance between international and local music played on air. These are the measures proposed by the Department to empower performers and artists.

Ms Rajoo added that the main aim of the amendments is to ensure that performers are protected and have the capacity to exercise their intellectual property rights. They will protect performers and artists from unscrupulous recording companies. Such companies traditionally required performers to sign complicated contracts that often required cession of the performer's intellectual property rights to the recording company and allowed the company to have the right to collect the royalties due to the performer. It is inconceivable that a good artist or performer should end up living almost in poverty because they are not benefiting from the use of their intellectual property. The idea is to correct the imbalance in the relationship between the record company and the artist.

The Bill seeks to provide a coherent system of royalties that are due to the holder or owner of intellectual property. This is a system that has been used extensively and successfully in other jurisdictions such as Switzerland. The idea is that collecting societies will exist which have to meet certain criteria. These criteria will be laid down by the Minister through regulations. A minimum requirement would be that a certain amount of royalties collected would accrue to the performer and that each time a recorded work of a performer is played on air there should be some money due to the owner of the work or artist. There must be correct infrastructure: that the agreements between collecting societies and performers are concluded, that they are monitored and that the money does reach the right person. Even though this might cause some tension within the industry, it is important from the artist's point of view that they have mechanisms with which to exercise their rights.

Discussion
Mr Zitha (ANC) asked several questions:
- Are performers currently paid royalties when their recorded works are played on air?
- Is there any legislation that protects cultural performers?
- Do the artist's dependents benefit from royalties collected on behalf of artists who died?
- Had the Department consulted with the lawyers who represent performers when drafting this legislation?
- Are there any royalties that are payable to international artists whose works are broadcast in these country?

Mr Netshitenzhe's replied that, with regard to cultural music, there are cultural agencies in other countries that have been instituted to deal with cultural rights. This is true for most of the Scandinavian countries. There may be a need for special collecting societies designed for this purpose. There may be a need to create collecting societies for folklore music performers. However, this may not be effectively regulated in terms of the intellectual property system as it currently exists. The reason for this is that there is a perception that folklore music belongs to the people at large.

He continued that collecting societies have a number of recognized artists and they have to collect for these specific members. These societies need to be operate on the same basis as one would operate a trade union or a bargaining council. If a collecting society collects on behalf an international artist, it needs to have completed a reciprocal agreement with a foreign collecting society abroad to the effect that whenever a song or record of an international artist is played, a particular rate is payable and that a certain amount of money should be remitted to the international artist.

Regarding royalties that are payable after the artist's death, an artist's heirs are entitled to claim royalties from a collecting society. However, this is limited to a period of 50 years after a performer's death. Thereafter, his recorded works become public property. If that performer performed cultural works during his lifetime such as Zulu traditional songs, then there might be a problem because African society regards intellectual property to be in the public domain.

On the issue of costs, Dr Davies asked what would stop the recording companies from claiming a higher royalty to adjust for what has to accrue to the performer in terms of the new regulations. That is, what will regulate the fixing of the total royalty as distinguished from its distribution?

Mr Netshitenzhe replied that he was not clear about the applicable rate between recording companies and broadcasters, but this rate should be revealed by the recording companies. It would be unreasonable for a recording company to make a demand that exceeds the applicable rate.

Ms C September (ANC) said she supported the Bill but asked how far it will stretch in controlling people who make unauthorized recordings on compact discs and audio tapes and sell these at a profit. Does the Bill also seek to control minibus taxis who play blaring music. Furthermore, given that one can now listen to music from a cellphone, would cellular operators pay royalties to the performers/owners of recorded works?

Mr Netshitenzhe replied partially to these questions and said that one does not have to pay royalties for private use, that is, in minibus taxis and in nightclubs.

He also said that SAMRO is one of South Africa's collecting societies. This is not an illegal organization but the Department would be passing measures to recognize this body and others in terms of the Act so that they might thereby comply with the Rules.

Mr Rasmeni (ANC) asked about the response of those people consulted during the drafting of this legislation. Secondly, did local artists earn royalties for their recorded works played in other countries?

Mr Netshitenzhe replied that in 1995 the Minister's Advisory Committee on Intellectual Property had conducted workshops and consultations where there was great polarization between recording companies and broadcasters. In 1998 the position changed somewhat and there was a positive response on the issue of collective management. In 2000 the Minister of Arts and Culture had appointed a task team that had consulted for three days in Kempton Park where ultimately agreement was reached that this matter be legislated. As recently as May 2001, there had been a workshop where the tone was a call for collective management of all intellectual property rights and performers' rights.

Mr Nkosi (ANC) asked if there is a recording fee which performers have to pay before having a work recorded. To what extent is this discouraging persons from entry into the music industry? Are small performers prevented entry into the industry and, do recording companies have a discretion about what type of music is to be recorded. He complained about Kwaito music having the same beat and that this was promoting a type of music culture that was discouraging variety in the music industry.

Ms Ntuli (ANC) complained that South African music is not played in international countries yet South Africa plays international music. She asked how this could be regulated in order to promote local artists. She also asked if there is a way of protecting South African broadcasting agencies from being flooded with international music.

Ms Rajoo replied that the regulation of international music and the promotion of local content is regulated by ICASA. The facilitation of the development and empowering of local musicians could also be done through ICASA.

She commented that the fact that one genre of music is very popular currently is not particularly problematic. There will always be a market for a variety of music. For example, Classic FM plays only classical music, others such as Khaya and Y FM play a lot of hip hop and Kwaito music. She opined that the popularity of one genre of music does not necessarily mean that other music would be neglected.

Dr Davies asked if SAMRO collects the royalties on behalf of international artists.

Ms Rajoo replied that foreign recording artists have their own collecting societies that enter into reciprocal agreements with collecting societies in each country as these agents cannot be present in every single country. These agreements ensure that payment is made to them.

Mr Zitha expressed dissatisfaction that performers such as Zim Ngqawana, a local jazz artist, plays Eastern Cape cultural music on his latest album yet he alone is benefiting from the royalties. The music he plays is traditional music. Mr Zitha proposed the creation of a fund so that contributions could be made to benefit the cultural communities.

Mr Netshitenzhe replied that this is a fairly contentious issue. There may be a need for the establishment of a collecting society for cultural and folklore/traditional music. There is however no problem with an artist performing cultural or traditional music. The Department is looking into this issue at present.

Dr Benjamin (ANC) asked how an organization can become a collecting society.

Ms Rajoo replied that one would need to have a licence from the Department of Trade and Industry. A licence is not something that is simply granted. There has to be evidence that the organization represents artisits. Therefore, representivity is very important. A collecting society would also have to comply with the regulations that accompany that licence. Failure to comply with any regulations would lead to a licence being withdrawn.

Dr Davies asked if the Department would.

Clause by clause briefing on the Copyright Amendment Bill
Mr McDonald Netshitenzhe took the Committee through the clauses in the Bill.

Clause 1
This clause introduces the concept of a collecting society into the Act. The Act used to be silent regarding this issue. The clause also substitutes reference to the Minister of Economic Affairs with a new reference to the Minister of Trade and Industry.

Clause 2
This clause is not intended to mean that collecting societies are the sole agents that do collecting work. There may be other persons who would not be members of collecting societies. They are allowed to enter into separate agreements. The Department does not want to tamper with their rights of association or dissociation, as the case may be, as contained in the Constitution. The Department does not intend to compel persons to become members of collecting societies. They can remain independent.

Clause 3
If there is no agreement between the broadcasters and the collecting societies or the individual performer - and if any dispute arises between these parties - they can have the dispute arbitrated in terms of the Arbitration Act of 1965, or alternatively, approach the Minister of Trade & Industry to establish a copyright tribunal.

Clause 4
This clause proposes that the Minister of Finance is consulted in the establishment and the funding of collecting societies.

He finally emphasized that a recording company need not act as an agent of the performer.

Discussion
Dr Davies asked where is the reference to the 50% provision that collecting societies have to pay performers provision that Mr Netshitenzhe had referred to in his briefing.

Mr Netshitenzhe replied that the 50% provision would be contained in the regulations. This is a minimum fixed threshold. Anything exceeding this rate should be negotiated between the parties.

Dr Davies asked where is the clause in this Bill which empowers the drafting of a regulation to fix the threshold of royalties payable by a collecting society to a performer.

Ms Rajoo replied that there is no specific clause regulating this or setting a minimum threshold of what has to be paid in royalties to the performers. She agreed that this is something that the Department should reconsider because there is a need for a specific enabling provision to allow the Minister to deal with this issue.

Ms Ntuli asked if performers playing demonstration music on programmes such as the "Shell Road to Fame" are entitled to royalties.

Mr Netshitenzhe replied that they should be paid royalties in terms of the new dispensation. Dr Davies added that this is what Clause 2 of the Bill stipulates.

Mr Netshitenzhe concluded that the Department would consider the arguments for a collecting society constituted specifically for the purposes of traditional or cultural music.

Dr Davies finally noted that relevant organizations would be notified of the public hearings from 8 to 12 October 2001. The closing date for receiving submissions is 5 October 2001.

Appendix 1:
BRIEFING NOTES: MERCHANDISE MARKS AMENDMENT BILL, 2001

Introduction
The Merchandise Marks Act, 1941, in general terms, deals with intellectual property issues, rules of origin, labeling and prohibitions of unauthorized use of state emblems. The purported amendments deal with these issues and the definition of a "trade mark" is to exclude a "device", a "mark" a "name", and names which describe trade description should not be used as trade marks since they are of a generic nature. The definition of intellectual property rights is to be broadened to include unregistered well-known marks as envisaged in terms of section 35 of the Trade Marks Act, No. 194 of 1993.

Amendments to Clause 1
Clause 1(a) Convention country: Insertion after the definition of "apply to".
"Convention Country means any country or group of countries declared a convention country or convention countries in terms of section 63 of the Trade Marks Act, No. 194 of 1993".

This is to enable applicants from convention countries to claim priority rights in trade mark applications.

Clause 1(b): Definition of "device".
The definition of a "device" in the Principal Act includes a "trade mark" and it is proposed that the definition of a "device" should exclude a "trade mark".

Clause 1(c): Definition of a "mark".

The definition of a "mark" in the Principal Act includes a "trade mark" and it is proposed that it should exclude the definition of a "trade mark".

Clause 1(d): Definition of a "name".
The definition of a "name" in the Principal Act includes a "trade mark" and it is proposed that it should exclude a "trade mark".

Clause 1(e): Definition of a "trade description".
The definition of a "trade description in the Principal Act includes a "trade mark" and is proposed that it should exclude a "trade mark".

Clause 1(f): Definition of a "trade mark" omit "well-known trade marks".
The definition of a trade mark in the Principal Act does not include the definition of a well-known trade mark as contemplated in section 35 of the Trade Marks Act, 1993.

Substantiation of this point is articulated in Annexure A, and these are the same reasons which were advanced during the adoption of the Counterfeit Goods Amendment Bill, 2001, which also contained the inclusion of "well-known marks" in the definition of a trade mark.

Clauses 2 - 6: Deals with activities amounting to false trade description
During the first briefing session to the Portfolio Committee, four pertinent questions were raised and further responses to them were still required. Responses are attached in Annexure B.

In view of the above responses, it is proposed that the amendments be effected.

Clause 7: Prohibition of use of state emblems and other heraldic signs of Convention countries or of international or regional organizations
The fact of the matter is that use of state emblems or heraldic signs of the Republic or Convention countries or international or regional organizations, without authorization by the Minister, must be prohibited.

Convention countries or the international or regional organizations must have notified the Republic, through the World Intellectual Property Organization (WIPO), or the World Trade Organization (WTO), that their symbols should be prohibited. If this is not done or if the Republic objected to the notification, the use of such symbols will not constitute an offence.

In view of the above, it is proposed that the amendment as contained in this clause be effect.

Appendix 2:
SOUTH AFRICAN INSTITUTE OF INTELLECTUAL PROPERTY LAW
SUBMISSION ON THE MERCHANDISE MARKS AMENDMENT BILL

I represent the interests of the South African Institute of Intellectual Property Law.

THE SOUTH AFRICAN INSTITUTE OF INTELLECTUAL PROPERTY LAW:
The South African Institute of Intellectual Property Law represents some 90 patent attorneys, patent agents and trade mark practitioners who specialise in the field of Intellectual Property Law.

One of the objectives of the Institute is to protect the interests of the owners of Intellectual property and to advise and liase with Government regarding legislation affecting Intellectual property rights and law.

WHY DOES THE INSTITUTE NEED TO ADDRESS THE COMMITTEE?
The South African Institute of Intellectual Property Law has an interest in ensuring that the amendment to the Merchandise Marks Act is passed.

MERCHANDISE MARKS AMENDMENT BILL
At present, a measure of overlap exists between the provisions of the Counterfeit Goods Act, 37 of 1997 and the Merchandise Marks Act, 17 of 1941, insofar as they relate to trade mark rights. The Counterfeit Goods Act was promulgated with the specific view of ensuring appropriate protection against counterfeiting in relation to trade mark rights recognised by statute, in particular, in terms of the Trade Marks Act 194 of 1993. The present definition of "trade description" in the Merchandise Marks Act can be interpreted to include trade mark rights. This has led to the practical problem that in some instances, the South African Police Services refused to act in terms of the Counterfeit Goods Act and prefer to continue to act in terms of the Merchandise Marks Act.

Amendments to the Merchandise Marks Act are therefore necessary, to clarify that the Merchandise Marks Act does not relate to all trade mark rights conferred by the Trade Marks Act of 1993 (including rights conferred by section 35 thereof).

This entails several consequential amendments being made to various sections in the Act such as to Section 8 and 9 to achieve the desired objective. The substances of these sections remain unaltered.

In regard to Section 2 of the Bill, which amends Section 2 of the principal Act, the changes in definitions in the Act as amended has made it necessary from a technical drafting point of view to insert the word "false" in the specified places, but these technical changes leave the substance of Section 2 unaltered.

The proposed amendment to the definition of "trade mark", now includes a reference to a well-known trade mark contemplated in section 35 of the Trade Marks Act of 1993. The new definition for "mark" is in line with the definition for "mark" that is currently in the Trade Marks Act, 194 of 1994, but for the fact that it excludes a trade mark.

The proposed amendments to section 2, 6 and 8 of the Merchandise Marks Act deal with acts which amount to false trade descriptions and seek to make such activities unlawful. The intention has, however, always been that the Merchandise Marks Act should continue to regulate the position with regard to the alteration of any trade mark, whether by addition or effacement, or in any other manner. Certain minor clarifying amendments in that regard were also required and have been incorporated (see section 7).

Lastly, in terms of article 6 ter of the Paris Convention, South Africa is obliged to prohibit the unauthorised use of the national flags, armorial bearings, official signs, hallmarks and the like of convention countries (including the Republic of South Africa). Section 14 of the current Merchandise Marks Act was regarded as inadequate and the proposed amendments will bring it in line with the provisions of 6 ter of the Paris Convention. South Africa is, of course, a signatory to the Paris Convention and has to fulfil its obligations in terms of that convention. The new definition of "convention country" is in line with the definition of a "convention country" that is in the Trade Marks Act, 194 of 1993.

On behalf of the South African Institute of Intellectual Property Law I urge you to lend your support to the approval of this Bill.

Adheera Bodasing (Spoor & Fisher Pretoria)

Appendix 3:
BRIEFING NOTES
COPYRIGHT AND PERFORMERS PROTECTION ACTS: NEEDLE-TIME (PAY FOR PLAY)

1. Introduction
Since 1995 stakeholders in the copyright and neighbouring rights (performing rights) regime, have been debating whether royalties which accrue from the recorded rights of performing artists (needle-time) should be paid to the performer. The debates were centered much on performers and recording companies' interests. The debates promoted the issue of needle-time at the expense of other rights in this regime. Further the debates failed to address how this right would be exercised, i.e. giving emphasis on collective management of this right (like labour rights). Furthermore, the debates ignored to address the issues of the percentage to be distributed amongst the performers and recording companies. Furthermore, although the power relations amongst the performers and recording companies is skewed towards the latter the debates chose to leave the intervention of the government out of the equation. Really, market forces cannot be left to determine development of this regime. Furthermore, the Independent Communication Authority of South Africa (ICCASA) needs to address the issue of local content if performers are to be uplifted. Furthermore training and development of artists need to be brought into equation. It is true that the issue of needle-time on its own will not advance the course of copyright and neighbouring rights regime. The purpose of the amendments therefore need to be accompanied by other related amendments to other sections, but this does not necessarily mean it must happen simultaneously.

What DTI wants to achieve can be categorized into two; namely short term and long term gains, both accompanied by tangible economic benefits to right holders, in particular, creators of these rights (see under Economic rationale, paragraph 5 below).

2. Short Term
In the short term, the Minister will issue regulations, which will address the following:
► needle-time royalty must be regulated by these regulations, whether the right is exercised collectively or individually (minimum rate imposed by regulations);
► a minimum of 50% royalty should be payable to the individual or his/her collecting society;
► 10% - 15% of the 50% may be deducted for administration by a collecting society;
► the constitution of collecting societies must provide precisely how collection of fees and their distribution are to be done;
► a Board should be appointed for the determination of tariffs;
► collecting societies must be given licenses to operate in this area, on terms and conditions and if these conditions and terms are breached, the license may be withdrawn (depending on the degree of the breach);
► collecting societies of different jurisdictions would enter into reciprocal agreements which govern repertoires;
► collecting societies should submit their constitutions, statements of accounts to the South African Patents and Trade Marks Office (SAPTO) for monitoring;
► broadcasters, performers and recording companies should form separate organizations if these rights are to be exercised appropriately; and
► the tariffs should be increased, progressively, and annually, negotiations (it may be a two year or three year negotiation circle).

· In view of the above, it is clear that the needle-time royalty, at least, would address in the short term, the plight of performers. The fact that collecting societies are allowed to operate within the confines of the law is a deterrent to exploitative tendencies by non-statutory societies. The applicable tariff, 50% distribution to performers, accountability to members and to SAPTO, and determination of local content by ICCASA, are mechanisms to assist in addressing the power imbalances amongst the parties.

For general functioning of collecting societies, see Annexures A, B, D and D and the purported regulations will be guided by such models;

4. Long term benefits
On 6 December 1999, SAPTO convened a workshop of stakeholders, with a view of acceding to the WIPO Copyright Treaty (WCT) and WIPO Performances and Phonograms Treaty (WPPT), and 90 representatives from copyright stakeholders attended. At the end of the day, there was an agreement that the following should take place:

► that an overhaul of the copyright and neighbouring regime needs to be entertained before accession is entertained. The rationale for this is that the "beneficiaries" of the copyright and neighbouring rights regime are not rights holders or owners, but recording companies, SABC and other intermediaries;

► that the collective management of copyright and neighbouring rights regime should be addressed to cater for all rights (copyright and neighbouring rights); and
► that e-commerce should be addressed in its entirety.

In view of the above, DTI couched the proposed amendments to capture the issue of needle-time within the confines of collective management as practiced in other jurisdictions, e.g. Spain, Germany, Switzerland, Bulgaria. This means that DTI has to separate issues in a sense that for collective management of other rights, appropriate amendments to these two legislations are to be effected. These amendments will be tabled before Parliament. On 21 and 22 May 2001 a workshop on the collective management of copyright and neighbouring rights was held at Pretoria Hof Hotel. Two hundred and sixty (260) persons attended and the outcomes of the workshop are as follows:

► that collective management should apply to all rights under the copyright and neighbouring rights regime;
► the state needs to intervene by providing a legislative framework for collective management to thrive;
► a Board should be formed to regulate rates and tariffs;
► local content must be closely monitored by ICCASA;
► that all stakeholders should form different collecting societies in order to regulate different rights;
► that universities', technikons' principals must start to negotiate with authors collecting societies and enter into contractual arrangements like in Canada;
► that the state should monitor aggressively the conducts of collecting societies whether they are operating within the confines of the law;
► that collecting societies should train and develop their members;
► that South African collecting societies should enter into reciprocal agreements with foreign collecting societies on the regulation of repertories, otherwise no fees should leave the country and the money should be used for skills and development of right holders; and
► finally that DTI should institute a commission of enquiry to conduct an impact study of the intellectual property regime to the South African economy.

5. Economic rationale for legislating for collecting societies

The Copyright Act, 1978, is amongst the best in the world regarding the protection of rights and related rights. The Performers Protection Act, 1967, is also amongst the best in the world regarding protection of performers rights.

However, problems pertaining to this entertainment industry, are many, and some of them are:
► Copyright owners and neighbouring rights owners do not know the provisions of the law which regulate them. This leaves them vulnerable during negotiations with parties such as the broadcasters, recording companies, producers and managers of their rights;
► Copyright owners and neighbouring rights owners cannot negotiate good contracts with institutions or individuals mentioned above. This encourages them to enter into contracts which even assign or transfer all the rights to the above institutions or individuals. This makes them to be in servitude perpetually;
► The abovementioned institutions end up owning these rights and make a fortune out of them. The above institutions can market these rights and derive millions of rands, but are not bound to transmit any benefit to any person since they are assigned or transferred wholly to them. There is a public outcry against this practice, but without changing the law, nothing, will ever change;
► Copyright owners and neighbouring rights owners, are disillusioned because of these practices and are requesting to be treated as workers in terms of the Labour Relations Act, 1956. This is not a route to follow! In terms of the Copyright Act, where a copyright is developed by an employee during the existence of an employment relationship (contract), the copyright belongs to the employer. This means that an employee does not have a claim over such rights. If copyright owners are trained to market themselves and to negotiate contracts, they wouldn't be asking for this;

► The Copyright Act and Performers Protection Act are silent as to the collective management of the relevant rights. This scenario created situations where the abovementioned institutions may agree amongst themselves to form collecting societies to manage rights which might have been transferred to them by "owners" as reasoned above. Where collecting societies are independent from these bodies, they may enter into a relationship which has lost the texture of fiduciary relationship with members and therefore disclosure of information to members may dispute into thin air;
► In terms of the Copyright Regulations, for an example, the copyright owner is entitled to only 5% of any royalty, which might have been collected. This situation is unacceptable!; and
► There is a need for the State to intervene by way of legislating for the creation of collective management (bargaining) of these rights. By doing this, owners of these rights will be empowered in the following manner:
rights will be managed collectively like in trade unions;
negotiating skills of contracts will be enhanced;
disclosure of information and fiduciary relationship will be enhanced;
Minister will issue regulations for regulating the conduct of collecting societies;
50% of the royalty collected will belong to, e.g. performer;
accountability to members and the state (DTI) will be enhanced; and
DTI will issue licenses to collecting societies to operate and if certain terms and conditions are breached, a license will be withdrawn.

► In the Latin American region, they have formed a regional collecting society and the money which is collected annually is $90m. The Caribbean Islands are going to follow the same route since they are very rich in copyright and neighbouring rights, e.g. music.
► All developed countries have collecting societies, with a limited intervention by the State, but they are regulated by acts of parliament. This is so in certain developing countries.

In view of the above, it is proposed that the proposed amendments to section 9 of the Copyright Act, 1978, sections 5 and 8 of the Performers Protection Act, 1967, be amended. Section 1 of the Performers Protection Act deals with definitional issues and a performer also includes a singer who performs artistic works or expressions of folklore.

Appendix 4:
PERFORMERS' PROTECTION AMENDMENT BILL

--------------------------------
(As introduced in the National Assembly as a section 75-Bill; explanatory summary of Bill published in Government Gazette No. 22249 of 24 April 2001 ) (The English text is the official text of the Bill)
---------------------------------

(MINISTER OF TRADE AND INDUSTRY)

[B - 2001]

GENERAL EXPLANATORY NOTE:

[ ] Words in bold type in square brackets indicate omissions from existing enactments.
___________ Words underlined with a solid line indicate insertions in existing enactments.


B I L L

Amendment of section 1 of Act 11 of 1967, as amended by section 19 of Act 38 of 1997
1. Section 1 of the Performers' Protection Act, 1967 (hereinafter referred to as the principal Act), is hereby amended by the substitution in subsection (1) for the definition of "performer" of the following definition:
"performer" means an actor, singer, musician, dancer or other person who acts, sings, delivers, declaims, plays in or otherwise performs, literary or artistic works or expressions of folklore;".

Substitution of section 5 of Act 11 of 1967
2. The following section is hereby substituted for section 5 of the principal Act:

"Restrictions on use of performances

5. (1) Subject to the provisions of this Act, no person shall [without the consent of the performer]
(a) without the consent of the performer -
(i) broadcast or communicate to the public [a] an unfixed performance of such performer, unless the performance used in the broadcast or the public communication is itself already a broadcast performance [or is made from a fixation of the performance or from a reproduction of such a fixation]; or
[(b)] (ii) make a fixation of the unfixed performance of such performer; or
[(c)] (iii) make a reproduction of a fixation of a performance of such performer—
[(i)] (aa) if the original fixation, other than a fixation excluded by section 8 from the necessity for obtaining the consent of a performer, was itself made without his or her consent; or
[(ii)] (bb) if the reproduction is made [from] for purposes other than those in respect of which such performer gave his or her consent to the making of the original fixation or of a reproduction thereof; or
[(iii)] (cc) if the original fixation was made in accordance with the provisions of section 8, and the reproduction is made for purposes not covered by those provisions; or

(b)
by means of directly or indirectly using a fixation of the performance published for commercial purposes, without payment of a royalty to the performer—
(i)
broadcast the performance; or
(ii)
cause the performance to be transmitted in a diffusion service unless such service transmits a lawful broadcast, including the performance, and is operated by the original broadcaster; or
(iii)
cause any communication of the performance to the public:
Provided that the amount of the aforesaid royalty shall be determined by an agreement between the broadcaster and the performer or between their representative collecting societies established by the Minister of Trade and Industry in terms of regulations promulgated under the Copyright Act, 1978 (Act No. 98 of 1978), or in the absence of an agreement, any party may refer the matter to the Copyright Tribunal established in terms of section 29 of the Copyright Act, 1978, or the parties may agree to refer the matter to arbitration in terms of the Arbitration Act, 1965 (Act No. 42 of 1965)
.

(2) In the absence of an agreement to the contrary, a performer's consent to the broadcasting of his or her performance shall be deemed to include his or her consent to the rebroadcasting of his or her performance, the fixation of his or her performance for broadcasting purposes, and the reproduction for broadcasting purposes of such fixation.
(3) A performer who has authorised the fixation of his or her performance, shall in the absence of any agreement to the contrary, be deemed to have granted to the person who makes the arrangements for such fixation to be made, the exclusive right to receive payment of royalties for the performance of any of the acts contemplated in subsection (1)(b) where such acts are performed by using the fixation in question or a reproduction thereof, and such performer shall be entitled to share in any payment received by such person or his or her successor in title in the manner agreed upon between the user and the performer or between their representative collecting societies contemplated in subsection (1)(b): Provided that in the absence of any such agreement, any party may refer the matter to the Copyright Tribunal or they may agree to refer the matter to arbitration. Provided further that any payment made by a user in terms of this section shall be deemed to have discharged any obligation by that user to pay a royalty to the owner of any copyright subsisting in that fixation in terms of section 9 of the Copyright Act, 1978."

Amendment of section 8 of Act 11 of 1967, as amended by section 22 of Act 38 of 1997
3. Section 8 of the principal Act is hereby amended by the substitution for subsection (3) of the following subsection:
"(3) (a) A broadcaster may make by means of his or her own facilities a fixation of a performance and reproductions of such fixation without the consent required by section 5, provided that, unless otherwise stipulated—
(i) the fixation [and the reproductions] or any reproduction thereof [are used solely in the] is intended exclusively for lawful broadcasts [made by the broadcaster] of the broadcaster to which the performer has consented;
(ii) the fixation and [the] any reproductions thereof, if they are not of an exceptional documentary character, are destroyed before the end of the period of six months commencing on the day on which the fixation was first made [; and] or such longer period as maybe agreed to by the performer.
[(iii) the broadcaster pays to the performer, whose performance is so used, in respect
of each use of the fixation or of any reproduction thereof, an equitable
remuneration, which, in the absence of agreement, shall be determined in
accordance with the provisions of the Arbitration Act, 1965 (Act No. 42 of 1965), or
alternatively, at the option of the performer, by the Copyright Tribunal established
by the Copyright Act, 1978 (Act No. 98 of 1978).]

(b) The fixation and the reproductions thereof made under the provisions of the this subsection may, on the grounds of their exceptional documentary character, be preserved in the archives of the [Corporation] broadcaster but shall, subject to the provisions of this Act, not be further used without the consent of the performer.".

Short title
4.
This Act is called the Performers Protection Amendment Act, 2001.

Appendix 5:
COPYRIGHT AMENDMENT BILL


--------------------------------
(As introduced in the National Assembly as a section 75-Bill; explanatory summary of Bill published in Government Gazette No. 22249 of 24 April 2001 ) (The English text is the official text of the Bill)
---------------------------------

(MINISTER OF TRADE AND INDUSTRY)

[B - 2001]
_____________________________________________________________________

GENERAL EXPLANATORY NOTE:

[ ] Words in bold type in square brackets indicate omissions from existing enactments.
___________ Words underlined with a solid line indicate insertions in existing enactments.


B I L L
To amend the Copyright Act, 1978, so as to insert a definition; to make further provision regarding the nature of copyright in sound recordings; and to provide for matters incidental thereto.

BE IT ENACTED by the Parliament of the Republic of South Africa as follows:-

Amendment of section 1 of Act 98 of 1978, as amended by section 1 of Act 56 of 1980, section 1 of Act 66 of 1983, section 1 of Act 52 of 1984, section 1 of Act 13 of 1988, section 1 of Act 125 of 1992 and section 50 of Act 38 of 1997
1. Section 1 of the Copyright Act, 1978 (hereinafter referred to as the principal Act), is hereby amended -

by the substitution in subsection (1) for the definition of "Minister" of the following definition :
" 'Minister' means the Minister of [Economic Affairs] Trade and [Technology] Industry;"; and


by the insertion after the definition of 'reproduction' of the following definition:
" 'restricted act' means any act in respect of a work which falls within the scope of the exclusive rights comprised in the copyright in that work."

Amendment of section 9 of Act 98 of 1978, as substituted by section 6 of Act 56 of 1980, section 7 of Act 52 of 1984 and section 2 of Act 6 of 1989
2. Section 9 of the principal Act is hereby amended by the addition of the following paragraph:
"(c) subject to the payment of a royalty-
(i) broadcasting the sound recording;
(ii) causing the sound recording to be transmitted in a diffusion service, unless that service transmits a lawful broadcast, including the sound recording, and is operated by the original broadcaster;
(iii) communicating the sound recording to the public:
Provided that -
(aa)
the amount of the aforesaid royalty shall be determined by an agreement between the user of the sound recording and the owner of copyright or between their representative collecting societies established by the Minister in terms of regulations promulgated under this Act, or in the absence of an agreement, any party may refer the matter to the Copyright Tribunal established in terms of section 29 or the parties may agree to refer the matter to arbitration in terms of the Arbitration Act, 1965 (Act No. 42 of 1965);
(bb) any payment made by the user of the sound recording in terms of this paragraph shall be deemed to have discharged any obligation which that user might have, to make any payment in respect of his or her use of a corresponding fixation of a performance contemplated in section 5 of the Performers' Protection Act, 1967(Act No. 11 of 1967);
(cc)
the person receiving payment of the royalty shall share such royalty with any performer whose performance is featured on the sound recording in question and who would have been entitled to receive a royalty in that regard as contemplated in section 6 of the Performers' Protection Act, 1967, on a basis determined by the user of the sound recording and the owner of copyright or a basis determined by their representative collecting societies contemplated in subparagraph (aa), or in the absence of such an agreement, any party may refer the matter to the Copyright Tribunal or the parties may agree to refer the matter to arbitration.

Amendment of section 39 of Act 98 of 1978
3. Section 39 of the principal Act is hereby amended by the insertion after paragraph (c) of the following paragraph, the existing paragraph (d) becoming paragraph (e) :

"(d) in consultation with the Minister of Finance, providing for the establishment, composition, funding, powers and functions of collecting societies contemplated in section 9(c), or any other matter that may be necessary or expedient to provide for the proper functioning of such societies;"; and

Short title
4.
This Act is called the Copyright Amendment Act, 2001.

 

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