Industrial Development Bill, Merchandise Marks Amendment Bill: briefing; Companies Amendment Bill, Counterfeit Goods Amendment B

Meeting report

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This Report is a Contact Natural Resource Information Service
Taking Parliament to People, and People to Parliament
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The aim of this report is to summarise the main events at the meeting and identify the key role players. This report is not a verbatim transcript of proceedings.

ECONOMIC AFFAIRS SELECT COMMITTEE
3 October 2001
INDUSTRIAL DEVELOPMENT BILL AND MERCHANDISE MARKS AMENDMENT BILL: BRIEFING; COMPANIES AMENDMENT BILL, COUNTERFEIT GOODS AMENDMENT BILL, AND TRADE PRACTICES AMENDMENT BILL: CONSIDERATION & VOTING;

Chairperson: Mr V. Moosa

Documents handed out:
Trade Practices Amendment Bill [B 34 - 2001]
Briefing Notes on Trade Practices Act, 1976
Industrial Development Amendment Bill [B 32B - 2001]
Industrial Development Act, No. 22 of 1940
Briefing Notes on Industrial Development Amendment Bill, 2001 (Industrial Development Corporation)
Letter Referring to Meeting Held on 19 June 2001 Regarding Industrial Development Amendment Bill (Department of Trade and Industry)
Briefing Notes on Counterfeit Goods Amendment, 2001 (Department of Trade and Industry)
Briefing Notes on Counterfeit Goods Act, 1997 (Department of Trade and Industry)
Counterfeit Goods Amendment Bill [B 27 - 2001]
Select Committee on Economic Affairs Amendments to Companies Amendment Bill (Department of Trade and Industry)
Briefing Notes for the Select Committee on Economic Affairs on Companies Amendment Bill, 2001 (Department of Trade and Industry)
Companies Amendment Bill [B 35B - 2001]
Speaking Notes on Merchandise Marks Amendment Bill, 2001 (Department of Trade and Industry)
Merchandise Marks Amendment Bill [B 33B - 2001]

SUMMARY
The Counterfeit Goods Amendment Bill was agreed to without amendments. The Trade Practices Amendment Bill was also agreed to without amendments, but on the premise that the Department of Trade and Industry had processes underway to ensure that local businesses would adequately be involved in events held by the big organisations that the Bill was protecting. The Companies Amendment Bill was agreed to with one amendment to wording in Clause 1, as discussed at the last meeting. The Merchandise Marks Amendment Bill was not discussed as it had not yet passed through the National Assembly and was, therefore, not before the Committee.

MINUTES
The Chairperson opened the meeting with an apology for the changed date of the meeting and said that most of the issues from last week's meeting remained on the agenda. He welcomed the presenters and asked Mr M. Netshitenzhe, Department of Trade and Industry, to begin with the Counterfeit Goods and Trade Practices Amendment Bills. He stated that these two Bills, along with the Companies Amendment Bill, would go through the following week, and he looked to the Committee to decide whether they needed debates or statements to accompany them in the NCOP and how much time should be allotted for such.

Counterfeit Goods Amendment Bill
Mr Netshitenzhe proceeded with the presentation of the Counterfeit Goods Amendment Bill. He said it was for the enforcement and protection of intellectual property rights. It covered trademarks, copyrights, designs, as well as state emblems. Beginning with Clause 1, he explained that currently the definition of intellectual property did not include well-known marks, but the amendment would change this so that well-known marks did not necessarily have to be patented in South Africa to be understood as intellectual property falling within protection of the Act. One must prove it to be a well-known mark in a court or a tribunal of trademarks. Clause 2 of the Amendment Bill, amending Section 5 of the Act, provided police and customs officials with the ability to seize goods and search locations where they suspected counterfeit goods to be made or housed so long as a warrant was obtained within ten days of the seizure. They should have reasonable belief that counterfeit goods were on the property, that a delay caused by waiting for a warrant would defeat the purpose of the search as the goods could be moved in such time, and that a warrant would be provided within the ten day period. He proceeded to Clause 3 that clarified the issue of intellectual property falling within the domain of the police.

The Chairperson asked if the National Assembly had made any amendments because there was a question of expanding the definition of "inspector".

Mr J. Strydom, Department of Trade and Industry, answered that no changes were made.

Mr Netshitenzhe stated that there was lobbying for expanding the definition to include owners of trademarks as inspectors who would then be allowed to seize goods. This, however, was excluded because it allowed individual owners of trademarks to act as judges in the situation and also took away much accountability.

The Chairperson asked whether this was the reason for the tabling of the Bill initially.

Mr Netshitenzhe said that it was not the reason for tabling the Bill because it was not in the principal Act and leaving it out would not be an amendment.

The Chairperson asked if there were any questions on the Counterfeit Goods Amendment Bill.

Mr E. Conroy (NNP) inquired about whether this act would prohibit people from painting things in the form of the national flag as many citizens tended to do on Heritage Day, for example.

Mr Netshitenzhe stated that the Act was amended in 1997 to allow people to use the form of the flag without permission as long as this permission was not abused. Police could act if they believed it to be abused in which case an investigation would take place.

Mr Z. Kolweni (ANC) asked the presenter to clarify on the arrest without a warrant and whether this allowed ordinary citizens to make arrests as well.

Mr Netshitenzhe said that ordinary citizens could not make arrests because the Act only allowed for inspectors, as defined by the Act, to do so.

Mr Conroy asked if the state could be sued if a location was searched without a warrant and nothing contraband was found.

The Chairperson said that the question was a very important one and highlighted the reference to "reasonable grounds" in Clause 2.

Mr Netshitenzhe said that "reasonable" was certainly up to interpretation, but this was a necessary aspect of the Bill.

The Chairperson then read Sub-Clause 3, stating that he believed it defeated Clause 2 because it banned searching without a warrant. He asked Mr Strydom to look that issue over while they entertained other questions.

Mr M. Themba (ANC) said that he worried that there were not many well-known trademarks that were South African. He stated that what was well-known in South Africa could be well-known in many other countries, and, if we had not registered all well-known trademarks, what would take precedence?

Mr Netshitenzhe argued that trademark law was territorial, so one must apply it to a domestic area. However, countries party to the Paris Convention were expected to respect each other's well-known marks. It was left up to the courts and the register to decide whether something would qualify as a well-known mark in a particular area.

The Chairperson then asked Mr Strydom to explain the previous question regarding necessity of a warrant for search and seizure.

Mr Strydom explained that an inspector in the aforementioned situation would be able to search without a warrant, for example, a company block where suspected counterfeit goods were housed, but one could never enter a private home without the necessary warrant, regardless of suspicion.

The Chairperson thanked Mr Strydom for the explanation and asked the Committee for more questions. When there were none, he read the Motion of Desirability for the Counterfeit Goods Amendment Bill. The Motion was made and seconded and the Counterfeit Goods Amendment Bill was adopted.

Trade Practices Amendment Bill
Mr Netshitenzhe stated that the Trade Practices Amendment Bill dealt with the issue of misrepresentation when someone wrongfully associated him or herself with an entity for financial gain. He gave the example of the Olympics and said that, if South Africa were considered as a potential site for the games, the deciding committee would look closely at legislation to see how intellectual property rights were protected in this country. The issue of third parties claiming association with sponsors would be a serious issue in such an instance. It would be ''ambush marketing'' because the proper sponsor could lose money due to the false claims of association made by third parties. Potential organisers could bring large amounts of money and investment into South Africa, and this legislation would make it more appealing to them to do so.

The Chairperson asked about organisers having the sole right to decide who could get involved with incoming events and why this was not dealt with in the same legislation. It should not be illegal to benefit from such activities if there was no legal way to do so.

Mr Netshitenzhe stated that the issue had to be dealt with as well to ensure that local business was not crowded out, but he said that the Department of Trade and Industry would deal with that issue separately. The Trade Practices Amendment Bill concerned protecting intellectual property; therefore, this was not the right area for addressing the issue of local involvement.

The Chairperson said that the Trade Practices Amendment Bill discussed both connection with a sponsor and connection with an event. He asked if a woman selling food outside an event would fall foul of this Act because she benefited from the event without permission. He wondered if anyone financially benefiting should be required to pay dues.

Mr Themba stated that the question fell on false or misleading association that a stall selling food outside an event did not necessarily involve.

The Chairperson then said that he would include in his report that they had word from the Department of Trade and Industry that processes were underway to involve local businesses adequately in such events, so they would allow the Clause based on that idea. He put the Motion of Desirability to the Committee, and it was so moved and seconded. The Trade Practices Amendment Bill was agreed to without amendments.

Companies Amendment Bill
Mr Strydom presented the amendments to the Companies Amendment Bill with the disclaimer that the title was indeed a bit presumptuous, but he said that the Committee's only remaining questions were on the word "physical" in Clause 1. He said that the presenter from the week before was seeking consistency with the wording in a law that might be adopted by Parliament in the near future. He said to the Committee that he believed the wording was fine and that the amendment should be dropped.

The Chairperson stated that, in the last meeting, they had proposed using "electronic or non-electronic manner" as the wording. The suggestion was to change the amendment to omit ''writing and printing" and substitute "non-electronic".

Mr Strydom said that the proposed amendment would be fine.

The Chairperson read over the exact wording that the new amendment would require to make sense. He asked if the Committee was otherwise satisfied and read the Motion of Desirability on the amendment to the Companies Amendment Bill. The motion was seconded and the Committee then agreed to the Bill with amendments.

Merchandise Marks Amendment Bill
Mr Strydom stated that the Merchandise Marks Amendment Bill had not yet passed through the National Assembly.

The Chairperson said it was, therefore, not before the Committee, so they would only deal with the Industrial Development Amendment Bill.

Industrial Development Amendment Bill
Mr Strydom said that the Department of Trade and Industry had requested that someone from the Industrial Development Corporation (IDC) be present and asked if this man could brief the Committee.

The Chairperson stated that he believed the question on the Industrial Development Amendment Bill was whether it was legal for the IDC to increase the gearing from 75 to 80 percent according to the resolution. Since the Industrial Development Act required that the gearing be three-fourths, he asked if it had been legal for them to pass a gearing that was inconsistent with that.

Mr L. Jiya, a legal representative of the IDC, said that the decision could be made by the shareholders, and that would be the Government, in this case.

Mr Strydom stated that they would have been opposed to the increase, but he presented a letter referring to a meeting held 19 June 2001 that explained why the Department of Trade and Industry was no longer opposed. That letter explained that the National Treasury's objections to the amendments were against the wording that allowed the shareholder to increase borrowing without concurrence from the Minister of Finance. If this concurrence were required, the shareholders could approve a gearing exceeding 100 percent. By presenting this within the amendments, the National Treasury's concerns were addressed.

The Chairperson said that he saw 100 percent as fitting from a business point of view and would have no problem with a higher gearing since profit was not the main purpose.

Mr Themba stated that one to one in theory was not necessarily one to one in practice, and it was not sound. It had only been successful thus far because there had been no unexpected issues in the market.

The Chairperson argued that the objectives were wider than profit and dealt with social stability and broader economic issues. He asked if they could discuss the second issue on this Bill, the question of ISCOR.

Mr T. Tshivahse, Head of Legal Services at IDC, briefly explained ISCOR and that shares were held by the State. One of the provisions of the Industrial Development Act was that they could not get rid of the shares without consulting the Minister. In other legislation, the Minister had apparently already waved that consultation, so the IDC wanted to get rid of the requisite consultation within the Act.

The Chairperson said that this was only bringing the Industrial Development Act in line with those actions, but the shareholders had not yet agreed that a certain percentage of the shares would go into furthering empowerment in the economy. He asked why the Minister was being removed before that occurred.

Mr Jiya said that other aspects of the Amendment Bill were matters of housekeeping, and these were briefly explained.

It was then brought up that the IDC sold shares the previous week, and news of this had been published. However, when it was discovered that these shares were not shares of ISCOR, the Chairperson deemed this irrelevant to the matter at hand.

The Chairperson thanked the presenters from the IDC and told the Committee that they must take the Amendment Bill back to the provinces to give a briefing. The interest in this Bill was that it affected possible increases in funding projects at the provincial level. Some provinces were already scheduled to have public hearings. He stated that, once all the briefings were completed, they would meet again to negotiate one position. The Committee then discussed the Bills going through the NCOP the following week and decided that two statements would be made on the Companies Amendment Bill, and the Counterfeit Goods Amendment Bill and Trade Practices Amendment Bill would be taken together with three ANC speeches and two opposition speeches.

The meeting was adjourned.



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