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TRADE AND INDUSTRY PORTFOLIO COMMITTEE
17 October 2001
COPYRIGHT AMENDMENT BILL; PERFORMERS’ PROTECTIONS AMENDMENT BILL: DELIBERATIONS; LOTTERIES AMENDMENT BILL: BRIEFING
Chairperson: Dr. Rob Davies (ANC)
Documents handed out:
TRADE AND INDUSTRY PORTFOLIO COMMITTEE
Presentation by Department on Needletime (Pay for Play)
Presentation on the Lotteries Amendment Bill
Copyright Amendment Bill [B73– 2001]
Performers’ Protections Amendment Bill [B74–2001]
Lotteries Amendment Bill [B 81-2001]
The Department of Trade and Industry outlined their response to the public submissions on the protection of South African performers. The Department supports the principles contained in both Bills but they have to be reconciled with the Regulations. The Chair proposed that both Bills be passed early in the following year with the Committee setting a deadline for the Department to report on the forming of parameters for the Regulations. The Committee were also briefed by Advocate Krull on the recent amendments to the Lotteries Act, contained in the Lotteries Amendment Bill
Copyright Amendment Bill; Performers’ Protections Amendment Bill
Mr McDonald Netshitenzhe (Registrar of Patents) noted as an introduction that there seemed to be agreement during the public hearings that South African performers are exploited. There was, however, a measure of divisions and different opinions that were expressed regarding the manner in which their plight could be alleviated.
For intellectual property to thrive it needs to be protected through a legislative framework. This should be accompanied by reasonable economic benefit to the holders or the owners of intellectual property rights. Performers as holders of these rights need to have some economic benefit from their holdings. Collective management can assist in the protection and translation of rights into economic benefits.
In the field of related or neighbouring rights there are three main stakeholders. These are performers, producers of phonograms (recording companies) and broadcasting organizations.
There was a question that there would be a problem because the benefits would accrue to the producers of phonograms or recording companies. He acknowledged that it was true that there may be a problem. He remarked that he deliberately used the word ‘may’, due to the fact that other jurisdictions use a systematic process in which these rights are effectively managed.
Where there are conflicting relations between the performers and the recording companies, performers usually form their own separate collecting societies. Broadcasters also form their own collecting societies. It is not true that the broadcasters should pay whatever amount is due. They also have rights that require protection.
There is therefore a need to introduce collective bargaining into this field of intellectual property. He thought that in South Africa a decision must be taken to separate the relationship between the performers, broadcasters and recording companies. He alluded to the fact that there is a need to have preliminary talks on the reduction and fixation of sound. The performers’ collective societies should arrange with the producers of phonograms concerning the fixation of sound recordings. There is therefore an absolute need to separate collecting societies for these three different major stakeholders.
At an international level, performers rights are regulated by the Rome Convention. South Africa is unfortunately not a member of this convention. However, there are certain rights and privileges contained in this Convention which can be translated into our national legislation. This is a needle-time issue. He indicated that one does not necessarily need to accede to a treaty in order to derive a benefit. One can sift provisions that are good and translate them into national legislation without acceding to the treaty. The Roman Convention is therefore accordingly not universalized and its application is not uniform. Thus, the needle-time issue is not yet universalized.
Performers are given benefits by different jurisdictions. Therefore, the workings of collecting societies are not uniform. Collecting societies normally enter into reciprocal agreements. Most have adopted the equal treatment of nations clause embodied in the Convention in order to prevent discrimination.
Another manner in which collecting societies do business with their counterparts is that in stead of concluding bilateral agreements whereby they transmit funds to their counterparts, they collect money and deposit it into a separate fund. The money that will have been credited to a separate fund may be utilized for a South African performer’s social security. Social security also includes the establishment or institution of a provident and a pension fund. This agreement could also be used to promote the cultural issues, training and development. He remarked that the Department is at liberty to insert a clause allowing for this form of arrangement either in the Bill or in the Regulations. Most collecting societies are regulated by bilateral agreements. This practice, as has been indicated, is not yet universalized.
In the field of related rights, national legislation of other countries provide for a right to remuneration payable to performers, producers of phonograms (recording companies) and the broadcasters. Spain and Scandinavian countries are good examples of countries where this is applicable.
Presentation had been made that there is an existence of big recording companies such as, among others, BMG, Sony, etc. and that there are other smaller recording companies which, by far, outnumber the bigger ones. A point was made that if these smaller recording companies are empowered, the fifty per cent that should accrue to the performers will generally remain in the country if one considers the second type of agreement. The other half, or the remainder, which must accrue to the recording companies will also remain in the country.
South Africa is not a member of the WIPO copyright, performance and phonograms treaties and it thus does not have any obligations in respect of these treaties.
The three distinct collecting societies have to negotiate the rights as they apply within themselves. The most common of the performers’ rights are the right to public performances (i.e. music that is played in discos’ restaurants, etc), the right of broadcasting (i.e. live and recorded performance on radio and television) and mechanical reproduction rights in musical works (i.e. reproduction of audio tapes and compact discs).
Another issue that was raised was that needle-time was not going to alleviate the poverty and the plight of South African performers. He admitted that this statement was true because of the existing contractual relationship between recording companies and performers. He remarked that this issue needs to be addressed at an appropriate forum. There was no need to club these two distinct issues.
There is also a claim that there is no benchmarking of what is to be introduced in South Africa. He dismissed this claim as false, saying that it was not true that there was no benchmarking or comparative study that was conducted in other international countries of the world.
In reality a policy decision has to be taken in order to introduce a collective management of these rights and also how to administer the collecting societies. Our law is currently silent on the regulation of South African collecting societies. Collecting societies do not account to the Department of Trade and Industry insofar as collective bargaining is concerned They merely enter into independent contracts and thereafter submit statements of account to the Registrar of Companies. The Department concedes that statements of account do not accurately or fully reflect the dealings between collecting societies and their clients. This creates a need for collective bargaining.
He concluded that the Department supports the principles contained in both Bill. However the Bills have to be reconciled with the Regulations. He dismissed the claim that major role-players were not consulted saying that the process of consultation began in 1995 until the portfolio committee’s public hearings. The Department of Trade and Industry would also consult important role-players in the framing of Regulations.
He also dismissed the claim that a fund, which he referred to as an "unknown fund", at the behest of the broadcasters or recording companies will alleviate the performers’ plight in this country. He said that this was not true and was, by and large, a paternalistic approach. The Bills are good pieces of legislation and only need to be complemented by something tangible such as draft regulations. There will be a process of consultations, they will be gazetted for public comments and workshops will be held.
Dr Davies noted that there was agreement during the public hearings about the need to generate revenue stream that would benefit South African performers. There was also an agreement about the need to regulate collecting societies. These issues were common to everybody. He thought that the proposal of a separate fund was very nebulous and there were no real details provided. Needletime, at the very least, offers the possibility of ensuring that there is a sustainable rights based stream of revenue for performers. The Committee was thus confronted with a problem of a need for processing the Bills with very nebulous knowledge about what the Regulations should entail. There were very general principles that were raised during the public hearings.
He reiterated that there needs to be a consultation over the parameters of the Regulations. This does not necessarily have to involve the details of the Regulations. These have to be about relative distribution and the mechanism for ensuring distributions between performers and record companies. And the question of whether or not some of the revenue should be credited to a provident fund for performers, and whether community broadcasters should be paying at the same rate.
He indicated that there was a very serious issue about reciprocity. There should be a clause in the Bill to the effect that unless there is a reciprocal agreement with some other jurisdiction needletime royalties will not be paid to artists from that country. He proposed that both Bills should not be withdrawn but should rather be passed early in the following year. The Committee should set a deadline for the Department to report on the forming of parameters for the Regulations. The Committee will then discuss this Report early in January. The Committee will proceed on that basis and take a decision about passing these Bills. This was to be a way forward because there was a number of uncertainties that still needed to be solved.
Dr J Benjamin (ANC) asked if the speaking notes were based on what came out of the public hearings or whether it was something that the Department had been sitting on since 1993 when the consultations began.
Mr Netshitenzhe replied that the speaking notes were generated recently and that the Department has not been sitting with them from the time the consultation process began.
Dr Davies asked if members desired to make a comment on the proposals that he had made, i.e. not to pass the Bills this year but to consider a Report on the draft Regulations first.
Mr Duma (ANC) supported the Chairperson’s proposals. There was no problem in essence with the Bills before the Committee but the matters that were to be the bone of contention were to be contained in the Regulations.
Ms F Haijaig (ANC) also supported the proposals. She commented that there was a need to see the parameters of the Regulations.
Lotteries Amendment Bill
Advocate Werner Krull (National Lotteries Board) sketched the background to the passing of the Bill. Gambling in South Africa used to be dealt with by a 1965 Act of Parliament which prohibited any form of gambling and lotteries. After the passing of this legislation there was a proliferation of illegal casinos and gambling establishments in the former homelands.
As early as 1990, two Commissions of Enquiry were tasked with investigating the issue of gambling in South Africa. The Veehan Commission made recommendations that were later translated into gambling legislation. This legislation was also to deal with lotteries. The legislation also introduced the Gambling Board, licenses, etc. It also resulted in the creation of the National Lotteries Board and the awarding of a license to an operator of a national lottery scheme.
While the Bill that led to the Lotteries Act was considered in Parliament, presentations were made by members of the private sector regarding promotional competition. Promotional competition is a competition where one buys a particular product and it affords him an opportunity to win a prize in some competition. Section 54 of the Lotteries Act deals with promotional competition and how it should be regulated. The Veehan Commission Report which led to the enactment of the Lotteries Act however did not deal with the issue of promotional competition. This was only a section in the Act that was incorporated during consideration by a parliamentary committee.
Section 54 sets out certain prohibitions. It also empowers the Minister to issue regulations to regulate promotional competition. However, the way it is framed it places an obligation upon the Minister to do so. The Lotteries Board issued instructions for the drafting of Regulations. These have to be drafted according to the empowering provision in the Act. The Regulations cannot change the Act and they follow on what the Act prescribes. The Act is very clear and does not leave a lot of discretion to the Minister because it provides exactly what those Regulations must contain. The Regulations were therefore drafted strictly in accordance with Section 54 and the Lotteries Board published them for public comment. Public comments indicated that marketing industry was not very happy with this provision. A total of 140 responses were received from major marketers in this country, associations, industry councils and groups. The negativity expressed was with regard to Section 54 as being draconian and impossible to implement. The research was done and a Report was submitted to the Board (refer to para. 2.2 of the discussion document). Paragraph 2.3 of the Report deals with a comparison between Section 54 versus the current practice.
The Board then resolved to recommend to the Minister of Trade & Industry that Section 54 be amended to bring it more in line with the general practice in South Africa in this regard. The proposed amendments do not deal with the essence of that particular exception. Section 54 should remain intact. There should be regulation of promotional competition and the Minister should have power to deal with other problems which may arise in this regard.
The proposed amendments are as follows:
Clause 1(1)(a), 1(1)(ii) and 1(d) are technical amendments. This has been done for clarification.
Clause 1(1)(e)(i) is a correction of a name of an Act of Parliament which changed since the enactment of the Lotteries Act.
Clause 1(1)(e)(ii) also contains a change to a name.
Clause 1(h) is to be wholly deleted. The clause dealt with the holding of joint competitions.
Clause 1(1)(j) is a new insertion to the Bill. The amendment is aimed at eliminating fraudulent practices in promotional competitions.
Clause 1(2) the word shall should be altered to "may". The Minister is empowered but not obligated to make regulations.
Clause 1(2)(a-d) are to be struck out.
Clause 1(3)(b-f) are to be struck out. These strict provisions are unnecessary and they have no real effect in protecting the general public. They have no effect on the national lottery itself.
Clause 1(3)(h) a new insertion is proposed.
Mr D Lockie (ANC) said he could find nothing in principle to amend the Bill to bring about a less restrictive regime for promotional competition. He said that it was hard to foresee how promotional competition could negatively affect the lottery as is envisaged in the new Clause 1(3)(h)(ii). He advanced a hypothetical situation where there is a promotional competition for maize meal and people buy less tickets and more maize meal. Would it then be possible to ban the promotion because people buy less tickets and more food?
Adv Krull referred to Section 54(4) of the Act. This section reads that "A Minister may, on the recommendation of a Board by notice in the Gazette, declare promotional competition to be unlawful. This provision is not proposed to be amended at this stage. Therefore, if there were was competition the Minister would have the power to ban a particular promotional competition or to declare it unlawful, a power derived not from the Regulations but from the Act itself. This power already exists. The Minister may make regulations where promotional competition is having a negative impact.
Dr Davies asked if this Bill was considered urgent and if it was, why.
Mr Johan Strydom (Legal Advisor: DTI) replied that the Bill was introduced into Parliament very recently. The Minister and the Director General indicated that a careful stance should be taken whether the leader of government business should be requested to give this Bill special treatment or whether a fast tracking of proceedings should be initiated. The eventual consensus was that the Bill should be fast tracked nevertheless it should be treated like any other Bill.
Dr Davies asked whether the first amendment proposed that promotional competition is lawful if it is conducted only in the Republic. This appears to say that promotional competition is unlawful if it is open to people in other countries. What was the rationale for this? He also asked for clarification on the inclusion of Subclause (j) into the Bill.
Adv Krull said that the intention of the amendment was to limit promotional competition to the Republic only. This is only a technical amendment to make it clear because the original text was a bit ambiguous. With regards to Subparagraph (j), this clause was intended to prohibit the artificial promotional competitions. It is intended to prohibit the inflation of a prize to be paid to participate in a competition.
The meeting was adjourned.