Copyright Amendment Bill: deliberations

Meeting report

The Chairperson identified attendees from various departments and entities: Dr Evelyn Masotja and other officials from the Department of Trade and Industry (DTI); Adv Rory Voller, Commissioner, and Mr Kadi Petje, Senior Manager: Copyright, from the Companies and Intellectual Property Commission (CIPC); Adv Charmaine van der Merwe from Parliamentary Legal Services; officials from the Department of Arts and Culture; Adv Gideon Hoon from the Office of the State Law Advisor. The Chairperson identified the three documents submitted to the Committee by the DTI. 

DTI Response to Public Submissions on the Copyright Amendment Bill
Dr Evelyn Masotja, Deputy Director-General: Consumer and Corporate Regulation Division, informed the Committee that she had submitted to the Committee a document that contained a matrix of all public submissions in response to the Copyright Bill clauses advertised in June and July 2018. More than 50 submissions had been received. She pointed out that most submitters had not adhered to the advertised clauses and some had simply re-submitted their earlier submissions. The document was detailed and contained all submissions, including the names of those who had made the submissions. Her presentation would be on those responses relevant to the advertised clauses as well as some pertinent inputs. Her presentation included the DTI’s preliminary policy responses.

Definitions
Firstly, there was concern about the definition of visual artistic work as it was very broad and raised questions about other art forms. DTI believed that the definition should be retained but words such as “commercialized’ could be removed as that was counter to the intention of the Bill. The title should also talk to the intent of the clause and the clause should be headed ‘re-sale rights of visual artistic works’. It aligned to the principal Act.

The minimum content of the agreement related to royalty percentages
Clause 5: Section 6A (4)
The second issue of importance was Clause 5: Section 6A(4). Submissions suggested that ‘assignment of rights’ did not apply to literary works. Some submissions indicated a preference for the use of the term ‘remuneration’ rather than ‘royalties’. It was alleged that the provision could cause commercial challenges.
The DTI explained that the clause did not talk to assignments per se but focused on the arrangements between the author and the publisher. DTI would propose an alternative clause as the Department still believed that the issue of royalties was important to the Bill.

Clause 5 and Clause 9 section 6A (4) and section 8A (4)
Submissions stated that those clauses regarding minimum content of royalty agreements were not applicable to certain works and had to be industry relevant. Clause 9 should be re-drafted to reflect the rights of authors/producers of audio-visual works if their plight was to be addressed. The submissions called for guidelines for the Tribunal for determining royalties. DTI would propose amendments for sections 6 and 8 as the section currently did not apply to audio-visual authors/producers. Guidance would be given to the Tribunal.

Clauses 5, 7, 9
Submissions on the minimum content of royalty agreements raised many concerns about the intention to determine compulsory minimum standards for the content of contracts. Submitters felt that freedoms were infringed upon and implementation would be impossible. There were also objections to the “cooling off” period which would not work in several spheres of the industry. DTI’s response was that those who had made submissions had not fully understood the intent and that there were safeguards, such as the Tribunal. However, DTI acknowledged the concerns.

The Chairperson asked that abbreviations, such as WPPT (World Performances and Phonograms Treaty), be written in full to refresh people’s memories.

The issue of Reciprocal Application
Clause 5: Section 6A (5) and Clause 7 section 7(a)(i)
A common comment was that all retrospective applications should be removed from the Bill as it would introduce material and virtually unmanageable financial risks to all academic institutions as well as to any existing business dependent on those types of copyright works. A legal opinion was required as retrospectivity posed constitutional challenges as legislation cannot be applied retrospectively unless certain conditions were present. There were also submissions that suggested that the clauses might not be unconstitutional. DTI acknowledged that many submissions were against retrospectivity and that it might be impractical to apply but the Department believed that retrospectivity was not necessarily unconstitutional. DTI suggested that a rationality test could be applied for royalties.

Clause 7: section 7B (3)(a)(i) read with Section 7B: Reciprocal application of Resale Royalty Rights (RRR)
Inputs proposed separate legislation on RRR. It was recommended that ‘increased’ be replaced by ‘amended’ as royalties could increase and decrease. There was a concern that RRR had been insufficiently researched and investigated. There were concerns about enforcement of the system. The application of RRR should be limited to visual artistic works. Concern was expressed about the alignment to treaties/ international obligation boundaries. Questions arose over when RRR had become a priority as it had not been included in public consultations, and who would be liable to pay. DTI’s response was that RRR should be retained because it would benefit those who had not benefitted previously. Separate legislation was not viable. Collective Management of RRR was possible, especially as application details would be contained in the Regulations. DTI proposed that resale royalties applied only after the commencement of the Act. The seller would pay the royalties.

Log sheets
Clause 11: Section 9A (1) (Aa)
Inputs supported the clause, but the Bill needed to look at log sheets for other art forms such as the visual arts. There were suggestions for wording, e.g. the removal of the word ‘intentional’. Regulations that clearly prescribed the accuracy levels required in user reporting were important. Making the violation of the clause an offence put the onus of enforcement on Government. Enforcement should rather continue to be the duty of collective management organizations through civil law. DTI was open to the consideration of the use of log sheets for other works. The Department would look at enforcement.

Clause 11: Section 9A (4)
Submissions noted that the legislature wished to implement the criminalization of failure to report uses of any of the rights forming the bundle of copyright, not just the public performance of sound recording. The penalties for such offences was considered ‘draconian’. DTI recommended that re-wording to be considered.

Discussion
The Chairperson asked who had made the submission that had called the penalties ‘draconian’. She wondered how many people knew how many artists died in poverty. As it was heavy-going, she suggested that people ask questions or make input during the presentation by raising their hands, instead of waiting until the presentation was complete. She also asked for doors to be opened and for people to help themselves to tea as the work was making great demands on concentration, but the venue was stuffy.

Mr A Williams (ANC) noted that submissions called for very strong legal action to be taken against all major music users, including broadcasters, who were infringing the rights of composers and performers by failing to report properly and/or pay correct licensing fees. He asked if restaurant chains were included in the reference to ‘music users’. He recalled that during the Soccer World Cup, there were attempts to stop people watching the games in pubs, etc. Would the legislation lead to a similar situation in the country?

Mr G Cachalia (DA) noted that the offence had to fit the crime. The Committee needed to understand why certain offences were criminal and others not. The Members should not be emotive but be sure that there was incentivising etc. They needed to be sure that the right thing was done, and a heavy hand was not necessarily the right way.

The Chairperson asked DTI to clarify the situation for Mr Williams.

Dr Masotja stated that all restaurants, even small restaurants, should pay compensation for the use of both music and visuals.

Mr Kadi Petje, CIPC Senior Manager: Copyright, responded that restaurants were major users of music and should comply by keeping accurate lists of needle time. Failure to comply would disadvantage artists.

Ms Meshendri Padayachy, DTI Deputy Director: IP Law and Policy, reminded the Committee that there were civil remedies in previous legislation, but the legislation had not been adhered to. The main problem was that it was the copyright owner’s responsibility to go to court, to get an interdict and so on. Criminal sanctions meant that now the South African Police Service (SAPS) would take responsibility for taking action against transgressors. She pointed out that big stores such as Pick ‘n Pay or Mr Price, that had their own radio stations, had to comply and to keep log sheets.

Mr D Macpherson (DA) asked who monitored that. Were there music police who went store to store? Did they check restaurants and taverns? How would it work? How would the log sheets be implemented in the hundreds of thousands of institutions?

The Chairperson commented that the point of the discussion was to determine whether it was workable and how it would be implemented.

Mr Petje stated that the collections societies had licencing agreements with musicians which should state how they were going to obtain the information so that the collecting society could collect the payments.

Mr Williams stated that most South Africans and companies generally adhered to the law, as would chain stores and big companies. They would simply send in the log sheets each month. He did not think it a big deal. The point of the legislation, particularly that clause, was to support musicians and artists and he believed that it would work. It would be easily implemented.

Mr Macpherson disagreed with Mr Williams that South Africans obeyed the law, citing speeding fines as evidence that they did not. He knew that in some provinces it was nigh impossible to get liquor licences for taverns and the relevant departments could not enforce it. He assured the Committee that music was played at every tavern, but he bet Members a case of Castle Lager that there were no log books in the taverns. He asked how the legislation would be monitored or enforced in taverns, sports clubs, night clubs, etc. He did not believe that it was enforceable because of the scale of operations across the country.

Mr Cachalia noted that Mr Williams had said that big companies would comply. He asked if there was something about equitable application of the law. A law could not apply only to big companies and not to small companies, but one would be in deep water if one tried to enforce the legislation across all establishments that Mr Macpherson was talking about.

The Chairperson appreciated the comments but said that Dr Masotja should complete her presentation.

DTI Response to Public Submissions on the Copyright Bill - continued
Nature of copyright in programme-carrying signals
Clause 12 section 11
Inputs were positive and did not challenge the clause. A few broadcasters proposed exclusive rights. It should apply to the signal only and not the content. DTI would bring a proposal that would make it clear that broadcasters owned the signal and not the content.

Panorama rights and incidental use
Clause 15 section 15
Inputs presented varying views but there was agreement that the clause should remain in the Bill. Some submissions stated that it was too restricted, and others said that it had been catered for in the Act. There was a minor view that the clause should be withdrawn as it would be a disincentive to visual artists.
DTI noted the strong support for the clause, despite the naysayers.

Mr Williams asked whether photographers were going to be included? Why did DTI not want to expand the legislation to include photographers and painters?

Mr Cachalia was concerned about the strict application of the clause as it had implications for digital use and for people who used Google and Wikipedia and others. On one hand the legislators were saying that the country was moving towards fair use, but that clause was going in the opposite direction.

The Chairperson asked for explanation of what was being regulated in Clause 15.

Ms Padayachy stated that there had been no reference to panorama rights in the Act but there had been a public call for the clause. She explained that Wikipedia, for example, could only put up pictures of apartheid buildings because new works were copyrighted. Section 21(3)(c) was the hot issue for photographers. The intention was to allow for the works to be included as an incidental background in photographs without the need to pay copyright fees. There was a concern about commissioned works, but she believed it would not be a problem.

Mr Williams asked what the disadvantage would be of not having the exception. He understood that currently people were infringing the law by taking photographs next to statues or taking selfies showing various works. Was the clause simply intended to cover that loophole or was there some advantage to someone in the clause?

Mr Cachalia stated that the clause harked back to ‘fair dealing’ where there were lists of exceptions. He understood that the Bill was embracing ‘fair use’ so that there did not have to be endless lists. ‘Fair use’ spoke to more generic freedoms and greater freedoms and in the digital age it was important to move away from lists of exceptions.

The Chairperson recalled the requests by photographers for panorama rights and how it had become particularly poignant when one of the photographers who had made a submission at the public hearings, had passed away while the public hearings were on. She understood that Section 21(3)(c) was not what the photographers had called for, but it was more for visual artists. One submission stated that it would it be a disincentive. Why was that so?

Dr Masotja stated that the intention was that people would not be infringing rights when they took a picture but with that was balancing the compensation for the artists or those who had created the work and who felt that they were being disadvantaged. She felt strongly that it was an important clause, even in its limited application.

Mr Williams was not familiar with the concept. If a person who took a photograph of the bust of Nelson Mandela, did the person have to pay a royalty to someone? He wanted a thorough explanation of why the clause was there and what was meant by the exceptions.

Ms Padayachy said that one was infringing copyright and ought to pay a royalty, although the state probably owned that particular bust in the grounds of Parliament that Mr Williams was referring to. The intention was to cover the incidental use of the images, such as a picture of Parliament on a Wikipedia page to explain what Parliament was about.  She added that pictures shared on social media might promote an artist’s work but, at the moment, Wikipedia could not include a picture to illustrate an article without infringing copyright. However, because of the history of the country, DTI wanted to ensure that artists were paid monies due to them.

Mr Cachalia explained to Mr Williams that he, Mr Cachalia, was arguing for the free and unfettered use of panorama, without exceptions.

Ms Padayachy said that the confusion was a result of the negative approach of some of the inputs. The clause as drafted in the Bill was very open and flexible. It had been the comments that had taken a negative approach because artists wanted the royalties. She noted that in some countries, some background objects, such as parliament buildings, had to be blacked out of a photograph. Germany had introduced the panorama right as Germans wished to move on from the past and display the new architecture and public artworks in the country.

The Chairperson thanked Ms Padayachy for the explanation that explained the situation. She asked the Department of Arts and Culture representative to report back to DTI and to let the Committee know if there was any issue with that clause.

New Process for Commissioned Work
Clause 22: Section 21(3)
Submissions: There was some confusion in that submitters thought that the clause stated that commissioning did not apply to literary or musical works but only to all other works. Submitters thought that
commissioned works, where ongoing royalties were most needed, had been exempted. The clause would be fatal to commissioned writers. Some stakeholders suggested removal of the clause, but others said that royalties should be applied in the clause. It was suggested that the term ‘tariff’ needed to be changed to read ‘fee’. The term ‘tariff’ denoted general application.

DTI explained that the principal Act covered commissioned works, but the term could be changed.

Mr Williams asked, if a work was commissioned and a contract signed, what happened or what was the consequence when the contract was broken. What if someone commissioning would only give a job if the commissioner were to own the work? That would undermine the person doing the work, and what was the point of having the clause?

Mr Cachalia suggested that Mr Williams had put his finger on it. The Committee had to tread very carefully. Firstly, there was the essential agreement of a contract that needed to be enshrined in a democracy and the legislation was playing against it in that clause. Secondly, one had to be mindful of the fact that someone who commissioned work could always take their money elsewhere. For example, a person could commission a foreign artist instead of a local artist, which would defeat what they were attempting to do. The Committee should exercise wisdom.

Mr Macpherson stated that one of the principles the DA had stood on in the process, was that the legislation should not be over-prescriptive about the negotiation and the contract. It was about the validity of the contract. The moment the state started stepping into the process, both parties would lose out. There should be frameworks and guidelines, but Parliament should not be over-prescriptive. South Africans should be allowed to exercise free choice and to draft a contract that suited both parties. If one was not happy with an arrangement, one could decline to sign a contract.

Ms P Mantashe (ANC) said that the purpose of the Bill was to address issues where people had been previously disadvantaged. One could not say that the old order should be maintained. There had to be a better proposal. She did not have a proposal but believed that one would come up through engagement.

The Chairperson recalled a previous discussion on the clause when a Member had referred to artistic creations on the side of the road, etc. Those who sat in the room might see the value of a contract, but others might not see its value. Rooibos tea was an example of a case where no one had thought to protect the name. Obviously, it was not American, but the intellectual property now belonged to the United States.

She asked Mr Macpherson to consider dropping that clause. Those who did not appreciate the value of a contract may prefer the cash in hand. People would have the freedom to go elsewhere and buy from a foreign artist. But should that stop the Committee from trying to protect the country’s artists, or was that becoming too paternalistic?

Mr Cachalia supported Mr Macpherson’s point about guidelines. People could be guided but the freedom had to remain for people to agree or not agree. The guidelines that would assist people were there, but the draconian description of the contract should fall away.

Mr Macpherson noted that the key would be minimum standards for a contract. He did not know if DTI had a new draft to propose but he thought that that was the direction in which the Committee should be heading. He thought that the clause should be parked until the Committee received the new draft.

The Chairperson agreed to flag the point.

Mr Williams asked if the Committee would only come back to flagged items.

The Chairperson replied that the Committee would be going back to all clauses, but that clause was specifically being flagged because the Committee was awaiting new wording on that one.

The DDG informed Mr Williams that the Copyright Tribunal would assist in contractual disputes. The role of the Tribunal was specified in those clauses to support the rights of the author. The Bill tried to address the points that Mr Cachalia had raised. Most of the clauses spoke to the Commissioner but the rights of the author would be addressed.

New Process for Commissioned Work (cont.)
Clause 22: Section 21(3)
In the submissions, an issue had been raised around reasonable time for the commissioning party to exploit the work so as to realise a return on investment.  A seven-year period was proposed in sub-section 3(c), after which the author could approach the Tribunal to have access to the work. DTI believed that the clause should stay in the Bill but supported the notion of a seven-year period after which an author could claim a commissioned work. Rewording was necessary.

Mr Cachalia asked if the clause applied to all artistic works, i.e. that there had to be a minimum period prescribed for all works.  He gave an example of how he could keep a work in a safe for ten years to prevent burglars stealing the work. Could the artist ask for it back, saying that he was not using it properly?

The DDG explained that the artist had a right to approach the Tribunal to return the work to the artist.

Mr Williams suggested that the intent was not to claim a work that had been bought or commissioned but was not making any money. One could buy a work and destroy it. That was fine.  However, if one exploited the work for financial gain, that was where the problem lay. If one owned a statue and left it in the garden, that was fine. But if one took the statue on tour and charged people to see the statue, that was a different purpose. It was about the work as a resource.

Ms Pregoria Mabaso Muvhango, DTI Director: Legislative Drafting, explained that the clause did not apply to personal works. If a work was commissioned for personal use, one could not get a licence to regain access to it.

The Chairperson asked if an artist or creator could re-use particular aspects of a work that had been commissioned.

The DDG explained that the Bill did allow for that but there were certain conditions that had to be met. The Tribunal could be approached, and it would look at the nature of the work and details would be required as to the use of the work and whether it was being used as initially envisioned. The DDG explained that Clause 21 was a contentious area, so she invited her colleagues to assist in clarifying the matter.

The Chairperson agreed that it had been a highly controversial clause on which the Committee had spent over an hour at a previous meeting.

Mr Petje began with the purpose of that section. He said that in terms of Section 3 of the Copyright Act, copyright could be acquired by virtue of nationality, domicile or residence, and duration of copyright. Section 4 dealt with copyright by reference to country of origin. Section 5 addressed copyright in relation to the state and state organs. Section 21 dealt with copyright where a person was employed to produce work. It also talked about commissioned work where the person who commissioned would own the copyright. There would be an agreement and it was about the person who commissioned the work getting his money’s worth. All of the above sections explained how copyright came about.

The only challenge in South Africa was commissioning done by broadcasting organisations that became the owner of the work. The problem was that very often the organisations commissioned people to undertake work which they used for a certain period and then shelved it or archived it. What happened if someone had been commissioned to create a work, but it was archived after five years. Would it create harm if the person who saw his or her work archived requested to re-use it?  The creator had signed a contract and had been paid for the work to be utilised in a certain way. All the interventions were made from that perspective, i.e. that creators should not have to see their work archived, especially when they could do something with it.

Mr Cachalia understood the purpose but again he wished to counsel that the Committee should be looking at his earlier submission. He suggested that, rather than creating an inalienable right of reverting, one should look at contractual agreements to provide for all the situations in the various sections. Templates and guidelines could be provided for those who wished to make use of the guidance. For example, if commissioning for seven years, the following five points should be considered. It was better than the blanket inalienable right that could be problematic going forward.

The Chairperson noted that it was not a simple matter that the Committee was dealing with but assured Members that the bulk of the following day would be devoted to the Copyright Bill. She had not found the venue conducive to working so there would be an attempt to change the venue for the following day. Commissioning was incredibly important but it was also about what happened to the work afterwards. Writers, artists, sculptors, etc. were incredibly sensitive people and they objected strongly to their work being treated in a manner that did not show it due regard. Legislation could not deal with all the subjective issues, so the Committee had to put forward legislation that took the key issues into account.

The Chairperson invited other officials to make a contribution to the discussion to assist in developing a good piece of legislation that would meet the needs of artists. She indicated that the meeting would move on to the next clause but return to reciprocal copyright at the next meeting.

Transitional provisions to provide for existing Collecting Societies
Clause 25: Section 22B (7)
Submissions were generally positive about the clause. Input suggested the need to distinguish between natural and legal persons and a legal person had to be not-for-profit or owned by the artists. The transitional period of 18 months could be reduced to 12 months, with an option to extend once for another six months.
DTI believed that the clause was adequate because the collecting societies were non-profit organisations (NPOs). The transitional period was debatable.

Reciprocity applying to pay-outs of royalties by Collecting Societies to foreign countries
Clause 25: Section 22C(3)(c)
Submitters felt that the collecting societies should be given a wide berth in pursuing reciprocal agreements.  Many felt that the Societies had no option but to pay royalties to foreign artists and, while it was a good idea to demand a reciprocal arrangement, that would hamper societies in international transactions. Some felt that the clause was redundant and should be deleted. ‘CMO’ in the submissions referred to Collecting Management Organisations.

DTI responded that it had to recognise international agreements. Laws should be aligned. Agreements would be between collecting societies and not between countries, although in some cases the international or inter-country agreement might include such arrangements. DTI wanted to keep clause.

The Chairperson reminded the meeting about those societies that had not paid out royalties to artists because the international royalties had not been paid.

Mr Petje stated that that the issue of payment of these royalties had been resolved. The current discussion, however, was about the legal position. Reciprocity was not automatic and depended on whether the country had agreed to such arrangements. In the national law, the country could determine which sections were or were not part of treaties that the country signed. Where the country opted not to enter into a reciprocal agreement, the collecting societies would not be able to enter into reciprocity agreements. The national legislation also had to reflect the provisions of the treaty.

How Collecting Societies should pay royalties out and what to do if the copyright owner is not found
Clause 25: Section 22D(2)(b) and 22D (3)
Input suggested that it would be prudent to grant authors more time to claim their unmatched royalties by increasing the claim period from three to five years and that unclaimed royalties be placed in a fund that would be used for development.

DTI had prescribed three years for unfound artists, but comments suggested five years and that the money should be utilised for development or special project, such as the upliftment of impoverished musicians. The Department was happy to extend the time period to five years and agreed with the proposal to use the funds for development of special projects or for funeral societies and medical aid for artists.

The Chairperson asked why only musicians would benefit from the development or special project fund.

The DDG explained that the collecting societies were currently working mostly in the area of music, but DTI was hoping that under the new legislation, more art forms would use collecting societies.

Mr Radebe told the meeting that collecting societies should be non-profit organisations, but he knew of a collecting society that had invested in Dubai and had lost the funds.

The Chairperson asked why a collecting society would be investing.

Mr Williams supported the move to five years to claim royalties as it was reasonable.

The Chairperson asked if musicians were more impoverished than authors or was it because in the current era, the focus was on music, dance and digital media.

The DDG responded that the comment on the impoverished could apply to any field of the arts, including authors. The submissions had mentioned musicians because the respondents themselves were mostly musicians.

Mr Williams understood that collecting agents were collecting money for musicians and that was why they wanted to keep it for impoverished musicians. They were not collecting money for writers. Who was going to be collecting money for authors? Was it the publishers? However, the collecting societies for musicians might have huge sums of money which could then also be used for artists in any field of the arts.

The Chairperson said that collecting societies were NPOs and should the Committee not ask for the architecture of those societies. Surely the organisations should ask members before they invested funds?

Ms Padayachy reminded the Committee that currently collecting societies were not regulated by the CIPC and that one of the provisions was that all collecting societies would be accredited by CIPC. Previously there had been no legislation for collecting societies and so they had created agencies or subsidiaries and various other forms. There was a lot of money in the societies, but they wrote it back to profit and that was what the legislation was intended to stop and to ensure that the funds benefitted the members of the collecting society. The Orphan Fund would cover other areas.

The Chairperson informed Adv Rory Voller, Commissioner at the Companies and Intellectual Property Commission, that she would be calling on him to give guidance as to what could be done in that area.

Adv Voller stated that CIPC had made a submission to the Committee indicating how the Commission would like to administer the collecting societies. As Regulator, CIPC wanted one collection society per right as it would be impossible to regulate and administer multiple societies. When it came to distribution plans, CIPC would scrutinize them and bring societies to book, where necessary. Under the current legislation, the powers of CIPC over the societies were very limited but he was hoping the Amendment would address that concern. The societies were unregulated but were managing enormous sums of money.

The Chairperson stated that the section would be completed the following day. CIPC should give input in the area. Adv van der Merwe would also give input.

The meeting was adjourned.