Copyright & Performers’ Protection Amendment Bills: Department response to submissions

Meeting report

The Chairperson noted that the Committee would finalise the Bills on 20 March 2019 and a week thereafter the Committee Report on the Bills would be taken to the House. Both Bills were Section 75 bills.

The Chairperson pointed out that he had looked at constitutionality in terms of public participation and access to the National of Council of Provinces (NCOP). Section 72 of the Constitution was the relevant section and he read it out. He stated that there had been extensive public hearings on the Bills in the Portfolio Committee on Trade and Industry. Some of the submissions made to the Portfolio Committee were repeated to the Select Committee. The Parliamentary Legal Advice Office ensured that the Bills passed constitutional muster. He did point out that there were groupings with conflicting interests who made submissions; there was even a petition opposing the Bills. He urged DTI to make the regulations available to the Committee for consideration. With the era of digitisation there was an ever changing environment.

▪ DTI responses to submissions on Copyright Amendment Bill
Dr Evelyn Masotja, DTI Deputy Director General: Consumer and Corporate Regulation Division, said that the DTI comprehensive response document had more detail. However a concise presentation had been prepared that would cover what was in the comprehensive response document. DTI had grouped submissions and responses into themes. She noted that some stakeholders had even commented on the older version of the Bill.
Consultations on the Bill
Submissions by stakeholders on the consultations process on the Bill were from opposite sides of the spectrum. Some stakeholders felt the time granted for comment was insufficient whereas others felt consultations have been lengthy and wide. Some felt the Bill should be substantially redrafted or suspended. The DTI response was that there had been consultations before the Bill got to Parliament, after its introduction in the Portfolio Committee on Trade and Industry as well as now in the Select Committee. The DTI was aware that consultations may never be exhausted and “never be enough”.
Tagging of the Bill
Submissions had alleged that the Bill had been incorrectly tagged as a Section 75 Bill. The DTI felt it had been correctly tagged. As the tagging of the Bill was done by the Joint Tagging Mechanism (JTM) in Parliament, it was best for the JTM to advise about the tagging concern.

Impact Assessment Study
Stakeholders questioned whether an impact study had been done or where it was done, it was not done to gauge the impact of the Bill. The DTI response was that various impact studies had been conducted on both Bills as well as on the policy positions underpinning the Bills.
Definitions
Comments were that digitisation was not defined or mentioned in the Bill whilst it served as important preservation in the online environment and digital media. DTI explained that the Bill addressed the digital environment through the Bill’s provisions informed by international treaties. It was thus not necessary to define digitisation in the Bill. It was something that could be considered in the future.

Reversionary Clause
Stakeholders felt that the reversionary clause which placed a 25-year limit on assignment of copyright created confusion and conflicted with exclusive rights of producers in section 9 of the Bill. The reversionary clause also created massive business risk for South African businesses. In addition it created limitations to assignment and the belief was that there was no policy rationale for its introduction. There were calls for the reversionary clause to be deleted from the Bill. The DTI response was that reversion clauses for different types of works were not new to legal frameworks whether in the USA or UK. The Bill limited the assignment of works because of concerns raised during public comment as well as concerns on assignment raised by the Copyright Review Commission.

Orphan Works
Stakeholders felt that the provisions on orphan works were impractical. The DTI response was that section 22A of the Bill provided a process for orphan works and it set out a step by step process. Regulations as subsidiary legislation would provide the more practical aspects to orphan works.

Penalty for non-reporting
Stakeholders had diverse views on penalties. Some felt the penalty for not reporting on use of works should be proportionate to the severity of the non-reporting. Others welcomed the criminalisation of failure to report music usage. The DTI responded that the usage of fixated performances was a commercial activity that was exploited. When the performance was used on any platform, the performer should be remunerated. The lack of information to performers was a major challenge when it came to payment of royalties in the music industry.

Retrospective Application
Many stakeholders felt that retrospectivity was unconstitutional. It was felt that the retrospective provision was an arbitrary deprivation of property and hence unconstitutional. It was believed that this would cause a massive business risk to South African businesses and create havoc for existing relationships duly concluded. There was a call for the retrospective nature of the Bill to be removed. The DTI response was that the parliamentary process on the Bill had addressed its constitutionality. The Bill had been tightened to address uncertainties about the retrospectivity provision. Retrospectivity if it met certain conditions was not unconstitutional. The retrospectivity part of the Bill would only be proclaimed once an impact assessment and regulations had been concluded and tabled in the National Assembly. The retrospectivity provisions were included in the Bill because of the historical context of contracts in South Africa’s past being unfair.

Fair Use Provisions
There was much criticism by stakeholders on the fair use provisions. Stakeholders felt fair use overrode exceptions and broadened fair use to copying of educational course packs and other educational purposes. Other concerns were that fair use potentially was not protecting domestic authors and would undermine the entire copyright market. Fair use would also lead to substantial loss of income for authors, book publishers and the entire publishing value chain. The DTI response was that the introduction of the hybrid fair use provisions was a policy position of the DTI to address socio-economic challenges of a developmental state like SA. Fair use had safeguards and was not foreign to SA and other jurisdictions. Countries that introduced fair use tend to be more innovative with a growing creative industry.

Contractual Freedom
Stakeholders felt that the provisions in the Bills interfered with the freedom to contract and it amounted to deprivation of property and violated section 22 of the Constitution. The powers of the Minister of Trade and Industry to prescribe compulsory and standard terms constituted undue regulatory intervention and violated freedom of parties to contract. The DTI responded that the Minister’s powers only prescribed minimum requirements and not the whole contractual arrangement; therefore parties were still free to include other terms. Providing guidance to contracting parties was to empower them to know how better to negotiate the terms of a contract.

Constitutional Compliance
Stakeholders said that the Bill gave rise to constitutional concerns. Many felt that the provisions in the Bill amounted to deprivation of property due to the unjustified interference in the right to freedom of trade. There were also constitutionality concerns on the retrospective provisions of the Bill. The DTI response was that the constitutional aspects of the Bills had been checked through the legal process with in Parliament. In addition before the Bill was introduced to Parliament, the Office of the Chief State Law Adviser had checked the constitutionality of the Bills. A process had been added to the retrospectivity provisions of the Bill to address constitutionality concerns.

Commissioned Works
Stakeholders were concerned that the changes to provisions on commissioned works would lead to legal uncertainty and to disputes which could lead to litigation that was costly and time consuming. It was felt that an inclusion of an agreement for commissioned works was not necessary. There was a concern that the provisions on commissioned works were vague and uncertain. The DTI disagreed and said that the legislative intervention was to ensure that an agreement was concluded on a commissioned work to create legal certainty. Parties involved in commissioned works were encouraged to conclude agreements to create certainty on copyright ownership. DTI said that the provisions on commissioned works provided clarity.

Sections 6A and 8A
Stakeholders contended that sections 6A and 8A of the Bill would severely erode the rights of producers. Further, that the provisions of the sections did not allow flexibility in the choice of the remuneration model. DTI responded that a policy decision had been taken. Royalties would be payable even though there was assignment. The issue of different payment models was taken into account.

World Intellectual Property Organisation (WIPO) Treaties
There was a concern that Parliament had incorporated provisions of the treaties in the Bill without SA having ratified the Treaties. DTI responded that the treaties were in the parliamentary process.

One Collecting Society per Right
Stakeholders questioned who these amendments would serve. Stakeholders felt that the SA Music Rights Organisation (SAMRO) was already accredited. DTI response was that not all collecting societies were accredited. The regulatory framework needed to be strengthened. It would be a criminal offence to operate as a collecting society without being accredited.

One Collecting Society
There were stakeholders who objected to the provision of one collecting society per right. DTI responded that the Bill no longer provided for one collecting society per right. That had been in previous versions of the Bill.

Digitisation
Stakeholders noted that digitisation was not mentioned in the Bill for libraries, archives etc. Computer programs required digital rights. They felt that the Bill did not sufficiently address digital issues including online licensing, safe harbours etc. DTI responded that the Bill did have elements of digitisation from treaties. Digitisation was something that could be more extensively considered in the future. Exceptions for computer programs were provided for. The point about digital rights was noted.

General Comments
General comments were made by stakeholders. One of which was that “local organisation” was not defined in the Bill. The DTI responded that “local organisation” would be clarified in the regulations which the Minister of Trade and Industry would prescribe.

Dr Masotja pointed out that many of the submissions were critiques of the Bill with a view to ensure that the process was suspended. Other submissions called for extensions to consult on the Bill.

▪ DTI responses to submissions on Performers Protection Amendment Bill
Dr Masotja followed the same format with the briefing as before:

Definitions
Stakeholders said the definition of “performer” was too broad. There was also no definition for “equitable remuneration”. How would reasonable compensation be determined in practice? DTI responded that the definition of a “performer” was in line with international best practice. The South African developmental agenda and its historical deprivation informed ongoing equitable remuneration.

|Freedom to contract
Concern was raised that the Bill violated the freedom to contract for both parties to the contract. DTI replied that the Minister of Trade and Industry’s powers to stipulate standard contractual terms and royalty rates were applicable. The current wording in the Bill captured the policy intent and addressed similar points.

Remuneration models
It was contended that performers in the audiovisual sector preferred the buyout model which was international practice as opposed to the royalty based model. Further, the extension of royalties for “any use” was not in accordance with industry practice. DTI responded that different remuneration models had been considered. The language of the Bill had to be considered and as such various models could be considered. The bottom line was that the performer had to be remunerated and the agreement had to take into consideration the usage of the fixated performances. The Bill incorporated Beijing Treaty provisions which spoke about a performer continuing to earn royalties for their performances. The world seemed to be moving in this policy direction.

Moral Rights
Stakeholders felt that the moral rights of performers were not clearly anchored in the Bill. This also applied to the Copyright Amendment Bill. DTI responded that moral rights were introduced in the Bill and that the Copyright Amendment Bill already made provision for moral rights.

Reporting
Stakeholders pointed out that clause 4(c) of the Bill inserted a new subsection which was simply not practical when considering the vast volume of content that was broadcast. On failure to report, the suggestion was made that the fine should not exceed R100 000. DTI responded that reporting on usage was important given the implications. For this reason the penalties were high. The Bill provided for a discretionary sentence by courts. The R100 000 limit on the fine was concerning considering that actors were dying as paupers even though their works were broadcast over and over again. Broadcasters needed to keep records even if cumbersome.

General Comments
Stakeholders asked for various provisions to be deleted from the Bill. One such provision was the reversionary right. DTI responded that deleting the provisions would adversely affect the rights of performers. The Bill had to ensure that performers were protected and had access to economic rights.

Discussion
Mr W Faber (DA, Northern Cape) felt that the Bills were incorrectly tagged. The Bills should be tagged as Section 76 bills as they did affect provinces. He suggested that the Joint Tagging Mechanism apply its mind to the matter. On the information he had to hand about the Bills, he felt that Members too had to apply their minds. The NCOP should not be seen as a rubber stamp. He had read in the media and elsewhere that there had not been enough public participation and consultation on the Copyright Amendment Bill. The concern was that the Copyright Amendment Bill could have unintended consequences which could lead to job losses. Another concern raised in the media was that the Copyright Amendment Bill could undermine copyright in SA. In summary, there were concerns that the Copyright Amendment Bill would have far reaching consequences for the economy, especially the publishing sector. An impact study had shown that there could be a 30% decline in the copyright industry if the Copyright Amendment Bill was passed. All these concerns were very troubling. The Committee needed to heed the concerns raised by subject matter experts. He noted that there were a multitude of submissions. An over aggressive copyright law could affect innovation. Experts suggested that the Minister of Trade and Industry needed to demand a full report on the consultation process and on the proposals that had been made. He was concerned about the Committee passing legislation that could have dire consequences. He felt that the DTI needed to relook at the Bill.

Mr M Rayi (ANC, Eastern Cape) raised a point of order about what Mr Faber had said as it was a matter of hearsay. The Committee had not seen the articles in the media he had referred to. The experts referred to in the articles should have participated in the consultation process by making submissions on the Bills. In this way the Committee could decide if there was merit to what they were saying. DTI could then respond to the submissions as well. He felt it wrong for Mr Faber to say that DTI should relook at the Bill based on what he had read in the media.

The Chairperson agreed with Mr Rayi. Process needed to be followed. The public submission process was there for a reason and was taken seriously. If no submission was made then what was out there in the media could not be considered. There were a number of experts that had made submissions as well. Sufficient time had been allocated for submissions, especially in the National Assembly. He had consulted with the Chairperson of the Portfolio Committee on Trade and Industry and had been briefed on the dynamics that had come out of the participation process in the National Assembly. There were people who did not wish for the Bills to be processed. Performers were not treated fairly in the industry, hence the need for legislation.

Mr O Terblanche (DA, Western Cape) said that it would seem that everyone was in agreement that the industry needed to be regulated. He would have liked to have heard inputs from the Parliamentary Legal Advice Office on the constitutionality of the Bill. He had serious concerns about its constitutionality. The Bills evoked a great deal of public interest as could be seen by the turnout for the meeting. Cape Town was a preferred destination for film makers and performers alike. Justice needed to be done and he appreciated the hard work by DTI. Nevertheless, he felt that a jackhammer approach was being followed. The Bill wished to dictate how contracts should be drafted. The industry seemed not be in favour of the Bill. He had concerns about how the legislation could negatively affect jobs and so could not support the Bills in their current form.

The Chairperson responded that the Parliamentary Legal Advice Office would be given an opportunity to speak to the constitutionality of the Copyright Amendment Bill. He agreed that there was increased interest in film making in SA and in particular the Western Cape Province. There was increased interest in Mpumalanga and the Northern Cape Provinces as well. South African performers were benefitting from this increased interest. This was more reason why SA needed to protect the interests of its performers. The film making industry had not raised serious concerns on the Bill but more wished for it to be delayed. Performers on the other hand welcomed it. Was the Bill really threatening jobs? He did not think so. It would seem as if Members would have to agree to disagree.

Mr B Nthebe (ANC, North West) agreed that Members needed to apply their minds properly. He was pleased that the Parliamentary Legal Advice Office would speak to constitutionality. The retrospective application of provisions in the Copyright Amendment Bill needed to be clear. There should be no ambiguity. The Parliamentary Legal Advice Office should explain. To what extent would there be retrospectivity? Would the Copyright Amendment Bill pass constitutional muster? The Committee was well aware that people lobbied to protect their own interests. It was their right to do so but Members needed to apply their minds.

Mr Rayi agreed with Mr Nthebe. The Committee needed to maintain the procedure for dealing with the Bills. The DTI had given its response and now it was Members’ turn to ask questions of clarity and on constitutionality. At some point Members would have to consider the views of stakeholders and of DTI and to find some sort of middle ground. He felt it wrong for Members to reject the Copyright Amendment Bill without even engaging on it yet. He was aware of party positions though. The Committee still needed to deliberate on the Copyright Amendment Bill and agree or disagree with its clauses.

The Chairperson pointed out that there were concerns about the definition of a performer. If the people had concerns with clauses they should propose amendments in their submissions. DTI had given its responses to the submissions and it was now up to Members to engage on these responses. In the next meeting the Committee would look at the Copyright Amendment Bill. Changes brought in by the National Assembly would be considered. The Committee would concentrate on these. The public submissions would be considered.

Adv Charmaine van der Merwe, Parliamentary Legal Adviser, said she had considered the DTI responses to the submissions and she was in agreement with DTI. When people were unhappy with a policy then they brought up its lack of constitutionality. There was no substantiation for the claim that the Bill was not constitutional. No mention was made of which sections in the Constitution that they were unhappy with. On tagging she explained that if a bill was not tagged properly then it could affect its constitutionality. Whether a bill had an influence in provinces or for that matter was important to provinces did not make the Bill a Section 76 bill as contemplated in the Constitution. The only Schedule 4 matter that these Bills could affect was trade. What the current Bills were trying to do was to regulate a profession. Regulating a profession did not necessarily make this trade per se. Hence the Bills were tagged Section 75. Her view was that both Bills were Section 75 bills.

She referred to the constitutionality concern about the “reversionary right” in clause 23 which set a limit of 25 years on the validity of a copyright agreement. The concern was that the clause amounted to deprivation or expropriation. The Constitution allowed the legislature to regulate a profession. The Bills attempted to regulate a profession. If the clause was applicable retrospectively then there would have been deprivation of property. The clause was only applicable prospectively. It meant that the reversionary right would only apply to an assignment of a literary or musical work where the assignment had happened after the clause had become operational. She felt that the reversionary right did not amount to deprivation of property. The clause only applied prospectively. No property rights were taken away.

Another constitutionality concern was the retrospective application of some clauses. There were a number of clauses that applied retrospectively. These covered where an author was allowed a share of a royalty going forward. It was also applicable on the resale royalty right. However on the resale royalty right the retrospective application was not one where it affected parts of profits made. Clause 7 dealt with resale royalty rights. It applied to visual artistic work before the commencement of the Copyright Amendment Bill if the visual application fell within the application of the Bill. But it only applied to commercial resale made after commencement of the Copyright Amendment Bill. This was on resale royalty rights. Where there was sharing of royalties as for example in clause 5, she said that it applied the same. There were various clauses that repeated this for different types of works.

The Copyright Amendment Bill required the Minister of Trade and Industry to draft regulations and to have an impact assessment process. The regulations had to be tabled in the National Assembly for approval. There would be further public participation process on the regulations. Clause 38 was the commencement clause which stated that the commencement of the clauses was subject to regulations being made and a proper process approved by the National Assembly. Only then would the retrospective clauses come into effect and be operational.

The Copyright Amendment Bill affected two aspects of retrospectivity. The first was retrospective sharing of royalties where a process had to be followed. The second was on the resale royalty right which became operational immediately but only applied to resale made in the future. Anything that becomes operational before the Bill was not affected by the Bill. Any bill passed by parliament automatically only applied prospectively. The only exception was if the Bill made itself applicable to before its operational date. An example was the National Credit Amendment Bill which applied retrospectively. If it did not them credit agreements made in the past would not be covered by it. On royalty sharing and on resale of royalty rights if it was not spelt out that retrospectivity applied to transactions entered into before the Copyright Amendment Bill, then it meant that the Bill would not apply to those transactions.

The concern was that current authors and performers were not receiving money for their prior works which were still being exploited for profit and they would not benefit unless there was retrospective application. This was where a “substantive need” came in — the one leg for constitutionality — the sharing of royalties retrospectively was a substantive need. The other leg was process. What about the process? There were so many scenarios to consider. What if an author had died? This was the very reason the Copyright Amendment Bill required an impact assessment. Once this was done then the Copyright Amendment Bill would become operational and only then would the retrospectivity apply.

She understood that retrospectivity was a difficult concept. She felt the retrospective provisions in the Copyright Amendment Act were constitutional. Both the Bills were substantively and procedurally fair. Retrospectivity in itself was not unconstitutional. It was only unconstitutional if it arbitrarily or through an unfair process took away the rights from someone.

Adv Rory Voller, Companies and Intellectual Property Commission (CIPC) Commissioner, said that the CIPC was pleased with the legislative process followed and with the explanation given by the Parliamentary Legal Advice Office. The CIPC had been involved with the Bills for many years and it would when the time comes for implementation.

Ms Meshendri Padayachy, DTI Deputy Director: Intellectual. Property Law and Policy, noted that the debate on the Bills has been going on since 2009. What the Copyright Amendment Bill was trying to achieve was crucial. Rigorous consultation had been done and many studies had been undertaken. On fair use, the DTI tried to encourage innovation to boost job creation. The Bills tried to balance the interests of rights-holders and that of performers. She pointed out that Mama Miriam Makeba had not owned the rights to her music and it has been ten years since her death.

The Chairperson stated that the Committee would consider the adoption of the Bills on 20 March 2019. He suggested that Adv van der Merwe forward her input in writing to the Committee. The House Chairperson had written a letter to him about the international treaties that the Committee needed to consider as they were relevant to these Bills. There were three treaties that would be presented to the Committee on 26 March 2019. The Committee’s next meeting was 13 March 2019 to consider the negotiating mandates on the National Gambling Amendment Bill.

Minutes dated 26 and 27 February 2019 were adopted and the meeting was adjourned.