Intellectual Property Laws Amendment Bill & Broad Based Economic Empowerment Amendment Bill: negotiating mandates

Meeting report

[PMG missed the first hour of the meeting as it was not informed the starting time was brought forward].

Intellectual Property Laws Amendment Bill [B8-2010]: negotiating mandates
In response to a question, Adv Charmaine van der Merwe, Senior Parliamentary Legal Advisor, replied that the World Intellectual Property Organization (WIPO) was working with a number of countries in drafting proposed legislation to deal with the protection of traditional knowledge also referred to as indigenous knowledge. WIPO looked at how intellectual property rights were dealt with differently across the borders, and once WIPO was finalized, South Africa could look at adopting a sui generis approach for indigenous knowledge. Another viable approach in the protection of Intellectual Property Rights was by amalgamating pieces of primary legislation which provided for the definition, protection, and enforcement of intellectual property (IP) into a single consolidated Bill. This issue with enacting a single Bill representative of all IP was the risk of indirectly omitting pertinent information. In creating an appropriate legal framework for the recognition and protection of Indigenous Knowledge (IK), it was decided by the Portfolio Committee that integrating the protection of IK into the current IP protection laws of the Republic would serve as a better protectionist tool in covering all bases and provided sanctions in the case of breach. The Bill (as sent back to Parliament by the President) had been redrafted and chapters had been inserted into each of the relevant principal acts, clearly demarcating the Traditional Knowledge aspect. Comments made by the Portfolio Committee on the protection of indigenous products were addressed in the current Bill, B8B-2010. Thus in clause 4 with the new section 28N, clause 9 with the new section 43K and clause 12 with the new section 53K. The Principal Act also upheld a provision where an international agreement between Europe was established favouring a reciprocal exchange in the protection of indigenous rights. In responding to the question about the protection of indigenous plants, the Bio Diversity Act dealt with that particular section.

On courts, community and legal aid, she explained that a community was acknowledged as a juristic person. Within the Legal Aid Act, the Legal Aid Guide allowed classes of people and communities to qualify for legal aid. The inserted dispute clause provided that the council would have to accredit institutions, and ensure that these institutions had knowledge about the customs of the community they were serving in case of having to resolve disputes. The Bill would achieve making the committees more financially viable. The difference between intellectual and indigenous knowledge was that indigenous knowledge was a type of property seen as intellectual knowledge. Overall, the proposed Bill achieved the objective expressed by all the provinces.

The Chairperson thanked Ms van der Merwe and asked the Gauteng province to put forward its stance on the Intellectual Property Laws Amendment Bill.

Gauteng Provincial Legislature
Ms T Magagula (ANC; Gauteng) said the Gauteng Economic Development Portfolio Committee supported the Intellectual Property Laws Amendment Bill.

The Chairperson asked the Department to provide the following day its responses to the concerns raised by the provinces about the Bill.

Mr Lionel October, dti Director General, said he would give a detailed written response on the concerns raised. The Department thanked the provinces for their consideration of the Bill and acknowledged that there was a consensus among the provinces in supporting the objectives of Intellectual Property Law Amendment Bill. The Department noted that this Bill was not the final solution in responding to the protection of the indigenous knowledge. However, as indigenous knowledge was being exploited without any benefit flowing to the communities by whom it was owned, there was a sense of urgency in getting the matter resolved.

The Chairperson thanked DG and apologized to parties unaware of the time change in the scheduling of the meeting. He asked if any interested parties wanted to make a comment but advised against Mr W James (DA), a member of the National Assembly, voicing his thoughts during an NCOP meeting dealing with provincial matters. He said if Mr James had any concerns, Ms E Van Lingen (DA, Eastern Cape) could speak on his behalf.

Ms E Van Lingen (DA; Eastern Cape) stated that according to Parliament's Rules, Members of the NCOP may visit NA Committees and vice versa; they were just not allowed to vote.

Mr James asked the Chairperson if he was not allowed to speak, which he felt was an incorrect ruling.

The Chairperson said since the Committee was dealing with a provincial legislative matter he would advise Mr James not to speak.

Mr James said he felt the ruling was incorrect and wanted it put on record that a colleague from the NA was not allowed to make a comment on a meeting of such a nature

Mr F Adams (ANC; Western Cape) said Mr James was out of order

Mr P Govender (IFP, KwaZulu-Natal) said the Committee understood and agreed with the Chairperson's ruling and hoped Mr James would respect it.

Ms T Magagula, Chairperson of Gauteng's Economic Development Committee, said that she was at peace with the summary of the objectives given by the DG.

Ms Van Lingen said she would like to have Ms van der Merwe’s written legal responses, she asked how a community could be classified as a juristic person and where in the Bill that was described. She said if WIPO was not ready to adopt a sui generis approach, South Africa did not have to stay within the confines of the WIPO agreement. The current approach being adopted by the Department to protect indigenous knowledge "is not the best approach but the approach dti wanted to take".

Mr Govender said it was important to come up with an internationally agreed upon document in dealing with the protection of indigenous knowledge. If any issues were left out, they could be discussed further. He said KZN stood firm on its standpoint about the amendments that needed to be made about disputes in section 28K(5) and (6), section 43I(5) and (6) and section 54I(5) and (6) if they were to support the Bill. With respect to appeals, one could not appeal decisions from a high court at a lower court. The decision would have to be appealed at a court above the high court. In Section 54I(6) the reference to court of law should be made specific as to which court will have the power to deal with the appeal. By limiting decision making to only the high courts, this would restrict people’s ability to appeal. Legal Aid was already difficult to obtain and the essence of this Bill was to make it easier for people. The KZN negotiating mandate said that new national legislation must be enacted that will conform to best international practices dealing with intellectual property principles.

Mr K Sinclair (COPE; Northern Cape) raised his concerns about the right of the individual vis-à-vis the right of the group. He maintained that there was a constitutional hurdle that needed to be crossed in terms of the constitutionality of that principle which still remained a grey area. The second issue reflected was in the Memorandum. The Amendment Act already provided recognition of indigenous knowledge but with this particular Bill, there were three or four grey areas about its practicality and implementation.

The Chairperson said in dealing with a Section 76 Bill, the Committee needed to concentrate on which provinces had mandated it - so that the Bill could be finalised.

Ms van der Merwe said there were two mandates outstanding which would be made available. In respect of WIPO she could not find any final document from WIPO on traditional knowledge. She could only find draft documents that spoke about legislation "to be developed". The Department's advice to the Portfolio Committee as well as to this Select Committee was that the insertion of amendments into specific sections within each Principal Act was confusing and from a legal point of view it made the law vague, but the insertion of chapters demarcated this, and put it within a current system which would not have a constitutional impact.

On the matter of appealing to the High Courts, she said if a community’s song was used without agreement, and an accredited institution agreed to represent this community, this appeal would be taken directly to the sheriff who would proceed to take action. This was the value of Section 54I(5). If a court decision was made by a single judge, that appeal would go to a full bench of the High Court, if the decision was made by two judges the appeal would have to go to an appeal court. Currently the only court able to review appeals was the High Court. She clarified that the right of the individual versus the right of the group in respect to indigenous knowledge, referred to a community with collective ownership of indigenous property versus a specific individual who had rights to a specific piece of indigenous knowledge.

Ms Van Lingen said a sui generis report needed to be done.

Free Provincial Legislature
Mr B Mnguni (ANC; Free State) said Free State voted in favour of the Bill if the province's proposed amendments were taken into consideration.

Limpopo Provincial Legislature
Ms M Dikgale (ANC; Limpopo)said Limpopo voted in favour of the Bill if its amendments were taken into consideration.

Mpumalanga Provincial Legislature
The Chairperson read that the Mpumalanga Legislature had voted in favour of the Bill if ts proposed amendments were taken into consideration.

Northern Cape Provincial Legislature
Mr K Sinclair (COPE; Northern Cape) reported that the Northern Cape Provincial Legislature
voted in favour of the Bill if its proposed amendments were taken into consideration.

Eastern Cape Provincial Legislature
Ms A Qikani (ANC; Eastern Cape) said Eastern Cape voted in favour of the Bill if its proposed amendments were taken into consideration.

Northern Cape Provincial Legislature
Ms K Kekesi (ANC; Northern Cape) said Northern Cape voted in favour of the Bill if its proposed amendments were taken into consideration.

Kwa-Zulu Natal Provincial Legislature
Mr P Govender (IFP; Kwa-Zulu Natal) noted that the provincial legislature voted in favour of the Bill ift its proposed amendments were taken into consideration.

Western Cape Provincial Legislature
Mr F Adams (ANC; Western Cape) said that the provincial legislature was not in favour of the Bill.

Broad Based Economic Empowerment Amendment Bill [B42B-2012]
The Chairperson said the Committee had received mandates from six of the provinces. The Eastern Cape, North Western Cape and Western Cape were the remaining provinces who had not provided their mandates. Delegates from the Western Cape said the mandate would be provided before 12pm that day. He said the IP Bill would be finalised in October.

Ms Van Lingen said the Eastern Cape Province had applied for an extension in formulating its negotiating mandate but the Chairperson had refused its request and she asked for clarification about the grounds for his refusal.

The Chairperson said the Eastern Cape was not granted an extension because all other provinces were able to deliver and formulate their negotiating mandates on time regardless of the challenges they had to face. He would give interested stakeholders the time to express their concerns about the B-BBEE Bill, but he clarified that the best way for institutions to influence decisions and mandates were in the provinces during their public hearings.

Free State Provincial Legislature
Mr B Mnguni (ANC; Free State) said the Free State's Portfolio Committee on Public Works, Economic Development, Environmental Affairs and Tourism voted in favour of the Bill, if their proposed amendments were taken into consideration:
Section 13(O) should be amended to read “a person commits an offence if the person knowingly and willingly…”
There was a proposal that B-BBEE should carry more weight on the Treasury scorecard for the procurement of goods and services since pricing disadvantaged many black owned businesses.
Monitoring and Evaluation must be more rigorous to ensure compliance
The Casino Association of South Africa (CASA) raised the following matters: sub section 9(6) read in conjunction with sub sections 10(3) and 10(4) may lead to a proliferation of contradictory codes in the Casino industry, which contradicted with stated objective of achieving uniformity in application of the B-BBEE
These sections also imposed conditions on licence holders over which they had little control over
Casino licence holders also ran the risk of noncompliance to the preferential procurement targets of buying local that they may experience a significant drop in the their B-BBEE status
 The Minister must by notice in the Gazette issue regulations to review previous transactions made through fronting after the Bill was signed
Section 13O(3)(b) the term ‘not exceeding’ should be replaced with the minimum sentence of 5 years imprisonment
Under the objects of the Bill 3.1 the following sections prohibiting and discouraging unethical business deals through fronting needed to be included
Under section13C dealing with the appointment of Commissioner and Acting Commissioner, the qualifications of the commissioner needed to be included
Under section 13K dealing with the summons, a person designated and appointed in terms of Section 13C of the B-BBEE Amendment Bill had authority to enter and search under warrant, authority to enter and search without warrant, powers to enter and search, conduct of entry and search needed to be included.

Kwa-Zulu Natal Provincial Legislature
Mr Govender said the KZN Portfolio Committee on Economic Development and Tourism was in favour of the Bill if the withdrawal of Clause 9(6) read together with Clause 10(3) and (4) was effected, or an exemption for licensed casino premises from these clauses was permitted. An amendment to the definition of ‘fronting practice’ in (c) was proposed: "without garnering that black person economic benefits, educational empowerment and responsibilities that would reasonably be expected to be associated with the status or position held by that black person".

Limpopo Provincial Legislature
Ms M Dikgale (ANC; Limpopo) said that the Limpopo Portfolio Committee on Economic Development, Environment and Tourism recommended that the NCOP Permanent Delegate vote in favour of the Bill, taking into consideration its proposed amendments in its negotiating mandate. The proposed amendments were answering the insufficient monitoring and evaluation on implementation of legislation, the need for skills empowerment and funding for upcoming entrepreneurs, the implementation of quality assurance measures put in place by government and the availability and accessibility of the South African Bureau of Standards (SABS) local offices.

Mpumalanga Provincial Legislature
The Chairperson read out the Mpumalanga negotiating mandate which stated that the Mpumalanga Portfolio Committee on Agriculture, Rural Development and Land Administration; Economic Development, Environment and Tourism was in favour of the B-BBEE Bill, if their observations were taken into account. Clause 13B(1) should read, when establishing the B-BBEE Commission, it is recommended that it should be independent and report directly to Parliament. Clause 13C(1)(b) should read: "When appointing the Commissioner, the Minister must consult the relevant Portfolio Committee of [Parliament] the National Assembly and the Select-Committee of the National Council of Provinces". Clause 13D(4)(a) should add "appoint 7 (seven) staff with suitable qualifications and experience, or contract with other persons, to assist the Commission in carrying out its functions".

Northern Cape Provincial Legislature
Mr K Sinclair, (IFP; Northern Cape) said the Northern Cape Portfolio Committee on Finance, Economic Development and Tourism supported on the Bill on the grounds that Committee took note of the comments and recommendations raised by the province. Stakeholders' input on the Bill stated that: the office of the commissioner that dealt with complaints needed to be decentralised, the Bill should seek to address promotion of economic development through Social and Labour Plans in areas where mining takes place; women and differently-able persons should be recognised, empowered and advanced in companies that would qualify for B-BBEE status; the Bill needed to outline the functions of the commission, penalties must also be imposed on small companies that did not comply with relevant sections of the Bill; in section 13(b) where there was the word major the word small needed to be included; a scoring chart encouraging localisation needed to be developed; and the Bill needed to include blacklisting of private companies who did not comply with the codes of good practice. The Committee's input on the Bill was: All Black people must be included irrespective of their salary level; companies that benefited from the government through B-BBEE needed to be compelled to give back to communities in which they operated; the word ‘fronting’ needed to be defined in the Bill; and a high penalty needed to be imposed on companies that practiced fronting.
  
Gauteng Provincial Legislature
Ms B Abrahams (ANC; Gauteng) said the Gauteng Portfolio Committee on Economic Development was in favour of the Bill on the grounds that their proposed amendments were taken into consideration. Clause 1(c) which provided broad-based black economic empowerment meant the viable economic empowerment of all black people. It noted that the word viable was confusing and a better suited word would be feasible. Clause 2(c)(h) on the objective of the Act: providing that" increasing effective black owned and managed enterprises", should be extended to not only include ownership or management, but economic participation in general. Clause 5(b) stated that the Minister may permit organs of the state or public entities to specify qualification criteria. This request to the Minister by an organ of state could lead to abuse of this section where such request were not in the spirit of the Act. In section 10(4) the word may should be removed and the section should read sector council that would have established. On 13D(1) it was suggested that the Council needed to make appointments for the Commission instead of the Commissioner in consultation with the Minister. An oversight process needed to be put in place to monitor the recruitment process of the Commission. On the memorandum, section 4.5(b) the B-BBEE verification professional should not be limited to only persons registered in terms of the Auditing Profession Act. The Auditing Profession Act did not regulate accounting officers, non-registered auditors or members of professional bodies that were not accredited in the Auditing Profession Act.

North West Provincial Legislature
Ms K Kekesi (ANC; North West) said it was in favour of the B-BBEE Bill but recommended the dti expedite the facilitation of the B-BBEE verification professional, in terms of the Auditing Profession Act. The Independent Regulatory Board of auditors would function as a verification professional regulator.   

The Chairperson sent a member to check on the mandate from the Western Cape. In the meantime she asked for organisations that had concerns with the Bill to make their submission (see Casino Association of South Africa submission on the B-BBEE Amendment Bill at end of this report) .

Western Cape Provincial Legislature
Mr F Adams (ANC, Western Cape) said that the Western Cape Standing Committee on Finance and Economic Development supported the Bill but recommended that section 13A of the Principal Act be amended.

Mr Sinclair said that the provinces had raised serious and important issues. The Department's full response to the recommendations should be made at a later date.

The Chairperson seconded Mr Sinclair’s proposal and said the Committee would further continue and finalise this meeting during the NCOP's visit to Gauteng.

Ms Van Lingen said she wanted to finalize the B-BBEE Bill before the meeting was adjourned and she also wanted clarification on the credit amnesty.

The Chairperson said it was important to finish these meetings on time and the Committee would like to hear what the Department would do with the recommendations proposed by the provinces.

The State Law Advisor said it was his own personal opinion that the proposed amendments suggested by each of the provinces were within the framework of the Constitution

Ms van der Merwe said she had one concern about a proposal from Mpumalanga. It recommended that in Clause 13B(1) the Broad Based Black Economic Empowerment Commission should be independent and report directly to Parliament. This was concerning because the B-BBEE Commission was not a Chapter 9 institution and the proposed amendment would have to appear in the Constitution.

Department response to provinces' proposed amendments to the B-BBEE Bill
Ms Nomonde Mesatywa, dti Chief Director: B-BBEE, said the Department had noted and supported that minimum and maximum penalties needed to be strengthened to address fronting. Some submissions by provinces had said that small companies needed to be punished for engaging in fronting practices. The dti's response was that the turnover rate exempted small companies from complying with the measures in the Codes of Good Practice. It was more common for larger companies to engage in fronting practices. Small companies tended to be victims of fronting instead of the perpetrators. The proposal on blacklisting was supported by dti. The provision in favour of establishing an independent B-BBEE Commission in clause 13B(1) did not need to be enhanced because the existing clauses sufficiently address that particular issue.

The proposal pertaining to the development of a scoring chart to encourage localisation was also sufficiently dealt with in another policy framework and thus it was not necessary for that particular provision to be dealt with in this Bill. The provision giving legal authority to a person designated and appointed in terms of section 13C to enter and search institutions under investigation for fronting would have powers that would be interlinked with the powers of other law enforcement agencies. In terms of the definition of fronting, the dti noted the changes proposed, however the fronting practice definition provided was broad enough and comprehensive enough to address the different faces of fronting methods that have been witnessed. The proposal stating that in appointing a Commissioner, the NA and NCOP Committees needed to be consulted, was a provision which the dti did not object to. Section 9(6) and 10(3) and (4) is an industry-driven process rather than a government-driven process. Due to fronting within industries, it had prompted a situation where different sector codes other than the generic requirements of the Codes of Good Practice on B-BBEE have been adopted to ensure that sectors were deterred from fronting.

Mr October said one must not lose sight of the main objectives of the Bill. It was important to accelerate the process of transformation and deal with the unintended consequences that came out of the original Act.

Mr Ngobese stated that section 9(6) and 10(3) and (4) were confusing because as an industry they did not know which sector code law to follow.

A Committee member commented that the reality of B-BBEE was that the very people it intended to uplift were the very same people who were being unintentionally left behind. The instruments within B-BBEE were inaccessible, and people previously excluded from the economy were still unable to become part of the market.

Casino Association of South Africa (CASA) submission on the B-BBEE Amendment Bill
Mr Themba Ngobese, CASA CEO, said it wished to record that CASA was in favour of the broad objectives that the B-BBEE Amendment Bill purported to promote, but it was concerned with Clause 9(6) read together with Clause 10(3) and (4). Clause 9(6) empowered the Minister, if requested to do so, to permit organs of state or public entities to specify qualification criteria for procurement and other economic activities which exceeded those which appear in any Codes published by the Minister in terms of sub section 1. The consequence of Clause 9(6) was that gambling licence holders would face the prospect of different Provincial Licensing Authorities (PLAs) and National Gambling Boards (NGBs) would seek to determine their own individual criteria pursuant to Clause 9(6), which may potentially result in no fewer than ten different sets of requirements or criteria with which gambling licence holders in different provinces would have to comply. Clause 10(3) implied that casinos would have to be measured only against the requirements of the Tourism Sector Code due to the tourism related components of their casino developments, even though most of their revenue was generated from casino operators. The proposition implied by Clause 10(3) would create significant difficulties for CASA members, as the various PLAs required CASA members to be evaluated against the Generic Scorecard set up by the Codes. CASA proposed the withdrawal of Clause 9(6) read together with Clause 10(3) and (4). Alternatively it proposed an exemption of licensed casino premises from the application of Clause 9(6) read together with Clause 10(3) and (4).

Ms van Lingen said she was excited about this compassionate plea from CASA. The Department needed to take into consideration the concerns raised by CASA. She would like to see the documents written by CASA as well as Ms Mestywa’s report in writing.

The Chairperson stated that her inquiry about credit amnesty could be done off record.

The Chairperson had earlier informed the Committee that on 4 September, Cabinet had approved the recommendations of the Select Committee on the ‘Removal of Adverse Credit Information Project’ report.
[Cabinet noted the report from the ‘Removal of Adverse Credit Information Project’ and approved the recommendations of the Select Committee on Trade and International Relations. This seeks to address the issue of access to credit to those South Africans that can afford credit. These are consumers who may have paid their debts in full and are in a position to afford credit but whose access is currently impeded by negative credit information on their record. This is primarily about ensuring that the National Credit Act (Act 34 of 2005) works as intended in terms of ensuring that consumers who can afford credit can be able to access it. Inaccessible or expensive credit hinders growth. Access to sustainable credit market is essential to all developmental goals].

Meeting adjourned.