Prof Wim Alberts and the University of Johannesburg’s annual IP seminar is just around the corner and, as usual, promises to be truly interesting. He has lined up an impressive collection of topics and speakers to bring new perspectives on intellectual property for 2016.
If you are around UJ next week, this would be a day well spent. The programme is available here.
Research and development is costly. International patent portfolios even more so. The business strategy of most corporations, when filing a patent application, is to seek some return on R&D investment, mostly through self-exploitation of the products of R&D, or through royalty earnings from intellectual Property (IP).
The time frame between filing a patent application to grant can take many years. Patent offices’ backlogs often result in a three year (or longer) delay before any office actions are issued or an application is reviewed.
Legislation provides for the licensing of pending applications in certain countries provided the patent application has been published. The risk of refunding a paid royalty, or forfeiting future royalties for the licensor remains if the patent is not granted, or not granted in a form reading onto the licence granting provisions.
What is there to be gained by a licensee by paying a royalty before a patent issues? Attractive alternatives include:
The possibility of licensing pending patent applications (provisional rights) and earning royalty income therefrom as provided under certain countries patent law systems presents an important business tool. This is so as the pre-issuance use of the invention may represent substantial value to a company during the time consuming patent prosecution wherein an examination period may span several years.
Opportunities for licensing revenue for a pending patent application are limited and it depends on the specific circumstances (i.e. independent licensing, as part of Merger and Acquisition), the type of invention, technology transfer possibilities, additional know-how underlying to the invention.
Where some form of technology transfer is part of the transaction it is generally easier to negotiate royalty payments as such deals provide access to new technology as well as a right under a future patent.
The key is for the licensor to convince a licensee that it has something to gain by paying a royalty before a patent is granted. Royalties are easier to negotiate where the patent application has not yet published, and the licensee is paying a royalty for the ability to obtain confidential information or some useful know-how that is not included in the patent application; or where the applicant is willing to offer the licensee a reduced long-term royalty, some level of exclusivity, or another benefit in exchange for royalties while the application is still pending.
Care should however be taken where global patent portfolios are licenced and the licensing of pending patent applications is not allowed by any specific country’s laws, or where there is an obligation to refund the royalty paid to the licensor in case of revocation or non-grant of the licenced patent applications.
Licence agreements should always include provisions concerning rejection, revocation and the like concerning the patents or patent applications covered by the licence so that it is clear to the licensee and licensor what the strategy is in the event of a patent not coming into effect or being invalidated. Furthermore, the regulations and exceptions of the antitrust regulations of the each country that effects the agreement have to be considered.
| Country | Patent law and relevant provisions | Freedom of contract/registration requirements |
| Australia | The Patents Act, 1990. S 13(1) S145 | Freedom of contract prevails and parties are free to contract with respect to license fees on pending application. O obligation for registration of patent licenses |
| Brazil | Industrial Property Law of Brazil, Law no. 9.279, of May 14, 1996Articles 42, 61, 62, 63
| There is no specific guideline attesting that royalties are only payable after grant of the patent. However based on interpretation of the law only after grant is the payment of royalties allowed. It is a requirement to record a patent licence once a patent is granted. It is however advisable and possible to record a patent licence agreement when the patent is still pending. Calculation of royalties from the date of the licence agreement being recorded at the Patent office |
| China | Patent Law of the People’s Republic of China (as amended December 27, 2008, Article 13 | Licensing of a patent application after publication is acceptable. Registration of licenses is a requirement. The application for registration of licences is complex and needs to meet specific requirements; and it and the parties would be well advised to seek the assistance of local counsel |
| European Union | European Patent Convention (EPC). Art. 73 EPC; Rules 22, 23 and 24 EPC. | It is possible to license pending patent applications under the EPC. Licences (also explicitly mentioned exclusive licences and sub licences. Rule 24 EPC) with regard to pending patent applications can be recorded in the Register of European Patents. |
| India | The Patent Amendments Act 15 of 2005. Section 11A (7)and S69 Where a pending patent is the subject matter of a licence, the terms with respect to royalty payments and restitution thereof in case of a non-grant would be governed by the terms of the licence agreement. However, for a pure patent licence, as there is no longer a licensable subject matter, the licensee would be at liberty to terminate the licence agreement subject to any additional termination provisions in the licence contract. | No express provision for the licensing of patent applications.provides that on and from the date of publication of an application for a patent until the date of grant of patent in respect of such application, the applicant shall have the same privileges and rights as if a patent for the invention had been granted on the date of publication, provided that the applicant shall not be entitled to institute any proceedings for infringement until the patent has been granted. Thus there is no specific restriction to enter into a licence agreement while a published application is pending and earn royalties or licence fees from it. The risk, however, is that, as the proprietor licensor is not able to sue for patent infringement until the grant of patent, potential licensees may be reluctant, or even refuse, to enter into a licence and use the published invention as there is no enforceable right.Section 69 embodies the proper procedure for registration of a licence agreement.
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| Indonesia | Indonesian Patent Law No. 14 of 2001. Article 1, 16 , 69, 71 and 72. | It is not possible to license and earn royalties for a pending patent application in Indonesia.A licensing agreement shall be recorded and by the Registry to have legal effect concerning third parties. |
| Malaysia | Malaysian Patents Act 1983 Part IX (Section 41-46) | Licensing of pending patent applications is possible, but at the risk of the patent owner. The recording of a licence contract is only applicable for a granted patent in respect of which the owner of a patent (the “licensor”) may apply to the Registrar in accordance with the prescribed regulations for an entry to be made in the Register by which the licensor grants to another person (the “licensee”) a licence which enables/provides the licensee with the rights of the owner of the patent. |
| Singapore | Singapore Patents Act, Section 43 | It is possible to license and earn royalties for a pending patent application. It is not required to record the licence agreement at the patent office for it to have commercial effect between the contracting parties |
| Philippines | The Intellectual Property Code Republic Act No. 8293 (Extracts) as amended by Act No. 9502 of 2008 (effective: July 4, 2008) governs Patent Law in the Philippines. | It is possible to license and earn royalties for a pending patent application. However, licensing of pending patent applications (or patents) must comply with the mandatory (S88) and prohibited clauses (S87) of the IP Code |
| Japan | Japanese Patent Law, Law No. 16 of 2008, which came into effect on April 1, 2009, Article 34 | It is possible to grant provisional exclusive licences and provisional non-exclusive licences which are based on a pending application. |
| Thailand | Thai Patent Act (Patent Act B.E. 2522) Section 45(1) | It is not possible to license and earn royalties for a pending patent application in Thailand. |
| South Africa | Patents Act 57, 1978 S45 (1) ; Sections 53-58. | It is not possible to license a patent application in terms of South African law. |
| New Zealand | New Zealand Patents Act 2013. Article 18 and 81 | After a complete specification relating to a patent application has become open to public inspection and until a patent is granted on the application, the nominated person has the same privileges and rights as the nominated person would have had if a patent for the invention had been granted on the day when the specification became open to public inspection. A patent license agreement must be registered after the grant of the patent, even if the licence agreement was prepared and signed before the patent was granted. |
| USA | American Inventor Protection Act of 1999,” 35 U.S.C. § 154(d) | Patentee may acquire a reasonable royalty from a third party that infringes a published application claim provided: actual notice is given to the third party by the applicant (the inventor needs to send a cease-and-desist letter), and a patent issues from the application with a substantially identical claim. |
THIS EVENT IS NOW CLOSED
Watch the video of the lecture below.
The annual Intellectual Property Law Public Lecture was presented by Prof Owen Dean on 6 October 2015 on the topic Copyright as an Agent of Social Justice – perspective on the Lion Sleeps Tonight case.
To read more about the lecture click here.
Prof Owen Dean (Chair of IP Law) and Prof Sonia Human (Dean of Law)
The IP Chair Team
From left: Prof Sadulla Karjiker, Mrs Annette van Tonder, Prof Owen Dean, Prof Sonia Human, Mr Cobus Jooste
Pre-drinks Reception
Pre-drinks Reception
To watch the video podcast of the lecture, click here.
The Chair of Intellectual Property Law will present the annual IP Public Lecture on 6 October 2015 with Prof Owen Dean, incumbent of the Chair of IP Law and consultant to Spoor & Fisher.
The topic of Prof Dean’s lecture, Copyright as an Agent of Social Justice, will present a perspective on the “Lion Sleeps Tonight” case which was led by Prof Dean and marked a watershed moment in the development of South African copyright law.
Introduction:
Intellectual Property is viewed by some as an unwarranted monopoly and as an instrument of oppression used by haves against have-nots. It is increasingly being attacked and maligned from these quarters. Copyright, as a species of intellectual property, is tarred with this brush. But this prejudice loses sight of the fact that copyright is freely available as a facility to all who have a creative bent. Copyright is bestowed automatically and gratuitously. Even the most humble and economically disadvantaged person can own it and benefit from it. It provides a ready means for acquiring wealth. In so doing it can be an instrument for achieving social upliftment and justice. This point is demonstrated by the renowned “Lion Sleeps Tonight” case which serves as an example of copyright at work in a worthy cause.
Date:
6 October 2015
Time:
18:30
Venue:
Stellenbosch University, Faculty of Law
JC de Wet Hall
Ou Hoofgebou Room 1023
Corner of Victoria & Ryneveld Street
Stellenbosch
Click here for directions.
Entry:
FREE
Attire:
Smart casual
RSVP:
By 2 October 2015
Email – annettev@sun.ac.za
Tel – 021 808 9371 (08:00 – 14:00)
To download the invitation click the image below:
In an earlier article posted on this blog, the Copyright Amendment Bill published in Government Gazette no. 39028, dated 27 July, 2915, was described as a curate’s egg, i.e something that is fundamentally bad but in principle has some good aspects. The view was expressed that the Bill could not be cured by piecemeal amendments, and that it was necessary to go back to the beginning, decide rationally what is actually wanted and warranted, and then re-draft it afresh. We stand by and reiterate this view.
Nevertheless, in the interests of ultimately having a workable and reasonable piece of legislation that does not mortally wound the Copyright Act, we have responded to the invitation expressed in the Government Gazette and have prepared detailed comments which can be downloaded here. In our comments, which take up some one hundred pages, we have attempted to unscramble the curate’s egg; we have sought to identify the bad parts of the egg and to highlight the good that we have been able to find. The latter should form the basis of the redrafting exercise that we have propounded. Separating the good part of an egg from the bad part is in principle unattainable, but we have done the best that we can.
It is hoped that the DTI will take these and the doubtless plethora of other critical comments on the Bill seriously and react responsibly and positively to them. They must not simply go through the motions of “consultation” with a view to saying that they have discharged their constitutional obligation in this respect. The degree to which the Bill is amended, or the fact that it is scrapped, will bear testimony to this question, and will be the acid test.
Download the full review of the Copyright Amendment Bill here. 
The Copyright Amendment Draft Bill (GG No 39028, 27 July 2015) (‘the Bill’) is by all accounts a grave misfortune and a study in amateur law-making. Enough has been said on this point to make it clear that the DTI has tripped at the first hurdle and that a re-evaluation is the only hope of achieving a grade that would admit it to the Introduction to Copyright Law 101 examination.
However, it is noteworthy that the Bill contains a set of provisions that is worthy of (limited) praise and deserving of closer analysis. These are, among others, the proposed amendments to the Copyright Act (‘the Act’) that seek to incorporate anti-circumvention protection measures where a copyrighted work in digital format is protected by or controlled with the aid of digital rights management (DRM) tools or technological protection measures (TPM).
These provisions are long overdue and have been submitted to the DTI on numerous occasions in the past as proposed amendments to the Act that would update our desperately out-dated law and address the perennial piracy problem in a meaningful and coherent manner.
The application of intellectual property law in the digital environment is a technical, rapidly developing and highly skilled area of an already specialised field of law. The use of technology (such as TPM/DRM measures) in order to support copyright law adds a further layer of complication. It is therefore not surprising that the DTI has been slow to formulate South Africa’s legislative approach to copyright enforcement in relation to digital works.
One would therefore be pardoned for imagining that once the proposed amendments did eventually appear, they would be flawless and state of the art. However, one must be disappointed.
The Bill introduces several provisions that address instances where a copyright work in digital form, such as a cinematograph film, broadcast, computer program or sound recording, is protected by technological means.
Common examples of this practice are the digital copy restrictions applied to audio CDs or films on DVD/Blu-Ray Discs, access control measures applied to databases of literary works, device specific limitations applicable to sound recordings or eBooks, geographically specific encoding and authentication measures applied to video-on-demand and pay-TV services and serial keys applied to computer software.
These measures are largely developed and maintained by private stakeholders in the digital content and cybersecurity industries and have long been applied to enforce copyright law on the Internet and in relation to the digital versions of copyright works disseminated by electronic means. It has evolved to reach a degree of general standardisation for each type of work, with a few variations on the same theme. As a result, the use of DRM or TPM is a common phenomenon and a standard bearer of copyright law in the battle against piracy.
Therefore, the international IP community and its leading expert (the World Intellectual Property Organisation) saw fit to propose that all nations should adopt national legal measures that prevent or restrict the removal of or interference with any of these protection measures. Why? Because in most cases of piracy the technological barriers must first be removed or modified before the work can be reproduced and distributed. Therefore, if the law prevents the removal of such digital measures, it may limit the proliferation of copyright infringement of digital works.
The WIPO Copyright Treaty proposed that all member states should implement measures to address the circumvention of digital and technological measures applied to copyright works, and South Africa paid some service to this suggestion by enacting chapter 13, section 86 of the Electronic Communications and Transactions Act 25 of 2002 (ECT Act).
However, the ECT Act addressed circumvention along with other conduct such as hacking, denial of service attacks and malicious software in general as criminal conduct or cybercrime. The result was that circumvention for purposes of copyright infringement is currently a criminal offence and absolutely prevents fair dealing of copyright works in digital form.
As a result, further attention was needed to balance the public interest with the economic interests of the copyright owner. Enter the Bill.
The Bill provides that, inter alia, it would be an offence to make, import, sell, distribute, advertise, use or advise on the use of any “process, treatment, mechanism, technology, device, system or component that in the normal course of its operation is designed to prevent or restrict infringement of copyright work”.
In other words, if for example a person rents a movie on disc and copies that film onto his computer (a process that would require a series of steps to enable the computer to copy the content of the disc) he would be guilty of an offence in terms of the Bill (and the ECT Act). The same is true where a person modifies an eBook file to print it or makes a copy of a film downloaded from iTunes.
However, in this respect the Bill does nothing more than duplicate the effect of the ECT Act and continues to criminalise such conduct. At this point the diamond in the rough begins to lose its sparkle.
The mere fact that a work is recorded in digital form and protected against the threats of digital incursion, should not mean that the work is no longer available for lawful use in the same manner as its analogue version. A digital work is certainly deserving of greater legal protection against the greater threat of infringement posed by the Internet, but that does not mean that digital works are excluded from fair dealing.
In this respect the Bill should be welcomed. It has taken note of this fact and provides in section 28P that technological protection measures may be lawfully circumvented for purposes of fair dealing, but not for any of the purposes of fair use proposed by the Bill. In addition, it makes provision for individuals to seek help with circumventing such measures for a lawful purpose and establishes specific safeguards applicable to libraries.
Unfortunately, the Bill has not achieved the lofty goal it has set out to achieve. It falls desperately short of protecting the interests of the copyright owner of digital works and at the same time fails to provide sufficient freedom to the user of digital content.
Firstly, the anti-circumvention measures (with the exception of one) culminate in criminal liability in the same manner as the much criticised section 86 of the ECT Act. It therefore exposes each case of fair dealing with digital works to the threat of criminal sanction, as opposed to civil copyright infringement. It is difficult to understand why the DTI would amend the Copyright Act and fail to employ the existing three-layer approach to copyright infringement currently contained in the Act to enforce the anti-circumvention provisions. Nevertheless, the fact that anti-circumvention is criminalised outright means that the Bill had to introduce a convoluted set of provisions to address the level of guilty knowledge required on the part of the offender.
Secondly, the slapdash drafting of the Bill has caused a further undue limitation on the use of digital works. It provides that circumvention may be carried out for purposes of fair dealing (quotation, review, private use, research etc.) but it may not be carried out for purposes of fair use (such as cartoon, parody, pastiche, format shifting or educational activity as introduced by the Bill). This interpretation may be avoided by reading section 12A into the meaning of “a permitted act” in section 28P, but the question remains whether, if that was the DTI’s intention, why it was not expressly included by merely referring to section 12A. Furthermore, the Bill introduces a general fairness test in section 12A(5) against which all forms of fair use must be evaluated. The act of circumvention is therefore, on the above reading of the Bill, made subject to this test in section 28P(a). As a result, any lawful act of circumvention for fair dealing or fair use purposes may nevertheless amount to criminal conduct if it is, for example, found to be an excessive or disproportionate amount of the work that was reproduced. Since the act of circumvention must necessarily relate to the whole of the work, it will in most cases amount to an excessive use of the work.
All of the defects in the Bill raised above may be cured with a modicum of care in drafting and a less aggressive approach to anti-circumvention. However, this does not mean that any lesser degree of protection for digital works is proposed. On the contrary, the digital environment requires the most comprehensive legal approach possible to safeguard intellectual property. All that is proposed here is a splash of spit and polish to allow the diamond in the rough to reveal its true colours.
How the Bill should be adapted to give effect to this sincere desire for effective and fair protection, is explained by the Chair of Intellectual Property in its official comments, available here.
It should be noted that this is not the only shortcoming of the Bill in relation to technology and IP in the digital environment. For example, a further glaring problem is the omission of the new exclusive right of communication to the public in relation to broadcasts and computer programs. The opportunity to tackle piracy and geo-blocking circumvention to its fullest extent has been missed. This is a significant and worrying lapse in concentration that should be addressed without delay.
The Licensing Executives Society (LES) of South Africa will present its one day short course L.E.S 101: Introduction to Licensing in Stellenbosch on 20 August 2015 at the Stellenbosch Institute for Advanced Study.
This course, aimed at everyone with an interest or role in IP rights management, commercialisation and/or technology transfer is an absolute must for any brand owner or manager. See below for the full programme.
The course will equip all attendees with a thorough and accessible introduction to the particular legal and practical skills required to effectively and comprehensively exploit intellectual property rights. In addition, the course will simulate a successful licensing transaction to practically illustrate the licensing process from negotiation to conclusion.
Presented by, among others, the Chair’s own Fellow and lecturer of the Patents & Designs module, Dr Madelein Kleyn and Bastiaan Koster (frequent contributor to the IP law Short Course), this in an opportunity to learn from the best that should not be missed. And at R850 it is an absolute steal! Register now.
Download the course programme here.
The figure of speech used in describing something as a “curate’s egg” derives from a cartoon by G du Maurier published in the British humorous magazine Punch in November 1895. It depicts a meek curate, faced with a bad egg at the Bishop’s breakfast table, commenting that it is partly good. In other words it is something that is thoroughly bad but is discreetly said to be partly good.[1]
“The term relies on an objective analysis and intuitive understanding of the depicted scenario: a self-contained egg cannot be both partially spoiled and partially unspoiled. To pretend to find elements of freshness in a bad egg is thus a desperate attempt to find good in something that is irredeemably bad.”[2] [Click here for more information].
The Copyright Amendment Bill published by the Department of Trade and Industry in GG no. 39028 of 27 July 2015 is an archetypal curate’s egg. I will commence by making a desperate attempt to find some good in it, which indeed there actually is.
Source: The Study June 2013 http://from-bedroom-to-study.blogspot.com/2013_06_01_archive.html
The Bill addresses certain issues that have been crying out to be dealt with for decades. It thus in principle makes laudable strides to modernise the Copyright Act, 1978 which has become badly out of date, having received scant substantive attention from the legislature for some two decades while the world, particularly in the technological field and more particularly the internet, has been moving forward at a terrifying pace. The Act has simply become outdated and is in grave need of modernising and being brought into line with contemporary reality. The worthy issues that it confronts and seeks to regulate include the control of collecting societies; broadening the scope of exemptions from copyright infringement by providing for instances of so-called “fair use” of copyright works, particularly in the field of education; creating facilities for making works available to persons with disability on equitable terms; making provision for access to and use of so-called “orphan works” (i.e. works in respect of which the ownership of copyright is unknown); providing for sanctions for abuse of digital rights management measures built into copies of works. In so doing it is purporting to give effect the report of the Copyright Review Commission dating from 2011. So far so good.
On a perhaps less favourable level, the Bill introduces the European “droit du suite” in terms of which an artist can claim to receive a portion of the resale price of his artwork when onward sales of it are made; it provides for performers to have the moral rights of being acknowledged when their performances are publicly commercially exploited and of objecting to distortions of their performances (which provisions belong in the Performers Protection Act, which is their home); there is a provision prohibiting the purported granting of licences in situations where no right capable of being licensed exists.
But that is where the illusion of goodness in the Bill ends. I say this because, although the sentiments of the draftsman are commendable, the execution is abysmal. With more than 40 years of specialising in the practice of copyright law and having done a doctorate and written a text book on the subject, which has been cited with approval by the court on many occasions, as well as having pursued an academic career in the field, I can safely say that I know my way about the copyright world. I regret to say that I have not come across a piece of intellectual property writing that is as badly formulated and presented, and that exhibits such a lack of understanding of the basic principles of the subject as is evident in this Bill. The draftsmanship and usage of grammar and language in writing it are appalling. On a substantive level, it is as though the author of the Bill did not take the trouble to read, let alone understand, the Act that he is purporting to amend. It contains terminology which is foreign to the Act and rides roughshod over the basic principles of copyright law. The Bill is riddled with contradictions and anomalies; it is frequently non-sensical or downright incomprehensible even to someone who can claim expert knowledge of the subject matter. If, as a Professor of Intellectual Property Law, this Bill was served up to me as an answer to an examination question or as a dissertation, I would award it an assessment or mark of less than 20%. I would suggest to the student that he rather goes and pursues some other avenue of study as he clearly has no aptitude for copyright law.
I have described the good part of the egg as best as I can find it. Let me now go on to the bad part. In the interests of keeping the length of this epistle within reasonable bounds, I will deal with examples and will not seek to catalogue all the defects. This latter task will be undertaken in the comprehensive commentary which the Anton Mostert Chair of Intellectual Property Law will submit to the DTI within the thirty days from publication of the Bill (by 26 August) which has been laid down for the submission of comments, a ridiculously short period given the amount of work involved in formulating rational and constructive comment on this lengthy piece of balderdash (some 50 pages of taxing and perplexing text).
At the outset it must be borne in mind that our copyright law is determined to a significant extent by the Berne Convention and the TRIPS Agreement by which we are bound and with which our copyright legislation must comply. One of the fundamental principles of these treaties is “national treatment” in terms of which our law must give the same protection and benefits to foreign works as it gives to its domestic works. We cannot give preferential treatment to domestic works over foreign works. Furthermore, the fundamental approach of both our and foreign copyright law is to have a restricted selection of works eligible for copyright that are mutually exclusive. There is no overlap between the various categories of works.
With scant regard to the latter principle, the Bill appears to have created two new categories of copyright work, namely “craft works” and “phonograms”. These categories of works will have to co-exist with the existing categories of “works of craftsmanship” and “sound recordings” from which they are virtually indistinguishable. There is no conceivable justification or logic in creating these two new categories of works eligible for copyright when the Act already has two identical categories which have been part of our law for the best part of a century and which operate perfectly well. What the Bill does is to provide for the content of the copyright in these two new categories without laying the ground work for their coming into existence as occurs with all the existing categories. There is thus no way of knowing how and whether works of this nature qualify for copyright. The category “phonogram” is foreshadowed in the Bill by purporting to amend a definition that does not occur in the Copyright Act but is to be found in the Performers Protection Act (which is thankfully not addressed in the Bill).
The Bill requires the “broadcasting industry” to meet certain local content requirements in their broadcasts and even to oblige the institution regulating broadcasting to use measures to ensure compliance with the local content requirements. How can the broadcasting industry compel ICASA to do anything? This is putting the cart before the horse. What all this has to do with copyright is beyond my comprehension and provisions of this nature have no place in a Copyright Act which is concerned with the protection of original works, one category of which is broadcasts, the copyright in which is vested in the broadcaster who makes a broadcast – rights of a monopolistic nature in respect of its broadcasts are conferred on a broadcaster (that is the nature of copyright). In any event giving preference to local content (literary and musical works, sound recordings and cinematograph films that are locally made) in the Copyright Act brings the Act into conflict with the national treatment principle discussed above and is thus in conflict with our international obligations and probably unconstitutional.
Another breach of our international obligations is created in the provisions introducing the droit du suite principle in relation to artistic works. This right on the part of the “creator” of an artistic work (the Act does not use this term at all and one can but wonder who the “creator” of a work is as distinct from the “author”, the term used throughout the Act and internationally) is limited to an “artist” (someone different to the “creator” or the ”author”?) who is a citizen or resident of South Africa. This is a clear abrogation of the national treatment principle, with its attendant consequences. The provisions of the Bill dealing with this issue in general leave a lot to be desired and are unacceptable in their present form.
Section 9 of the Bill amends the existing section 9A of the Bill dealing with “needletime”. Sub-clause (b) to (d) of the amendment is completely duplicated by its sub-clauses (g) to (i), thus creating considerable confusion and evidencing shoddy draftmanship. Sub-clause (k) of the amendment has nothing whatsoever to do with needletime and probably belongs in section 23 of the Bill dealing with section 20 of the Act (moral rights). Aberrations such as this contribute to the unintelligible nature of the Bill.
The live performances by performers of works, i.e. singers, musicians, dancers and the like, are protected by the Performers Protection Act. Performers’ rights under this act are not copyright – they are rights somewhat akin to personality rights held by performers. A performer’s right is a cousin of copyright. These two types of rights often come together in a sound recording, which is a separate copyright work. A sound recording carries the performer’s rendition of a work (usually a literary and/or musical work). The Performers Protection Act creates economic rights in a specific performance, which rights vest in the performer. Protection of performance rights are dealt with internationally in a separate treaty (the Rome Convention) to the Berne Convention and our Performers Protection Act is closely based on the Rome Convention, as is performers protection legislation throughout the world. Performers rights and copyright are different animals. However, the author of the Bill has thought it good to reiterate some of the provisions of the Performers Protection Act dealing with the economic rights and their enforcement in the Bill. Apart from amounting to mixing apples and oranges, this will create enormous confusion and will undermine the integrity of both pieces of legislation. This is of course entirely unnecessary and undesirable and indeed makes no sense whatsoever.
The Copyright Act confers upon authors both economic and moral rights in their works. This is in accordance with the Berne Convention. Moral rights comprise the right to be identified as the author of a work and the right to object to alterations or mutilations of his work. In addition to conferring copyright economic rights on performers’ performances, the Bill also bestows moral rights on performers in respect of their performances. A moral right in a performance is a strange and remarkable concept and is not provided for in the Rome Convention. If it is to be provided at all it should be catered for in the Performers Protection Act and not in the Copyright Act.
The Bill introduces provisions allowing for permission to be obtained for the use of “orphan works”. Such works include works whose owner is deceased. The Copyright Act creates a right of property in a work and like all other forms of property this right of property can pass to an heir in terms of the Copyright Act and the law of succession. Accordingly, if a particular owner dies, his heir(s) acquire the ownership of the copyright. It is thus difficult to see why a work should become an orphan work when its owner dies. To make matters worse, the ownership of the copyright in an orphan work is vested in the State which can grant licences in respect of it and generate income for the State from its use. The copyright in an orphan work is perpetual, in complete abrogation of one of the basic principles of copyright law that a work should fall into the public domain after the effluxion on a specific time period. There is no reason why an orphan work should be in a preferential position as compared to a work that has a “parent”. Having provided that the copyright in an orphan work vests in the State, the Bill then goes on to provide in section 27 (introducing section 22A into the Act) that a licence can be granted in an orphan work and that royalty payments can be deposited into a particular account so as to enable the owner of the copyright or his heirs or executors to claim such royalty. This cannot be reconciled with ownership of the copyright in an orphan work (especially a work in respect of which the owner has died) vesting in the State. It makes no sense and is typical of the confusion and obfuscation that exists in the Bill.
Draconian criminal offences are created by the Bill for mild transgressions. For instance someone who contravenes the provisions relating to the payments due in terms of the droit du suite is guilty of a criminal offence! Likewise anyone who contravenes the provisions relating to orphan works. As a general rule infringements of intellectual property rights are civil law wrongs and only in exceptional cases do they constitute criminal offences. These rather innocuous transgressions do not warrant being criminal offences when more serious infractions are mere civil wrongs. Moreover, the newly created criminal offences are provided for in section 23 of the Act, which deals with civil copyright infringements, and not in section 27, which is devoted to criminal offences. This is but one instance of several where the existing format and system of the Act is disrupted and upset for no good reason. This is not at all conducive to coherent regulation of the law of copyright and interpretation of the Act.
There are a myriad of other problems attaching to the Bill that need to be addressed, but space does not allow for this here. In conclusion, the best approach would be for the DTI to go back to the drawing board and start all over again. Persons skilled in copyright law with drafting experience should be commissioned to draft the Bill to meet the Department’s requirements and thereafter it should be published again for public comment. Once it is in a presentable and lucid form, proper constructive debate and consultation can take place in regard to its content. No fruitful intercourse is possible with the Bill in its present incoherent state. The egg that has been dished up should be consigned to the trash can.
[1] http://dictionary.reference.com/browse/curate%27s%20egg
[2] http://encyclopedia.thefreedictionary.com/Curate%27s+egg
On 27 July 2015 the Department of Trade and Industry (“the DTI”) published the Copyright Amendment Bill 2015 (the “Amendment Bill”) in the Government Gazette, asking for public comment within 30 days from such date. Given the number of issues contained in the Amendment Bill that needs to be addressed, it will be almost impossible for one person to give comprehensive comments within the allotted time, unless that is their only task. It never ceases to amaze me how much time now has to be dedicated, by myself, and other academics and professionals, in trying to get legislation which is even vaguely coherent and workable. If that is not enough as a source of frustration, most of the comments which experts painstakingly submit are probably destined for the waste-paper basket, judging by past experience.
The legislative process, particularly in a technical field such as intellectual property law, appears to be a shambles, and it would be farcical if the consequences were not so significant. Most of our time seems to be spent trying to get the DTI (the custodian of such legislation) to abandon some hare-brained, or, at best, half-baked, proposal. Moreover, the quality of the legislation (or proposed legislation) implementing its proposals demonstrates a level of incompetence which induces a sense of shock, if not despair. We should not have to suffer fools gladly. If you consider my criticism to be unduly harsh, ask yourself this question: As a partner of a law firm, would you consider this standard of work acceptable if it was delivered to a client by a lawyer in your firm? If you as a client were rendered services of this quality, would you pay for it? So why should we, as the citizens of this country, be expected to be satisfied that our taxes are being used to pay people for delivering work of this standard? This is yet another example of service-delivery failure, and this is my service-delivery protest.
As has been recognised by our courts, copyright is a technical subject. Apart from plain sloppiness in the actual drafting process of the Amendment Bill, there is ample evidence to suggest that the drafting was done by persons who, quite frankly, first need to learn the basics of copyright law, and take the time to read the Copyright Act 1978 (as amended). I cannot be more blunt about this. It is astounding how “easily” legislation is drafted nowadays, without any regard to legal principles, clear legislative objectives (however ill-informed they may be), or just literal clarity. Even ill-informed, or downright immoral, objectives can be drafted in a manner which exhibits clarity of thought and technical competence, as was done in the past in a host of pieces of Apartheid legislation. Not only do we now get legislation which is substantively garbled, we have to waste time in first deciphering it, and give it some sort of meaning. The fact that legislation, even major legislation like the Companies Act 2008, and the Consumer Protection Act 2008, is never accompanied by any form of detailed explanatory memorandum setting out the goals and objectives, is no coincidence. No discernible, and coherent, account (other than a concocted ex post facto one) exists for the various provisions, and we have to wrestle with legislative diarrhoea. Let me illustrate my point with reference to the Amendment Bill.
Seeking to substitute a definition (“phonogram”) in the Copyright Act that is not even a defined term in the Act should already get the alarm bells ringing. The Amendment Bill is littered with references to the “creator” of one or other type of copyright work; in the Copyright Act the technical terms are the “author” or “owner” of a copyright work. Nowhere in the Copyright Act is the term “creator” used, so why does it appear in the Amendment Bill? The fact that the Amendment Bill seeks to introduce a new category of copyright work, namely, “craft works,” is just perplexing. The Copyright Act already protects “works of craftsmanship” as a species of “artistic works.” There is nothing to suggest, or explain, why what is sought to be protected as “craft works” is not already protected as “artistic works.”
A stunning example of a lack of any coherence of objectives, or clarity of thought, are the proposed provisions concerning so-called “orphan works,” which are copyright works the copyright owners of which cannot be located. As copyright law requires the copyright owner’s authorisation for the exploitation of a copyright work, it is considered socially undesirable that a demand for such works remains unsatisfied where a demand for such works exists. Accordingly, while such a work is still under copyright protection, countries are permitting persons to, inter alia, print and distribute copies of such works against payment of royalties into a fund, which can compensate the copyright owner should he or she reappear. What the Amendment Bill does is to vest copyright in the state, and to provide that copyright in orphan works shall be perpetual! Instead of allowing the copyright work to pass into the public domain, like all copyright works, the state seeks to continuously earn an income from such works. This not only runs contrary to the fundamental notions of copyright protection, it should infuriate those, such as supporters of the Creative Commons, who seek to make copyright works more accessible. The other kicker in relation to orphan works is that the compulsory licensing provisions (again, problematic in themselves) which allow for translations to be made of copyright works, without a copyright owner’s authorisation, expressly excludes the possibility of such a licence for orphan works. Why? Of course, given the abysmal level of drafting, it should now come as no surprise that the very same licensing provisions later implicitly contemplate the licensing of orphan works. So which is it?
In relation to the compulsory licensing provisions, there does appear to be a worrying undertone. It seems that the government wants to provide educational material without having to negotiate with copyright owners in the normal course of business. While there is no doubt a case to be made for making educational material more accessible, it is hoped that the government is not seeking to undermine the principles of copyright law as a quick fix to its well-publicised failure to provide adequate schooling provisions. On the other hand, there appears to be no hesitation to waste money on the creation of institutions of questionable value, or size, such as the National Trust for Indigenous Knowledge, and the new Intellectual Property Tribunal envisaged under the Amendment Bill. No reason has been given for replacing the Copyright Tribunal – which is currently a single judge – with an Intellectual Property Tribunal consisting of at least 10 members! To date there has been no suggestion that the Copyright Tribunal is overworked. There appears to no lack of desire to create new statutory bodies, which will no doubt be staffed by suitably well-connected appointees. If cronyism and nepotism was not the order of the day, we would not be facing government failure on this scale.
This is by no means the full extent of drafting failure in the Amendment Bill but I hope it serves to illustrate what the legislative process in South Africa has been reduced to.
Lest there be any misunderstanding, or doubts about my motives: I was raised on the Cape Flats, and received my schooling under the days of so-called gutter education during the turbulent 1980s. We should not have to endure gross government failure with good grace in a democratic society, which was achieved at great human cost. Government should fulfil its mandate. Those tasked to do something should do so competently. We do not require that those persons “#BeMoreMadiba” or some such popular refrain. Being mediocre would be enough for now.
Technology companies take note: Google may have found a way to beat patent trolls, and you are invited to join them.
The term “patent troll” refers to an entity which exists for the sole purpose of enforcing or licensing patent rights which were not the result of its own innovation. Although the term “patent assertion entity” is preferred by policy makers and academics, the more colourful and emotive “patent troll” has firmly entered our lexicon and has recently even appeared in a U.S. Supreme Court decision.
Google, SAP, Uber and other leading technology companies have banded together to create a network they call the License on Transfer (LOT) Network, aimed at curbing litigation initiated by patent trolls. It works like this: by joining the LOT Network you agree that if you sell any patent you own to a non-member, that sale triggers an automatic royalty-free licence of that specific patent in favour of all other LOT Network members. And if a member is acquired outright by a patent troll or becomes a patent troll itself, all other members obtain an automatic royalty-free licence to its entire portfolio. In short, if a patent owned by a company within the LOT Network ends up in the hands of a patent troll, it cannot be enforced against any members of the LOT Network.
Since patent trolls generally do not develop their own patents, they must acquire them from those that do. While universities and individual inventors may be one source of such patents, most of these patents originate from operating companies which may sell patents as a result of projects being moth-balled or large patent portfolios being trimmed back to rid them of “non-core” patents. Since an operating company will usually sell a patent while retaining a license for itself, the risk of being sued for patent infringement is not on the company that developed the technology but on other players in the marketplace. I heard one general counsel of a large company compare this practice to selling overstock weaponry in your arsenal to rebels in a far flung country. It may not be your problem, but if others do the same thing in your part of the world then you become decidedly unhappy about the situation.
To curb the ability for patent trolls to bring enforcement proceedings against companies that produce products or services, Google has taken the lead in setting up the LOT Network. According to its website at www.lotnet.com, enforcement actions brought by patent trolls have cost operating companies $29 billion in direct expenses a year, slowing down the pace of innovation and driving up costs to consumers.
At first blush the LOT Network may seem a lot like a patent pool, which is often set up when an industry agrees to adopt a certain standard and all participants are required to put their patents in a pool where they can be licensed by third parties on a reasonable and non-discriminatory basis. But on closer inspection the differences are clear. Unlike patent pools, LOT Network members are free to enforce their patents against each other or against any third parties. The licence is only triggered in the event of a sale of a patent to a third party, where normal corporate mergers and acquisitions are excluded. So nothing prevents a LOT Network member from using a patent defensively or offensively, provided it retains ownership of it. You can use your arsenal as you please as long as it remains in your control.
The upside for members is that they become immune to patent enforcement proceedings brought by third parties using patents that were originally owned by LOT Network members. There are already over 325,000 patent assets, including more than 99,000 issued US patents in the LOT Network. The downside is that a member may be less able to monetize a portion of its patent portfolio by selling patents it no longer requires. The absence of patent trolls from the secondary patent market for LOT Network members, however, seems like a small price to pay for the advantages of not having any of those weapons being offloaded in your backyard.
The best part is: Any company can join, whether large or small and from any industry and with any business model. All you have to do is sign and upload the LOT Agreement on the website and pay a nominal annual fee to cover administrative costs. If your annual revenue is less than $10 million, the fee is $1,500 per year and it ratchets up to US 20,000 per year for those Fortune 500 companies with revenues of over $1 billion.
What is really positive about this solution is that it retains the benefits of patents, such as the ability to hold defensive positions, enforce rights against competitors or follow a licensing program, while curbing the abuse of the system which has given patents a bad name. The LOT Network reduces abusive behaviour without unduly restricting parties’ rights or requiring an overhaul of the patent system. This is welcome news for everyone except the patent trolls.
[box] Ed.: This is a guest editorial post.
Ralph is a patent attorney and partner at Von Seidels. His expertise includes patent prosecution, litigation and technology licensing for a broad range of clients. His particular focus is in the ICT, software and electronics industries where he has extensive experience in developing and managing large patent portfolios. His clients range from start-ups and universities to global technology companies. Ralph holds undergraduate degrees in electronic engineering, computer science and law, and holds a Master of Laws from Stanford Law School. As one of the few practising South African patent attorneys with a United States IP law qualification, Ralph offers clients valuable insight into IP matters in the US. [/box]
