Competition Commission’s assumptions about the Copyright Bill are mistaken – The Mail & Guardian

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Late last month, the Competition Commission released a provisional report of its Media and Digital Platforms Market Inquiry (MDPMI).  Among the report’s many findings and recommendations were the well-publicised findings about Google’s effective monopolistic position in online search and its effect on South African published news. 

Among the provisional recommendations are that Google compensate the South African news media for the additional value extracted annually of R300-500 million and make search engine design choices to build referral traffic that compensates South African news publishers.

The commission also cast its eyes toward the future of online search of news content powered by artificial intelligence (AI), together with the possible enactment of the Copyright Amendment Bill.  In the process, it made some mistaken assumptions about the “fair use” provision that the Bill proposes to introduce to South African law.

The “fair use” provision is to be a new statutory defence to copyright infringement, modelled on a provision in the United States Copyright Act, allowing users of copyright works to reproduce them without permission and without that use being remunerated.

Professor Keyan Tomaselli, of the University of Johannesburg, in an article in the Mail & Guardian’s Thought Leader section in August 2024, argues that the Bill’s “fair use” provision would create a safe harbour in South Africa for Big Tech to harvest creative content for AI. Tomaselli’s warning applies equally to news content published by the South African media.

The commission considered that AI-powered search query summaries would represent substitutes to clicking through to news websites as a source of news information.  These AI-generated news substitutes would be unfair competition by the search engine companies.  

It impliedly concluded that these AI-generated summaries would also be an infringement of the copyright in those articles published in the news media that were summarised in this way. The commission opined that the search engines would not be able to rely on the Bill’s “fair use” defence because their summaries would affect the market value of those works. It also assumed that two key factors in determining whether the “fair use” defence applies were similar to those in US law.

The commission seems to have come to this conclusion without the benefit of having a US copyright law specialist look at the terms of the South African “fair use” clause. But advice based on US law, which has applied “fair use” since 1841, would not have helped, because the factors in the South African clause and the factors in the US provision are materially different.  

The one factor in the South African clause is incorrectly quoted by the commission in its report as “the purpose and character of the use including whether it is of a commercial nature or for nonprofit research, library or educational purposes”. The quotation omits stating that the South African clause also says, “whether such use serves a purpose different from that of the work affected”. This element does not appear in the US counterpart.  

The other factor is “the substitution effect of the Act upon the potential market for the work in question”. The US counterpart is entirely different: “the effect of the use upon the potential market for or value of the copyrighted work”. Notably, the element of “value of the copyright work” does not appear in the South African provision, thereby undermining the commission’s conclusion.

This departure in the South African Bill from the example set by US law for these two factors is no doubt intended to favour findings of a “fair use” defence in uses of copyright works in novel technological applications made without permission.

Contrary to the commission’s expectation, therefore, if the Bill were to become law, search engines may well want to rely on the expanded “fair use” provision to defend claims of infringement of copyright in published news. But, with the adjudication of “fair use” being a fact-based inquiry made after the event, no one can predict today whether such a defence would be successful.

How did this state of affairs come about?

Google seems to have played a significant role in the government’s development of the Bill before it was presented to the cabinet in mid-2016 and its introduction to parliament in May 2017.  

That the department of trade and industry did “collaborate” with Google, as well as other unspecified companies, in a “pragmatic” approach to preparing the Bill, was admitted by its director general in reply to questioning by parliament’s portfolio committee in August 2017.  

More conspicuously, the department’s public launch of the Bill in July 2017 was co-hosted by Google, at which event the Bill was presented as a “user-centric Bill” and Google was referred to as “one of our partners”.  But neither at that time nor since did any of South Africa’s private sector creative industries have this level of access in framing the Bill.

The Bill’s “fair use” defence against infringement, its scope expanded by the terms “serves a purpose different” and “substitution effect” and the omission of “value of the copyright work”, reflects Google’s views of “a copyright law that leaves that leaves room for innovation, by allowing novel and non-substitutional uses of pre-existing material”, according to a brochure it circulated at the time of the Bill’s release.

Another provision, denying copyright protection to computer programme interface specifications, mirrors Google’s defence against a copyright infringement claim in the US brought by computer technology company Oracle.

The Bill was finally adopted by parliament after seven torturous years, in February 2024.  But, in October, the president referred it to the constitutional court for reservations about its constitutionality. The president specifically identified the “fair use” clause as a provision that may fall foul of the Bill of Rights and South Africa’s obligations under international agreements relating to copyright.

The constitutional court’s hearing of the president’s referral is set to take place in May.

André Myburgh is an attorney and specialises in international copyright law and policy.  He is the lead author of a monograph about the Copyright Amendment Bill, Copyright Reform or Reframe? (Juta 2023).