High Court Judgment on Caller Ringback Tones, Definition of Public Performance and Regulation of Collecting Societies

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Previously we reported here that several members of Music Copyright Society of Kenya (MCSK) had filed a case in the Commercial Division of the High Court challenging a license pertaining to the caller ringback tones (CRBT) service known as “Skiza Tunes” owned by mobile network operator, Safaricom issued by the three music collective management organisations (CMOs) including MCSK.

While the outcome of this commercial suit is still pending, we have come across a recently delivered judgment in the case of Petition No. 350 of 2015 David Kasika & 4 Ors v. Music Copyright Society of Kenya in which several MCSK members alleged that the collection of royalties by MCSK under the CRBT license agreement in question violates their constitutional rights, that the making available of works for download on Safaricom’s CRBT service amounts to a private performance as such section 30A of the Copyright Act does not apply and thus the CMOs cannot collect royalties on behalf of its members as required under the section. Finally, the petition invited the court to weigh in on several damning allegations made regarding mismanagement by MCSK in its collection and distribution of members’ royalties.

From the outset, it is important to state the present Petition No. 350 of 2015 (which we shall refer to as the ‘Skiza II case’) was heard together with Petition No. 317 of 2015 Xpedia Management Limited & 4 Ors v. The Attorney General & 4 Ors which we earlier referred to as the ‘Skiza I case’ in our analysis available here. Justice Ngugi, who heard and determined both constitutional petitions in the Skiza I and Skiza II cases, stated that notwithstanding the non-consolidation of the two petitions, the findings and conclusions on some issues in the Skiza I case will apply to Skiza II case.

Out of the four petitioners in the Skiza II case, 3 of them are author/composer members of MCSK whereas the remaining two are non members. This case offers the public a glimpse into the deteriorating relationship between CMOs in Kenya and the rights holders they claim to represent.  The petitioners begin by claiming that MCSK failed to inform its members that it had concluded the CRBT license agreement in question with Safaricom and that they only learnt about this development through the press. The following excerpts from the court’s summary of the 3rd petitioner’s deposition illustrate the extent of mistrust and acrimony between MCSK and some of its members:

“….MCSK is not a trustworthy entity. She [the 3rd petitioner] contends that it [MCSK] will mismanage the royalties she earns from [Skiza]. She also alleges that MCSK was, sometime in 2011, deregistered by its regulator, KECOBO as a collecting management organization because of the mismanagement of collected royalties for public performances and failure to adhere to regulations. She also argues that MCSK still persists in its mismanagement of collected royalties for public performances and has as a result received a letter from KECOBO threatening it with denial of an operating license.

[the 3rd petitioner] alleges that MCSK’s audited accounts show a clear case of deliberate mismanagement of public performance royalties and therefore they cannot be trusted to handle [skiza] royalties. She argues that should the… performances on the Skiza Tunes portal be allowed to be managed by MCSK, it will be handed over to an unlicensed Content Service Provider that the MCSK’s Chief Executive Officer has an interest in, and that MCSK has already appointed a company called Nasratech Limited whose shareholders, she alleges, are the wife and brother-in-law of MCSK’s Chief Executive Officer, to handle the Skiza tunes portal.

[the 3rd petitioner] further contends that MCSK has been extremely reluctant to share the logs of her public performances, and she has only received Kshs 1,300 for her public performances since she joined MCSK as a member [on 5th July 2011]. She contends that despite her songs receiving massive airplay, and despite demanding her payments, MCSK has failed, neglected and refused to account for and remit her royalties earned through the public performances of her musical works.”

From the above, it is clear that the members hoped that the court would be moved by its claims to  directly intervene in the regulation of MCSK. In its defence, MCSK begun by challenging the jurisdiction of the court to hear and determine the Skiza II petition. Firstly MCSK stated that in respect to the first three petitioners, that as its members, they are bound by the provisions of MCSK’s Memorandum and Articles of Association, which bar MCSK members from taking any matter to court before arbitration has taken place. Secondly MCSK claimed that in respect to the 4th and 5th petitioners, as they are not its members it has never represented their interests with Safaricom or any other party, and its arrangement with Safaricom is one that strictly involves a catalogue that does not include the works of these non-member petitioners.

The court dismissed MCSK’s claims and rightly asserted its constitutional jurisdiction since the petition in question related to the alleged violation of the petitioners’ constitutional rights which if proved, requires that the court by law gives an appropriate remedy. However, based on the court’s judgment in Skiza I case, the petitioners failed to prove any of alleged violations of their constitutional rights.

An interesting part of the Skiza II judgment was the court’s “brief consideration” of whether the playback musical works and sound recordings on the Skiza platform was a private or public performance.  The petitioners argued that Safaricom’s caller ring-back tones service amounts to a private performance as such section 30A does not apply and thus the CMOs cannot collect royalties on behalf of its members as required under the section.

Although the court failed to clarify that section 30A is not applicable to MCSK,  it nonetheless disagreed with the petitioners and cited with approval two Canadian cases to support its view namely Canadian Wireless Telecommunications Association v. Society of Composers, Authors and Music Publishers of Canada, 2008 FCA 6, [2008] 3 F.C.R. 539 and Entertainment Software Association v. Society of Composers, Authors and Music Publishers of Canada [2012] 2 SCR 231. In adopting the Canadian Wireless decision to the facts of the Skiza II case, the court agreed with Safaricom that a person offered members of the public the opportunity to download ringtones for their mobile phones thereby communicates the musical works contained in the ringtones to the public and that it would illogical to reach a different result simply because the transmissions are done one by one, and thus at different times. Similarly, the court cited the dissenting opinion in the ESA v. SOCAN case decided by the Supreme Court of Canada (commonly referred to as part of the “Copyright Pentalogy” according to Canadian copyright commentators). The relevant portion of the dissenting opinion endorsed in the Skiza II judgment reads as follows:

“…Where there is a series of repeated transmissions of the same work to different recipients, each transmission cannot be analyzed in isolation, even if each transmission is initiated at the request of an individual member of the public. Focusing on the transmissions individually loses sight of the true character of the activity in question. Copyright protection is not dependent on the technicalities of methods of transmission.”

The implications of this endorsement in Kenya of Rothstein J’s strong dissent against technological neutrality will be worth observing in future court decisions bearing in mind that Kenya’s copyright regime ought to be receptive to innovative wireless platforms which deliver digital works to consumers.

Finally, with regard to the allegations of mismanagement and impropriety against MCSK, the court reiterated its finding in the Skiza I case that the mandate of licensing, supervising and overseeing the functioning of CMOs lies with KECOBO under section 46 of the Copyright Act therefore MCSK members must report any cases of lack of integrity and financial probity to the relevant statutory bodies, including KECOBO. As a result the court judgment comes to the following conclusion:

“Bearing those constitutional imperative in mind [Articles 10, 23(3), 35 and 165(3)], it appears to me that in this matter, the petitioners’ grievances arise as a result of a lack of openness and transparency, perceived or real, on the part of the respondent [MCSK]. As a statutory CMO, MCSK has an obligation to be transparent with its members with regard to the royalties it has collected on their behalf. With respect to non-members, in light of its duties under section 30A and 46 of the Copyright Act, as well as its agreement with Safaricom, it must equally account for any royalties collected on their behalf.

The appropriate order therefore that commends itself to me in the circumstances of this case, and which I hereby issue, is that the respondent does render, within 45 days hereof, a full account of all performance logs on the basis of which it collected royalties from Safaricom, for and on behalf of the petitioners.”

This judgment by the court represents a progressive step in holding CMOs accountable to their members for the collection and distribution of royalties. It also represents the need to build a credible trustworthy Copyright Tribunal that will hear and determine disputes between rights holders and CMOs where the latter’s internal dispute resolution mechanisms and/or KECOBO’s mediation efforts fail to bear fruit.

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