Ten Years Later: Dismal Performance Scorecard for Kenya’s Copyright Office

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As discussed previously, this month marks the 10 year birthday of Kenya’s Copyright Office (KECOBO) and this blogger promised to rate KECOBO’s performance over the past decade. In this blogger’s humble opinion, KECOBO deserves no score higher than 4/10 for its performance in overall administration of copyright and related rights in Kenya. In arriving at this score, this blogger looks at two key result areas for KECOBO, namely fighting piracy and regulation of CMOs in Kenya.

A good starting point would be to interrogate the theory behind the creation of institutions like KECOBO in our laws. From the landmark work of Richard Posner, one may term KECOBO a public interest regulator. The public interest theory of regulation holds that institutions like KECOBO exist to correct inefficiencies and inequities in the operation of the free market. Therefore government intervention generally is assumed to benefit society as a whole rather than particular vested interests. The regulatory body is considered to represent the interest of the society in which it operates rather than the private interests of the regulators.

An important component of KECOBO’s outcomes as a regulator under the public interest theory is the considerable costs to be borne by members of the public in order to know what KECOBO is doing and thereby, supervise its actions. This situation results in what public interest theory terms as “principal-agent slack”, whereby KECOBO enjoys a fair amount of slack because you and I require large amounts of time, information and organisation to supervise KECOBO’s activities.

Let’s test this public interest theory of regulation with respect to KECOBO’s performance in fighting piracy and regulating CMOs.

KECOBO’s Scorecard on the Fight Against Piracy: 3/10

It is no secret that KECOBO’s enforcement unit consists solely of 8 copyright inspectors and 5 prosecutors covering the entire country. This fact alone underscores the uphill task KECOBO faces in dealing with the menace of piracy. For instance, in 2003 when the Attorney General launched KECOBO, software piracy levels were at 78% in Kenya.

BSA estimates indicate that between 2010 and 2011 software piracy levels oscillated between 78% and 79% corresponding to a commercial value of US$85 million. KECOBO has acknowledged that this insignificant change in the piracy rate is evidence that little progress has been made in reducing piracy. It is important to note that aside from pirated software, the overwhelmed enforcement unit at KECOBO has to deal with other forms of piracy relating to music, film, broadcasts and books.

From an enforcement perspective, this blogger has often wondered why KECOBO has never made any real head-way in the fight against piracy in Kenya. Indeed it is difficult to recall any notable raids against large-scale piracy operations. In reality, KECOBO’s enforcement actions seem to target small to medium piracy operations instead of large-scale manufacturers and suppliers of pirated goods. It is based on this reality that many have argued that there must an inter-agency approach to intellectual property (IP) enforcement led by the newly formed Anti-Counterfeit Agency (ACA) whose empowering legislation is much broader in scope and stringent on violations of IP rights. With ACA solely in charge of IP enforcement, KECOBO will be able to re-focus its limited resources away from fighting piracy to its other functions under the Copyright Act such as the regulation of collective management organisations (CMOs).

KECOBO’s Scorecard on Regulation of Collecting Societies: 4/10

During the launch of KECOBO 10 years ago, the Attorney General’s speech noted that KECOBO faced the herculean task of creating a conducive environment for Kenya’s music industry to thrive amidst a climate of disorder, disagreements and mismanagement. At the time, the Music Copyright Society of Kenya (MCSK) was already 24 years old and was in operation as an unregulated CMO. In this blogger’s humble opinion, KECOBO ought to have pushed for CMO Regulations (like Nigeria and South Africa) to address the gaps in the Act relating to licensing and supervision of CMOs. The Copyright Regulations of 2004 pay little attention to important issues relating to regulation of CMOs. This lack of clear regulations for CMOs may have led to the deregistration of MCSK in 2011-2012.

In the meantime, KECOBO seems to have opted for several short-term extra-statutory means of regulating CMOs including performance contracting, developing a license agreement and licensing guidelines. In 2012, KECOBO failed to seize a second opportunity to amend the Act so as to empower it to adequately monitor the activities of CMOs. The amendments to the Act in 2012 did very little to improve the shaky legal framework within which CMOs are regulated.

Another important failure on the part of KECOBO is the Competent Authority under the Act aka the Copyright Tribunal. The Chair and members of this Tribunal were gazetted in 2009 however this Tribunal has never heard or determined any cases relating copyright. One of the key functions of the Tribunal is to consider certain licensing practices of CMOs deemed to be unreasonable by users.

The next 10 years?

In truth, many stakeholders would want the Copyright Office to allow the mandate of fighting piracy to be taken over by one sole agency eg. ACA. This would allow KECOBO to do better at its functions as a copyright registry through improvements and technical enhancements to the information technology platforms that support registration and recordation functions, including an online registration system. Generally, KECOBO would be expected to do a host of new things to help make copyright law more functional. For example, some people would like KECOBO to administer enforcement proceedings (such as a small copyright claims tribunal), offer arbitration or mediation services to resolve questions of law or fact, issue advisory opinions, and engage in countrywide awareness campaigns.

Of course, much of this will depend on the availability of technical capacity and resources.

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Revenue Service and Copyright Office: Strange bedfellows?

Over the past couple of years, one of the most problematic provisions in the Copyright Act has been, without doubt, section 36, which reads, in part:

“36.

(1) A manufacturer or producer of sound and audio-visual works or recordings shall apply
to the Board. for the authentication of copyright works.

(2) The Board shall authenticate copyright works according to all required documents
furnished to it by the applicant for that purpose and shall issue an approval certificate in the prescribed form to the applicant for authority to purchase an authentication device from the Kenya
Revenue Authority
.

(3) A manufacturer or producer of sound recordings or audio-visual works shall purchase
such authentication device from the Kenya Revenue Authority as may be required to cover the
number of copyright works he intends to sell or distribute.”

10 years since the drafting and enactment of the Copyright Act, section 36 has not been implemented as envisaged with the Kenya Copyright Board (KeCoBo) handling the issuance of the authentication stickers without any involvement from Kenya Revenue Authority (KRA). KeCoBo launched the authentication stickers in 2010 and called it “Anti-Piracy Security Device (APSD)”. This APSD is composed of both a hologram and barcode stickers, sold together by KeCoBo. Earlier this year, IPKenya discussed the APSD here.

KeCoBo has in the past argued that there are two angles to having a voluntary registration system accompanied with authentication of copyright works through the APSD: 1) revenue collection; 2) deterrent against piracy. However the reality is that KeCoBo lacks the resources and infrastructure to ensure that the APSD is available for purchase throughout the country. In addition, the non-involvement of KRA as provided for in the Act has resulted in a number of court cases filed against KeCoBo for acting ultra vires and in breach of the statutory provisions.

The rationale behind section 36 was based on Ghana’s Copyright Office which chose the national internal revenue service to be in charge of issuing authentication stickers to be affixed on all copyright works being sold. The internal revenue service KRA would therefore be best placed to issue these stickers because it was considered that KRA has the necessary infrastructure already in place including offices countrywide as well as measures for security, storage and distribution.

Another compelling factor behind KRA’s consent to be part of the copyright administration process was that it would allow it to levy tax on the audio-visual and musical copyright industries. This sector largely operates in the informal sector of the economy, which is largely untaxed. The added advantage of KRA is also that its Customs Department works at the national borders and can enforce authentication of all imported copyright works coming into the country.

In light of this, KeCoBo will be forced in the very near future to approach KRA and come up with either a Memorandum of Understanding (MoA) or an Agent-Principal Agreement so as to give full effect to section 36. Regardless of what name or shape this agreement takes, it is clear that KRA will solely be responsible for issuing the APSD in all its branches countrywide, collecting the proceeds from the sales of the APSD and accounting for the same to KeCoBo. However, it is almost certain that KRA will levy tax from the proceeds of the APSD sales since those monies are not considered as ‘exchequer revenue’ and also for purposes of covering its costs involved in collection.

KeCoBo on its part would remain the enforcement authority and therefore would have to expand its enforcement actions countrywide to ensure that the APSD is being purchased and affixed on each copyright work being sold, in line with the Act.

It is worth mentioning that KeCoBo has, at several times this year, undertaken to use a portion of the proceeds from the sale of the APSD to set up an “Artists’ Fund” which would be used to conduct awareness campaigns and provide some financial assistance to copyright holders in Kenya. Therefore a meaningful partnership with KRA would ensure that KeCoBo is able to collect enough money to set up this fund as well as run its other operations as mandated by the Act.