Previously, this blogger reported here that the High Court had suspended the coming into force of the Tobacco Control Regulations 2014 made by the Cabinet Secretary for Health scheduled to take effect on 1st June 2015. Recently in the case of British American Tobacco Kenya Ltd v Cabinet Secretary for the Ministry of Health & 4 others  eKLR, Lady Justice Mumbi Ngugi (known to many readers for her landmark decision on anti-counterfeit law and access to medicines here) delivered a judgment at the High Court dismissing claims by ‘Big Tobacco’ that their constitutional rights including intellectual property (IP) rights are being violated by the new Tobacco Regulations.
Recently, Kenya Copyright Board (KECOBO) published on its website here the proposed 2016 collecting society joint tariffs for musical works, sound recordings and audio-visual works. A copy of these joint tariffs is available here. In order to ensure public participation before the approval of these tariffs, KECOBO will convene an open half-day public forum to be held next week on February 10th 2016 at the Auditorium of NHIF Building starting at 8:30am.
This blogpost will focus on the tariffs for sound recordings since they have recently been the subject of thorough debate and analysis in South Africa’s Supreme Court of Appeal. It is hoped that the South African experience will be useful to Kenyan users in their negotiations with collecting societies on reasonable tariffs to pay for use of copyright works.
As many will recall last year this blogger was the only African named among 2014 Managing IP Top 50 Most Influential People in Intellectual Property.
This year, Managing IP (MIP) has recently published the 13th edition of the annual List of the 50 Most Influential People in IP (MIP50). According to MIP:
“This year’s list… is one of the most diverse ever, including people from Europe, North America, Africa, the Middle East and Asia. Some of those on the list are known for promoting stronger IP protection; others are skeptical; some are known for attacking IP rights; and many do not fit easily into any of these categories. More than one-third of those included are women, a record number.”
This blogger came across a recent media report stating that the government through the Ministry of Agriculture had successfully applied for registration of a mark of origin for Kenyan coffee at Kenya Industrial Property Institute (KIPI) and that a similar application was pending at World Intellectual Property Organization (WIPO).
The media report reads in part:
“Speaking yesterday at a preparatory meeting for the launch at Safari Park Hotel in Nairobi, Agriculture Cabinet Secretary Felix Koskei said the move was intended to increase visibility of local coffee in the domestic and international markets.
“The use of national mark of origin is another measure geared at improving visibility of Kenyan coffee in the domestic and international market,” Mr Koskei said.
Interim head of coffee directorate Grenville Melli said the mark is registered by Kenya Intellectual Property Institute and listing by World International Property Organisation is being considered.
So far, four companies have met the requirements to use the mark. They are C. Dormans, Kenya Nut Company, Kimanthi University of Technology and Super Gibs Ltd.”
While scanty on the actual facts and details, the media report brings to light an interesting development. This blogger has confirmed that the Coffee Board of Kenya (CBK), a state corporation, has registered a Certification mark with the Registrar of Trade Marks at KIPI. A representation of the mark has been reproduced above. The Board also made an application to register the Certification Mark through WIPO’s Madrid System. They duly designated a number of countries including Australia, Japan, Republic of Korea, Switzerland, Iran, Sudan as well as the European Community but apparently the CBK did not attach the rules governing the use of the mark, as required for purposes of registration of a Certification Mark.
Upon examination of the application, all the designated countries, apart from Sudan, required the Board to forward the above rules within a certain period but the Board did not comply in time. The mark has therefore been deemed abandoned in all the countries designated apart from Sudan where it appears the mark has been registered. The Board has indicated that it will commence the process all over again.
A copy of the “COFFEE KENYA” Madrid application is available here.
It is recommended that a tariff to be set by the tribunal should neither be too high nor too low, but a tariff which the owners of the royalty will realise profits on the one hand and the consumers will purchase voluntarily. It is hard, in my view, to satisfy the preferences of either party. It has already been indicated that I am not tasked to judge as to which case is superior in law but to set a tariff that may be said to be reasonable. – Foschini Retail Group (Pty) (Ltd) and 9 (Nine) Others v South African Music Performance Rights Association (0003/2009)  ZAGPPHC 304 at Paragraph 76.
Recently this blogger reported a major victory for Kenya’s related rights collective management organisations (CMOs) when the court upheld their statutory mandate to license for the communication to the public right (See here). It is clear that the majority of these disputes between the related rights CMOs and users arise because the latter contest the license fees charged by these CMOs. The genesis of this contestation stems from the users’ perceived “double taxation” of paying both a copyright CMO on the one hand and the related rights CMOs on the other hand.
In this regard, this blogger has argued on several occasions (see here, here and here) that the Competent Authority must be immediately operationalised to deal with the rising cases of CMO-user disputes. Meanwhile, in South Africa, the Copyright Tribunal (equivalent to the Competent Authority under the Kenya Copyright Act) has recently issued a landmark judgment in which it set aside the license tariff for retailers as fixed by the South African Music Performance Rights Association (SAMPRA) holding that the tariff was not reasonable and proceeded to set a tariff to be applied by SAMPRA. In addition, the Copyright Tribunal ordered SAMPRA to pay the the retailers’ costs of referring the matter to the Tribunal.
For Kenya, this judgment is of great importance as the tariff determined by the Copyright Tribunal in South Africa is significant lower than that of the concerned related right CMO in Kenya. Therefore this blogger submits that there is a need for a review of all tariffs set by related rights CMOs using the methodology of the South African Copyright Tribunal.
In the present case, the retailers, namely Foschini Retail Group (Pty) (Ltd), Pepkor Retail Limited Stores, Just Kor Fashion Group (Pty) (Ltd), Mr Price Group Limited, Pick ‘n Pay Retailers (Pty) (Ltd), Truworths Limited, New Clicks SA (Pty) (Ltd), Dunns Stores, Metrotoy (Pty) (Ltd) and Young Designers Emporium (Pty) (Ltd) contended that SAMPRA had unilaterally set a tariff, and that it basically adopted a take-it-or-leave-it approach, when demanding payment. The retailers claimed that the tariff was inflated and without economic justification. They said that they had tried to negotiate with SAMPRA, but that the parties had been unable to reach agreement, hence they referred the matter to the Copyright Tribunal for determination.
As many know, the South African Music Performance Rights Association (SAMPRA) is a national, non-governmental, organization that licenses to third parties specific copyrights that vest in record companies that are members of the Recording Industry of South Africa (RiSA). It is therefore clear that SAMPRA’s equivalent in Kenya is the Kenya Association of Music Producers (KAMP).
In response to the retailers’ contentions, SAMPRA claimed that its tariff was reasonable. It stated that its tariff was bench-marked with international best practice, with reference to the UK, Australia and Canada being mentioned. SAMPRA’s tariff was based on the square meterage of the ‘audible area’, in other words those parts of the store where the music can be heard even if they are inaccessible to customers. Therefore according to SAMPRA’s tariff, the annual fee for a store of 51 to 100 square metres was ZAR 1000.00, whereas the annual fee for a store of 201- 300 square metres was ZAR 2000.00.
The Tribunal agreed with the retailers that the SAMPRA’s tariff was too high, even compared with lower tariffs in developing countries such as Australia. The Tribunal also agreed with the retailers that SAMPRA’s take-it-or-leave-it approach in setting its tariff was wrong both under the Copyright Act and the Collecting Society Regulations. In this connection, the Tribunal found that it would not be in the interest of justice to “cut and paste” the international practice without engaging the market forces prevailing in South Africa.
Therefore the Tribunal was of the view that tariff to be set must be a tariff that “optimizes public welfare”, in other words “a tariff that is neither too high nor too low, by which the service providers would realize profits, whereas the consumers would purchase voluntarily”. The Tribunal therefore set a tariff which, for example, saw the annual cost for shops of 50 to 100 square metres drop down to ZAR 389.00, whereas the annual fee for shops of 200- 300 square metres was set at ZAR 620.00.
As alluded to above, the tariff set by the Tribunal does not compare favourably with KAMP’s tariff here in Kenya. According to KAMP’s recent tariffs available here, the annual cost for shops of 50 to 100 square metres is currently set at KES 6500.00 which is approximately ZAR 650.00. In other words, a Kenyan shop half the size of a South African shop pays twice as more in license fees per year.
In light of the above, this blogger submits that there is a pressing need for the relevant government agencies to intervene and regulate the license tariffs, terms and conditions imposed by CMOs in Kenya to protect the public interest.