Room for Judicial Review in Collective Administration of Copyright: High Court Judgment in Nakuru Pub Owners v. KAMP & PRISK

KAMP PRISK

The High Court of Kenya sitting at Nakuru has recently handed down an interesting judgment in the case of Republic v Kenya Association of Music Producers (KAMP) & another Ex-Parte Nakuru Municipality Pubs, Bars, Restaurants and Hotel Owners Association (Suing Through Their Trustees) [2015] eKLR. A copy of the judgment is available here. In this case, Nakuru Municipality Pubs, Bars, Restaurants and Hotel Owners Association sought judicial review orders of prohibition to restrain two collective management organisations (CMOs) from collecting licence fees and or levies from the membership of the Association. The CMOs in question: Kenya Association of Music Producers (KAMP) and Performers Rights Society of Kenya (PRiSK), two related rights CMOs representing owners of sound recordings and performers respectively.

The crux of the Association’s case against the CMOs is as follows:

“It is argued that the proposed levies and licences were never communicated to their association or any of the members, and that as they were not notified, or invited to participate in their formulation and approval nor gazetted/published, the Respondents [CMOs] failed in their duty to communicate the passage and approval of the levies to them, they are in breach of rules of natural justice by withholding information that would affect them economically and financially and a breach of their constitutional rights as enshrined in Article 43 of the Constitution. (…)”

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Copyright Act (Amendment) Regulations 2015: Attorney General Hikes Registration and Renewal Fees

The fees payable to the Kenya Copyright Board are only going up by “this much”

The Honourable Attorney General (pictured above) in exercise of the powers conferred by section 49 of the Copyright Act has made new regulations.

Contrary to the picture caption above, the thrust of these new regulations is a substantial increase in the fees for applications for registration and renewal of registration of a collecting society.

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Copyright Licensing Requires Salesmanship: Lessons from the Banned “Wolf of Wall Street”

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One of the most talked about stories in the month of January was the decision by the Kenya Film Classification Board (KFCB) to ban the sale, exhibition and distribution of the critically acclaimed Hollywood film “The Wolf of Wall Street”.

KFCB claims that the film was “restricted” due to elements that include nudity, sex, alcohol, drugs and profanity found in almost every scene of the 3-hour long motion picture which chronicles the title character’s (Jordan Belfort’s) pursuit of the American Dream.

This blogger has watched the banned film and believes that it is a must-watch for all those involved in the sale/assignment and/or licensing of content. In particular, this blogger recommends several short clips from the movie where the lead character demonstrates the art and skill of making a sale.

In the above scene, Jordan Belfort is trying to turn a group of inexperienced, undisciplined misfits into Wall Street stock brokers. In order to illustrate to the basic fundamentals of making a sale, Belfort pulls out a pen and thrusts it in their faces, with the instruction: “Sell me this pen.” After one member of his team declines, another member of his team grabs the pen from him and states:

“Do me a favour and write your name on that piece of paper, there.”

When Belfort looks around for something to write with, the future salesman replies:

“Oh, you don’t have a pen anymore. Supply and demand, bro.”

This scene illustrates a fundamental point for all salespeople: Until a need is recognized, it simply doesn’t matter how great your product or service is. Therefore, there are essentially three parts to any sale: identifying the need, creating urgency and applying the need and urgency to the sale. In short, the role of the salesperson is to help the client reconnect with his/her needs and the urgency to act upon them.

In the case of content, the license is the most common sale because it allows users to enjoy certain rights in the content without transferring ownership in the content. In this connection, this blogger has in mind the four collective management organisations (CMOs) currently in operation within Kenya, namely the Reproduction Rights Society of Kenya (KOPIKEN)Kenya Association of Music Producers (KAMP), Performers’ Rights Society of Kenya (PRiSK) and Music Copyright Society of Kenya (MCSK). Each of these CMOs is in the business of selling licenses to users throughout Kenya with respect to the rights holders in the various categories of works they control. From the CMOs’ perspective, the ends justify the means when it comes to licensing users of copyright works: an increase in licenses issued means an increase in royalties distributable to copyright owners. Therefore licensing staff employ various tactics to create awareness on copyright law while emphasising the need for them to take out licenses for commercial exploitation of copyright works.

A common challenge among the CMOs is increasing the number of licenses issued while at the same time reducing their administrative (operational) costs. One possible solution is tele-licensing whereby licensing staff spend the majority of their time on the phone with potential licensees countrywide. The trick behind tele-licensing is to persuade a commercial user that it requires a copyright license to continue or commence its operations and making arrangements with the user for the CMO to dispatch a licensing staff to deliver an invoice and collect the license payments.

Once again, Jordan Belfort illustrates how tele-licensing could be done in the clip below where he sells penny stocks worth $40,000 in a non-existent company.

In the Kenyan context, a higher degree of salesmanship may be required than that displayed by Belfort in the above clip due to the ignorance of copyright law among a large portion of potential content users. In fact, some licensing staff argue that in some cases, unless they physically visit business premises in the company of uniformed police officers, content users will not take out copyright licenses. However, this blogger argues that despite the low levels of awareness among copyright users, there is still an important need for sales training among the licensing staff of all the CMOs to ensure that they understand the content licenses they are selling and how to create the need and urgency among content users to take out the licenses.

 

In the Kenyan context, a higher degree of salesmanship may be required than that displayed by Belfort in the above clip due to the ignorance of copyright law among a large portion of potential content users. In fact, some licensing staff argue that in some cases, unless they physically visit business premises in the company of uniformed police officers, content users will not take out copyright licenses. However, this blogger argues that despite the low levels of awareness among copyright users, there is still an important need for sales training among the licensing staff of all the CMOs to ensure that they understand the content licenses they are selling and how to create the need and urgency among content users to take out the licenses.

Very Awkward Interview on Music Copyright & Piracy on KTN Africa Speaks

 

Along with KECOBO’s bad decision not to attend the interview, this blogger was left with several other questions after watching the above full length video clip.

1. Was there any mention or explanation of KECOBO’s role as regulator of collective management organisations (CMOs)? And how this role could impact both positively and negatively on the music industry?

2. Was there a clear distinction made between:
– the benefits of depositing one’s work at KECOBO for registration?
– the benefits of declaring one’s work at a CMO for purposes of membership (which may entail further entitlements such as royalties, centralised rights clearances and policing of rights)?

3. Was the issue of the internet as a double-edged sword (music distribution vs music piracy) addressed (as brilliantly brought out in the Salif Keita clip)?

4. Was there any mention of the role of KECOBO in fighting piracy through enforcement actions and prosecutions arising from the various offences created under the Copyright Act? And how this role could impact both positively and negatively on the music industry?

5. Is “having one CMO” (whatever that means) the only solution available to the current problem of unlawful competition and unethical practices among the three music CMOs?

Music Copyright Society of Kenya MCSK Boss Finally Speaks Out

Over the past year, IPKenya has written several blogposts on the Music Copyright Society of Kenya (MCSK), based primarily on credible information from the national Copyright Office (KECOBO), media reports as well as information from online sources.

IPKenya has always endeavoured to be balanced and fair in its appraisal of the fall-out between KECOBO and MCSK as well as the latter’s own tarnished public image.

Finally, the General Manager of MCSK, Mr. Maurice Okoth has decided to respond to IPKenya and present his side of the story.

Here are his comments:

“Following your post and comments. Bit of misunderstanding and thought perhaps to clear the air.

Firstly, yes court order allowed us to continue collecting license fees and distribute royalties.

Secondly, regulations and conditions for operation of Collective Management Organizations (CMO’s ) vividly set out in the Copyright Act. Also regulation on renewals of certificate of registration etc ..the JR filed basically was addressing these issues as it was our view that KECOBO did not adhere to the law while purportedly deregistering MCSK.

Thirdly, please refer to the law and if you do find provision requiring CMO’s to operate at 30 % admin expenses, please cite this provision of law (local or international laws). This is a creation of KECOBO and cannot thus be used as a legal argument.

Finally, how is it that MCSK is setting a bad precedent in Kenya ..?

Currently, I am in Sweden in part to share the experience and developments at MCSK.
We are one of the only countries that is effective with general rights licensing , also known as performances in public places. In this category of licensing, collections from public service vehicles forms a large part of the collection and again this is a unique scenario in the world and I, on behalf of MCSK, have been invited to several countries to especially share in how we are able to achieve this.

We are unique in another way: unlike most other CMOs, a larger percentage of our collections is from performances in public places (general rights), whereas most CMO’s collect a larger percentage from broadcasting, telecommunications etc ..where collection expenses are quite minimal. The deductions from each class of collections thus varies and as such for collections from broadcasters where minimal costs incurred, you would not need to deduct much admin costs etc ..but in the area of general rights, where the situation in Kenya demands that we have to actually go out to the field in a daily basis to collect the license fees..I would actually like to hear of an alternative way of collecting ..(and you can also refer to how kamp , prsk and even kopiken are collecting where they have also adopted our style..) ..
So I’m not sure what IPKenya means that MCSK is setting a bad example for the other CMOs in Kenya.

I have much more to share ..for example the KECOBO principle of 70-30 and what actually entails admin expenditure ..for example, when we invest in assets for the Society that will in future save on costs i.e. capital expenditure (capex), where then do you classify this ..what about depreciation on assets ..bank charges which rise as you pay more members through the bank …all admin expenditure right, IPKenya ..? What about when you hold seminars for members ..annual general meeting and you pay out fare to members ..? Admin expenditure right ..? What about when members pass on and we make contribution to the funeral etc… What about when members fall sick and we provide funds for medical treatment ..perhaps you should consult with KECOBO and see how they want us to treat these expenditures…and see the rationale for 70-30.

I am also part of an African Committee comprised of Collecting Societies (CMOs) within Africa and part of the International Confederation of Societies for Authors and Composers (CISAC) that has been appointed to look into the budgets for CMO’s and the preferred ratio for operating (rather the permissible expenditure) ..we should be presenting our paper at the next African committee meeting and I think this will now be the guiding principle in future…for now IPKenya, show me where KECOBO ascertained that we should operate at 70-30.”

IPKenya has already contacted Mr. Okoth to schedule a one-on-one interview to discuss the salient issues raised in his comments above.

In the meantime, the floor is yours. Kindly let me know via the comments box if you have any questions or issues you would want me to raise with the MCSK GM.

The Fate of Music Copyright Society of Kenya (MCSK)

Today IPKenya came across this story in the Bahamas Tribune about the Bahamas Copyright Royalty Tribunal titled “Copyright Holders Recieve ‘Not One Cent’ in 11 Years” and the opening paragraph summarises the article as follows:

“”NOT one single cent” has been paid by the fund set up 11 years ago by the Bahamas to compensate intellectual property rights holders, Tribune Business can reveal, due to the absence of a regulatory regime that stipulates payment rates.”

Immediately one is reminded of Kenya’s own challenges with fees collection and royalty payments, best exemplified by Music Copyright Society of Kenya (MCSK).

As you know, an ugly row took centre stage last year after KECOBO deregistered MCSK as a collective management organisation (CMO) acting on behalf of authors and composers of music primarily because MCSK’s operational costs were too high compared to the royalties it pays musicians. For instance, MCSK’s expenses stood at Sh137 million in the year to June 2010 against revenues of Sh185 million, leaving it with a surplus of Sh48 million or 25 per cent of its collections, which are supposed to go to musicians. Meanwhile KECOBO maintained that the guidelines for CMOs clearly stated that only 30% of monies received can be spent on administrative costs and the remaining 70% must be distributed among musicians as royalties. As the financial books showed, MCSK was doing quite the opposite: distributing 30% and spending 70%, notwithstanding the large number of complaints over unpaid royalties from musicians.

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