High Court Judgment on Constitutionality of Equitable Remuneration Right and Copyright Collective Management

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Previously we reported here that two content service providers and three individual copyright owners had filed a constitutional petition at the High Court challenging the content of the equitable remuneration right in section 30A of the Copyright Act, the application and implementation of section 30A by the collective management organisations (CMOs) and the manner of licensing and supervision of the CMOs by Kenya Copyright Board (KECOBO).

Recently in the case of Petition No. 317 of 2015 Xpedia Management Limited & 4 Ors v. The Attorney General & 4 Ors 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 content service providers and the copyright owners that the contents and implementation of section 30A are unconstitutional.

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Remuneration Rights vs. Exclusive Rights: IFPI, SCAPR, Kenya Copyright Board Clash over Removal of Section 30A

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The International Federation of Musicians (FIM) reports that powerful record label umbrella body International Federation of the Phonographic Industry (IFPI) has written to Kenya Copyright Board (KECOBO) demanding the removal of Section 30A of Kenya Copyright Act. (See our previous discussions of section 30A here)

According to FIM, the criticism of section 30A by IFPI is an unacceptable “step backwards, the implication of which is that all treaties guaranteeing artists’ rights would be made devoid of any meaning (Rome Convention, WPPT, Beijing Treaty).”

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Revisiting Section 30A of the Copyright Act: Right to Equitable Remuneration for Performers and Producers

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“For many years Kenyan composers and authors have received royalties from the broadcast or public performance of their songs. These royalties are collected by the Music Copyright Society of Kenya (MCSK).
The Copyright Act has since been amended to acknowledge the essential contribution of performers and producers of sound recordings in the creation of recorded music and works by including a right to equitable remuneration for both the performers and producers, which is in line with international best practices. The rights to equitable remuneration are the rights of performers and producers to be paid fairly for the broadcast and communication to the public of their works.” – Performers Rights Society of Kenya (PRiSK)

In 2012, the Copyright Act was amended with the insertion of a new provision, section 30A which introduced the right to equitable remuneration for use of sound recordings and audio-visual works. This blogger has discussed this section in several blogposts available here, here and here.

In a recent article, intellectual property (IP) lawyer Judy Chebet argues here that section 30A is unconstitutional as it obliges performers and music producers to cede some of their rights to collective management organisations (CMOs). While this blogger fundamentally disagrees with Chebet, it is argued that her views raise serious concerns that must be addressed by the Kenya Copyright Board (KECOBO) and the related rights CMOs both of whom play an important role in explaining to the Kenyan public (in a fair amount of detail) exactly “what section 30A is all about”.

Copyright and related rights are bundles of different rights which can be exercised individually or, where for practical purposes it is very difficult to enter into individual arrangements, can be managed by collective management organisations (CMOs). Because of the uses to which sound recordings and fixations of performances are traditionally put, collective management has become an indispensible method by which performers and producers can be remunerated for the uses of their performances or recordings.

Both Article 12 of the Rome Convention and Article 15 of the WIPO Performances and Phonograms Treaty (WPPT) give performers and producers of sound recordings a right to a single equitable remuneration for broadcasting and communication to the public. In most CMOs this will be the great bulk of the collectable remuneration.

The WPPT goes on to provide that the contracting parties may establish in their national legislation that the single equitable remuneration shall be claimed from the user by the performer or by the producer or by both. The single equitable remuneration may be shared by agreement or domestic legislation may provide how the remuneration must be shared.

Given this modern environment it has started to make more sense for the activities of performers’ and producers’ CMOs to be merged into one organisation; the users are the same and the remuneration has to be shared so that it can be more efficient for one organisation to collect and to manage the distribution of the remuneration to the different parties. The efficiencies also benefit the user who only has one organisation to pay. Even in cases where there are two separate CMOs, they can collect jointly but distribute separately. This is the case for instance in Kenya with Kenya Association of Music Producers (KAMP) or even the case of Sweden with SAMI and the Swedish Group of IFPI. In the Kenyan context this blogger has previously discussed the amalgamation of KAMP and PRiSK here.

Therefore, to the extent that Chebet argues section 30A creates a conflict with the WPPT in that the latter does not allow compulsory licensing, this blogger concurs fully with Chebet. However, the point of departure with Chebet’s views is that this form of mandatory collective management through compulsory licensing amounts to a limitation of Article 40 of the Constitution (Protection to right to property) that is not in accordance with Article 24 (Limitation of rights and fundamental freedoms).

Compulsory licensing is the term generally applied to a statutory license to do an act covered by an exclusive right, without the prior authority of the right owner. This concept of compulsory licensing in copyright is derived from patent law, where the owner is forced to face the competition in market, similarly in copyright law; the copyright holder is subjected to equitable remuneration. One of the main reasons for introducing non-voluntary licenses is where the users of certain works have access to these works on terms which are known in advance and it is not practicable for them to locate right owners and obtain an individual license from them.

According to copyright scholars, legislative arrangements for equitable remuneration occupy a position on the continuum of copyright and author’s right somewhere between exclusive rights and absolute exemptions. In strictly economic terms, these arrangements reflect the legislator’s judgment that to extend an exclusive right would hamper socially important uses, typically because of the high transaction cost of negotiating a license, but that to make the use entirely free would seriously impair needed rewards for the author. Compulsory licenses trade the bargaining power conferred by the prospect of injunctive or other coercive relief for a monetary award aimed at approximating the sum a reasonable licensee would in good faith offer and a reasonable copyright owner would in good faith accept.

Article 9(2) of the Berne Convention provides the legal basis for compulsory licensing in copyright law. The Article reads:

“It shall be a matter for legislation in the countries of the union to permit the reproduction of such works in special cases, provided that such reproduction does not conflict with the normal exploitation of the work and does not unreasonably prejudice the legitimate interests of the author.”
This provision provides the Convention’s exclusive basis for equitable remuneration and provides for the conditions which should be met before a member country can entirely excuse a use which includes the equitable remuneration and not prejudicing the reasonable interests of the author. Therefore this Article provides the so-called three (3) step test for compulsory licensing, namely exceptional circumstances, no conflict with the normal exploitation of the work and no unreasonable prejudice to legitimate interests of the author.

Article 11 bis (2) provides that:-

“It shall be a matter for legislation in the country of the Union to determine the conditions under which the rights mentioned in the preceding paragraph [11 bis (1)] may be exercised but these conditions shall apply only in the countries where they have been prescribed. They shall not in any circumstances be prejudicial to the moral rights of the author, nor to is right to obtain equitable remuneration which in the absence of agreement, shall be fixed by competent authority.”

Therefore in order for Chebet’s unconstitutionality argument to succeed, this blogger submits that the enactment of section 30A must be proved to be a violation of the Berne 3-step test in a manner that unreasonably and unjustifiably limits the rights enshrined under Article 40 as set out in Article 24.

Meanwhile, this blogger reiterates that the real elephant in the room is the government’s regulatory role vis-a-vis equitable remuneration.

In the UK, the Copyright Tribunal established under the Copyright, Patents and Designs Act, 1988 is empowered to determine the amount of equitable remuneration payable to performers where commercially published sound recordings of their works are performed or communicated to the public. In Australia, the Copyright Tribunal, established under the Copyright Act 1968, is similar in the scope of its jurisdiction to the 1988 UK Tribunal, including determination of remuneration to be paid in respect of certain uses which are subject to compulsory licenses.

In the US, the US Copyright Act 1976 created a Copyright Royalty Tribunal comprising five government-appointed Commissioners with a Chairman appointed annually. The Tribunal’s jurisdiction includes determining royalty rates payable under certain compulsory licenses, and the distribution of royalty fees deposited with the Register of Copyrights in respect to those compulsory licenses.

Meanwhile here in Kenya, the Competent Authority established under section 48 of the Act remains non-existent over a decade since the establishment of the Kenya Copyright Board (KECOBO). This situation is problematic as there are no mechanisms in place to monitor the practical implementation of the compulsory licences under section 30A.