High Court Upholds Freeze of Collecting Society’s Bank Accounts: Ruling in MCSK v Chief Magistrate, Inspector General

Music-Copyright-Society-of-Kenya-MCSK-CEO-Maurice-Okoth People Daily

This blogger has recently come across an astute ruling by the High Court in the case of Music Copyright Society of Kenya v Chief Magistrate’s Court & Inspector General of Police [2015] eKLR. Justice L. Kimaru sitting in the High Court was approached by the authors’ collecting society, Music Copyright Society of Kenya (MCSK) to stay orders issued by the Magistrate’s Court freezing all the bank accounts of MCSK following a request by the Serious Crimes Unit under the Directorate of Criminal Investigations (DCI). DCI requested that MCSK’s accounts be frozen as it investigates complaints made by MCSK members in regard to alleged misappropriation and theft of funds at the collecting society.

After carefully evaluating the facts before him, Kimaru J ruled that the investigations were lawful and based on several complaints received by DCI from MCSK members and that the orders to freeze MCSK’s accounts were within the precincts of the law.

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Copyright Regulations Amended and Collecting Societies’ Tariffs Gazetted

KAMP PRISK

Most IP observers will concur that in the recent past the related rights collecting societies namely Kenya Association of Music Producers (KAMP) and Performers’ Rights Society of Kenya (PRiSK) have done exceedingly well for themselves in the area of legislative and policy reforms by leveraging on the goodwill from Kenya Copyright Board (KECOBO). As a result, KAMP and PRiSK have been the major beneficiaries of consecutive amendments to the Copyright Act and Copyright Regulations in 2012, 2014 and now 2015.

Recently, the Attorney General made Copyright Amendment Regulations which expressly deal with the private copying levy or blank tape levy payable to KAMP and PRiSK under sections 28 and 30 respectively of the Copyright Act. In addition, the Attorney General has also recently approved and gazetted the tariffs to be used by KAMP and PRiSK to collect royalties from various categories of users including broadcasters, telecommunications companies, service providers, business premises and vehicles both public as well as corporate.

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Blind Opposition to Caller Ringtone Deal between Safaricom and Collecting Societies: High Court Case of Irene Mutisya & Anor v. MCSK & Anor

Robert Collymore CEO Safaricom

This blogger has recently come across Nairobi High Court Civil Case No. 262 of 2015 Irene Mutisya & Anor v. Music Copyright Society of Kenya & Anor. In this case Mutisya and another copyright owner Masivo have filed suit against Music Copyright Society of Kenya (MCSK) and mobile network operator Safaricom Limited for copyright infringement. The copyright owners filed an urgent application on 30th July 2015 for a temporary injunction to restrain Safaricom from remitting license fees to MCSK pursuant to a recently concluded license agreement for caller ring-back tones (CRBT) made available through Safaricom’s Skiza platform. The copyright owners also asked the court to restrain both Safaricom and MCSK from implementing the CRBT License Agreement pending the hearing of the application.

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Legality of Equitable Remuneration Challenged: High Court Petition of Xpedia & 4 Ors v. Attorney General & 4 Ors

equitable remuneration

Editor’s Note: On 31st July 2015, the urgent application in this Petition No.317 of 2015 dated 29th July 2015 was heard and certain interim orders were granted. A copy of the orders is available here.

This blogger has confirmed a recent media report that two content service providers and three copyright owners have jointly filed a petition challenging the constitutionality of the right to equitable remuneration under the now infamous section 30A of the Copyright Act. The Petition was filed against the Attorney General, Kenya Copyright Board (KECOBO), Kenya Association of Music Producers (KAMP), Performers Rights Society of Kenya (PRiSK) and Music Copyright Society of Kenya (MCSK).

As stated above, the crux of the Petition filed by Xpedia Management Limited, Liberty Afrika Technologies Limited, Elijah Mira, Francis Jumba and Carolyne Ndiba is that KAMP, PRiSK and MCSK should be stopped by the court from receiving or collecting royalties under section 30A of the Copyright Act in respect of works owned or claimed by the Petitioners.

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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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The Copyright (Amendment) Act 2014: The Good, the Bad and the Ugly

parliament of kenya by diasporadical

This blogger has received official confirmation that the Statute Law (Miscellaneous Amendments) Bill, 2014 passed by the National Assembly on 13/08/2014, was assented to by the President of the Republic on 28/11/2014 thereby bringing the Copyright (Amendment) Act 2014 into force. The Bill has effectively amended four sections of the Copyright Act, namely sections 22, 28, 33 and 46. A copy of the Bill is available here.

The Bill’s Memorandum of Objects and Reasons explains that the Copyright Act has been amended to “empower the competent authority to grant a compulsory licence for the publication or republication or broadcasting of works which are subject to copyright where it considers that the right holder withholds consent unreasonably. It [The Bill] also restricts the imposition of a tariff or levying of royalties unless approved by the Cabinet Secretary.”

It is recalled that four other sections in the Copyright Act were amended in 2012 in the exact same manner. Please see this blogger’s comments on the 2012 amendments here. What follows are this blogger’s thoughts on the 2014 amendments to the Act:

Section 22(5)

This is an amendment by insertion. The new subsection inserted relates to the principle of automatic protection under the Berne Convention for the Protection of Literary and Artistic Works (Paris Text 1971). Article 5(2) of the Berne Convention reads:

“The enjoyment and the exercise of these rights shall not be subject to any formality; such enjoyment and such exercise shall be independent of the existence of protection in the country of origin of the work. Consequently, apart from the provisions of this Convention, the extent of protection, as well as the means of redress afforded to the author to protect his rights, shall be governed exclusively by the laws of the country where protection is claimed.”

This blogger reckons that this amendment is aimed at counteracting the effects of section 36 of the Act which requires authentication of copyright works.

Section 28(5)

The amendment to Section 28(5) states that the blank tape levy shall be collected by KECOBO and then distributed to “the respective copyright collecting society registered under section 46”. This wording is problematic since no CMO has been registered to administer audio blank tape compensation from the private copying of musical works and sound recordings.

Currently section 28(3) as read with section 30(6) of the Act provide that that owner of the sound recording and the owner of a related right in the fixation of a performance shall have the right to receive fair compensation consisting of a royalty levied on audio recording equipment or audio blank tape suitable for record and other media intended for recording, payable at the point of first sale in Kenya by the manufacturer or importer of such equipment or media.

Section 28(4) as read with section 30(7) further provides that the royalty payable under the above subsection (3) shall be agreed between organisations representative of producers of sound recordings, performers, manufacturers and importers of audio recording equipment, audio blank tape and media intended for recording or failing such agreement by the competent authority appointed under section 48.
From the aforegoing, it is clear that the copyright owners of musical works have been systematically side-lined from receiving any compensation from the collection of audio blank tape levies within the Republic of Kenya.

With reference to international best practices, it is clear that Kenya’s current legislative provisions on private copy levying are not only illegal but more importantly unconstitutional. This line of argument has been explored by this blogger here.

Finally, this blogger wonders whether the reference to “the respective copyright collecting society registered under section 46” in the amendment creates an opportunity for establishing a Collective Agency for blank tape levy administration. In other jurisdictions, such Agencies do exist and are made up of all CMOs that represent concerned rights holders.

Section 33A

This is an amendment by insertion. The new section inserted officially introduces compulsory licensing in Kenyan copyright law. However this blogger has argued previously that section 30A in the 2012 Amendments was the Government’s successful move to unofficially introduce a compulsory licensing regime under the guise of the right to equitable remuneration.

Compulsory license is the term generally applied to a statutorily 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.

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 compulsory licensing and provides for the conditions which should be met before a member country can entirely excuse a use which includes compulsory licensing 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.”

The amendment to section 33 emphasises the regulatory role of the Competent Authority (aka Copyright Tribunal) in compulsory licensing. This role is common in other common law jurisdictions such as the UK, US, Australia and India.

As this blogger has previously noted here, the reality in Kenya is that the Competent Authority provided 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 and the proposed section 33A.

Section 46A

This is an amendment by insertion. The newly introduced section 46A creates an approval system for all tariffs set by CMOs to license copyright users. This new section prohibits any registered CMOs from imposing or collecting royalty based on tariffs that have not been approved and published in the Government Gazette from time to time by “the Cabinet Secretary in charge of copyright issues”. In addition, the new section empowers “the Cabinet Secretary” to exempt users of copyright works from paying royalties by notice in the Gazette.

A preliminary issue that may require clarification is whether the Attorney General can be deemed to be “the Cabinet Secretary” for purposes of the Act? The Act defines “Minister” as “the Minister for the time being responsible for matters relating to copyright and related rights”. In the previous dispensation, the Attorney General (who was an ex-officio member of the Cabinet) assumed the role as “Minister” since KECOBO was under the Office of the Attorney-General. It is submitted that there is an established practice in Kenya whereby the Attorney General exercised the powers and performed the functions conferred on the “Minister” such as appointment of the Competent Authority and making Regulations for the better carrying out of the provisions of the Act.

However this issue is now settled under the Statute Law (Miscellaneous Amendments) Act, 2014 which has amended the definition of “Minister” under the Interpretation and General Provisions Act (Cap 2 Laws of Kenya) making specific reference to the Attorney General. The relevant portion of the amendment has been reproduced below:

Statute Law Miscelleneous Amendments Act 2014 Kenya

Nevertheless, this blogger maintains that the section 46A amendment may serve to further frustrate the relationship between CMOs and users of copyright. Over the years, this relationship has been severely strained due to the absence of the Competent Authority – a body which is authorised under the Act to deal with all issues relating to the licensing terms and conditions imposed on users by CMOs. The powers given to the Attorney General to approve tariffs and to exempt users from paying royalties may also prove problematic for CMOs.

Regrettably, this blogger notes that KECOBO and the Office of the Attorney General did not formally invite for public comments and/or conduct stakeholder consultations before causing these amendments to the Copyright Act to be passed by the Legislature and the Executive.

In the next blogpost, this blogger will discuss another set of IP law-related amendments with respect to the Kenya Anti-Counterfeit Act as contained in the Statute Law Miscellaneous Amendments Bill, 2014.

#ipkenya Weekly Review (18th-25th May, 2014)

gado cartoon anglo fleecing corruption AG

Since our last weekly review, the Minister in charge of Copyright and Related Rights in Kenya namely, the Attorney General has under siege for his alleged involvement in the Anglo Leasing contracts scam. This blogger has the full story here. As always, your comments are invited.

Meanwhile in the intellectual property (IP) world, here are some of the top news and views from Kenya and beyond:-

– OpenAIR presents its findings at WIPO Seminar on Intellectual Property & the Informal Economy [WIPO YouTube]

– Copyright Society of Nigeria signs historic royalty agreement with 400-member umbrella body for broadcasters [COSON]

– No More Substantive Examination of Utility Models in Kenya [AfroIP]

– Hidden Treasure and the New Colonialism: Why South Africa Must Protect Its Intellectual Property [SACSIS]

– Nigeria: Nollywood from an intellectual property perspective [WIPO Magazine]

– Kenya: The Maasai ‘Shuka’ Has Evolved Into A Brand [The Star]

– South African Tech firms can now transfer intellectual property offshore [TechCentral]

– Tanzania: Copyright Society and Revenue Authority devising a banderole system for copyright administration [TZ Daily]

– Nigerian Economy Loses N82 Billion Yearly to Software Piracy – BSA [Daily Independent]

– Kenya: The First Thing We Do, Let’s Kill All The Lawyers [BrainstormKE]

– IP Rights and Digital Content: Kenya’s New Headache [ModelEmployee254]

Court Rules Public Performance and Communication to the Public Licenses Are Distinct Under Copyright

nairobi-pacific-hotels

On February 14, 2014 in the case of Nairobi Pacific Hotel vs KAMP & PRISK CMCC 7240 of 2013, the court dismissed an application filed by Nairobi Pacific Hotel seeking a grant of temporary injunction to restrain the Kenya Association of Music Producers (KAMP) and the Performers Rights Society of Kenya (PRiSK) from collecting fees with respect to their jointly-issued Communication to the Public license. A copy of the ruling is available here.

This court ruling creates an important precedent that a Public Performance License from the Music Copyright Society of Kenya (MCSK) is not sufficient for the protection of the rights of performers and producers represented by PRiSK and KAMP, respectively. In making its ruling, the court noted that KAMP and PRiSK are collective management organisations (CMOs) duly licensed by the Kenya Copyright Board (KECOBO) to collect license fees from the users who broadcast or communicate sound recordings and audiovisual works to the public.

The court further finds that the clean hands doctrine applies since the user in question, Nairobi Pacific Hotel, had been implored upon to obtain a Communication to the Public License but neglected and/or refused to do so solely on the basis that the latter had already obtained a Public Performance License from MCSK.

Comment:

This blogger supports the court’s ruling in this matter and applauds the related rights CMOs for successfully using litigation as a tool to enforce and protect the rights of their respective members.

The existence of the MCSK license and KAMP-PRiSK for public performance is premised on the definition of the “communication to the public” in the Copyright Act. This definition reads:

“communication to the public” means
(a) a live performance; or
(b) a transmission to the public, other than a broadcast, of the images or sounds or both, of a work, performance or sound recording;”

However the Copyright Regulations of 2004 provide the clearest definition of what amounts to “Public Performance” as it is licensed by MCSK for the rights under copyright and KAMP-PRiSK for the related rights.

Section 2 reads as follows:

“public performance” means –
(a) in the case of a work other than an audio-visual work, the recitation, playing, dancing, acting or otherwise performing the work, either directly or by means of any device or process;

(b) in the case of an audio-visual work, the showing of images in sequence and the making of accompanying sounds audible; and

(c) in the case of a sound recording, making the recorded sounds audible at a place or at places where persons outside the normal circle of the family and its closest acquaintances are or can be present, irrespective of whether they are or can be present at the same place and time, or at different places or times, and where the performance can be perceived without the need for communication to the public.

From the users’ perspective, they argue that public performance licensing by KAMP – PRiSK and MCSK “feels like double taxation since one is paying 3 different bodies licence fees for the same thing”. Herein lies the biggest challenge for CMOs: to successfully convince users that “music”, as they know it, is simultaneously categorised as three different subject matter under copyright law, namely “sound recordings”, “musical works” and “audio-visual works”. In this regard, this blogger has previously argued here that it requires a great deal of skill and salesmanship for licensing officers from the CMOs to convince users to take out their respective licenses.

In the present case of the KAMP-PRiSK license, the tariffs are based on the area in square feet of the business premises wwhere the sound recordings and audio-visual works are used. The tariff structure is available below:

PRiSK KAMP Communication to the Public CTP license tariffs

In disputes between CMOs and users, the elephant in the room always seems to be the question of CMO regulation, in particular the reasonableness of the license terms and conditions imposed by CMOs on users. As previously discussed here and here, this blogger has noted that there is an increase in complaints by users against CMOs relating to license fees, in addition to the manner in which license fees are collected from users.

In the case of KAMP and PRiSK, CMO-user relations appear to have been complicated further with the enactment of section 30A in the 2012 Amendments to the Copyright Act. It would seem that Section 30A has introduced a system of compulsory licensing with the introduction of the right to equitable remuneration for use of sound recordings and audio- visual works. However, the term “equitable remuneration” remains undefined and where users of sound recordings and audio- visual works may have complaints against KAMP and PRiSK, the Competent Authority is not yet in operation to give directions on these matters.

Copyright Board To Review Guidelines for Collective Management Organisations

This blogger has learned that KECOBO is in the process of the review its CMO Guidelines titled “Guidelines for Licensing Collective Management Organisations”. These CMO Guidelines are available on KECOBO’s website here. Therefore, this blogger hopes to provide an in-depth examination of the Guidelines while making comments on important areas and issues connected with the Guidelines.

In coming up with these Guidelines, KECOBO explains in the opening paragraph that it is mandated under the Act to license and supervise CMOs in Kenya so to ensure that CMOs carry out their core function, namely the collection and distribution of royalties. It is noteworthy that since 2011 when the Guidelines were introduced, KECOBO has been enforcing these Guidelines against CMOs despite the fact these guidelines have no force of law. It is therefore advisable that KECOBO causes the inclusion of these Guidelines in Regulations to be made by the Minister (Attorney General) under section 49 of the Act.

Notwithstanding the legal force of these Guidelines, this blogger has the following comments to make on the Guidelines:

1. Title: this blogger suggests that the title of the Guidelines be amended to include “and Supervising”.

2. Public Notice: KECOBO may wish to include a time frame within which notices shall be published to increase KECOBO’s accountability and transparency. In addition, KECOBO may wish to specify which platform(s) will carry the public notices eg. local dailies with national circulation, KECOBO’s official website, KECOBO notice board?

3. Licensing: In the spirit of transparency and accountability, KECOBO may consider including a time frame within which licenses shall be processed once all application documents are submitted.

4. New Applications: The requirement under (g) appears vague and KECOBO may consider specifying what documents would be required to satisfy that the applicant has the “capacity for collection and distribution of the royalties”.

5. Renewal of License: To avoid duplication of documents submitted by licensed CMOs, the requirements of (a) and (b) should be removed. In the alternative, the requirement (b) should be qualified for cases where the memorandum and articles of association have been amended.
With regard to requirement (i), submitting individual deeds of assignment for each and every member may be onerous for most CMOs due to the sheer bulk of documentation to be produced. At any rate, KECOBO may decide to verify the deeds during an inspection visit to ensure that it corresponds with the list of members submitted.

6. Revocation of a license: The CMO Guidelines have made several additions to the grounds provided under the Act. However the wording and punctuation of this list of grounds for revocation is ambiguous as it does not disclose whether all the ten (10) listed grounds must be present for revocation or whether the presence of one or several grounds is sufficient.

In sum, this blogger submits that the Guidelines play an important role of supplementing the existing legal provisions on licensing and supervision of CMOs found in the Copyright Act, 2001 and Copyright Regulations, 2004. However these Guidelines ought to be given the force of law in order for KECOBO to enforce them against CMOs.

Editor’s note: The author currently works with MCSK however the views, opinions and analyses expressed herein are solely those of the author and are not those of his employers, both past and present.

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

The-Wolf-of-Wall-Street-KFCB-Facebook-page1

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.