The deficiencies in the currently-unregulated CMO system have long plagued the creative industry. In a field where individuals rely on compensation for their creative efforts, an efficient collective management system for licensing fees and royalties is not only essential but critical to promote and encourage the constant generation of new works that enrich our society. As MinLaw and IPOS have observed, collective management reduces transaction costs associated with licensing, thereby allowing the wider society cost-effective access to a broad range of works. This end goal of benefiting the public at large renders it all the more important that we build a sustainable compensation ecosystem to incentivise the creators. There is therefore much to commend about the spirit and purpose underlying the new Proposed Licensing Scheme, insofar as it is aimed at introducing order and transparency into the overall collective management system, which presently suffers from high information asymmetry. This, it is hoped, will in turn guard against any monopolistic behaviours which may not only impede the use of works but also gradually disincentivise creators overtime.
In more detail
On 3 June 2020, the Ministry of Law (“MinLaw“) and Intellectual Property Office of Singapore (“IPOS“) launched a public consultation on “Proposed Licence Conditions and Code of Conduct for Collective Management Organisations” (the “Consultation Paper“). The proposed amendments follow from the responses received during the Copyright Collective Rights Management Ecosystem Public Consultation 2017, and forms part of the ongoing review of Singapore’s copyright regime.
The proposed licensing scheme also seeks to address issues raised in the 2019 Copyright Review Report, which had proposed, among others, a class licensing scheme (the “Proposed Licensing Scheme“) for Collective Management Organisations (“CMOs“) with the following key features.
1. Clarifying the definition of CMOs
All entities engaging in collective licensing in Singapore will be automatically subject and required to comply with the relevant licence conditions.
As there is currently no definition of a CMO in the Copyright Act (Cap. 63), MinLaw and IPOS intend to prescribe a definition which considers the entity’s function, organisational structure and the manner in which they obtain mandate from their members.
2. Safeguarding members’ rights
Members will be granted minimum rights and allowed involvement in the CMO’s key decision-making processes.
This feature seeks to redress the power imbalance between CMOs and their members, where members often find themselves wholly dependent on the CMOs for an efficient transaction of their rights. CMOs will be required to enter into a ‘membership agreement’ with their prospective members, which will provide for, among others, the right to vary and terminate the scope of rights the member has granted to the CMO upon serving reasonable notice. To promote and ensure greater freedom and flexibility in handling their rights, members will also be entitled to deal with their works through a non-exclusive arrangement with the CMO, or only in specified scenarios.
3. Mandatory Code of Conduct to promote transparency
There will be a mandatory Code of Conduct implementing standards for transparency, governance, accountability and efficiency, and requiring CMOs to incorporate dispute resolution mechanisms for creators.
Where licensing fees are concerned, CMOs would be required to disclose their distribution policy clearly and provide ample information to members on the sources of the CMO’s revenue and its basis for calculating the quantum of licence fees due. These policies would have to be published on the CMOs’ public websites, alongside various other information such as its membership terms, the names of individuals involved in the management of the CMO and the type and nature of rights being administered.
4. Ensuring good governance and management
The management and governing board of the CMO will bear the responsibility of implementing and adhering to the Code of Conduct. These governing boards would have to have a fair and balanced representation of different categories of members to ensure that no one category is neglected or under-represented. In the interests of transparency and good governance, MinLaw and IPOS also recommend imposing a cap on the number of years a board member can serve, and allowing members to inspect the financial records upon request.
5. IPOS to wield supervisory powers
Members are encouraged to resolve disputes through the CMO’s internal complaint handling mechanisms. In line with the light-touch nature of the Proposed Licensing Scheme, it is only where this fails that the parties may lodge a complaint with IPOS. In this regard, IPOS will wield certain supervisory powers and be able to intervene as the regulator and authority overseeing the implementation of the Proposed Licensing Scheme.
MinLaw and IPOS are seeking feedback on the above Proposed Licensing Scheme features from all interested persons. The consultation period is set to run from 3 June 2020 to 30 June 2020.
Further information on the recommended features for deliberation are set out in the Consultation Paper which may be found here.