Section 30A of the Copyright Act**: Mandatory use of CMOs to collect remuneration for sound recordings

Section 30A of the Copyright Act (CA) was introduced by the Statute Law (Miscellaneous Amendments) Act of 2012 and has, in my view, far reaching consequences to the music industry in Kenya because it obliges performers (artistes) and music producers to their remuneration collection rights to CMOs.

Section 30A introduced a ‘right to equitable remuneration for use of a sound recording and audio visual works’.

Sound recordings and audio visual works?? Think downloadable ringtones like skiza tunes, mp3 downloads, music video downloads.

The law provides for a ‘single equitable remuneration’ by the user to the performer and producer of the sound recording through the respective CMO if the sound recording is used directly for broadcasting or other communication to the public.
Sound recordings and fixations of performances that have been made available by wire or wireless means in such a way that members of the public may access them from a place and a time individually chosen by them shall be considered as if they have been published for commercial purposes. This covers, say, ringtone downloads made available via mobile phones and devices, as well as tunes available for downloading from websites.
In my view, the new section of the CA was meant to introduce into the CA the contents of Article 15 of the WPPT which states as follows:
“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 of a phonogram or by both. Contracting Parties may enact national legislation that, in the absence of an agreement between the performer and the producer of a phonogram (sound recording), sets the terms according to which performers and producers of phonograms shall share the single equitable remuneration.”

Interestingly and curiously, unlike the WIPO Performances and Phonograms Treaty (“WPPT”), Section 30A effectively creates an obligation on the owners of copyright in sound recordings to register and contract with CMOs because the provision is mandatory (“shall”) and provides the only mechanism for the right holders to access their remuneration is through the CMO. In essence, music producers and artistes in Kenya cannot themselves directly collect this ‘single equitable remuneration’ from the users, and neither can they collect this remuneration through, for example, a content service provider such as mobile telecommunications company.

Music artistes and producers must therefore assign or exclusively license copyright to the CMO to exploit the copyright in the sound recording and collect royalties.

Our view is that this breaches the Constitutional right to private property and protection from deprivation of property or interest in property, enshrined in Article 40 of the Constitution of Kenya.

The law is silent on how the remuneration is to be arrived at or set. This is different from, for example, the ‘fair compensation’ in Section 30(6) which is to be levied on audio-visual recording equipment or blank-audio-visual media, and is to be agreed upon between CMOs and representatives of manufacturers and importers of audio-visual recording equipment, and failing agreement, set by the Copyright Tribunal.

In conclusion, artistes and producers should not celebrate the enactment of Section 30A.

As the law currently stands, a producer is  barred from seeking this single equitable remuneration directly or themselves even though, on occasion, them may wish to exercise ownership rights and seek royalties themselves, say when a producer wants to get into an exclusive contract or deal with a mobile telecommunication service provider.

Further, this section also muddies the waters in the music copyright scene because an entity such as a mobile telecommunication service provider will now, irrespective of its contract with, say a ‘record label’ , in respect of certain music that the telecoms company avails for downloads to its subscribers, will also have to separately pay this additional remuneration to KAMP and PRISK.

Perhaps the only people who have a win-win here are PRISK and KAMP to whom 50% of the single equitable remuneration is to be paid to and for no less than 50 years.

**Updates

1. Constitutional Petition no 5 of 2016 MERCY MUNEE KINGOO and another VERSUS SAFARICOM LIMITED and another: On 3rd Nov 2016, Justice Chitembe in Constitutional Petition no 5 of 2016 MERCY MUNEE KINGOO and another VERSUS SAFARICOM LIMITED and another held that indeed section 30A of the Copyright Act was unconstitutional. Here is a verbatim exerpt of the judgement:-
   • The use of collective management organizations to receive royalties seems to be the core issue which led to the dispute.  Prior to this, the petitioners had contracted a Premium Rate Service Provider to manage their affairs including the collection and disbursements of the royalties.  The position prior to the enactment of section 30A seems to be that each artist was represented by a Premium Service Rate Provider.  These providers were not licensed as CMOs.  Section 5 of the Copyright Act provides for functions of the Kenya Copyright Board, KCOBO.  One of its functions under section 6 (b) is to license and supervise the activities of Collective Management Societies as provided for under the Act. Section 46 (5) of the Act states as follows.
   • “The Board shall not approve another collecting society in respect of the same class of rights and category of works if there exists another collecting society that has been licensed and functions to the satisfaction of its members.”
   • It is clear that only one collecting society can be licensed in respect of the same class of rights or category of works.  Section 30 (3) recognizes a performer’s right to enter into a binding authorization and appoint a representative.  Section 30A calls for payment to producers and performers of the single equitable remuneration through the respective Collective Management Organizations and the remuneration shall be paid by the user to the CMO.  The remuneration shall be shared equally between the producer of the sound recording and the performer….
   • I do reiterate that the dispute herein relate to the point of payment for royalties earned by the artists and other produces through the Skiza Tunes.  According to the petitioners, they are satisfied with their current arrangement with the Premium Rate Service Providers (PRSPs) who are licensed by the Communication Authority of Kenya.  They were not involved in the change of paying point from the PRSPs to the Collective Management Organizations (CMOs). 
   • I do agree with the findings of Justice Mumbi Ngugi that there is no requirement for any artist to become a member of a CMO in order to receive remuneration for the use of copyright works.  Section 30A does not make it mandatory for the 1^st respondent to channel the royalties only through the CMOs.  The argument that it would be difficult to deal with each individual artist is not tenable as the 1^st respondent has been paying dividends to its shareholders through their mobile phones.  Further, the 1^st respondent has over twenty million subscribers and is able to manage all their affairs which are not limited to phone calls but include m-pesa transactions, purchase of bundles, accumulation of points through the use of phones, use of internet and crediting airtime.  The 1^st respondent’s technology is quite advanced and has been of great service to Kenya. Between 2013 and 2015, the 1^st respondent has been paying the royalties through the PRSPs and has not been charged in curt for violating the law.
   • I do not agree with the position taken by the 1^st respondent that all the royalties have to be paid through the CMOs.  The 1^st respondent was a party in Nairobi Petition Number 317 of 2015.  The court held that it is not mandatory for the artists and producers to be members of the CMOs for them to receive their remuneration for the use of their copyright works.  The effect of that is that the CMOs can only pay those registered with them.  Since the PRSPs are also legally licensed, they can still continue to receive the royalties of those artists who are contracted with them.  PRSPs are not amorphous or illegal organizations.  Section 30A of the Copyright Act does not illegalize payment of royalties to any person other than CMOs.  If that is the case, then the section would be violating the petitioners’ right of freedom of association as well as freedom not to be compelled to join any kind of association.  If all royalties are to be paid through CMOs, the effect would be that an artist cannot receive his/her royalties until he/she joins one of the three CMOs.  The dispute is about payment point and each artist should be at liberty to be paid through the point of his choice.  Receiving royalties for an artist who is not your member is unconstitutional.  It is therefore clear to me that the manner in which section 30A of the Copyright Act is implemented is unconstitutional.  Artists who already have existing contracts with their Premium Rate Service Providers are being called upon to abandon those agreements and join any one of the three Collective Management Organizations.  The right to choose where one’s royalties are to be paid is being infringed.  The 1^st respondent, safaricom, insists that section 30A did illegalize payment of royalties to other organizations not registered as CMOs.  During the pending of the suit, over Kshs.200 million due to artists was being held as the 1^st respondent insisted on releasing the money through the CMOs.
   • The petitioners are seeking orders of injunction among other prayers.  They contend that they are being forced to get their royalties through the CMOs yet they have existing contracts with their PRSPs.  Since 2008 upto 2015, they were receiving their royalties through their duly contracted PRSPs.  It is clear from the stand taken by the 1^st respondent that the petitioners will not get their royalties until the same is paid through the CMOs.  It is not clear to me whether any fees or charges are levied by the CMOs.  Although they are described as non-profit making organizations, that does not mean that they are charitable institutions.  They are private bodies.  What would be the need of them receiving the royalties and thereafter passing the payment over to the artists without any fee.  If that is the case, which I find is not, then the royalties ought to be paid directly to the artists without any involvement of the CMOs.
   • I do find and hold that the petitioners’ rights to associate with their PRSPs are being infringed.  The petitioners are involved in an industry which involves the youths as well as well established artists.  It takes time, money and hard work to produce the artistic works.  The law should not way-lay the artists at the very end of the process and order them to receive their royalties through three Collective Management Organizations.  What is so special with these three organizations?  Such an arrangement is tantamount to obstructing an employee or anyone not to get his salary or payment through any other bank other than the one preferred by the employer or paying body.   This is unconstitutional.  The 2010 Kenyan Constitution has pumped fresh air and freedom into the Kenyan society.  No Kenyan should have his options of how he would like his payments to be made after his/her hard work limited to a specific paying point.  This amounts to tethering one’s freedom of association and right to choose where to be paid and limiting such fundamental rights and freedoms to only three CMOs is unconstitutional.  That cannot be allowed in a democracy like ours based on equality, human dignity and the rule of law.
   • In the end, I do find that to the extent that section 30A of the Copyright Act, Cap 130 Laws of Kenya limits the artists’ right to choose how their royalties are to be paid, that section is unconstitutional as its effect is to limit the petitioners’ freedom of association.  The 1^st respondent entered into an agreement in 2015 with the three CMOs whose effect is to channel their royalties through those CMOs.  The 1^st respondent’s positon is that the agreement is a private arrangement and the petitioners are strangers to it yet at the same time contends that section 30A illegalizes payments to other institutions other than the three CMOs.  Such arrangement is unconstitutional as it indirectly bind third parties who are not privy to the contract.
   • … Section 30A of the Copyright Act is unconstitutional as it was enacted without public participation and it is being retrospectively applied.  It also limits artists’ freedom not to be compelled to join an association of any kind as provided under Article 36 of the Constitution.  The petitioners are being forced to receive their royalties through Collective Management Organization yet they have no dealings with them.   This is unconstitutional.
2. Statute Law (Miscellenous Amendment) Act No 11 of 2017 deleted section 30A of the Copyright Act 2011