29 June 2020
The Ministry of Law (“MinLaw”) and the Intellectual Property Office of Singapore (“IPOS”) are jointly conducting a public consultation from 3 to 30 June 2020 to seek feedback on a proposed licensing scheme and Code of Conduct for collective management organisations (“CMOs”) in Singapore. This follows feedback received from the Copyright Collective Rights Management Ecosystem Public Consultation 2017 and elaborates on the “light-touch” regulatory approach laid out in the Copyright Review Report in 2019.
Collective management organisations
A well-functioning collective management system for copyrighted works that is transparent, accountable and efficient is crucial for rights-holders as well as the overall functioning of the broader economy. Collective management reduces transaction effort, and therefore transaction costs, of licensing. As CMOs are currently not regulated in Singapore, there is no minimum standard which they adhere to, in particular in their dealings with members and users. Further, the public is unable to find an exhaustive list of all the CMOs operating in Singapore and the rights each CMO administers.
Proposed licensing scheme
The proposed licensing scheme will address a wide range of issues relating to collective management in Singapore, while being “light-touch” in nature, focusing on key areas which would help promote better market efficiency but without unnecessarily increasing compliance effort. This will keep compliance costs to a minimum.
The proposed licensing scheme will hold all CMOs to certain minimum standards in areas relating to transparency, governance, accountability and efficiency. The proposals on the licensing scheme are categorised as follows:
- Application and scope of the proposed licensing scheme, mandatory Code of Conduct: CMOs will not be required to apply to or register with IPOS before carrying out licensing activities. Any entity that carries out such activities in Singapore that fall within the prescribed definition will be automatically subject to the class licence and will therefore have to comply with the licence conditions. The licence conditions will set out the broad principles and general obligations which CMOs must comply with in the various aspects of their operation and reference a mandatory Code of Conduct which gives further details and specific guidance on how these principles should be operationalised.
- Definition of CMO: In determining what falls within the proposed definition of a CMO, MinLaw and IPOS took into consideration the function and structure of a CMO as well as members’ mandate. The proposal is to include all entities which negotiate, grant or otherwise collectively administer licences in relation to a repertoire of works, and which collect and distribute the royalties, including an organisation that carries out both collective licensing and individual licensing activities. It is not necessary for the CMO to carry out collective licensing activities as its main business or as its sole or main purpose.
- Members’ rights: The proposal is to set out the minimum standard that a CMO must provide its members. For example, a CMO must have a membership agreement with their prospective members, convene a general meeting of its members at least once a year and allow members the right to call for an Extraordinary General Meeting of members. Members will also have the right to vary and terminate the scope of rights granted to the CMO, upon serving reasonable notice not exceeding six months.
- Distribution of licence fees: CMOs will be required to set out their distribution policy clearly and provide sufficient information on the source of revenue and calculations done to arrive at the distribution amount to members.
- Information to be provided by a CMO to users: CMOs will have to make available certain types of information, which stakeholders would generally have a keen interest in. For example, CMOs must allow the public to determine from their websites the portfolio of copyrighted materials they manage and administer.
- Dispute resolution: It is proposed that CMOs should provide an effective and cost-efficient complaint handling and dispute resolution procedures. Parties will be allowed to file formal complaints with IPOS if parties are unable to resolve disputes through the complaint handling and dispute resolution procedures of the CMOs. The proposal is to require parties to attempt mediation before IPOS exercises its supervisory powers.
- Governance and management of CMO: CMOs must submit an annual audit report or its financial statements to IPOS when specifically requested. Additionally, some safeguards have been proposed to enhance the accountability of CMOs to their stakeholders. For example, CMOs must establish a governing board which is responsible for monitoring the activities of the CMO and for its compliance with the proposed licensing scheme.
- Facilitating an efficient market: It is proposed that members contract with CMOs on a non-exclusive basis. Other proposals include enhancing the Copyright Tribunal’s effectiveness as a mechanism for resolving licensing disputes and reviewing the reasonableness of licence schemes and fees, including where relevant, allowing the tribunal to take into account broader systemic concerns regarding anti-competitive conduct by CMOs.
- Supervision powers of authority: IPOS will be the authority accorded certain supervisory powers to ensure that CMOs comply with the proposed licensing scheme. Where CMOs are found to be in breach of the licence conditions, IPOS will have the power to impose various sanctions depending on the severity for the breaches.
- Appointment of Code Reviewers: As part of its supervisory functions, IPOS can appoint one or more Code Reviewers, or compel parties to appoint Code Reviewer(s), to audit a CMO’s compliance with the licence conditions.
The proposal to regulate CMOs would be welcome, especially from the perspective of users and rights holders. This is particularly so given the current situation where CMOs are not regulated and also do not comply with any voluntary code of conduct. Users and right holders would likely benefit from regulatory oversight (whether in the form of a “light-touch” or otherwise) being exercised over CMOs and the conduct of their affairs. It would also align Singapore with the practice in other jurisdictions where CMOs are subject to some form of regulation.