Collective Management Organisations

UNIT 11 COLLECTIVE MANAGEMENT ORGANISATIONS

Structure
11.1 11.2 11.3 11.4 11.5 11.6 11.7 11.8 Introduction
Objectives

What is Collective Administration of Copyright? Need for Collective Administration and Management Rights that come under the Collective Administration of Copyright Membership of Copyright Societies Collective Administration at the International Level The Working of Collective Management Collective Administration of Copyright in India
Copyright Societies in India How a Collective Management Organisation can be Formed Functions of Copyright Societies Obligations of Copyright Societies Cancellation and Suspension of Registration of a Copyright Society Accounts and Audit of Copyright Societies Practical Side of Collective Administration of Copyright in India Is it Necessary to Obtain Licences from more than One Society for Exploitation of a Work?

11.9 11.10 11.11 11.12

Social Dimensions of Collective Administration Summary Terminal Questions Answers and Hints

11.1 INTRODUCTION
Collective administration of copyright is a concept where management and protection of copyright in works are undertaken by a society of owners of such works. Collective management is the exercise of copyright and related rights by organizations acting in the interest and on behalf of the owners of rights. Creators of copyright works are generally artists and not businessmen and hence lack in entrepreneurial skills. Further, time horizons and geography of spread have made it nearly impossible for individual owners to guard their copyright against infringement by others. Profit-greedy businessman have made liberal use of latest advanced technologies to invade this protected area of the copyright owners These developments together with many more, make it virtually impossible for copyright owners to manage their own copyright. The copyright societies come to the aid of the creators to provide necessary entrepreneurial auxiliaries so that the overall purpose of copyright is fulfilled. Thus copyright societies as collective administration organisations act as an important link between the creator and the user of copyright work. Objectives At the end of the unit, you should be able to make out: what is collective administration of copyright; working of collective management organisation; the Copyright Amendment Act, 1994 and various functions and obligations of copyright societies which can be created under this Amendment; and practical side and the social implications of the collective administration of copyright protection.

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Collective Management of Copyright and Related Rights in India

11.2 WHAT IS COLLECTIVE ADMINISTRATION OF COPYRIGHT?

Copyright grants exclusive rights to the owner of copyright. The creator of a work has the right to allow or to prohibit the use of his works; a playwright can consent to his work being performed on stage under certain agreed conditions; a writer can negotiate a contract with a publisher for the publication and distribution of a book; and a composer or a musician can agree to have his music or performance recorded on compact disc. These examples illustrate how the owners of the rights can exercise their rights in person. Collective administration of copyright is a concept where management and protection of copyright in works are undertaken by a society of owners of such works. Collective management is the exercise of copyright and related rights by organizations acting in the interest and on behalf of the owners of rights.

11.3 NEED FOR COLLECTIVE ADMINISTRATION AND MANAGEMENT

Normally each individual owner of copyright has a right to manage his rights himself or through his private arrangements. Obviously no owner of copyright in any work at an individual level can keep track of all the uses others make of his work. It is equally difficult for the users of copyrighted works to deal with individual rightowners. Experience shows that individual management of rights is virtually impossible with regard to certain types of use for practical reasons. An author is not materially capable of monitoring all uses of his works; he cannot for instance contact every single radio or television station to negotiate licenses and remuneration for the use of his works. Conversely, it is not practical for a broadcasting organization to seek specific permission from every author for the use of every copyrighted work. An average of 60'000 musical works are broadcast on television every year, so thousands of owners of rights would have to be approached for authorization. The very impracticability of managing these activities individually, both for the owner of rights and for the user, creates a need for collective management organizations, whose role is to bridge the gap between them in these key areas, among others. When an individual copyright owner becomes a member of a national copyright society, that society, because of its organisational facilities and strength, is able to keep a better vigil over the uses made of that work throughout the country and collect due royalties from the users of those works. From this it can automatically be inferred that it will be in the interests of copyright owners to join a collective administration organisation to ensure better protection to the copyright in their works and for reaping optimum economic benefits from their creations. Users of different types of works also find it easy to obtain licences for legal exploitation of the works in question, though the collective administrative society. Composers, writers, musicians, singers, performers and other talented individuals are among society's most valuable assets. The fabric of our cultural lives is enriched by their creative genius. In order to develop their talent and encourage them to create, we have to give those individuals incentives, namely remuneration in return for permission to make use of their works. Collective management organizations are an important link between creators and users of copyrighted works (such as radio stations) because they ensure that, as owners of rights, creators receive payment for the use of their works.

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11.4 RIGHTS THAT COME UNDER THE COLLECTIVE MANAGEMENT OF COPYRIGHT

Collective Management Organizations most commonly take care of the following rights: The right of public performance (music played or performed in discotheques, restaurants, and other public places); The right of broadcasting (live and recorded performances on radio and television); The mechanical reproduction rights in musical works (the reproduction of works in CDs, tapes, vinyl records, cassettes, mini-discs, or other forms of recordings); The performing rights in dramatic works (theatre plays); The right of reprographic reproduction of literary and musical works (photocopying); Related rights (the rights of performers and producers of phonograms to obtain remuneration for broadcasting or the communication to the public of phonograms).

11.5 MEMBERSHIP OF COPYRIGHT SOCIETIES

Membership of copyright societies for collective administration is open to all owners of copyright and related rights, whether authors, composers, publishers, writers, photographers, musicians, or performers. Broadcasting organizations are not included in the list, as they are considered users, even though they have certain rights in their broadcasts. On joining the collective administration organization, members provide some personal particulars and declare the works that they have created. The information provided forms part of the documentation of the collective management organization that allows the link between the use of works and payment for the use of works to be made to the correct owner of the rights. The works declared by the organization's members constitute what is known as the national or local repertoire (as opposed to the international repertoire which is made up of the foreign works managed by collective management organizations in the world).

11.6 COLLECTIVE ADMINISTRATION AT THE INTERNATIONAL LEVEL

The application of national laws that establish rights in literary and artistic works and in related rights has an effect only within the boundaries of that country. According to the national treatment principle enshrined in both the Berne Convention and the Rome Convention, foreign owners of rights are treated in the same way as nationals in most respects. This principle is upheld by collective administration organizations which, under reciprocal representation agreements, administer foreign repertoires on their national territory, exchange information and pay royalties to foreign owners of rights. Because of the countrys membership in international conventions, the copyright societies are able to have reciprocal agreements with similar societies in other countries for collecting royalties for the uses of Indian works in those countries. By virtue of the provisions of the Copyright Act it is be competent for a copyright society to enter into agreement with any foreign society or organisation administering rights corresponding to rights under the Copyright Act, to entrust to such foreign society or organisation the administration in any foreign country of rights administered by the said copyright society in India, or for administering in India the rights administered in a foreign country by such foreign society or organisation.
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Collective Management of Copyright and Related Rights in India

Provided that no such society or organisation shall permit any discrimination in regard to the terms of licence or the distribution of fees collected between rights in Indian and other works. 1

11.7 THE WORKING OF COLLECTIVE MANAGEMENT

Virtually every country in the world recognizes some form of non-voluntary licensing. Among the 1 more prominent type of licenses are those relating to mechanical reproduction and distribution of musical work, public non-commercial broadcasting, cable retransmission, home taping, reprographic reproduction, droit de suite, and public lending. These activities represent least intrusive form of nonvoluntary licensing and as such, they constitute a good chunk of work done by CMOs. There are various kinds of collective management organization or groups of such organizations, depending on the category of works involved; like musical works, dramatic works, cinematographic works, etc. that will collectively manage different kinds of rights. Typical collective management organizations, acting on behalf of their members, negotiate rates and terms of use with users, issue licenses authorizing uses, collect and distribute royalties. The individual owner of rights does not become directly involved in any of these steps. Rights clearance centres grant licenses to users that reflect the conditions for the use of works and the remuneration terms set by each individual holder of rights who is a member of the centre (in the field of reprography, for instance, authors of written works such as books, magazines and periodicals). Here the centre acts as an agent for the owner of the rights who remains directly involved in setting the terms of use of his works. In the field of musical works documentation, licensing and distribution are the three pillars on which the collective administration of the rights of public performance and broadcasting is based. The collective administration organization negotiates with users (such as radio stations, broadcasters, discotheques, cinemas, restaurants and the like), or groups of users and authorizes them to use copyrighted works from its repertoire against payment and on certain conditions. On the basis of its documentation (information on members and their works) and the programs submitted by users (for instance, logs of music played on the radio), the collective management organization distributes copyright royalties to its members according to established distribution rules. A fee to cover administrative costs, and in certain countries also socio-cultural promotion activities, is generally deducted from the copyright royalties. In the field of dramatic works the practice of collective management is rather different in that the collective management organization acts as an agent representing authors. It negotiates a general contract with the organizations representing theatres in which the minimum terms are specified for the exploitation of particular works. The performance of each play then requires further authorization from the author, which takes the form of an individual contract setting out the author's specific conditions. The collective management organization then announces that permission has been given by the author concerned and collects the corresponding remuneration. In the field of literary works collective management mainly involves the grant of the right of reprographic reproduction, in other words allowing protected material to be photocopied by institutions such as libraries, public organizations, universities, schools and consumer associations. In the field of related rights the national legislation of some countries provide for a right of remuneration payable to performers or producers of phonograms or both when commercial sound recordings are communicated to the public or used for broadcasting. The fees for such uses are collected and distributed either by joint organizations set up by performers and producers of phonograms or separate ones, depending on the relation of those involved and the legal situation within the country.

S. 34(2), Copyright Act, 1957.

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11.8 COLLECTIVE ADMINISTRATION OF COPYRIGHT IN INDIA

The Copyright Amendment Act of 1994 has introduced the operation of legal provisions to the business of issuing and granting licenses in respect of all rights relating to any class of copyright work. Organisations which are authorised to carry on such business 2 are called copyright societies.

11.8.1 Copyright Societies in India

So far, four copyright societies have been registered; one each for: cinematograph films (Society for Copyright Regulation of Indian Producers of Films and Television (SCRIPT); musical works (Indian Performing Right Society Limited [IPRS]); sound recordings (Phonographic Performance Limited [PPL]); books/literature/artistic photocopy rights the Indian Reprographic Rights Organisation (IRRO).

These societies have been actively participating in generating awareness about Copyright and IPR. They also have set up their own Anti-piracy Cells, which in collaboration with police/enforcement authorities have been actively engaged in curbing piracy in musical/sound recording works. Ordinarily, only one society is registered to do business in respect of the same class of work. A copyright society can issue or grant licences in respect of any work in which copyright subsists or in respect of any other right given by the Copyright Act.

11.8.2 How a Collective Management Organization can be Formed

A copyright society is a registered collective administration society. Such a society is formed by copyright owners. The minimum membership required for registration of a society is seven. The Copyright Act provides for setting up separate copyright societies for different categories of works. No person or association of persons shall, after coming into force of the Copyright (Amendment) Act, 1994 commence or, carry on the business of issuing or granting licences in respect of any work in which copyright subsists or in respect of any other rights conferred by the Copyright Act except under or in accordance with the registration granted under section 33(3). 3 But the creation of a copyright society can in no way affect the rights of the owner to grant licenses. An owner of copyright shall, in his individual capacity, continue to have the right to grant licences in respect of his own works consistent with his obligations as a member of the registered copyright society. Any association of persons that fulfils such conditions as may be prescribed may apply for permission to do the business of collective administration of copyright to the Registrar of Copyrights who shall submit the application to the Central Government. 4 The Central Government may, having regard to the interests of the authors and other owners of rights under the Copyright Act, the interest and convenience of the public and in particular of the groups of persons who are most likely to seek licences in respect of the applicants, register such association of persons as a copyright society subject to such conditions as may be prescribed. 5 The Central Government shall not ordinarily register more than one copyright society to
2

Copyright business means the business of issuing or granting licenses in respect of any work in which copyright subsists. (Rule 2(aa), Copyright Rules, 1958). 3 S. 33(1), Copyright Act, 1957. 4 S. 33(2), Copyright Act, 1957. 5 S. 33(3), Copyright Act, 1957.

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do business in respect of the same class of works. 6 That is the reason we have four copyright societies as mentioned above for different categories of works.

11.8.3 Functions of Copyright Societies

Subject to such conditions as may be prescribed, a copyright society may i) issue licences under section 30 7 in respect of any rights under this Act;

ii) collect fees in pursuance of such licences; iii) distribute such fees among owners of rights after making deductions for its own expenses; iv) perform any other functions consistent with the provisions of section 35.

11.8.4 Obligations of Copyright Societies

The owners of copyright have general control over the copyright society. Every copyright society shall obtain prior approval of the owners of rights for its procedures of collection and distribution of fees. A copyright society may accept from an owner of rights exclusive authorisation to administer any right in any work by issue of licences or collection of licence fees or both but an owner of rights shall have the right to withdraw such authorisation without prejudice to the rights of the copyright society under any contract. 8 Every copyright society shall obtain their approval for the utilisation of any amounts collected as fees for any purpose other than distribution to the owner of rights. And every society has to provide to such owners regular, full and detailed information concerning all its activities, in relation to the administration of their rights. 9 All fees distributed among the owners of rights shall, as far as may be, be distributed in proportion to the actual use of their works. 10 Every copyright society shall submit to the Registrar of Copyrights such returns as may be prescribed. Any officer duly authorised by the Central Government in this behalf may call for any report and also call for any records of any copyright society for the purpose of satisfying himself that the fees collected by the society in respect of rights administered by it are being utilised or distributed in accordance with the provisions of this Act. 11 The copyright society shall, subject to such rules as may be made in this behalf, frame a scheme for determining the quantum of remuneration payable to individual copyright owners having regard to the number of copies of the work in circulation. Such scheme shall restrict payment to the owners of rights whose works have attained a level of circulation which the copyright society considers reasonable. 12 Each society is required to file their returns with the Government about their earnings and spending. They also prepare a Tariff Scheme and a Distribution Scheme. The Tariff Scheme lays down who is to be charged how much royalty for which use. The Distribution Scheme lays down out of the collected royalty, who is to be paid how much. These societies are allowed to claim up to 15% of their collections on behalf of their members as expenses.

6 7

Proviso to s. 33(3) of the Copyright Act, 1957. S. 30, Copyright Act states: The owner of the copyright in any existing work or the prospective of the copyright in any future work may grant any interest in the right by licence in writing signed by him or by his duly authorised agent: Provided that in the case of a licence relating to a copyright in any future work, the licence shall take effect only when the work comes into existence. 8 S. 34(1), Copyright Act, 1957. 9 S. 35(1), Copyright Act, 1957. 10 S. 35(2), Copyright Act, 1957. 11 S. 36, Copyright Act, 1957. 12 S. 34A(2), Copyright Act, 1957.

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11.8.5 Cancellation and Suspension of Registration of a Copyright Society

If the Government is satisfied that a copyright society is operating detrimentally to the interests of the owners of rights concerned, the Government can cancel the registration of such society after conducting an appropriate inquiry. 13 If the Central Government is of the opinion that in the interest of the owners of rights concerned it is necessary so to do, it may by order, suspend the registration of such society pending inquiry for such period not exceeding one year. 14 If the Government decides to do so, it shall have to give opportunity of hearing to the Society, in the interest of principles of natural justice. In the event of suspension of registration the central government shall appoint an Administrator. In such a case, the Administrator shall perform the functions of the Society.

11.8.6 Accounts and Audit of Copyright Societies

Every copyright society appointed under section 34A shall maintain proper accounts and other relevant records and prepare an annual statement of accounts, in such form and in such manner as may be prescribed by the Central Government in consultation with the Comptroller and Auditor General of India. The accounts of each of the copyright societies in relation to the payments received from the Central Government shall be audited by the Comptroller General of India at such intervals as may be specified by him and any expenditure incurred in connection with such audit shall be payable by the copyright society to the Comptroller and Auditor General. The Comptroller and Auditor General of India or any other person appointed by him in connection with the audit of the accounts of the copyright society referred to in sub-section (2) shall have the same rights and privileges and authority in connection with such audit as the Comptroller and Auditor General has in connection with the audit of the Government accounts and, in particular, shall have the right to demand the production of books, accounts and other documents and papers and to inspect any of the offices of the copyright society for the purpose only of such audit. The accounts of each of the copyright societies as certified by the comptroller and Auditor General of India or any other person appointed by him in this behalf together with the audit report thereon shall be forwarded annually to the Central Government and that Government shall cause the same to be laid before each House of Parliament.

11.8.7 Practical Side of Collective Administration of Copyright in India

In the Western world, copyright societies have existed for more than 150 years (It is said they originated in 1840 when Alexander Dumas witnessed a play he had written being enacted in a coffee house where he was having coffee. When he was asked to pay, he said not unless Im paid a portion of the collections for the play.) By virtue of their long existence, they have had time to develop their systems and settle down. They have, therefore, highly developed efficient and deeply entrenched systems of collection and distribution of royalties. By contrast the Indian scenario is very new and yet to come to terms with their new found existence. The Indian Copyright Societies suffer on many fronts and are, therefore, not able to efficiently perform their duties towards their members. There is almost complete unawareness amongst all levels of Indian society about the concept and enforcement of copyright. Therefore, there is tremendous scope for the activities and development of these copyright societies in India.

13 14

S. 33(4), Copyright Act, 1957. S. 33(5), Copyright Act, 1957.

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Consequent to the number of measures initiated by the Ministry, there has been more activity in the enforcement of copyright laws in the country during the last years compared to the past. As per the data relating to copyright offences available with the National Crime Records Bureau, the number of copyright cases registered has gone up from 927 in 1999 to 2364 in 2000. The number of arrests has increased from 1191 in the year 1999 to 1762 in the year 2000. The value of seizures has gone up from Rs. 8.14 crore in the year 1999 to 8.26 crore in 2000. These figures reflect the general improvement in the enforcement of Copyright Law. Out of four copyright societies, IPRS existed even before 1994 and was functioning for the benefit of its members without the benefit of any statutory force. After the Copyright (Amendment) Act, 1994, which provides for setting up separate copyright societies for different categories of works, IPRS has been operating under force of the statute. 15 PPL is an active and functional society. However, SCRIPT and IRRO are at present defunct by practical standards and have not started operating functionally yet.

11.8.8 Is it Necessary to Obtain Licences from more than One Society for Exploitation of a Work?
In many cases, it is necessary to obtain licences from more than one society. For example, playing of the sound recording of music may involve obtaining a licence from the IPRS for the public performance of the music as well as a licence from the PPL for playing the records, if these societies have the particular work in their repertoire.

11.9 SOCIAL DIMENSIONS OF COLLECTIVE ADMINISTRATION

Collective management does a valuable service to the world of copyright and hence creative arts. By managing their rights, the system is rewarding creators for their work, and the creators in turn are more inclined to develop and apply their talents in an environment that provides adequate copyright and related rights protection and an efficient system for the management of rights. Such a situation encourages creators to contribute to the development of the cultural sector, attracts foreign investment and generally enables the public to make the most of a broad array of works. The copyright market is divided into a few big players and innumerable small and medium size enterprises. The big players know and have the capabilities to protect their interests as far as copyrights are concerned but it is the smaller player who is normally the victim of copyright violations. It is the private individual's rights that have to be taken care off, as this section is most vulnerable and there is nobody except the person himself who has to manage the rights. Copyright protection is more dependent on self-determination, where the management cost in terms of the cost of monitoring, enforcement, legal support, etc is very high and at times may be more than the damages awarded. The solution can be the collective management of the rights. In this case the associations of the respective fields will play a major role. This will provide some kind of system and additional bargaining power/collective pricing. SAQ 1 a) What are the circumstances under which the membership of a copyright society can be suspended? b) How many copyright societies are presently registered in India and what role they perform with respect to various categories of works?

Spend 5 min.

Proviso to S. 33, Copyright Act 1957 states: ---a performing rights society functioning in accordance with the provisions of section 33 on the date immediately before the coming into force of the Copyright (Amendment) Act, 1994 shall be deemed to be a copyright society for the purpose of this Chapter and every such society shall get itself registered within a period of one year from the date of commencement of the Copyright (Amendment) Act, 1994.

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c) How successful is collective management of copyright through copyright societies in India?

11.10 SUMMARY
Collective administration does a valuable service to the world of copyright and hence creative arts. Collective Management is the exercise of copyright and related rights by organizations acting in the interest and on behalf of the owners of rights. Experience shows that individual management of rights is virtually impossible for practical reasons. Copyright societies are an important link between creators and users of copyrighted works (such as radio stations) because they ensure that, as owners of rights, creators receive payment for the use of their works. The principle of National Treatment is upheld by collective management organizations which, under reciprocal representation agreements, administer works of foreign origin. Typical collective management organizations, acting on behalf of their members, negotiate rates and terms of use with users, issue licenses authorizing uses, collect and distribute royalties. The creation of a copyright society can in no way affect the rights of the owner to grant licenses. If the Government is satisfied that a copyright society is operating detrimentally to the interests of the owners of rights concerned, the Government can cancel the registration of such society after conducting an appropriate inquiry. Every copyright society appointed under section 34A shall maintain proper accounts and other relevant records and prepare an annual statement of accounts, in such form and in such manner as may be prescribed by the Central Government What do you understand by copyright societies? How collective administration of copyright is a must for encouraging creativity in society? Spend 10 min.

11.11 TERMINAL QUESTIONS

1. Why do we need collective administration of copyright? 2. What do CMOs do?

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11.12 ANSWERS AND HINTS

Self Assessment Questions 1. Refer to text. Terminal Questions 1. Refer to text. 2. Refer to text.

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