This article is produced by CMS Holborn Asia, a Formal Law Alliance between CMS Singapore and Holborn Law LLC.
On 31 October 2023, the Copyright (Collective Management Organisations) Regulations 2023 (“Regulations”) were enacted pursuant to the Copyright Act 2021 and will take effect from 1 May 2024.
Aimed at regulating collective management organisations (“CMOs”), the Regulations ensure that CMOs operate with a minimum standard of transparency, accountability, efficiency and good governance under a new class licensing scheme. This scheme will be administered by the Intellectual Property Office of Singapore (“IPOS”).
A. Applicability of the Regulations
Under the new class licensing scheme, a single class license is automatically established for all entities carrying on a business as a CMO. An entity will be considered as a CMO under the Copyright Act 2021 if:
the entity is in the business of collectively managing the use of copyright works or protected performances (or both);the works or performances (referred to in (a) above) are made or given by different authors, makers, publishers or performers (“Creators”), and these works or performances are not made or given by the Creators (i) as employees of the entity; or (ii) under a commission from the entity;the entity manages the works or performances (i) as the rights owners or with the rights owners’ authority; and (ii) for the collective benefit of the Creators or the rights owners;the entity formulates or operates one or more schemes (however named) which sets out (i) the classes of cases where the entity is willing to grant permission to use the works or performances managed by the entity; and (ii) the terms (e.g. payment of a fee) on which the entity would be willing to grant that permission;one or more of the schemes (referred to in (d) above) are available to the public in Singapore; andthe entity does not fall within any of the prescribed classes of excluded persons.A new class of ‘excluded persons’ (referred to in (f) above) was included in the final Regulations, increasing the number of classes of ‘excluded persons’ to two (2). In addition to entities that provide subscription-based services that primarily provide access to digital content on demand, an entity will be ‘excluded person’ if:
the entity is part of a group where the entity manages a set of works or performances exclusively for entities in that group; andevery rights owner for this set of managed works or performances is an entity in the group, and but for such management, the managing entity would not be a CMO.Entities will be considered as part of a group if all of them are substantially linked to one another (i.e. if company X controls more than 75% of the voting power in company Y). Based on IPOS’s explanation, this new excluded class is meant to address entities who “manage the use of what is effectively their own works (in a group setting)” – for instance, a wholly-owned subsidiary incorporated by a publisher to solely manage the publisher’s repertoire of works and performances.
B. Key features of the class license conditions
All licensed CMOs will need to comply with the class license conditions which are found in Part 3 of the Regulations. Some of the key license conditions are highlighted below:
Membership Agreement: CMOs will have to review each of their agreements with rights holders for compliance with the requirements in the Regulations, and where necessary, amend the agreements to comply with the new requirements. For instance, the agreement must be clear about the works and performances that the CMO will manage under the membership agreement.Membership, distribution, and dispute resolution policy: CMOs must establish these three (3) policies which must comply with the requirements in the Regulations. Further, these policies must be incorporated by express reference into the membership agreement and must prevail over any inconsistent term found in the membership agreement. The CMO’s dispute resolution policy must require it to give a final decision on the dispute (which includes any internal recourse) within 60 days, or any shorter period specified in the policy, after the notice of dispute is given. This provides the CMO with the freedom to manage its own timelines in relation to its dispute resolution procedures within this 60-day period.Publishing detailed information on website: The Regulations introduced an alternative to publishing (on the CMO’s website) a list of every work and performance in the CMO’s portfolio. Instead, as an alternative under Regulation 39, the CMO need only to publish a list of its members and partner collecting societies which must be kept up to date. Importantly however, the CMO must provide a contractual indemnity to all its users against any rights infringement liability arising from the user’s use of the work or performance that was apparently in the CMO’s portfolio, and this indemnity must be expressly included in the CMO’s user agreement. To mitigate against the liability exposure of this indemnity, the CMO can introduce a liability cap (which must be reasonable) in all of its user agreements. The law does not specify the liability cap.Constitutional requirements: Amongst other requirements, the CMO’s constitution must provide that any appointment of a director of the CMO must be approved by a general meeting of members, and that a person would be disqualified from being a ‘key officer’ under certain prescribed circumstances (e.g. if the person was disqualified under any written law from being a director of a company). Practically, this would require the CMO to obtain the necessary approval from its shareholders for amendments to its constitution.Governance requirements: There must be a general meeting of members at least once every financial year. CMOs are also required to make and present a ‘transparency report’ to the general meeting of members. This report is unique to the CMO regulatory framework and is not to be confused with other corporate governance reports. In addition, the information that must be contained in this transparency report include information about the total remuneration (which includes non-monetary benefits) paid to the officers and employees (instead of only ‘key officers’) of the CMO for that financial year.Apart from the above, the Regulations also prescribe the mechanism for regulatory action by IPOS. For instance, IPOS is empowered to request that a person produce any information or document to assist IPOS in ascertaining whether that person is carrying on a business as a CMO. If a person is not satisfied with the regulatory action taken by IPOS, they can apply for a reconsideration of the decision by IPOS, and subsequently, an appeal to the Minister for Law.
Since the Regulations will take effect on 1 May 2024, CMOs should move expeditiously to ensure that it is compliant with the new requirements. Equally, users can expect to see some additional terms in their licences.
Please get in touch with us if you wish to understand any of the above in more detail or the practical implications of the Regulations to your business.
Link to website: Singapore moves to regulation of collective management organizations (cms-lawnow.com)
