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Copyright amendment: a game changer

In April 2007, the Malawi Broadcasting Station (MBS), a state-owned radio station, had its office furniture and cars impounded by the country’s police following a dispute over unpaid music royalties.

The measures followed a long-running legal wrangle between the station and the Copyright Society of Malawi (COSOMA). A Malawi court ordered MBS to pay USD 250,000 to COSOMA for years of accumulated music royalties. The confiscation was aimed at ensuring MBS pays up the sum. 

COSOMA, a consortium of associations in the field of intellectual property, is a statutory body tasked to enforce copyright laws of Malawi. Boasting a history of over two decades, the society is considered a role model for the rest of Africa in the protection of copyright. Here is one of the six African countries where an Ethiopian delegation went last year to draw lessons. The delegation was tasked with the responsibility of proposing an amendment to the Copyrights and Neighboring Rights Protection Proclamation (No. 410/2004) of Ethiopia.


 

After two years of benchmarking that also assessed Asian countries, the drafting process culminated and the amendment was tabled before the House of Peoples' Representatives on the first week of November. To the dismay of some, the bill was approved within two weeks.

“The draft was approved before we even had a chance to properly study its impact on our industry,” Zerihun Teshome, co-owner of Zami FM, told The Reporter. “We were not involved during the drafting process as a stakeholder.”

The amendment concerns broadcasters like Zami FM as the law puts an obligation on them to pay royalties for the use of copyright protected works like music. The obligation also extends to businesses such as hotels, clubs, lodges, beauty salons and taxis. It also creates a collective management society to enable right holders administer their rights in an organized and enhanced manner including collection and redistribution of royalties.

Berhanu Adelo, director general of the Ethiopian Intellectual Property Office (EIPO), says that the drafting process was participatory enough and various consultation forums were held with the “relevant stakeholders” including broadcasters.

“The amendment is aimed at providing legal protection that is compatible with an ever growing development of copyright and neighboring right,” Berhanu told The Reporter.

On the other hand, those in the entertainment business believe the amendment is long overdue.

“This amendment should have been incorporated in the copyright and neighbouring rights protection proclamation ten years ago,” Equbay Berhe, president of Ethiopian Audio-Visual Association, told The Reporter.

Payment of royalties is not an entirely new concept in Ethiopia. It was introduced a decade ago with the coming into force of the existing Copyright and Neighboring Rights Protection Proclamation. But payment of royalties was limited to use of protected sound recordings and even then users were obliged to pay producers “equitable remunerations” only once. The law does not provide for royalties for other literary and artistic works. The proclamation also failed to establish an effective system to collect royalties.

“The former collective management society was registered as an NGO which is not mandated by law to issue license or collect royalties from third party and distribute it to right holders,” Dawit Yifru, president of Ethiopian Musicians Association, told The Reporter.

Hence, right holders of protected works stood to gain nothing when their song, for instance, is aired on broadcasting stations or other forms of public performances. The only economic benefit they get from their works was through mechanical royalties (royalties from the recording of composed music on CDs and tape).

Enforcing the mechanical royalties of right holders was further compounded by the growth of the digital world which made transfer of music easy. Songs can easily be transferred using flash disks, memory sticks and the internet which complicated controlling mechanisms.

“Album copies plummeted from around four million to just 100,000 copies as a result of the digital growth,” Equbay, who participated in the drafting process, told The Reporter. “This has forced publishers to go out of business.”

According to data from the Ethiopian Audio-Visual Association, over 2,000 criminal suits were filed over copyright infringements in the last ten years alone. However, right holders got no monetary gains from such criminal proceedings.

“We could not even file a single civil suit against the infringers for compensations in these cases because we were unable to pay the 10 percent (of the amount claimed) court fee,” Equbay told The Reporter. 

The introduction of a system of royalties for protected works used for commercial purposes is aimed at boosting the thriving industry under flawed system. However, devising a royalty scheme, including how those royalties are calculated, is an intricate and controversial matter.

This daunting task, which includes identifying the category of works for which royalty payment is to be made and the list of users subject to pay royalty, is left to the EIPO based on a proposal submitted to it by the collective management society.

Biruk Haile (LLD), head of the School of Law at Addis Ababa University, contends that leaving the decision of devising the royalty scheme and who should pay – to the society and EIPO – without first providing minimum guideline by the law is problematic.

He argues that the powers given to the office and the society whose constituting members is not clearly stated in the law is just too big.

“The pure discretion given to the society and the office in the most crucial issues is uncommon from the experience of other well established societies,” Biruk, who has specialized in the field intellectual property studies, told The Reporter.

The amendment states that the collective management society, a non-profit organization, is formed only when it is recognized by EIPO. The society is expected to be a consortium of associations, not individual right holders, in the literary and artistic professions.

EIPO together with the society is in the process of drafting an implementation strategy which is expected to address issues such as the amount of royalties to be paid for protected works and the amount of administrative fees and tax to be withheld from collected royalties. And the director general believes that it is only fair to allow the right holders to determine the amount of payment they should be paid in royalties for their properties.

“However, the office is there to ensure that the royalty rate is not unreasonable,” Berhanu told The Reporter.

The office is considering its options for the kind of royalty system it plans to introduce. The schemes proposed includes a ‘fixed rate’, which will be levied on users, like hotels, who will be issued standards and will be required to pay periodically, and ‘proportional rates’, where users, like broadcasters, will be required to pay royalty proportional to their use of protected works.

“We are working with WIPO (World Intellectual Property Organization) to develop a royalty assessment program to keep track of usage,” Dawit told The Reporter. Such applications (software) are mostly ideal to assess royalties from broadcasters. 

As a booming entertainment industry, which comes out with some 300 films annually and musicians in and around Addis Ababa numbering 40,000, the contribution of the industry to the national economy is immense. 

With the introduction of a royalty system which also seeks to protect all foreign works used in Ethiopia, the potential for a boost in the economy can only get better, those in the entertainment business say.

“With a well-functioning royalty system in place the industry’s contribution to the country’s GDP could very well exceed eight percent from the current six,” Equbay told The Reporter, citing recent studies commissioned by EIPO. 

Those in the industry are eager to embrace the new change. However, others, who might find themselves in the receiving end of the law, feel neglected in the drafting process and fear the unknown.

Biniam Negessu, founder of the popular video sharing site DireTube, says he was in the dark about the amendment and only learned of it shortly before the law was approved by parliament.

“As a member of the Ethiopian Audio-Visual Association, I should have been informed of the process,” Biniam told The Reporter.

For DJs like Aron Kebede, who is president of a recently established association of his professional peers, the amendment could mean that he would have to pay royalties whenever he plays songs in social occasions like weddings.

Aron, who participated in the drafting process, has no problem with paying royalties to right holders, but he is wary of enforcement issues which are yet to be clarified.

Yonathan Hambissa, owner of Club Illusion and Flirt Lounge, popular spots for nightlife in Addis Ababa, was foreign to the issue of the amendment when approached by The Reporter for comment. His club mostly plays popular Western music with few local songs thrown here and there. In fact, he believes that playing local music in his club is to the advantage of local artists.

Indeed, in practice, the trend is in reverse. Broadcasters like Zami FM and Biniam’s DireTube are frequented by artists who offer their works for free in the hope of having their artistic work reaching the public.

Zami’s Zerihun says that the station has hired an expert to understand the possible impact of the amendment on their industry.

“As the collective management society is not yet established, it is our hope that our involvement will be sought to make the institution functional,” Zerihun told The Reporter adding that the fledging broadcasting industry also needs protection. 

“If the law is only intended to serve the right holder and disregard the space required for the broadcasting industry to grow, I am afraid it will cripple both,” Zerihun warns.

The Malawi Broadcasting Station financially struggled to pay the amount of royalties it owed COSOMA. After years of negotiations and legal battle, the station settled its long-standing feud by paying the full amount two years ago. 

COSOMA, in turn, redistributed the royalty to its members after deducting 30 percent for administrative fees and withholding another 20 percent in government tax out of the total USD 250,000.

source: The reporter

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