New class licensing scheme for collective management organisations from 1 May 2024 : Allen & Gledhill

8 November 2023

With effect from 1 May 2024, the statutory framework for the regulation of collective management organisations (“CMOs”) in the form of a mandatory class licensing scheme under the Copyright Act 2021 will come into force. The Copyright (Collective Management Organisations) Regulations 2023 (“Regulations”) which set out the licence conditions that CMOs must comply with as well as procedural matters relating to the regulation of CMOs will also come into force on 1 May 2024.

CMOs are private entities appointed by rights owners (i.e. CMO members) to manage the rights in their copyright works or protected performances. CMOs administer the licensing of rights, collection of royalties (known as tariffs in the legislation), and enforcement of rights on behalf of these rights owners. CMOs will then monitor the use of the works and performances and collect licence fees on behalf of the rights owners.

Currently, CMOs are not regulated in Singapore and there is no minimum standard which they adhere to, including in their dealings with members and users.

Under the new class licensing scheme, CMOs will be automatically licensed and must comply with the class licence conditions in the Regulations. There is no need to register or pay any fee to be a CMO. The scheme does not interfere in the fees that CMOs charge for the use of the material they manage and CMOs remain free to determine such fees. The Intellectual Property Office of Singapore (“IPOS”) will be the regulator of the scheme and will be empowered to take regulatory actions against CMOs and their officers for any breach of licence conditions. After the licensing scheme comes into force on 1 May 2024, it will be an offence to operate as a CMO without a class licence.

Key aspects of the new class licensing scheme

Set out below are key aspects of the new class licensing scheme:

Light-touch regulation: The scheme applies a light-touch model of regulation and regulates five key areas: (i) members’ rights; (ii) distribution of tariffs; (iii) dispute resolution; (iv) governance; records and reports; and (v) information provided to the public.
Ground-up policing by members and users: CMOs are not required to periodically report to IPOS and are not subject to periodic audits by IPOS. However, CMOs are required to establish and publish various policies for membership, distribution of tariffs, and dispute resolution, which can only be amended by a general meeting of the CMO’s members. Further, CMOs are also required to publish on their websites a list of every work and performance in the CMOs’ portfolios. Members and users can hold CMOs to account by asking IPOS to investigate a potential breach of a class licence condition. IPOS will step in after the affected member or user has attempted to resolve the matter with the CMO through the CMO’s dispute resolution process.
Fair processes, proportionate outcomes: CMOs and their officers have a right to be heard at every stage of the regulatory action process, and tiered avenues for appeal that ultimately lead to an appeal determined by the Minister for Law. Depending on the nature of the non-compliance and the circumstances in issue, IPOS may issue a regulatory direction, impose a financial penalty or order a CMO to cease business as a CMO.

Implementation

CMOs are given a six-month notice period from 31 October 2023 to adjust their operations so that they will be in compliance with the class licensing scheme when it comes into force on 1 May 2024.

Best practice notes

Best practice notes are non-binding resources that are intended to encourage and help CMOs to meet industry and international standards, which include recommendations, illustrations, and templates. These will be progressively developed in close collaboration with the industry after the class licensing scheme comes into force. Best practice notes are intended to complement the licence conditions.

Practical effect

Once the statutory framework for the regulation of CMOs fully comes into force on 1 May 2024, rights owners who are members of CMOs will have greater visibility and influence over how CMOs conduct their operations in enforcing the IP rights managed by the CMOs. Further, prospective users of copyrighted works will have greater visibility of each CMO’s policies including tariff schemes, as well as the works and performances managed by each CMO.

Background

The Regulations incorporate feedback received by the Ministry of Law (“MinLaw”) and IPOS during the public consultation exercise conducted from 7 November 2022 to 4 January 2023. IPOS has released a summary of the key changes made to the consultation draft of the Regulations on its website. For more about the public consultation, please read our previous article titled “MinLaw and IPOS seek views on proposed Copyright (Collective Management Organisations) Regulations”.

Reference materials

The following materials are available on the Singapore Statutes Online website sso.agc.gov.sg and IPOS website www.ipos.gov.sg: