Pursuant to the Copyright Collective Management Organization Act (hereinafter, the "Act"), the Intellectual Property Office (hereinafter, the "IPO") of the Ministry of Economic Affairs rendered the Zhi-Zhu-103166007541 Disposition of November 21, 2014 (hereinafter, the "Disposition) to announce that the Music Copyright Society of Chinese Taipei (MUST) will be the "single contact" that collects the joint royalty rate from an exploiter for the public performance of a computerized karaoke machine, and that the joint royalty rate is set at NT$9,000 (not including taxes) for each machine. The Circular will go into effect on January 1, 2015 for a term of three years.

Article 81 of the Copyright Act provides: "Economic rights holders may, with the approval of the specialized copyright agency, establish a copyright collective management organization for the purpose of exercising rights or for collecting and distributing compensation for use. Exclusive licensees may also join such copyright collective management organization. The approval for establishment and the organization and capacities of the organizations referred to in paragraph 1, as well as the supervision and guidance thereof, shall be otherwise provided for by act. "With this authorization, the Ministry of Economic Affairs formulated Article 30, Paragraphs 1, 2, 3 and 5 of the Act as follows: "The specialized copyright agency in charge of copyright matters may designate relevant collective management organizations to adopt a joint royalty rate with respect to a specified type of exploitation," "The designated collective management organizations under the preceding paragraph shall engage in consultation in order to adopt the joint royalty rate and methods of distribution of royalties, to be collected from users by one of the collective management organizations." "If agreement cannot be reached by consultation pursuant to the preceding paragraph, any of the collective management organization may apply to the specialized agency in charge of copyright matters for a determination," "In determining the joint royalty rate under paragraph 3, the opinions of users and of the Copyright Review and Mediation Committee shall be sought, and the disposition containing the determination shall be published on the website of the specialized agency in charge of copyright matters."

This Disposition was rendered because the IPO had designated three collective copyright management organizations for musical works, namely, the Music Copyright Association of Taiwan (MCAT), the MUST and the Music Copyright Intermediary Society of Taiwan (TMCS), in accordance with Article 30, Paragraph 1 of the Act to negotiate and set a joint royalty rate and the royalty distribution method for the public performance of computerized karaoke machines as a type of exploitation and to have one copyright collective management organization collect royalties from exploiters.However, the three collective management organizations failed to complete the negotiation. In accordance with Article 30, Paragraph 3 of the Act, the MUST applied to the IPO to set the joint royalty rate, the royalty distribution method and the single contact for the public performance of computerized karaoke machines on March 20, 2014. After completing the procedure of consulting the exploiters and the Copyright Review and Mediation Committee, the IPO rendered and released this Disposition.

The Disposition target three collective management organizations as the respondents with the announcement of the following details: The MUST will be the "single contact" that collects a joint royalty rate for the public performance of computerized karaoke machines from exploiters. The joint royalty rate will be NT$9,000 (not including taxes) for each machine, which will be distributed among the MUST, MCAT and TMCS by a ratio of 5:3:2. The royalties will be distributed by such ratio to the collective management organizations after 2% administrative fees are deducted. The joint royalty rate will go into effect on January 1, 2015 and shall not be changed by collective management organizations within three years after the effective date, and the exploiters shall not apply for rate review. Since the implementation of this system is unprecedented in Taiwan, its efficacy will be reviewed three years later. If necessary, the IPO may reconsider such system. Any respondent dissatisfied with this Disposition may file administrative appeal.

In addition, two types of public performance exploitation, namelycomputerized karaoke machines and equipment set up in a tour bus and the use of computerized karaoke machines for public interest, have not been decided with respect to the "computerized karaoke machines" set forth in the Disposition. To respect the opinions of collective management organizations and market mechanisms, the three collective management organizations are required to negotiate within three months after receipt of this Circular and communicate the outcome of the negotiation to the IPO for subsequent handling of this matter.