A recent decision by the Ugandan Commercial Division of the High Court highlighted some of the intricacies of the functioning of the law of the Copyright and the general lack of understanding of this by the relevant rights holders.

In the matter of Uganda Performing Rights Society v MTN (Uganda) Ltd, Civil Suit No. 287 of 2010, the Ugandan Performing Rights Society (UPRS), which collects royalties for the performance of the original musical works of their registered members, instituted legal proceedings against MTN for the payment of royalties which they believed to fall due for collection after a concert by the legendary band UB40 in 2008 in Kampala, Uganda. MTN sponsored the concert at the time and contracted directly with UB40 insofar as payment of performance fees to them are concerned. MTN collected gate receipts and UPRS subsequently demanded the payment of 3% of those receipts as performance royalties due to the owner of the copyright in UB40’s original musical works performed during the concert.

MTN’s defence was that no royalties were due as there was no obligation on them to obtain an additional performance rights license from UPRS. They (MTN) contracted directly with UB40 and the band agreed that a certain payment for their performance at the event would be sufficient reward.

In 1987, however, the UB40 artists assigned all of their copyright in their original musical works in existence at that time to the Performing Rights Society of the United Kingdom (PRS-UK) for the purpose of the effective management of the copyright in their works worldwide on their behalf by PRS-UK. UPRS was (and still is) engaged in a reciprocal agreement with PRS-UK for the collection of royalties in Uganda (including performance royalties) on behalf of the registered members of PRS-UK, including UB40.

The Court found that UPRS had a right to claim royalties from MTN in the circumstances, but they did not provide sufficient evidence that UB40 performed all or some of the original works (in relation to which their copyright was assigned in 1987) at the actual concert. No record of the songs which were performed was submitted in the Court papers. Consequently, the Plaintiff did not establish that any of the works in which copyright was assigned to PRS-UK in 1987 were actually performed at the Kampala concert in question. On the basis of this technical mistake by the Plaintiff’s legal representatives, the damages claim (and/or the monies claimed for royalties) failed before the Court. In copyright infringement matters it is vital for the plaintiff to prove ownership and/or to establish the chain of ownership in their favour in instances where copyright ownership was transferred or assigned in the past.

Regardless of this, important lessons can and should be learned from this judgement.

The role of Royalty Collection Agencies

When becoming members of a collection agency such as PRS-UK or UPRS, artists and musicians are usually asked to assign/transfer their performing and/or reproduction rights in their original works (in which Copyright subsists) throughout the world to PRS-UK. This is not an unusual arrangement as corresponding collection agencies all across the world operate in a similar fashion.

The Court considered the (1987) assignment agreement and concluded that the UB40-members indeed assigned the relevant copyright throughout the world to PRS-UK, making PRS-UK the owner of the assigned rights with the power to enforce them.

In light of this, the UB40-members did not have the legal capacity to negotiate with MTN as the copyright owner of their musical works when they negotiated with MTN prior to the 2008-show.

Most copyright royalty collection agencies in the music industry are members of The International Confederation of Societies of Authors and Composers (CISAC) which has its operational headquarters in Paris, France and has regional offices all across the world. CISAC established a centralized database and strives to promote communication between royalty collection agencies in the music industry and establish appropriate and effective reciprocal agreements to ensure the efficient collection of royalties from jurisdictions where the protected musical works are reproduced, performed or otherwise communicated to the public.

The manner in which the reciprocal arrangements function, can briefly be explained as follows:

The Performing Rights Society of the UK (PRS-UK) was formed in 1914 to act on behalf of composers in Britain. PRS-UK extended its operation throughout the Commonwealth (including South Africa) and independent collection societies (such as SAMRO in South Africa and UPRS in Uganda) were established as some Commonwealth countries (such as South Africa and Uganda) became independent of British rule.

PRS-UK collects royalties by issuing licenses to music users in terms of which such users pay annual license fees, the amounts of which will depend upon the nature of the musical works proposed to be used and the extent of such usage. If the (copyright) protected musical work or performance of one of the members of PRS-UK (for instance, an artist or group on whose behalf royalty payments are collected) are to be used in another country, then PRS-UK will depend upon the local collection agency in that other country to collect the royalties due for the usage of the musical work. The local agency will then deduct their expenses as well as an operational fee (usually 10% of the monies collected) and then it will transfer the monies to PRS-UK who, in turn, will distribute the monies to the relevant copyright owner (the artist or the record label, for instance).

Royalty collection agencies are non-profit organizations, but are largely dependent upon the relatively small percentages of money which they subtract from collected monies before paying royalties to the relevant artists or copyright owners (whether composers, songwriters, music publishers, performers, recording companies, etc.).

In the view of the writer, this is one of the reasons for UPRS instituting proceedings to recoup monies from MTN for the relevant concert performance of UB40 in Uganda.

Licensing v Assignment

The main difference between a license agreement and an assignment is that the copyright owner retains ownership in the licensed rights; whereas through a written assignment agreement, those ownership rights are transferred to the other contracting party.

In the music industry, one of the keys to commercial success is the ownership of copyright in original works (literary or musical works). Copyright in these works may subsist for 50 years after the death of the author, which means that the copyright owner or his/her estate may be in a position to exclusively commercialise these works for the duration of the copyright. Michael Jackson’s estate received around US$170 million in profits from record sales two years after his death in 2009. Michael Jackson guarded the rights in his music well and he wrote or co-wrote most of his own music and owned the copyright in these works as the author thereof. Another example of continued commercial success even after death may be seen in the legendary Godfather of Soul, James Brown. He composed and wrote over 900 original songs (many of which are still to be released or re-released) and since his passing in 2006, Hollywood still pays top dollar (6-figure deals) to his estate for the use of some of his works in feature films.

Given the manner in which Copyright operates and the length of time which is guaranteed for exclusive exploitation of works in which Copyright subsists, it is not surprising that all players in the music industry, from record labels, producers, managers, music publishers, etc. strive to obtain the Copyright in original musical works.

From an Intellectual Property management perspective, a rights holder will always be well advised to maintain the ownership of their rights and to adopt an appropriate licensing structure to allow third parties to exercise the protected rights to assist with the effective commercialization of the protected Intellectual Property asset on behalf of the copyright owner.

Artists and related rights holders in original musical (and related works) should understand that once you assign your rights in your works, you effectively lose the ability to contract further in relation to these rights. If rights in music are assigned to a record label, then it is not possible to subsequently also assign the same rights to a collection agency or music publisher or any other party for that matter.

The above-referenced Ugandan case once again highlighted the fact that parties involved in the music field do not necessarily appreciate the impact of copyright assignments in relation to their works and how this potentially affects their dealings with other third parties in business. The Court underlined that royalty collection agencies have legitimate claims to safeguard royalty streams on behalf of copyright owners – even when royalties are claimed from the original copyright holders themselves in certain circumstances. The message is clear. If you wish to use or perform music which is the subject of another party’s copyright, you will in all likelihood need to Pay the Piper (or his Collection Agency), notwithstanding the fact that you may have originated the music yourself.