by Olugbenga Olatunji*

Introduction

For over two decades, an acrimonious relationship has lingered between the leaderships of Copyright Society of Nigeria (COSON) and the Musical Copyright Society of Nigeria (MCSN). While Chief Tony Okoroji shepherds COSON, Chief Ayilaran is the CEO of MCSN.

At the heart of their hostility is who should be the rightful manager of the wealth accruing from the public performances of the rights of musicians, sound recorders, and performers of music. COSON, with the law on its side, prefers management of these rights by a single collective management organisation (CMO), but MCSN, with no governmental approval, wants a multiple CMO system. The Nigerian Copyright Commission (NCC) is the legal regulator for the industry. Because of its status as a non-approved CMO, MCSN has been involved in legal tussle with COSON, NCC and other rights users as a way of staying afloat in the business of right management. In April 2017 and reacting to a petition submitted to his office by MCSN, Abubakar Malami, SAN, the Attorney General of the Federation (AGF) gave directives for the immediate approval of MCSN. Expectedly, COSON has gone to court to challenge the AGF’s decision. Chief Okoroji of COSON, for reasons better known to him, has been leading protests against the AGF, accusing him of being a meddlesome interloper in a domain where he has no expertise. He has also accused him of bias and of an attempt to ‘kill’ the music industry by his incompetence. This latest development prompts this academic intervention. In the paragraphs that follow, I examine how collective management of rights works in the music industry. I also discuss which of COSON and MCSN has the legal imprimatur to operate as a CMO. I then proceed to examine the legality of the AGF’s directives and the effect these directives may have on the music industry. In the postscript, I particularly respond, through the prism of the law and international practice, to some of the allegations raised against the AGF because of these directives.

How collective management of rights work

The Copyright Act 1988 (as amended) and the Copyright (Collective Management Organisations) Regulations 2007 are the applicable laws to this discussion. Both COSON and MCSN are CMOs. The Copyright Act defines a CMO as ‘an association of copyright owners which has its principal objectives as the negotiating and granting of licenses, collecting and distributing of royalties in respect of copyright works.’ The opposite of CMO is individual management of rights. Almost all countries prefer CMO because of its advantages such as suitability to manage rights in the secondary copyright market, economies of scale advantage that leads to reduced transaction cost, availability of blanket licensing, special benefits to upcoming artistes, and collective enforcement power.

Copyright confers exclusive right on all musicians (with recognised exceptions) to authorise the use of their songs by any user, such that anyone who uses their songs without authorisation will be liable for infringement. The implication of this in practical term (using Olamide as an example) is that anyone, any business, or any broadcasting corporation who desires to use Olamide’s WO track for some commercial purpose must secure his approval before use. This imposes a herculean obligation on Olamide who has to enforce his right against all of these people/businesses. For instance, against how many individuals can Olamide enforce this right? How many radio or TV stations in Lagos alone can he visit? What about other users of music such as shopping malls, eatery, nightclubs, hotels, etc. in the 36 states of the federation and FCT? How many of them can he single-handedly visit to enforce this right? Assuming he acquires some supernatural power to do this, what about the cost implication of concluding authorisation agreements with each of these users? Will it be worth it after all?

The challenges above make CMO a preferred option. Under a CMO arrangement, Olamide and other musicians WILLINGLY come together to form an association of owners. They then assign/license their rights in present and future songs to this association. They appoint people among themselves to manage these rights on their behalves. The management performs the following duties:

  • the maintenance of a repertoire (this contains all the songs belonging to members);
  • the issuance of licenses to interested users (such as broadcasting corporations, shopping malls, eateries, hotels, transportation companies, clubs, hotels, etc.);
  • the collection of royalties (the tariff received from these users for using songs in the association’s repertoire); and
  • the distribution of the royalties to members at an agreed period every year.

Since section 39(2)(a) of the Copyright Act provides that CMOs must be non-profit organisations, their management are only permitted to deduct up to 30% of the royalties collected as running costs before distributing the remainder to all members as royalties. Thus, with this arrangement, artistes like Olamide no longer need to embark on the strenuous and expensive individual management of their rights. This has now become the responsibility of their CMOs.

 

COSON vs MCSN—Why AGF's Directive is Best for Nigeria's Music Industry by Olugbenga Olatunji, Nigerian Law Today

Image source: Africa Music Law

COSON vs MCSN: which is the lawful CMO?

By the combined reading of sections 17 & 39 of the Copyright Act, any association of more than 50 people acting as a CMO by negotiating and granting license, collecting and distributing royalties to its members in respect of copyright works must obtain approval or exemption from the NCC. In 2009, MCSN, COSON and the Wireless Application Service Providers Association of Nigeria Ltd (WASP) submitted applications for approval as CMOs. Relying on section 39(3) of the Copyright Act, NCC in 2010 approved the application of COSON and rejected those of MCSN and WASP on the ground that their applications failed to comply with statutory requirements. Section 39(3) prohibits NCC from registering more than one CMO for a class of right if it (NCC) is satisfied that the existing CMO adequately protects the rights of its members. This is the basis for the argument that NCC can only register one CMO for a class of right. This means that, prior to the AGF’s directive in April 2017, COSON was the sole (legal) CMO for musical works, sound recordings and the rights of performers in Nigeria.

Since only COSON secured approval to act as CMO in 2010, why has MCSN continued to act as a CMO? The inability of the Nigerian courts (comprising of the FHC and the different divisions of the Court of Appeal) to agree on the correct interpretation of sections 16, 17, & 39 of the Copyright Act is the reason for this anomaly.

The 1992 amendments to the Copyright Act introduced government regulation into the business of collective management of rights. Section 32B of the amendments (this is now section 39) is relevant to this discourse. The section introduced an extensive regulatory framework for collective management of rights in Nigeria. For instance, it laid down in section 32B (2) conditions that a prospective CMO must meet before securing approval from NCC. In section 32B (3), it made the approval of an additional CMO in the same class conditional on the ‘inadequate protection’ clause. Subsections 4 to 6 made it an offence to operate as a CMO without NCC’s approval and then imposed penalties for doing so. Subsection 7 empowered NCC to make regulations necessary to give effect to the new section. Lastly, subsection 8 defined collecting societies as association of copyright owners with the objectives of negotiating and granting licenses, and collecting and distributing of royalties. Any association, society or organisation engaged in all of these responsibilities must secure approval before it can operate as a CMO.

One thing is certain from the introduction of the above section: the paradigm shift from a regime of zero regulation to that of total regulation of CMOs. A court must importantly consider this paradigm shift when interpreting the provisions of the new section. This submission also aligns with the different rules of statutory interpretation. As I and other colleagues argue in an article currently under review (see O.A. Olatunji, M.A. Etudaiye, & S.O. Olapade, ‘Is the approval of a second CMO the solution to the struggle in the Nigerian Music Industry?’ The International Review of Intellectual Property and Competition Law), in interpreting the provisions of a statute, it is the responsibility of the court to ascertain the intention of the parliament in enacting that statute. To do this, the court can apply the literal, purposive or mischief rules, depending on the circumstances of each case.

The literal rule is apposite where the wording of a statute is clear and unambiguous. However, where the application of a literal rule may lead to an absurd conclusion, the court is oblige to apply the purposive rule by reading the statute as a whole and determining its overall purpose. Mischief rule is applicable where the court cannot decipher the intention of the parliament after applying the first two rules. The court is then required to take a historical journey into the enactment of the statute. The purpose of the proposed expedition is to determine the mischief that made the enactment of the law inevitable. The question here is what was the mischief that the parliament intended to curb by enacting the new law/provisions?

An understanding of the above rules is important to comprehending subsequent discussion on the issue of why MCSN continued to act as a CMO even though NCC had continuously refused to grant it approval. MCSN had argued that it had the right to protect the works of its members, not as a CMO but as owners, assignees or exclusive licensees. It relied on the provision of section 15 of the 1992 amendments (this is now section 16) for this argument. If we apply literal rule to this section, it looks convincing that rights holders such as those represented by MCSN would be able to sue as ‘owner, assignee or an exclusive licensee’. However, what will be the consequence of such interpretation? Will it not be absurd to conclude that, after an introduction of section 32B with comprehensive regulatory provisions over CMOs, the intention of the parliament was to allow CMOs like MCSN with over two million members to operate without regulation through the backdoor of section 15?

Odunowo J of the FHC recognised this absurdity in MCSN v Details Nig. Ltd (suit no: FHC/L/CS/434/95) and rightly held that MCSN had no right to sue either as a CMO or under section 15 because in fact, MCSN was acting as a CMO, whether it referred to itself as one or not. Ukeje J., another FHC judge, also pointed out the absurdity in allowing MCSN to function as a CMO through the back door in MCSN v. Ade Okin Records Ltd (suit no: FHC/L/CS/216/96). A division of the Court of Appeal, Galadima JCA presiding, however overturned Ukeje J’s fine decision in Ade Okin Records Ltd v MCSN (suit no: CA/L/498/97) and recognised MCSN’s right to sue under section 15 (now section 16). It appears that while Odunowo and Ukeje JJ., applied the purposive rule to appreciate the rationale for the new amendments, Galadima JCA and his learned brothers applied the literal rule, which resulted in absurdity. This decision rubbished the regulatory power conferred on NCC because it emboldened the MCSN to enforce the rights of its members as CMO without approval.

To regain its regulatory power, NCC sponsored amendments to the Copyright Act again in 1999 and one of the new amendments was section 15A (now section 17). This section made it clear that, notwithstanding the provisions of any other laws, (including section 15 that allowed ‘owner, assignee and an exclusive licensee’ to institute action), any association of MORE than 50 people, performing the function of CMO as defined under section 32B(8) must obtain NCC’s approval under section 39 or must be expressly exempted by NCC.

With this new provision, one will expect that the court will understand that it is not the intention of the parliament that an association should operate as a CMO without approval. This is where the mischief rule would have been apposite. It is very clear that the mischief that the parliament intended to curb by this amendment was to preclude an unapproved CMO from operating as such. Unfortunately, even after this amendment, the different divisions of the Court of Appeal continued to hand down conflicting judgments with one group holding that MCSN could not operate as a CMO using section 15 (now section 16); and another group holding that the 1999 amendment did not preclude MCSN from suing for infringement as ‘owner, assignee or an exclusive licensee.’

The above is the current state of case law on whether MCSN can sue as owner, assignee or an exclusive licensee. Answering this question in the affirmative, as some divisions of the Court of Appeal had done means that MCSN is able to operate as a CMO through the back door. These conflicting decisions are also important for another reason. It means that it was not ‘ILLEGAL’ for MCSN to act as CMO even though the NCC refused to approve it. This is because by the doctrine of stare decisiswhere there are two conflicting decisions of courts of coordinate jurisdiction, the lower courts are free to follow any of the conflicting decisions. Further, the determination of the principle of law involved in such proceedings is not deemed final until decided upon by the Supreme Court. Since this question has not gone to the Supreme Court, MCSN is right to follow the decisions of those divisions of the Court of Appeal that favour it. This is why MCSN was able to act as CMO for more than two decades without approval.

What is the legality of the AGF’s directives?

Armed with a strong conviction that it had a right to obtain approval as a CMO, MCSN petitioned the office of the AGF, chronicling the failure of NCC to approve it as a CMO and alleging bias against the regulatory body. After investigation, the AGF found that it would be in public interest to approve MCSN. He therefore gave directives in April 2017 authorising NCC to approve MCSN with immediately. NCC had complied with this directive. COSON has contended that the approval is illegal because MCSN did not fulfil the conditions precedent to approval. It has instituted an action against the AGF, NCC & MCSN, praying the FHC to quash the approval. What then is the legality of the AGF’s action?

While NCC is the regulatory body overseeing the activities of CMOs under the Copyright Act, section 50 of the Act reserves an interventionist power for the AGF. That section gives discretionary power to the Minister (in this case the AGF) to issue to NCC ‘directives of a general or special nature with respect to any of the functions of the Commission under the Act’. While the exercise of this power by the AGF is discretionary, once the AGF exercises it, ‘it shall be the duty of the Commission to comply’ with it.

The justification for the inclusion of this section in the Copyright Act is to monitor and regulate the activities of the regulator (NCC) to avoid abuse. MCSN had alleged bias and collusion against NCC in two petitions, one written in May 2013, addressed to the House of Representative, and the second written in 2016, addressed to the office of the AGF. The House of Representative tasked its joint Committee on Justice and Judiciary with the investigation of these allegations and asked the Committee to report its findings and recommendations to the whole House after investigation. The Committee invited all the stakeholders in the music industry including COSON, NCC, MCSN, Broadcasting Organisation of Nigeria (BON), etc. for questioning. After investigation, the Committee found, among others, that ‘the continued refusal to register MCSN is casting NCC, a regulatory agency, as having been compromised and pursuing only the interests of a particular section of the industry.’ The Committee recommended the immediate approval of MCSN as a CMO. The whole House of Representative passed a resolution to give imprimatur to these recommendations in December 2013. NCC, however, did not obey the recommendation on immediate approval.

MCSN further petitioned the AGF in 2016. After investigation, the office of the AGF found that NCC’s continued refusal reeked of bias; hence the issuance of the directives under section 50. With the concurrent findings of both the House joint Committee and the office of the AGF on the biased role of NCC, it is clear that the AGF has rightly invoked the provisions of section 50. This leads us to the conclusion that the AGF’s action is lawful.

Will the AGF’s intervention make or mar the music industry?

One of the arguments of Chief Okoroji was that the action of the AGF would mar the music industry. Looking at the reality on ground, and bearing in mind that collective management of rights should be for the benefits of the ‘real’ rights holders, I find it difficult to agree with the Chief on this for the following reasons.

Before Nigeria’s independence, the Performing Rights Society (PRS) of UK was responsible for the collective management of copyright in Nigerian music. With the enactment of the first indigenous Copyright Act in 1970 post-independence, the performance of this responsibility by PRS of UK gradually ceased, culminating in the emergence of MCSN as a full-fledged Nigerian registered collecting society in 1984. Under the 1970 and 1988 Copyright Acts, there was no provision for regulating the activities of collecting societies and MCSN was the sole collecting society throughout this period. This however changed when the 1992 amendments to the Copyright Act 1988 introduced section 32B, which mandated collecting societies to obtain approval from the NCC before they could operate as such. It is important to note that prior to the introduction of a regulatory framework, MCSN had operated as a sole collecting society for over two decades (from 1970 when it entered into agency arrangement with the PRS of UK). During this period, it had acquired tremendous skill, large repertoire (music collections), reciprocal agreements with other foreign CMOs, broad-based membership, and the experience of a veteran collecting society.

COSON vs MCSN—Why AGF's Directive is Best for Nigeria's Music Industry by Olugbenga Olatunji, Nigerian Law Today

Image Source: Music Page

The above scenario repeated itself in 2010 when NCC called for another set of applications for approval as collecting societies. MCSN, PMRS (now COSON), and WASP applied. At the end of the process, NCC, again, approved COSON as the sole collecting society for musical works, sound recordings and the rights of performers. The continued implication of this for MCSN was that millions of its members remained unprotected by the law. Some of the solutions that MCSN had deployed included approaching the courts to interpret the law in a way that would allow it to protect the rights of its members. In this regard, MCSN was successful as some divisions of the Court of Appeal agreed with it that it could enforce the rights of its members as ‘owner, assignee or an exclusive licensee’. In addition, MCSN had petitioned the House of Representatives and the office of the AGF. After examining the above historical facts, the House of Representatives passed a resolution mandating NCC to register MCSN. With NCC’s total disregard for this resolution, MCSN took its case further to the office of the AGF. After investigation, the AGF also gave a binding directive, authorising the immediate approval of MSCN by NCC. NCC had since implemented the directive of the AGF because it has the force of law as discussed above.

It is clear from the foregoing that the AGF did not act in bad faith as COSON alleged. Not only do the AGF’s directives align with earlier recommendations of the House of Representatives, they also take the interests of millions of rights holders who are MCSN’s members into consideration. As mentioned earlier, the focus of any collective management system is the protection of the ‘real’ rights holders. The non-approval of MCSN had created many problems for rights holders. While some of MCSN’s members later joined COSON, they could not claim royalties from overseas CMOs because those CMOs would only deal with MCSN that signed reciprocal agreements with them. Tee Mac, for instance, could not hide his joy for the approval of MCSN. He narrated how it had been impossible for him to claim royalties abroad because of the ongoing imbroglio between COSON and MCSN. A Kenyan copyright blogger, Victor Nzomo, also expressed frustration that rights holders from the Music Copyright Society of Kenya (MCSK) could not claim royalties from Nigeria despite having a reciprocal agreement with MCSN because of the non-approval of MCSN. This situation cannot in anyway be beneficial to the members. It could only be beneficial to COSON that enjoyed monopoly prior to MCSN’s approval.

The AGF’s directive will therefore benefit the industry by ensuring the protection of more members. It will also promote healthy competition between the two CMOs. On the long run, the need to win rights holders over to their side will lead to more creativity, more accountability and more respect for rights holders between COSON and MCSN. It will therefore be right to submit that the AGF’s directives will make (and not mar) the music industry.

Postscript

Contrary to the agitation from COSON, I have demonstrated above that the provisions of the applicable law, not politics, inform the action of the AGF. The AGF’s directives mandated NCC to approve MCSN as a collecting society. This is in line with the provision of section 50 of the Copyright Act. A part of the directives also instructed NCC to withdraw all pending criminal cases it instituted against MCSN. This finds legal authority in the provisions of section 174 of the 1999 Constitution of the Federal Republic of Nigeria (as amended). That section confers the power of nolle prosequi on the AGF. This is the AGF’s power to institute or discontinue any criminal case in any court in Nigeria. In respect of Chief Okoroji’s allegation that the AGF stopped a FHC from reading an already written judgment in respect of a suit challenging the legality of the AGF’s directives, there is nothing in the public domain to support this. Neither the judge nor any of the other parties (MCSN, AGF, and NCC) to the suit has come out to confirm this allegation.

COSON has raised two other issues against the approval of a second CMO for the music industry.  First, it argues that other countries favour a single CMO for their music industries. Second, it contends that the Nigerian Copyright Act only supports a single CMO system. Agreed that there are countries with single CMO in their music industries. However, there are also countries that allow multiple CMOs in a class of right. Canada is a perfect example. On the first issue, I (and two other colleagues) have argued elsewhere (see O.A. Olatunji, K.I. Adam & F.O. Aboyeji, ‘Collective management of rights in musical works and sound recordings: A critique of the Copyright Society of Nigeria’ (2017) 48(7) International Review of Intellectual Property and Competition Law 838, 857-859) that the adoption of a single CMO or multiple CMO is not automatic. It depends on the peculiar situation of each country. We argued in that paper that single CMO is not right for Nigeria for three reasons. First, Nigeria has a large population. Many countries with single CMO for their music industry have small populations (e.g. Italy, Argentina, and Morocco). Second, there is lack of respect for intellectual property (IP) by Nigerian music users. The level of respect for IP in many of those countries with single CMOs is high such that their CMOs have little enforcement to do. This is not the case in Nigeria. As we demonstrated in that article, we have a situation where COSON is overwhelmed with its right management responsibility because of the non-cooperative behaviour of the Nigerian music users. Third, the fact that the music CMO in Nigeria controls multiple rights makes single CMO inappropriate for us. For instance, in countries with single CMOs for music industry, there are ‘single’ CMOs controlling musical works, sound recording, and performers’ rights (three CMOs in the music industry); but in Nigeria COSON controls all of these rights.

COSON vs MCSN—Why AGF's Directive is Best for Nigeria's Music Industry by Olugbenga Olatunji, Nigerian Law Today

Image source: NCC

On the second issue, that is registration of multiple CMOs under the Copyright Act, the law is not against NCC approving two or more CMOs for a class of rights; the law has only imposed conditions precedent to doing this. COSON should therefore desist from the narratives that it is illegal to approve a second CMO for the music industry in Nigeria. Further, it reeks of double standard for COSON to raise issue about the legality of an AGF’s directive. In 2005 when NCC temporarily approved MCSN as a collecting society, PMRS (now COSON) petitioned the presidency, alleging collusion between the DG of NCC and MCSN. The presidency relied on this same section 50 to give a directive withdrawing MCSN’s approval.

In sum, both COSON and MCSN should face the reality of this new dawn; hence they be left out. Instead of this continued bickering, blackmailing, and trading of abuses, they should concentrate on how to convince rights holders of their efficiencies. The AGF has recommended the amendment of the extant copyright law to further benefit rights holders in the music industry. COSON and MCSN should be ready to take advantage of this by actively participating in any stakeholder amendment forum that may be subsequently set up for this purpose. Finally, government should ensure that any amendment to the current copyright law further entrench more accountability and transparency among Nigerian CMOs.

 

*Olugbenga Olatunji is a lecturer at the Faculty of Law, University of Ilorin, Nigeria. He is currently a PhD candidate at the Faculty of Law, University of Tasmania, Australia.

 

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