1. Introduction

Recent developments in the Copyright Law (“Law”) have introduced new Regulations on the Establishment of Collective Management Organizations (“CMOs”) on Copyrights or Related Rights (“Regulations"), effective as of 6 August 2024. These Regulations provide a comprehensive framework for the registration of CMOs, detailing the application process, registration issuance, organizational responsibilities, procedures for cancellation, suspension, and renewal of registration, and general operations. This alert summarizes the key aspects of these Regulations.

2. Key Features of the New Regulations

Definition of CMO: According to Section 2 (ll) of the Copyright Law, a CMO is an association that manages copyright and related rights on a non-profit basis. It is established by agreement among authors, copyright owners, and relevant rights owners to protect their rights under this Law.

Registration Requirements: Establishing a CMO begins with a formal application to the Intellectual Property Agency (“Agency”). To initiate this, the general manager, chief executive officer, or an authorized representative must submit a CMO-1 Form on behalf of the organization. The organization must operate on a not-for-profit basis, be composed of the relevant copyright or related rights holders, and possess the capacity to manage collective copyright or relevant rights tasks effectively.

Applications must provide certain information, including but not limited to detailed organizational structures, member information, proof of fee payment, and agreements concerning copyright management and royalty distribution. These can be submitted in person, via recognized postal services, or electronically. Should an application be incomplete, the Agency must inform the applicant within 30 days. The application is nullified if the organization fails to provide the necessary information within the specified timeframe. Following submission, the application is forwarded to a working group that verifies compliance with the required standards, with the findings then reported back to the Agency for final review.

Issuance of Registration Certificates: Once the application is deemed complete, the Agency has 60 days to review it. If the application meets all requirements, the Agency will approve it, record the decision, notify the applicant, and make a public announcement detailing the organization's information. Upon approval, a registration certificate is issued, granting the CMO the right to manage the relevant copyrights for a term of five years from the date of its establishment. The decision is similarly recorded and communicated to the applicant if the application is rejected.

Suspension and Cancellation: The Agency may suspend a CMO’s operations for up to six months for issues such as non-compliance with the Copyright Law or relevant notifications, misrepresentation of information, failure to include copyright or related rights holders in forming the CMO, lack of transparency, good governance, or accountability, contract breaches, fraudulent certification, unauthorized management of rights, non-compliance with royalty provisions, misuse of collected fees, or non-operation within one year of authorization. A CMO may request that the suspension be lifted within six months of receiving notice. The Agency will review the request and decide whether to lift the suspension. If the CMO remains suspended after the period, fails to request reinstatement, or continues to violate rules post-suspension, the Agency will cancel its authorization. The cancellation will be recorded, and the organization will be notified and publicly announced.

Renewal: As the five-year term nears expiration, a CMO must apply for renewal by submitting a CMO-2 Form at least three months before the current term ends. The renewal application must include various documents, such as a copy of a certificate, Articles of Association, list of members, audited financial statements, and evidence of resolved complaints, and is subject to a fee. Failure to apply for a term extension within three months before expiration will result in a prescribed fine. The organization will be removed from the registration list unless an extension is applied within the following year. The Agency will then review the renewal application and decide whether to approve or decline it. If approved, the renewed certificate will be issued to the organization, and the registration list will be updated accordingly.

Governance and Accountability: CMOs must be composed of the relevant copyright and related rights owners. Their structure will include a Board (administrative body), Accounts Team, Information Technology Team, Royalty Management Team (for collecting and redistributing royalties), Document Maintenance Team, and any other necessary teams. A general manager or chief executive officer must be appointed to oversee the organization. All members and board members must be citizens residing within the state. Organizational rules will address the terms for collecting copyrights and distributing royalties.

Once established, CMOs must hold an annual general meeting and submit an annual report, alongside audited financial statements, to the Agency within three months of the fiscal year’s end. Such regular audits and reporting requirements are mandated to ensure accountability and prevent mismanagement of funds. Any changes in operations, including adjustments to internal regulations, royalty collection and distribution terms, and copyright rates, must be promptly reported. CMOs must negotiate permissions for the use of copyrighted works, collect royalties from users, and distribute these royalties to their members efficiently. They must maintain accurate member records and ensure royalty collection and distribution transparency.

CMOs must specify the methods for calculating royalties and the timeframe for redistributing them, including the frequency and method of distribution, the percentage of collected funds allocated for administrative expenses, and the procedures for handling non-redistributable royalties. Additionally, CMOs must maintain a website that regularly publishes essential information, including the Articles of Association, royalty terms, dispute resolution procedures, types of rights and rights holders they manage, the works available for licensing, and details about their board and employees.

Dispute Resolution: CMOs may resolve disputes between their members through mutual amicable settlement. If these methods do not resolve the dispute, it can be settled through arbitration or litigation. Furthermore, CMOs may, on behalf of their members and with their consent, negotiate settlements or pursue legal action for infringements of the rights they manage.

3. Compliance and Next Steps

These Regulations stipulate that up to two organizations can manage the same type of rights within a relevant work sector, such as literary, artistic, musical, audiovisual, cinematographic, or dramatic works. Existing organizations must apply for permission within three months of the enactment of these Regulations. CMOs must adhere to equality, transparency, and fairness principles in their operations, strictly following internal and Agency-imposed rules. Additionally, CMOs are encouraged to collaborate with other domestic and international CMOs. These Regulations also empower the Agency to request reports and inspect documents anytime.

CMOs will operate to ensure the fair representation of copyright holders, providing them with effective management of their rights, efficient royalty collection, and transparent distribution. Users seeking to utilize copyrighted works must obtain permission from the rights holders or relevant CMOs. This process is facilitated through the licensing agreements managed by the CMOs. CMOs must invite a representative from the Agency to annual general meetings. All public announcements related to CMO activities must be posted on the department’s official website or through recognized publications, with all fees being non-refundable.

4. Conclusion

The introduction of these new Regulations marks a significant step towards ensuring the structured and transparent management of copyrights and related rights. These changes aim to protect the interests of creators and copyright holders while providing a clear framework for users of copyrighted materials to obtain necessary permissions. Please get in touch with our office for further information or guidance on how these Regulations may impact your rights or obligations.

The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.