Singapore: Copyright Tribunal provides guidance on determining appropriate approach to assess reasonableness of copyright licence rate

In brief

In SingNet Pte Ltd v. Composers and Authors Society of Singapore Ltd [2021] SGCRT 1, a decision issued on 28 December 2021, the Copyright Tribunal of Singapore ("Tribunal") adopted a fourfold framework in determining the appropriate approach to assess reasonableness of a copyright licence rate:

  • First, if a market price is available, then that price will be imposed.
  • Second, if no direct market price is available, then an attempt will be made to determine what bargain the parties might have reached in a hypothetical negotiation (on a willing but not over anxious basis).
  • Third, if this is not possible, then the Tribunal will examine comparable transactions to see whether they can throw any light on price.
  • Finally, if that cannot be done, the Tribunal will engage in a process of judicial estimation that will involve a synthesis of the relevant facts and circumstances into a rate that the Tribunal regards as reasonable or equitable in the circumstances.

Contents

In more detail

Brief facts:

  • SingNet Pte Ltd ("SingNet"), which provides pay television in Singapore, brought an application under section 163(2) of the Copyright Act disputing the reasonableness of the charges sought to be imposed by the Composers and Authors Society of Singapore Ltd ("COMPASS"), a collective management organisation, for a licence in respect of the right to communicate copyright musical works.
  • The parties were engaged in rather protracted negotiations relating to the payable licence fees, but were unable to reach an agreement. As a result, SingNet made the application that led to the present decision.
  • SingNet disputed the methodology that COMPASS adopted to determine the licence rate, and argued that COMPASS's shifts in the licence rate and royalty base during negotiations demonstrate the capriciousness in COMPASS's approach to fixing the licence rate.
  • The Tribunal dismissed SingNet's application, finding that SingNet failed to prove on a balance of probabilities that the licence rate imposed is unreasonable in the circumstances of the case.

Key findings of the Tribunal: 

  • The Tribunal reiterated that there is no presumption of reasonableness in favour of the referred licence scheme.
  • The Tribunal also gave a caveat that it is not bound by any decision on royalty rates from other jurisdictions, although these decisions may have some persuasive value.
  • Accepting that reasonableness is not a concept whose parameters can be defined with mathematical precision, the Tribunal recognised that there are four main approaches that might be adopted in determining whether a licence fee is reasonable, namely:
    • Market rate approach: the rate actually being charged for the same licence in the same market in similar circumstances
    • Notional bargain rate approach: the rate on which the Tribunal considers the parties would agree in a hypothetical negotiation, between a willing but not anxious licensor and a willing but not anxious licensee
    • Comparable bargains approach: bargains not in the same market but sufficiently similar to such a notional bargain as to provide guidance to the Tribunal
    • Judicial estimation approach: the rate determined by the Tribunal after taking into account a range of matters
  • The parties diverged on their proposal on the approach to be adopted. The Tribunal affirmed a fourfold framework in determining the appropriate approach to assess reasonableness:
    • First, if a market price is available, then that price will be imposed.
    • Second, if no direct market price is available, then an attempt will be made to determine what bargain the parties might have reached in a hypothetical negotiation (on a willing but not over anxious basis).
    • Third, if this is not possible, then the Tribunal will examine comparable transactions to see whether they can throw any light on price.
    • Finally, if that cannot be done, the Tribunal will engage in a process of judicial estimation that will involve a synthesis of the relevant facts and circumstances into a rate that the Tribunal regards as reasonable or equitable in the circumstances.
  • Applying this framework, the Tribunal landed on the judicial estimation approach as the appropriate approach for the case in question.
  • The Tribunal then assessed the available evidence and found that the licence rate imposed was not unreasonable.

 

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