Copyright decision highlights the commercial hazards of using orphan works

In a recent judgment, Taiwan’s Supreme Administrative Court expressly stated that the scope of compulsory licensing should not be limited to what the user of a copyrighted work actually exploits the licence for. In doing so, it affirmed the judgment of the IP Court that a copyright authority may require manufacturers and sellers of commercial karaoke machines or jukeboxes to apply for compulsory licences for musical works, even if their actual scope of exploitation does not include public performance.

Article 24(1) of the Development of Cultural and Creative Industries Act provides that:

if a user of a copyrighted work employs its best efforts but fails to obtain a valid authorization from the copyright owner due to either the identity or the location of the copyright owner being unknown, the user shall clarify the reason for its failure to obtain such valid authorization to the competent copyright authority. After the completion of an investigation conducted by the competent copyright authority, and if as a result of the investigation the user has obtained permission and authorization from the competent copyright authority, the user may utilize the work within the permitted scope if it has deposited the amount required for usage remuneration.

This provision lays the ground for a compulsory licence for any work whose copyright owner is unknown – so-called ‘orphan works’. It also suggests that users need only apply for a compulsory licence within the intended scope of exploitation of the work. Manufacturers and sellers of commercial karaoke machines or jukeboxes have generally been considered to engage in the acts of reproduction, distribution and/or lease of musical works only, rather than participating in their public performance. Thus, it has long proved controversial whether, in addition to the reproduction, distribution and/or lease of these works, manufacturers and sellers, when applying for compulsory licences, should also include public performance in the scope of their use.

The main reasoning behind the IP Court’s judgment in the case at hand was that, according to the Copyright Act, a copyright owner has the exclusive right to reproduce, distribute, lease and/or publicly perform their works. Thus, the scope of compulsory licensing that may be required by the competent copyright authority (namely Taiwan’s Intellectual Property Office (TIPO)) under Article 24(1) of the Development of Cultural and Creative Industries Act would certainly include the various rights enjoyed by a copyright owner under the Copyright Act.

The judgment of the IP Court, affirmed by the Supreme Administrative Court, further clarified that in order to prevent consumers from becoming involved in copyright infringement disputes with unknown copyright owners as a result of their use of musical works in public performances, it would be appropriate for manufacturers and sellers of commercial karaoke machines or jukeboxes to include the right to public performance in the intended scope of exploitation when applying for a compulsory licence (ie, in addition to the right to use these works for reproduction, distribution or leasing).  

Therefore, following the Supreme Administrative Court’s judgment, when manufacturers and sellers of commercial karaoke machines or jukeboxes apply for a compulsory licence to reproduce, distribute or lease musical works where the copyright owners is not known, they must, when requested by TIPO, also apply for permission to subsequently use these works in public performances at business premises.

Businesses intending to use the works of unknown copyright owners are thus advised to visit TIPO’s website and download the Summary Evaluation Table before submitting an application for a compulsory licence, in order to determine whether the works are protected under the Copyright Act and if a licence required (eg, to determine whether a work is excluded from the protection of the Copyright Act or whether the copyright of a work has expired). If so, applicants are advised to consider the amount of time required to complete the application (including for the user to conduct searches for the identity or whereabouts of the copyright owner, and for TIPO to undertake an investigation into the case and determine the usage remuneration pursuant to the laws), and whether this timeline can meet its commercial schedule.  

Generally, it takes between four and six months for a user of a copyrighted work to complete these procedures and for TIPO to deliver its decision. Once TIPO authorises the application, the applicant must still deposit a set amount with the court before it can start using the work. Thus, if there is an urgent need for commercial distribution, the applicant may wish to reconsider using orphan works and use other works instead.