Singnet Pte Ltd v Composers and Authors Society of Singapore Ltd [2021] SGCRT 1

Tribunal/Court:

Copyright Tribunal of the Republic of Singapore (“Tribunal”)

Type:

Application for the Tribunal to decide on the reasonableness of the License Rate imposed by a Collective Management Organisation (“CMO”) in Singapore

Applicant:

Singnet Pte Ltd (“SingNet”), the larger of two internet and cable Pay TV service providers in Singapore.

Respondent:

Composers and Authors Society of Singapore (“COMPASS”), a CMO in Singapore.

Background:

SingNet and COMPASS had been in negotiations relating to License Rate since 2010. Parties eventually entered into an agreement dated 17th December 2014 for the sum of S$1,070,000 in license fees to COMPASS for the period 1st July 2007 to 31st March 2013. SingNet paid the sum to COMPASS on 7th January 2015.

However, Parties could not agree on the License Rate from 1st April 2013 onwards. Negotiations resumed from August 2016 to January 2019 (for the period from 1st April 2013 onwards) but Parties could not reach an agreement.

SingNet proceed to file their application with the Tribunal leading to the present proceedings.

During the proceedings, SingNet’s main contention was that COMPASS had pegged the License Rate offered to it to the License Rate that its main competitor (StarHub) was paying COMPASS. SingNet’s view was that given the difference in the programmes offered (SingNet’s main revenue came from its extensive sports content) the degree of music use and value of music use (for sport content) by SingNet was far less than that by StarHub.

As such, the key tenets of SingNet’s case were as follows:

• the Licence Rate demanded by COMPASS purportedly applicable to pay television service providers in Singapore is based on   a  flawed methodology.
• the circumstances in relation to SingNet are different from those in relation to StarHub, its closest competitor in the pay television service provider business. In particular, sports content is an important differentiator for SingNet. Unlike StarHub, a large proportion of SingNet’s pay television revenue is attributable to sports content that uses less music.Thus, it is unreasonable to apply the same Licence Rateto SingNet.
• COMPASS’ consistent shifts in the licence rate and royalty base during negotiations demonstrated the arbitrariness in COMPASS’ approach to the fixing of the Licence Fee for SingNet.
• A reasonable License Rate in the circumstances is 0.45% of SingNet’s Net Television Revenue instead of 1.5% demanded by COMPASS.

Claim(s)/Issue(s):

The two main issues before the Tribunal are:

1. Whether the License Rate is reasonable or not in the circumstances of the case; and
2. If the Tribunal finds the License Rate not to be reasonable, then what are the charges does the Tribunal consider reasonable in the circumstances in relation to SingNet. 

Decision:

After reviewing the evidence and considering the parties’ extensive submissions, applying the Judicial Estimation approach (see paragraph 7 of "Points of Interest" below) the Tribunal found that:

1. COMPASS’s methodology in deriving the License Rate was principled, objective and logical;
2. COMPASS had been even handed with the treatment of SingNet during the negotiations of the License Rate; and
3. SingNet’s contention that COMPASS had sought to fix the License Rate in an arbitrary and capricious manner is without merit

SingNet’s application was accordingly dismissed. 

Points of Interest:

The proceedings clarified/affirmed the following:

1. Copyright Tribunals in Singapore function as a quasi-judicial forum for copyright owners and users to resolve disputes over copyright licensing issues without recourse to formal court proceedings. One of the functions of the Copyright Tribunal is to serve as a check against CMOs imposing unreasonable license fees or terms.
2. The Tribunal shall not be bound by the Evidence Act.
3. It is for the Applicant to discharge their legal burden of proof on a balance of probabilities (which is the standard of proof in civil cases) that the Respondent’s charges were not reasonable.
4. While the concept of “reasonableness” (what is fair and equitable) is the key deciding factor, there is no presumption of “reasonableness” in favour of the referred license scheme.
5. “Reasonableness” must be assessed in the particular circumstances of the position of the parties in Singapore
6. The Tribunal is not bound by any decision on royalty rates from other jurisdiction.
7. In determining whether a proposed scheme, and the licence fee payable under it, are reasonable, a number of approaches might be adopted.The approaches include the following, which may overlap to acertain extent:

• Market rate: the rate actually being charged for the same licence in the same market in similar circumstances.
• Notional bargain rate: 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: bargains not in the same market but sufficiently similar to such a notional bargain as to provide guidance to the Tribunal.
• Judicial estimation: the rate determined by the Tribunal after taking into account a range of matters such as previous agreements or negotiations between parties, comparison with other jurisdictions, comparison with rates set by other licensors, capacity to pay, value of the copyright material, the general public interest and the interests of consumers; and administrative costs of a licensing body.

Note to Readers:

The information provided in this article is a mere summary of the Grounds of Decision. Full details of this case should be retrieved from the Grounds of Decision.