Out-Law News 3 min. read

CLA announces new code of conduct to govern its collective licensing activities

The Copyright Licensing Agency (CLA) has established a new code of conduct that details the organisation's obligations to its licence users.

A range of organisations in the education, Government and private sectors pay a licence fee to CLA in order to access and use material from content creators such as authors and publishers that appear in UK published books, journals, magazines and other periodicals as well as a range of overseas published titles.

Under its code of conduct the CLA has committed to treating all its licensees "fairly and reasonably" and apply "the same terms and conditions, to the extent possible, to licensees who are in similar circumstances". The CLA said it "will correct any errors as quickly as possible."

The terms of the licensing agreements will be accompanied by explanatory notes which the CLA said will be "in plain English" as far as is possible. CLA staff are required, under the code, to treat licensees "in a courteous, friendly and professional manner" and to "explain clearly" what licence users need, what the licence covers, what the licence fee rate is and how to calculate it.

"The rate is normally calculated by reference to the number of students or pupils in a licensed institution (for education) or by reference to the number of 'professional employees' of an organisation (for business and public administration)," the code of conduct states.

CLA has said that whilst it aims to "negotiate and agree" licence rates with users or "representative bodies" it said that if agreement cannot be reached it will give licensees at least three months notice before affecting changes to he rates with that notice "communicated" on its website.

"We cannot negotiate individual rates for particular licensees as we are obliged to treat licensees equally," the CLA code states.

Details of the complaints process are also contained in the CLA's code, but the Agency said that it is not responsible for complaints about how royalties are distributed.

CLA licenses out material on behalf of "collective management organisations" (CMOs) such as the Authors’ Licensing Collecting Society, Publishers Licensing Society and the Design & Artists Copyright Society. Those bodies then distribute royalties to the creators. CLA takes a cut of the licence fees it collects as an "administration fee". It said it "does not itself make a profit".

"We pay the licence fees we collect to other organisations for direct payment to individual authors, artists and publishers," CLA said. "Payments attributable to the copying of overseas literary works are sent to the CMOs abroad with whom we have an agreement. For copying of UK literary works, licence fees are paid to ALCS, PLS and DACS in the proportions agreed between those 3 organisations. We pass on title information where available to enable these organisations to make the onward payment."

"Our administration fee is normally 11% for most licences (25% for new licences) which is deducted from our total revenues before payment of the amounts due to ALCS, PLS, DACS and overseas CMOs. Our administration charge reflects our running costs and is set by our

Board of Directors, who are themselves appointed by ALCS and PLS on behalf of the copyright owners in the UK. CLA does not itself make a profit. Any questions or complaints about distributions of our licence fees (as to the amount or timing of payments or any other queries) should be addressed to ALCS, PLS, DACS or the relevant overseas CMO," it said.

CLA represents more than 70,000 authors, 60,000 artists and 3,000 UK publishers. Its licences cover more than three million UK published titles and 16m overseas titles.

In a Government consultation into the UK's extended collective licensing (ECL) regime licensees and some rights holders had "described problems with the current system – particularly in relation to lack of transparency, administrative costs, and negotiation practices around licences and tariffs – that codes of conduct could address," the Intellectual Property Office (IPO) said earlier this year.

In July the IPO said, though, that despite licensees' "overwhelming" support for statutory codes of conduct for governing how collecting societies operate ECL schemes, it would instead press ahead with drawing up a law that facilitates voluntary codes to be created and would only resort to use "backstop" powers to establish statutory codes if the voluntary rules do not solve existing concerns.

The licensees had claimed that statutory codes, together with penalties for non-compliance, would "counteract the monopoly position of collecting societies".

Last month the IPO published "minimum standards" (6-page / 368KB PDF) that it expects to see adhered to in collecting societies' voluntary codes. The standards stretch across areas including staff conduct, information and transparency, complaints handling and collecting societies' obligations to licensees.

Backstop powers have been drafted and are currently progressing through Parliament, the IPO said. The IPO intends to review how the voluntary codes are working in November 2013.

CLA said its code of conduct "demonstrates [its] commitment to best practice in customer service and internal governance".

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