Court bars MCSK from collecting ringtone royalties

The Music Copyright Society of Kenya (MCSK) has been stopped from collecting royalties from Cellulant Kenya Ltd pending the outcome of an appeal in the Court of Appeal.

But the ring tone service provider was ordered to deposit in court Sh2 million within 30 days from October 23, failure to which the injunctive orders would automatically be vacated, ruled Justice Luka Kimaru.

Justice Kimaru directed that the money be deposited in a fixed interest earning account in the names of their respective advocates until the dispute is determined by the appellate court.

After losing the battle to bar MCSK from colleting royalties, Cellulant contested the ruling but pleaded with the High Court to grant them orders restraining the society from demanding royalties as provided in the statute.

The orders also restrain MCSK from trespass, or interfering with Cellulant business in respect of the public performance rights.

“I am of the view that the Court of Appeal should be given an opportunity to interpret the contentious sections of the Copyright Act 2001 so as to safeguard the intellectual property of artists and others who rely on their creativity to earn a living,” ruled Justice Kimaru.

Dismissed application

In the earlier ruling, the High Court dismissed an application seeking to block the society from carrying its statutory duties and directed Cellulant to deal with MCSK on matters regarding the conversion of music into ring tones.

The Judge observed that although the Copyright Act did not specifically prohibit any party from entering into individual agreement with the copyright owner, maintained the society was established for the purpose of coordinating and administering the collection of royalties from licensed copyright owners.

According to the agreement entered between Cellulant and MCSK in March 2004, Cellulant was to use the ring tones from music downloads on condition that the product would not be distributed further from mobile phones.

“Irrespective of whether Cellulant entered into individual agreements with music artists, it is required by law to deal with their legal representative (Music Copyright),” said Justice Kimaru.

Cellulant, voted among the small and medium-sized companies that made it to last year’s Top 100 roll of honour in a survey conducted by consultancy firm KPMG, was to pay three per cent of its gross revenue as royalties to MCSK in line with a five-year agreement.

Quarterly basis

The royalties were to be paid on a quarterly basis and Cellulant was to benefit from an annual discount.

They, however, differed with MCSK and in protest chose to deal with musicians and artists themselves.