Supervision and monitoring of CMOs
Particular issues concerning supervision & monitoring of Collective Management Organisations.
CMOs should be governed, and the CMO management supervised and controlled, by the right holders who own the rights and who have made a decision to entrust the management of their rights to the CMO. Governments play an essential role in introducing the regulatory framework for the establishment and operation and supervision of CMOs, including standards for good governance, financial management, transparency, and accountability. This is essential to make sure that the CMOs operate in the best interest of their members and right holders they represent. It is equally essential that the regulators or supervisory bodies’ role is limited to creating the right framework for efficient, transparent, and accountable collective management.
Governments should not unnecessarily interfere in the operation of CMOs, which manage right holders’ property rights on their behalf. Supervision of CMOs should be fair, transparent, and proportionate, and governments should avoid setting requirements which place disproportionate administrative and financial burdens on CMOs.
CMOs, Users and Governments can also put in place a supervisory and monitoring mechanism by mutual agreement. In this scenario, it is customary that a code of conduct will be published, to ensure that all relevant parties clearly understand their obligations and rights
PROVISIONS OF THE BILL IN REGARD TO MONITORING & SUPERVISION OF CMOs.
In the case of self-regulation and monitoring, a working group should be established, comprising all stakeholders, including, but not limited to, Rightsholders, CMOs, Users and Government. The working group should consult and collaborate on the drafting of a code of conduct, which should be mutually agreed before being published.
1. In both the case of self-regulation and monitoring, and by provision in national laws, the provisions should include sections on at least:
(a) the role and functions of CMOs;
(c) accountability and consultation;
(d) governance structures;
(e) licensing policies;
(f) Distribution policies;
(g) Operating Expenses and deduction policies;
(h) data protection;
(i) dispute resolution.
HOW OTHER COUNTRIES ARE DEALING WITH THE PROPOSAL
In Ecuador: Article 258, Organic Code on the Social Economy of Knowledge, Creativity, and Innovation provides that:
“The competent national authority for intellectual property matters may, proprio motu or at the request of an interested party, conduct inspection and monitoring visits to verify the proper functioning of collective management organizations and to conduct summary proceedings or investigations in cases of infringement of the regulations governing them. In any event, the competent national authority for intellectual property matters may, either proprio motu or at the request of an interested party, conduct inquiries and investigations and intervene with regard to a collective management organization if it fails to comply with the applicable regulations. Such intervention shall cover all areas of the collective management organization.
Once the intervention has taken place, acts and contracts must be authorized by the competent national authority for intellectual property matters to be valid. The intervention may be ordered by the competent national authority for intellectual property rights matters, after an investigation and by a properly reasoned administrative act, as a precautionary measure prior to or during the conduct of an investigation or inquiry concerning a collective management organization. For this purpose, the competent national intellectual property authority shall appoint one of its officials or another person who is technically qualified to perform the task as controller. The intervention shall last until the conclusion of the summary proceedings or investigation. In cases identified by the competent national intellectual property authority, intervention may be ordered as a measure to ensure compliance with the penalties imposed on the collective management organization for infringements of the regulations governing intellectual property rights, and until such time as they are remedied.”
“If the collective management organization fails to comply with the provisions of the Code, the respective regulation or its Statutes, and does not remedy the non-compliance within the term established by the competent national authority, the authority may impose any of the sanctions laid down in this article, having regard to the seriousness of the infringement or the recidivism.
Sanctions shall be imposed taking into account the following criteria: the seriousness of the non-compliance and failure to follow the rules set out in this Code, together with other applicable rules, and whether the violation was single or repeated.
In case of concurrence of misconduct, the penalty for the most serious misconduct will be imposed. If they are all of equal severity, the maximum penalty will be imposed.
The sanctions are as follows:
1. written reprimand;
3. suspension of the operating permit for a period of up to six months; and
4. cancellation of the operating permit.
When a collective management organization is sanctioned, it shall inform its members of the scope of the sanction and the competent national authority for intellectual property matters shall publicize the sanction as stipulated by the relevant regulation. In the event of non-compliance with this provision, the competent national authority for intellectual property rights may sanction it with the fine stipulated in the regulations for this purpose.
Where the infringements are the result of willful misconduct or gross negligence on the part of the Director General, managers, members of the Board of Directors or Monitoring Committee, the collective management organization shall take further action against the officials for damages by way of a fine.”
Article 259, Organic Code on the Social Economy of Knowledge, Creativity and Innovation
“The competent national authority for intellectual property matters may, proprio motu or at the request of an interested party, carry out inspections or proceedings to establish non-compliance with the rules of this Code and other rules applicable to the operation of collective management organizations by the managers, the Board of Directors and the Monitoring Committee. In the event that responsibilities are established by the competent national authority for intellectual property rights matters, it shall provide that the collective management organization shall proceed to impose the following sanctions:
1. written reprimand;
2. fine; and
Article 260, Organic Code on the Social Economy of Knowledge, Creativity and Innovation
“Where the suspension of the operating permit is decreed, the collective management organization shall retain its legal personality solely for the purpose of remedying the breach. If the company does not remedy the breach within six months after the suspension has been decreed, the competent national authority for intellectual property rights shall definitively cancel the company’s authorization to operate. The collective management organization shall then be liquidated, and the corresponding sums shall be distributed immediately to all members, in equal parts.”
Article 261, Organic Code on the Social Economy of Knowledge, Creativity and Innovation
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