By Samuel Olufowose Esq.
INTRODUCTION
The law on copyright protection and use is relatively universal to the extent that no one is permitted to use a copyrighted work belonging to another person or creator without the express consent of the owner, whether through an assignment or a license. Consequently, where the copyright owner is unwilling to grant permission, a prospective user is generally prohibited from using the work. In other words, should the copyright owner not be willing to give, the prospective user cannot take. However, as an exception, copyright law, in certain circumstances, permits the use of a copyrighted work without direct recourse to the owner or even compels the owner to grant access to their creation.
This exception serves as a mechanism through which copyright law curtails the excesses, abuse of dominant positions, and monopolistic tendencies that copyright holders might otherwise exercise over their works. Unchecked control could stifle the commercial growth of the copyright industry, an outcome that is counterproductive to economic progress. Since greater commercial utilization of copyrighted works leads to increased revenue generation for both the industry and the government, legal provisions that ensure wider access to copyrighted content are put in place—after all, the more commercial use of copyright, the more money for the government.
The concept and application of compulsory licensing vary across jurisdictions. Notably, there exist distinguishable differences in the scope of compulsory licensing for copyright under the Nigerian Copyright Act and U.S. copyright law. The essence of distinguishing this is to appreciate the rationale behind compulsory licensing and its impact on copyright law.
A compulsory license is a statutory authorization that permits the use of a copyrighted work without obtaining prior consent from the copyright owner, provided that certain conditions are met. It is a legal mechanism designed to balance the interests of copyright holders and the public by preventing copyright infringement while allowing access to works that might otherwise be withheld from use.
Essentially, a compulsory license limits the exclusive rights of copyright holders by allowing other parties to reproduce, use, or distribute copyrighted content without the express approval of the original rights holder.
A key question that often arises is why an artist or copyright holder would unreasonably refuse a licensing opportunity that could enhance the visibility and value of their work. The answer is often rooted in human nature. Decisions may be driven by emotions, business miscalculations, insecurities, or other subjective factors. In such instances, compulsory licensing serves as an intervention to prevent stagnation in the dissemination of creative works.
The concept of compulsory license is the direct opposite of “voluntary license,” where a copyright holder freely and by choice decides to license his copyright to another person upon his own convenient terms.
Under the United States Copyright Act of 1976, Title 17 of the United States Code, which provides the legal framework for copyright matters in the U.S., a copyright holder is obligated to compulsorily license his or her copyright to an intending user under the following main broad circumstances:
Section 111 of the Copyright Act of 1976, which is part of Title 17 of the United States Code, set up a compulsory licensing framework that allows cable systems to retransmit copyrighted content. Essentially, this regulation applies to cable TV providers that rebroadcast over-the-air television signals. In particular, Section 111(c)(1) states:
“Subject to the provisions of paragraphs (2), (3), and (4) of this subsection and section 114(d), secondary transmissions to the public by a cable system of a performance or display of a work embodied in a primary transmission made by a broadcast station licensed by the Federal Communications Commission or by an appropriate governmental authority of Canada or Mexico shall be subject to statutory licensing upon compliance with the requirements of subsection (d)”
To illustrate this, imagine a local broadcast station in the US, such as ABC Channel 7, that airs a live prime-time news program. A cable provider like CableOne receives ABC Channel 7’s over-the-air broadcast and retransmits the news program to its subscribers as part of its cable service. Under Section 111, CableOne is not required to negotiate separate licenses with each copyright holder involved in the production of the news program. Instead, it can utilize the statutory licensing system, provided it complies with the relevant requirements and pays the prescribed fees
Moreover, the statutory license outlines several conditions that cable systems must satisfy to obtain a compulsory license for retransmitting copyrighted works, including filing statements of account and making statutory royalty payments.[1] Notably, a stipulated percentage of the Cable Tv’s revenue is paid as royalty which is to be further shared amongst the copyright holders. This way, the copyright holders of the transmitted works cannot decline or reject to licence their creations.
This generally applies to Public Broadcasting stations or systems in the business of media transmission. The law is that it is not an infringement of copyright for a transmitting organization like a nonsubscription broadcast radio or television station or a broadcast station under proper government licence that makes broadcast transmission of a performance of a sound recording(song) to make no more than one copy or phonorecord of a particular transmission program embodying the performance or display. This can be done by obtaining a statutory licence.
What this means is that such an organization is permitted to make only one copy or phonorecord of a program that features a performance(play) of the song for the purpose of transmission, without violating the copyright provided that it is not a motion picture. Notably, the exception in this provision does not apply to motion pictures or other audiovisual works. Hence, the Organization cannot hide under this provision to broadcast a Producer’s motion picture(film) without proper licence. The conditions for this statutory license include that:
One interesting provision regarding this statutory license is that if the copyright owner uses a technical measure that prevents the transmitting organization from creating the copy or phonorecord, the copyright owner must make the necessary means available for the organization to do make a copy and if the copyright owner doesn’t provide this in a timely manner, the transmitting organization is not liable for violating circumventing such technological measures.
Historically, Sound Recording(masters) did not initially enjoy copyright in the United States, even when it recognized author’s exclusive rights in their musical composition (i.e. musical works copyright) since 1831.[2] It was the Sound Recording Act 1971 that for the first time provided limited copyright protection for sound recordings with the specific aim of preventing “privacy” by companies that were copying recorded music onto records and tapes and selling them to the public. However, this copyright did not extend to public performance. Thus, it means that the Sound Recording Act 1971 forbade the copying of a sound recording without permission from the copyright owner but public performance was excluded from the scope of this sound recording copyright and so radios(AM and FM stations) could publicly perform(play) sound recording without the consent of the owner and without having to pay any fee for compulsory license. At this time there was no compulsory license for the use or broadcast of a sound recording like it already existed for the mechanical reproduction of musical composition.
Hence, with the advent and rise of digital music dissemination (i.e dissemination of music via the internet) such as MP3 music files capable of being played or downloaded via the internet, digital music platforms/retailers such as iTunes in the business of duplicating sound recordings to be played via the internet were required to negotiate with and obtain licenses from record labels before selling music.[3]
However, because sound recording copyright did not extend to public performance, it meant that digital radios were also free to play or perform songs without record owners’ consent or without a fee.
After much agitation from record labels, the US Congress passed the Digital Performances Rihts in Sound Recording Act (DPRA) 1995 which created public performance copyright in sound recordings performed “by means of a digital audio transmission” such as satellite and internet radio but with the provision for compulsory license.[4]
Therefore, by the provision of the DPRA 1995, sound recording copyright now extended to public performance by means of digital audio transmission only -(internet radio). The DPRA however, coupled this extension or grant with a compulsory license regime requiring compulsory license of sound recordings to any digital radio service. This compulsory license is often referred to as the Section 114 compulsory license.
In other words, internet radio could no longer freely play sound recordings without obtaining a license from the record owners but the record owners must compulsorily license at a fixed fee to the internet radio service.
By the provision of Section 114(2) of the Copyright Act, interactive digital audio transmission service and subscription based non-interactive digital audio transmission service are subject to the public performance copyright in a sound recording and thus, must obtain the license of the record owner but they enjoy statutory/compulsory license under this provision, which means that record labels must compulsorily license to any interactive digital music platform or non-interactive subscription based music platform for a fee based on the rate set by the Copyright Royalty Board in the United States.
However, by Section 114(d)(1) of the Act, non-subscription-non-interactive digital audio transmissions were initially exempt from obtaining a statutory license altogether(as they were categorized with the terrestial radio- AM & FM not subject to the public performance copyright). This exemption, however, was revised in 1998 by Congress with the enactment of the Digital Millennium Copyright Act (DMCA). Under the DMCA 1998, all digital radio stations whether operating on a subscription or non-subscription basis are now obligated to pay royalties and may use the Section 114 compulsory licensing framework.
Also, the DMCA 1998 also switched the mode of determining compulsory license fee to a willing buyer-willing seller standard. This means that the compulsory license fee will be based on negotiations with the record owners as in a free marketplace, except for digital audio transmission services that existed before the passage of the DMCA and will retain the rate setting model by the Copyright Royalty Board.
Section 115 of the Copyright Act sets forth what is known as the “mechanical” compulsory license. Once a musical composition’s owner permits the initial recording and distribution of their work on a CD, MP3, or any other mechanically reproducible format, they are then required to grant licenses to other parties at a rate determined by the government.[5]
According to Section 115, once a song has been recorded and released to the public, then the copyright owner of the music composition must license the song (i.e, they must issue a compulsory mechanical license) to anyone else that wants to use it in a phonorecord at a set price.[6] Notably, the Copyright Act defines phonorecords to mean “audio-only” recordings. It means that home video devices and video streams are excluded from the definition of phonorecord, therefore, there is no compulsory license for audiovisual works, and by implication, motion picture companies have to negotiate with every copyright owner for audiovisual streaming of each song and the song owners can chare any rate they choose because there is no compulsory license for audiovisuals.[7]
Conditions for enjoying Compulsory Mechanical License.
Although by the provision of compulsory mechanical license in Section 115, the user is not required to seek the consent of the copyright owner before using the song, so long he has paid the license fee set by the law. However, there are certain conditions to be met before compulsory mechanical license can be invoked or enjoyed and they are as follows:
If all the above conditions are met, then any user can get a compulsory license of the song by simply paying the fixed fee known as the statutory rate to the U.S Copyright Office even without the consent of the copyright owner. The statutory rate ranges from 12￠ to 2.31￠ depending on the run or playtime of the song to be used.[10]
Notably, the Music Modernization Act, 2018 (MMA) extended compulsory mechanical license to digital streams. Before the passage of the Music Modernization Act, the compulsory mechanical license only applied to traditional sales of physical records and digital downloads. However, the MMA now allows compulsory mechanical license to be available for interactive streaming as well. This allows streaming platforms to enjoy mechanical license, and have songs reproduced or hosted on their platforms.
For streaming compulsory license, the song does not necessarily need to have been previously released, it could be firstly released on the platform, however, it must have been recorded and the copyright owner must have authorized the recording and its digital distribution.
Essentially, mechanical rights are the rights to reproduce songs in records which are obtained by means of a mechanical license.
The compulsory license regime under the Nigerian Copyright Act, 2022, exhibits distinct limitations and a stringent framework that tries to carefully balance access to copyrighted works with the protection of copyright owners’ rights. This compulsory license provisions permit compulsory licenses primarily for specific categories of works such as literary, and artistic works and restricts their use to narrowly defined purposes such as teaching, scholarship, research, broadcasting, and public interest.
The following are instances where compulsory licenses are available to be obtained:
However, to enjoy compulsory license under any of the provisions above, the Applicant must have first undertaken extensive due diligence to locate the copyright owner or contact the publishers and make reasonable effort to seek the owner’s permission. The Applicant must prove that permission was sought and denied or that the owner could not be found, certain period must have elapsed after such denial and the applicant must pay a stipulated fee to the Nigerian copyright Commission and undertake to pay royalty to the copyright owner before the applicant can obtain the license.
Notably, the Nigerian Copyright Act exhibits a restrictive attitude towards compulsory licenses for other classes of works like sound recordings and audiovisual works, particularly when compared to the more expansive framework of the U.S. Copyright Act. The provisions for compulsory license under Sections 31-35 are largely focused on literary and artistic works for educational, research, and public interest purposes, with little to no direct application to sound recordings or audiovisual works. Even more, the research referred to does not include research by a corporate organization carrying on a business.
However, Section 35 of the Nigerian Copyright Act provides a broader mechanism, which allows the Nigerian Copyright Commission to authorize the use of any work to address market dominance abuse or serve the public interest. While this could theoretically apply to sound recordings and audiovisual works, it is a discretionary and based on case-by-case provision rather than a standardized compulsory license framework. Before any work can be used by compulsory license, under Section 35, the proposed User must first show that he has made reasonable effort to obtain permission from the copyright owner and attempted to commercially negotiate with the copyright owner with no success.[11]
It is opined that this condition waters down the nature of compulsory license which ought to give access to the use of a work without necessarily obtaining or making recourse to the copyright owner as it is the standard in the United States.
Practically, unlike the U.S. Copyright Act, which provides mechanisms like mechanical licenses for musical works, the Nigerian Copyright Act offers no clear compulsory license provisions for sound recordings or audiovisual works. This omission severely limits legal options for creators in Nigeria’s music and film industries, where sampling, remixing, and adaptation are integral to production and the consequence of this is that collaboration amongst creatives is unreasonably stifled.
The challenges of securing copyright licenses in Nigeria’s entertainment industry are stark. Nollywood filmmakers, for instance, often grapple with clearing music rights for soundtracks, which has become a process muddled by the lack of a centralized copyright owner database and informal industry practices. This often leads to production delays or reliance on unlicensed material which is an invitation to legal risks.
In the music sector, the absence of statutory licenses for sampling, stifles artists’ creativity and ability to freely collaborate unlike in markets with streamlined mechanical licensing. Even more, copyright owners in the space become unreasonable when negotiating a fee to obtain license for the use of their work. Clearance in the Nigerian entertainment space is an expensive trade. Artists, record labels often abandon music projects after months of futile attempts to clear samples due to an opaque licensing process. The rise of streaming platforms like Boomplay and Spotify further exposes these flaws, as the current system struggles to address digital distribution complexities, resulting in royalty disputes and limited content availability.
There is, therefore, a need for the Nigerian Copyright Commission and all copyright stakeholders to upgrade the compulsory license regime to adequately cater for the commercial needs in the entertainment industry. More should be done, to pay attention to royalty and royalty determination standards and attention needs to be paid to the evolved digitization of copyright use. Even more, the Nigeria may replicate the Copyright Royalty Board mechanism which can be an offshoot of the Nigerian Copyright Commission to regulate modern use and license of copyright across all classes of works, specifically in the music and film industry.
The concept and application of compulsory license vary according to the laws applicable in each jurisdiction. Considering the collaborative style and format practice of the Nigerian entertainment industry and its US counterpart, a comparison of the applicable laws in both countries on compulsory license necessarily reveals the disparity and large gap between both especially as it relates to the industry.
The United States has a more robust legislative regime developed based on the country’s historical and indigenous needs and has a compulsory license structure that largely also caters for modern use of copyrightable materials in the space to catalyze fair commercial and creative competition in the space.
In Nigeria, the restrictive scope and procedural complexity of the compulsory license regime fail to meet the needs of Nigeria’s entertainment industry, which is a vital contributor to the nation’s economy and cultural influence. The focus on educational and research purposes neglects the commercial and creative realities of entertainment, while the heavy burden on applicants discourages compliance and pushes creators toward informal or unauthorized use of works. Without addressing these shortcomings, the system risks undermining the growth of an industry that relies on efficient access to copyrighted material.
[1] 17 U.S.C. § 111(c)-(d)
[2] Robert P. Merges, ‘One Hundred Years of Solicitude: Intellectual Property Law’, 1900-2000, 88 CALIF. L. REV. 2187, 2195 (2000)
[3] Jacob Victor, ‘Reconceptualizing Compulsory Copyright Licenses’ (2020) 72 Standard Law Review 951
[4] Ibid
[5] S. 115(c)(1)(E)-(F) Title 17 U.S.C
[6] Donald S. Passman, All You Need to Know About Music Business, Simon & Schuster, 11th ed., p. 221
[7] Ibid
[8] Peter S. Menell, Adapting Copyright for the Mashup Generation, 164 U. PA. L. REV. 441, 465 n.120 2016
[9]Donald Passman, Op. Cit
[10] Ibid
[11] Section 35(3)(a) Nigerian Copyright Act, 2022.
Source: thenigerialawyer
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