8.7 Compulsory licences grant broad rights to use copyright material ‘subject to the payment of a fixed royalty and the fulfilment of certain other conditions’. Rights holders cannot opt out of the statutory licence. Professors Ricketson and Creswell write that compulsory or statutory licences represent ‘a form of “forced taking” or compulsory acquisition from the copyright owner’.
8.8 A leading UK work on copyright law identifies seven factors which have seemed to influence when the UK legislature has favoured non-voluntary licences:
(i) where a change in the law (such as extension of the term of copyright, or the addition of new rights) alters the assumptions upon which owners may have acquired copyright and potential users planned their activities;
(ii) where in the light of technological change (such as the emergence of sound recordings), the refusal to license the use of copyright works might impede the emergence of certain industries or activities, or a negotiated price might give the copyright owner an unjustified windfall;
(iii) where the copyright owner has failed to supply the needs of the public and other producers and distributors are available;
(iv) where copyright owners have refused to license use of their works or have imposed conditions which do not reflect the purposes for which copyright is granted;
(v) where there is evidence of abuse of monopoly;
(vi) where there exist otherwise insuperable transaction costs or delays;
(vii) where a negotiated price would be too high and it is deemed desirable to subsidise users, for example those which are public institutions.
8.9 The most common policy justification for imposing a statutory licence seems to be market failure due to prohibitively high transaction costs—that is, where ‘the costs of identifying and negotiating with copyright owners outweigh the value of the resulting licence’. The Franki Committee, which recommended the introduction of the statutory licences for educational institutions, stated that it was usually not practicable for educational institutions to obtain specific permission in advance from individual copyright owners to make copies. It said that
very often the administrative costs involved in seeking permission would be out of all proportion to the royalties reasonably payable in respect of the reproduction of the work.
8.10 Professor Jane Ginsburg has expressed reservations about such transaction cost analyses, in part because ‘in many cases transaction costs may be subdued by voluntary collective licensing’. Ginsburg finds the purpose of compulsory licences elsewhere:
The effect, and, I would argue, the real purpose of a compulsory license is to reduce the extent to which copyright ownership of the covered work conveys monopoly power, so that the copyright owner must make the work available to all who wish to access and exploit it. Imposition of a compulsory license reflects a legislative judgment that certain classes or exploitations of works should be more available to third parties (particularly ‘infant industries’) than others.
8.11 Statutory licences are largely enacted for the benefit of certain licensees, such as educational institutions. If the licensees claim they do not want or need a statutory licence, because they are inefficient and costly, then this may suggest the statutory licences should be repealed.
Thomson Reuters, The Law of Intellectual Property: Copyright, Designs and Confidential Information, [12.0].
K Garnett, G Davies and G Harbottle, Copinger and Skone James on Copyright (16th ed, 2011), [28-08].
E Hudson, ‘Copyright Exceptions: The Experience of Cultural Institutions in the United States, Canada and Australia’, Thesis, University of Melbourne, 2011, 56.
Copyright Law Committee, Report on Reprographic Reproduction (1976) (the Franki review), [6.29].
J Ginsburg, ‘Creation and Commercial Value: Copyright Protection of Works of Information’ (1990) 90 Columbia Law Review 1865, 1926.