Newsletter
Copyright Collective Management Organization License Disputes: Risks of Copyright Infringement Due to Improper Payment or Deposit of Royalties
I. Whether a user is deemed to have obtained a license by making payment or lodging royalties with a court
Paragraph 2 of Article 34 of the Copyright Collective Management Organization Act stipulates: "If a user is refused a license by a Collective Management Organization ("CMO"), or no licensing agreement can be reached, the user shall be deemed to have obtained a license if, prior to exploitation, the user has made payment of or lodged with a court the amount according to the royalty rate or the amount requested by the CMO." The legislative purpose of this provision is to prevent CMOs from abusing their dominant position in copyright licensing, arbitrarily exercising contractual freedom, and thereby monopolizing and obstructing the channels through which users lawfully utilize works, so as to promote the utilization of works.
If a user cannot reach a license agreement with a CMO, they may cite Paragraph 2 of Article 34 of the Copyright Collective Management Organization Act to make payment or deposit payment with a court before using the work, as a basis to claim that it has obtained a license and that its actions do not constitute copyright infringement. However, this provision does not automatically apply to the user once payment or deposit is made; if the amount paid or deposited is lower than the applicable royalty rate set by or the amount requested by the CMO, it may still be difficult to avoid copyright infringement liability.
In the Intellectual Property and Commercial Court's Civil Judgment 112-Ming-Zhu-Su-Zi No. 82 (dated January 23, 2026), the court held that the amount of royalties deposited by the defendant did not conform to the royalty rate set by the CMO, and thus the defendant's use of the work still constituted infringement.
II. Facts of the case
The plaintiff in this case is the Taiwan Music Collective Management Association (TMCA), while the defendant is a company operating karaoke (KTV) service. The plaintiff alleged that the defendant is liable for copyright infringement, because it transmitted musical works managed by the plaintiff (hereinafter the "disputed works") to song selection machines in private rooms via a karaoke accompaniment system without a license.
III. The Court's Judgement
1. Plaintiff obtained exclusive licenses for some disputed works
The defendant argued that the plaintiff did not obtain exclusive licenses for the disputed works. The court found that the plaintiff failed to provide evidence of license for some musical works; however, for certain musical works, the court recognized that the plaintiff had obtained exclusive licenses and could file a lawsuit in the capacity of the economic rights holder under Paragraph 4 of Article 37 of the Copyright Act.
2. Defendant's actions constitute public transmission
With the song selection system, the defendant stored all the accompaniment song files on the hard drive of the main system unit and transmitted them via an internal network in a closed manner. After consumers selected songs, the defendant provided the song files from the hard drive of the main system unit via transmission to the karaoke machine in the private room for playback, allowing consumers to receive the content of the works at the time of their choosing in certain private rooms via a network, and engage in an interactive activity. This constitutes public transmission.
3. Defendant's unauthorized public transmission of "musical works" constitutes infringement
Audiovisual works and musical works are distinct and separate types of works. To use audiovisual works, one must obtain respective licenses from the economic rights holders of audiovisual works, musical works, and sound recordings. Although the defendant claimed to have obtained the licenses for the audiovisual works of the music videos (MVs), it did not obtain the license for public transmission of the musical works from the plaintiff, thus constituting infringement of the plaintiff's copyright.
4. As the amount of royalties deposited by the defendant did not match the plaintiff's published royalty rate, it did not create the effect of "deemed to have obtained a license."
After the dispute arose, the defendant deposited royalties with the Taipei District Court, but the amount did not match the plaintiff's published royalty rate. The defendant's self-calculated amount that it thought reasonable was not recognized as having the effect of "deemed to have obtained a license" under Paragraph 2 of Article 34 of the Copyright Collective Management Organization Act.
5. Defendant's "negligent" infringement of public transmission rights of the disputed works
During negotiations on royalty rates with the plaintiff, the defendant was aware that it had not obtained from the plaintiff a license for its use of musical works. Even though the plaintiff did not give a public notice for every work under its management, the defendant failed to fulfill its duty of inquiry and breached the duty of care required of a good administrator, constituting negligence.
IV. Conclusion
As audiovisual streaming platforms become increasingly widespread, it is important to recognize that videos encompass various copyrights, including those for audiovisual works, musical works, and sound recordings, that different types of works are independently protected, and that obtaining the respective licenses for each of them from the licensors is required under the law before use.
In Taiwan, economic rights holders are not required to entrust their works to CMOs for license management, resulting in dispersed ownership. However, users often rely on CMOs managing the majority of works to obtain licenses and ensure lawful use. Currently, CMOs in Taiwan mainly manage licenses for musical works (public broadcasting, public performance, and public transmission), sound recordings (public broadcasting and public performance royalty claims), and music MVs (public broadcasting and public presentation). Users seeking a comprehensive license covering all types of works and uses still face considerable costs and difficulties.
In summary, we recommend that users confirm the rights holders of all involved works and obtain licenses before use. When a user seeks to obtain a license from a CMO but disagrees with the royalty rate or cannot reach an agreement, they may apply for review by the competent copyright authority (the Taiwan Intellectual Property Office) according to Paragraph 1 of Article 25 of the Copyright Collective Management Organization Act; at the same time, they should adopt the applicable royalty rate before use and pay the CMO or deposit royalties with the court accordingly so as to avoid the risk of copyright infringement.