Collective Management Organizations and Protection of Intellectual Property Rights in Georgia

The legislation of Georgia provides safeguards for intellectual property both on an individual and collective basis. Individual protection entails acquiring authorization for the lawful use of a work by signing individual contract with the rights holder, while collective protection implies concluding a contract with an organization that manages property rights on a collective basis.

In addition to the protection of intellectual property on individual basis, the laws of Georgia envisage framework collective management of the property right. The Law of Georgia on Copyright and Related Rigths (the Copyright Law) proposes the establishment of a Collective Management Organization (the CMO) – a non-entrepreneurial (non-commercial) legal entity, which is granted accreditation by the National Intellectual Property Center of Georgia Sakpatenti (Sakpatenti).

Latest Amendments to the Copyright Law and Selection of the new CMO

The most significant changes regarding the CMO were introduced to the Copyright Law on 3 July 2023. One of the most notable amendments was a direct clarification that specially created accreditation commission shall accredit the sole and exclusive CMO. The amendments determined the criteria for accreditation of the CMO, a specific system for royalty collection and distribution, criteria ensuring transparency in the organization’s activities, and mechanisms for oversight. The adoption of these amendments introduced detailed regulations and conditions for establishment of the CMO. Additionally, the guidelines for its registration and accreditation, along with the functions and obligations of the authorized body responsible for granting accreditation were stipulated.

To accredit such CMO, on 26 September 2023 Sakpatenti announced a competition for granting accreditation to a CMO of economic rights and selected the new CMO – Intellectual Property Owners Association (IPOA). Effective from 1 January 2024, IPOA is the sole and exclusive CMO on the Georgian market, which manages the following property rights: (i) the right to public performance; (ii) the right to public display; (iii) the right to public transmission; (iv) copyright to audiovisual works; (v) the right of the author of fine art works; (vi) the right to use a phonogram issued for profit; (vii) the right to reproduce; (viii) the right to synchronize; (ix) the right to adapt the work.

Rights and Duties of the CMO

The CMO operates within the framework of rights and obligations prescribed by the Copyright Law. Specifically, the CMO possesses powers which include the following: (i) conducting negotiations on use of the work and amount of royalty; (ii) issuing licenses pertaining to the use of the work; (iii) collecting and distributing royalties to right holders; (iv) representing the interests of the right holders in judicial and administrative proceedings.

In exchange for the transfer of rights, the CMO manages intellectual property in compliance with the obligations set forth in the Copyright Law. Several pivotal obligations of the CMO include: (i) safeguarding the confidentiality of information provided to the CMO; (ii) operating within the interests of the relevant right holder; (iii) complying with specific rules when collecting and distributing royalties, such as: ensuring regular and highly accurate distribution of royalties, maintaining separate accounts, and distributing royalties within a designated (9-month) timeframe; (iv) providing the right holder and user with comprehensive information about their rights.

The above legal framework establishes a system wherein the CMO collectively manages the property rights on behalf of the right holders in accordance with their interests and rights and duties of the CMO as mandated by the law.

Agreements Between the Users and the new CMO

Granting accreditation to one exclusive CMO resulted in revocation of authority for previously established CMOs. Consequently, contracts previously executed between users and former CMOs are no longer valid. To ensure the lawful use of objects protected by the Copyright Law, it is necessary to obtain appropriate permission and enter into new contracts with the newly appointed authorized CMO – IPOA or the entity designated by IPOA. IPOA is authorized to issue sub-licenses and designate authorized entities to grant specific set of rights.

It is important to highlight that when users enter into a contract with the CMO / a sub-licensee of the CMO, the peculiarities that resulted from the operation of one exclusive CMO in the market shall be considered. In this context, issues concerning licensing and termination of a contract hold particular significance. The Copyright Law stipulates the option for the CMO to decline license issuance only in the presence of substantial grounds, necessitating a stringent standard of justification, which shall also apply to termination of the contract. It would be advisable to also address such matters directly in the contract.

In conclusion, Collective Management Organization plays a significant role in protecting intellectual property rights. Through the establishment of a collective management system for property rights, legislation facilitates a simplified mechanism for both right holders and users to protect their intellectual property rights and acquire necessary permits. The recent legislative changes have further enhanced this notion, potentially fostering greater development within the field of intellectual property in the future.

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