The South African Music Performance Rights Association v Foschini Retail Group (Pty) Limited and 9 Others

SAMPRA, as an accredited representative collecting society representing copyright owners in sound recordings, set a tariff for retailers to pay royalties for playing background music in their stores under section 9A of the Copyright Act 98 of 1978. Ten retailers (the Foschini Retail Group and 9 others) were unable to reach agreement with SAMPRA on the amount of the tariff set by SAMPRA. The tariff was based on the floor area of retail stores in square metres. The retailers referred the matter to the Copyright Tribunal for determination of a reasonable royalty. The tribunal determined a tariff that was higher than that proposed by the retailers but less than that set by SAMPRA. SAMPRA appealed to the Supreme Court of Appeal contesting the tariff awarded and the costs order.

• What is the jurisdictional basis for the Copyright Tribunal to determine a royalty tariff when parties cannot agree?
• Does the party referring a matter to the Copyright Tribunal bear a legal onus to prove that the claim is well-founded and that the tariff is unreasonable?
• What evidence is necessary for the tribunal to determine a tariff that is 'reasonable in the circumstances' under section 33(5)(b) of the Copyright Act?
• Can international benchmarking of comparable royalties in foreign jurisdictions be used to determine a reasonable tariff?
• What constitutes a reasonable tariff in the circumstances of this case?

1. The appeal was upheld to the extent that the tariff awarded by the Copyright Tribunal was varied. 2. The order of the Copyright Tribunal was set aside and substituted with a tariff schedule based on store size (floor area in square metres), starting at R150 for stores up to 50 m² and increasing progressively to R3300 for stores between 9001-10000 m², with an additional R150 for every additional 1000 m² above 10000 m². The tariff was declared effective from 1 January 2008 and subject to annual revision according to the Consumer Price Index. 3. The respondents (retailers) were ordered to pay 50% of the appellant's (SAMPRA's) costs of the appeal, including costs of two counsel.

1. The jurisdiction of the Copyright Tribunal to determine royalty tariffs under section 9A of the Copyright Act arises from the absence of agreement between the user and the copyright owner on the amount of the tariff, not from proof that the tariff is unreasonable. 2. A referral to the tribunal under section 9A constitutes an application under section 30(b) read with sections 33(3) and 33(5) of the Act. 3. There is no formal legal onus on the party referring a matter to the tribunal to prove that their claim is well-founded; rather, the tribunal must be satisfied on all of the evidence placed before it that the claim is well-founded. The claimant bears only an evidential burden to place evidence before the tribunal. 4. The Copyright Act and regulations envisage informal tribunal procedures, making it incongruous to impose a formal onus of proof. 5. Reference to comparable royalty tariffs in foreign jurisdictions, adjusted using purchasing power parity, is a valid and appropriate method to determine what is a reasonable tariff in South African circumstances, in the absence of evidence of the specific rand value derived by users from playing copyright music. 6. A tariff determined by the tribunal must be 'reasonable in the circumstances' under section 33(5)(b) of the Act, which requires a rational and consistent basis for the tariff computation.

1. The court noted that SAMPRA's "take it or leave it" approach to tariff negotiations, with an explicit preference to refer disputes to the tribunal rather than negotiate, would be encouraged if users bore a formal onus of proof, thereby undermining the Act's apparent purpose of facilitating agreement. 2. The court rejected new submissions based on competition law principles raised for the first time on appeal, as these had never been canvassed before the tribunal and it would be unfair to the parties to introduce them at the appellate stage. 3. The court observed that it does not appear that royalty rates for sound recordings internationally exceed composer royalty rates, questioning SAMPRA's justification for setting its tariff higher than SAMRO's (the composers' collecting society). 4. The court noted the administrative benefit to users of dealing with one collecting society (SAMPRA) rather than multiple record companies, and the promotional benefit to SAMPRA of having its music played in retail stores, but did not regard these factors as significant in determining the reasonable tariff in this case. 5. The court commented on the "tortuous statutory scheme" under which the Copyright Tribunal derives its powers, requiring provisions to be read mutatis mutandis to accommodate disputes arising from section 9A.

This case provides important guidance on the interpretation and operation of the Copyright Tribunal's jurisdiction and powers under the Copyright Act 98 of 1978, particularly sections 9A, 30, 31 and 33. It clarifies that the tribunal's jurisdiction is activated by the absence of agreement on tariffs, not by proof of unreasonableness. It establishes that tribunal proceedings are intended to be informal, without strict legal burdens of proof. The judgment endorses the use of international benchmarking (particularly comparable foreign tariffs adjusted for purchasing power parity) as a legitimate and practical method for determining reasonable copyright royalties in South Africa. The case is significant for the music industry, collecting societies, and users of copyright music, as it establishes principles for fair tariff determination and balances the rights of copyright owners with the interests of users and public welfare.