Royalty Law in Nepal: A Modern Approach of Copyright Law

The author of this article is an American University Washington College of Law graduate who practices corporate law in Nepal.

Following the establishment of the Nepal Copyright Registrar’s Office relating to copyrights in Nepal on April 29, 2004, the concept of royalty emerged. Several singers have demanded royalties. Many singers have approached Prime Legal Consultants and Research Center with questions about royalties that has compelled me to write this article.

1. What is Royalty?      

Royalty is a legal term that refers to the payment made to the owner for his or her creation and performance. It covers copyrighted works such as literary, musical, and artistic performances. A royalty is a legally enforceable payment made to a person or entity for the continued use of their assets that may include copyrighted works, franchises, or natural resources.

Royalties are fees paid to musicians when their original songs are played on the radio or television, used in films, performed live at concerts, bars, and restaurants, or accessed via streaming sites.

Royalty payments are typically calculated as a percentage of the gross or net revenue generated by the use of property. They can, however, be negotiated on a case-by-case basis in accordance with the interests of both parties involved in the transaction.

Royalties are commonly revenue generators that are designed specifically to compensate song or property owners when they license out their assets for use by another party.

Royalty payments are typically calculated as a percentage of the gross or net revenue generated by the use of property. They can, however, be negotiated on a case-by-case basis in accordance with the interests of both parties involved in the transaction.

2. Different Kinds of Royalties

Royalty payments can be made on a variety of property types. Among the more common types of royalties are book royalties, performance royalties, patent royalties, franchise royalties, and mineral royalties.

Book Royalties: Publishers pay book royalties to authors. Typically, the author receives a set amount for each book sold.

Performance royalties: In this case, the owner of copyrighted music receives a payment whenever the music or song is played on a radio station, used in a film, or otherwise used by a third party.

Patent royalties: Patent royalties are paid to inventors or creators who patent their products. Then, if a third party wants to use the same patent product, they must enter into a licensing agreement and pay royalties to the patent owner. The inventor receives payment for their intellectual property.

Franchise royalties: In exchange for the right to open a branch under the company name, a franchisee, or business owner, will pay a royalty to the franchisor. For instance, the cost of running a McDonald’s franchise, schools in Nepal such as Euro Kids, and hotels.

Mineral royalties: Mineral royalties, also widely recognized as mineral rights, are payments made to property owners by mineral extractors. The party seeking to extract the minerals will frequently pay the property owner a sum based on revenue or units, such as barrels of oil or tons of coal.

Despite the fact that royalties are protected by a variety of intellectual property laws.

The production company or the individual obtains the copyright to the book, song, and music video from which they produce movies. Article 39 of the Institution/Organization Copyright Act 2059 foresees a royalty collection institution that determines the royalty rate and how the singers who lend their voices in the videos of the said song are compensated.

3. What is meant by Royalties Collection Organization?

A society of authors and other owners of such works manages and protects the copyright of their works.

• No author or other owner of copyright in a work can keep track of all the uses made of his work by others. He is able to keep a better diligence over the uses made of that work throughout the country and collect due royalties from the users of those works when he becomes a member of a Royalties Collection Organization because of its organizational facilities and strength.
• Because Nepal is a party to international treaties, the Royalties Collection Organization can enter into reciprocal agreements with similar organizations in other countries to collect royalties for the use of Nepali works in those countries. As a result, it is in the best interests of copyright holders to join a collective administration organization to ensure better copyright protection in their works and to gain the greatest economic benefits from their creations. It is also simple for users of various types of works to obtain licenses for legal exploitation of the works in question through the collective administrative society.

4. Organization for Royalty Collection

Section 39 of the Copyright Act of 2056 defines a Royalties Collection Organization as a collective administration society. Authors and other owners constitute such a society. A society must have at least seven members before it can be registered.

Members can number up to 50. In most cases, only one society is registered to conduct business in relation to the same type of work. It is registered with the Nepal Copyright Register Office. A copyright society may issue or grant licenses in relation to any work in which copyright continues to exist, as well as any other right granted by the Copyright Act.

Only a copyright society duly registered under this Act may issue or grant licenses for literary, dramatic, musical, or artistic works incorporated in cinematograph films or sound recordings. This is a type of mandatory collective licensing for performing rights management.

5. Royalties Collection Organization Functions

Conditions under which a Royalties Collection Organization may grant licenses, collect fees, and distribute those fees.

• A Royalties Collection Organization may issue licenses and generate revenue in conformity with its Tariff Scheme in connection with only those works that the authors and other owners of rights have authorized in writing for the Royalties Collection Organization to administer, and only for the period specified.
• An Organization may accept exclusive permission from an author or other rights holder to administer any right in any work through the issuance of licenses, the collection of license fees, or both;
• The Royalty Collection Organization is a self-governing body.
• The Royalty Collection Institution will create a separate stamp for the purpose of its work.
• A royalty collection institution has the same rights as an individual to acquire tangible or intangible property, use it, sell it, or manage it in any other way, and can file a complaint or file a lawsuit under the same name.
• The Royalty Collection Institution may be subject to conditions imposed by the Nepalese government.

6. Who is eligible to join the Royalties Collection Organization?

Individuals involved in the fields of literature, art, and science royalties, presenters or broadcasting owners, copyright experts, and law professionals.

7. The Royalty Collections Organization

Once the title is determined, seven executive members of lyricists, vocalists, presenters, and broadcasting owners will be formed, along with at least fifty general members of the Royal Collection Institution.

8. What documents are required to register the Royalty Collection Institution with the Nepal Copyright Registrar Office?

• The name and address of the organization, as well as the section in which the registration is to be completed.
• The objectives of the organization.
• The member’s removal from the organization, as well as the details of the membership fee.
• The qualifications of the organization’s members, as well as the membership fee details
• A provision relating to the general assembly of the organization.
• The formation and election of the organization’s executive committee, the Organization Fund and its income/expenditure, and accounting provisions.
• A provision relating to the collection and distribution of royalties.
• Provisions pertaining to the organization’s complaint procedures.
• Provisions pertaining to amendments to the organization’s Memorandum of Understanding.
•  The organization’s memorandum.
• A copy of the executive committee members’ citizenship certificates.
•  A copy of the executive committee’s minutes; and any other relevant and required evidence.

9. What Is the Process of Paying Royalties?

A contract or agreement is usually signed by all parties involved. The agreement will detail the royalty fees and payment amounts. A fixed fee, for example, or a variable percentage of gross sales could be used.

The number of units sold can be used to calculate royalties for specific products (such as a book).

10. What are Stock Royalties?

Royalties can be purchased and invested in. Commonly, an investor will receive a monthly or quarterly payment based on the sales of a company. Because they are not influenced by the stock market or interest rates, these investments are thought to be less risky than traditional stocks. Furthermore, royalties diversify a portfolio. Royalties, like stocks, can be bought and sold.

11. What Exactly Is a Royalty Agreement?

A royalty contract is a legally enforceable contract between a licensor and a licensee. The agreement grants the licensee the right to use the licensor’s intellectual property in exchange for royalties. The royalty rate, as well as the terms and amount of the payment to be made by the property’s user to the property’s owner, will be specified in the agreement.

The agreement will also specify the parties involved, the rights granted, and the period of use.

12. What Are Royalty Interests, Exactly?

Royalty interest is a component of mineral rights agreements. A royalty interest authorizes the owner of mineral rights to a portion of the minerals produced or a portion of the net income from sold production.

Conclusion

In general, people in Nepal believe that royalty refers to the amount received by musicians. This concept has been instilled in the general public as a result of the long-standing practice of paying royalties in the fields of film and music.

However, royalties are now extended to books, plays, and other works of creativity, and the practice is growing.

Royalties are, at their core, a way for creators, innovators, intellectual property owners, or landowners to profit from their assets. Royalties take the form of agreements or licenses that specify the terms under which a third party may use someone else’s assets.

Copyrights, patents, and trademarks are examples of intellectual property. Royalties can be earned on a variety of assets, including books, music, minerals, franchises, and many others. Some royalties are earned for a set period of time, while others are earned in perpetuity.

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