Japan’s Time-Limited Use Arbitration: Fast Copyright Clearance When Rights-Holders Won’t Reply

TL;DR
Japan’s 2023 amendments add Article 67-3, letting creators obtain a 3-year compulsory licence—after reasonable outreach—when a right-holder is known but silent. Users pay a fee to a designated CMO, and the licence auto-cancels if the owner later surfaces. It complements the older “orphan-works” arbitration (Art. 67) and should speed clearance for UGC, archives and streaming.

Table of Contents

• Introduction: The Persistent Challenge of Rights Clearance
• The Existing System (Article 67): Arbitration for Unknown Rights Holders
• The New Time-Limited Use Arbitration System (Article 67-3)
  • Objective and Rationale
  • Scope – “Unmanaged Published Works”
  • Trigger: Failure to Confirm Rights-Holder’s Intent
  • Procedure: Streamlining the Process
  • Effect: A Temporary Licence
  • Cancellation Mechanism
  • Key Differences: Art. 67-3 vs. Art. 67
• Handling Specific Issues
  • Adaptations & Moral Rights
  • Determining “Unmanaged” Status
  • Compensation Levels
• Potential Use Cases
• Implementation and Outlook
• Conclusion: A Pragmatic Step Forward for Content Use

Introduction: The Persistent Challenge of Rights Clearance

In the digital age, content creators, platforms, archives, and other businesses frequently need to incorporate existing copyrighted materials into their own offerings. Whether it's background music in a user-generated video, historical photographs in a digital archive, or snippets of text for a new service, obtaining the necessary permissions is a fundamental step. However, clearing these rights can often be a significant hurdle, particularly for older works, works with unclear ownership, or works created by individuals or entities who are difficult or impossible to contact.

Japan, like many countries, has long had a system in place to address the issue of "orphan works" – copyrighted works whose owners cannot be identified or located despite diligent efforts. Article 67 of the Japanese Copyright Act allows potential users, after demonstrating a substantial but unsuccessful search effort, to apply to the Commissioner of the Agency for Cultural Affairs (文化庁長官 - Bunka-chō Chōkan) for arbitration (裁定 - saitei). If granted, the user can legally exploit the work by depositing a compensation fee determined by the Commissioner.

While functional, this existing Article 67 system has faced criticism for being procedurally cumbersome. The required search efforts can be extensive, the application process involves consultation with the Council for Cultural Affairs (文化審議会 - Bunka Shingikai) and can be time-consuming, and the need to deposit funds with a legal affairs bureau adds complexity. Furthermore, the system primarily addresses situations where the rights holder is truly unknown or unlocatable. It offered little help in common scenarios where the rights holder is known (or suspected) but simply fails to respond to permission requests – a frequent issue with older content or individual creators who are no longer active.

Recognizing these limitations and aiming to further facilitate the smooth use of content in the digital environment, Japan introduced a significant addition to its rights clearance toolkit as part of the 2023 amendments to the Copyright Act (Act Partially Amending the Copyright Act, Law No. 33 of 2023, with relevant parts planned for future implementation). This new mechanism, often referred to as the "Time-limited Use Arbitration System" (通常利用許諾法の裁定制度 - tsūjō riyō kyodakuhō no saitei seido, sometimes informally 時限利用裁定制度 - jigen riyō saitei seido), established under the new Article 67-3, offers a potentially simpler and faster route for obtaining compulsory licenses for temporary use of certain hard-to-clear works.

The Existing System (Article 67): Arbitration for Unknown Rights Holders

Before delving into the new system, it's helpful to briefly understand the existing mechanism under Article 67, which remains in place.

• Scope: Applies to published works (or works demonstrably offered/presented to the public for a substantial period) where the copyright holder cannot be contacted due to being unknown or their whereabouts being unknown, despite considerable effort.
• Procedure:
  1. The potential user conducts and documents a "considerable effort" (相当な努力 - sōtō na doryoku) to identify and contact the rights holder, typically involving searches in relevant databases and public notices.
  2. An application is filed with the Commissioner of the Agency for Cultural Affairs (CAA), including evidence of the search efforts.
  3. The CAA consults the Council for Cultural Affairs.
  4. If approved, the Commissioner issues an arbitration decision setting the terms of use and the compensation amount (usually based on standard usage fees).
  5. The user deposits the compensation amount with the competent Legal Affairs Bureau (供託 - kyōtaku).
  6. The user can then legally exploit the work under the terms of the arbitration.
• Limitations: As noted, the process can be lengthy (often taking several months), involves bureaucratic steps, requires a deposit, and crucially, doesn't cover situations where the rights holder is known but unresponsive.

The New "Time-limited Use Arbitration System" (Article 67-3)

The new system introduced by the 2023 amendments aims to address some of the shortcomings of Article 67, particularly concerning unresponsive rights holders and procedural efficiency, albeit for a limited duration of use.

Objective and Rationale

The primary goal is to create a "simple and unified rights clearance" pathway, especially for the vast amount of diverse content, including older materials and user-generated content (UGC), where traditional licensing is difficult. It specifically targets situations where obtaining explicit permission is blocked not by the absence of a known rights holder, but by the lack of communication or clear intent from a potentially identifiable rights holder.

Scope - Target Works: "Unmanaged Published Works, Etc." (未管理公表著作物等)

The new system applies only to a specific category of works termed "Unmanaged Published Works, Etc." (mi-kanri kōhyō chosakubutsu tō). This is defined as a published work (or equivalent, similar to Art. 67) that meets neither of the following conditions (Article 67-3(2)):

1. It is not managed by a Copyright Management Business Operator (著作権等管理事業者 - chosakuken tō kanri jigyōsha, i.e., a registered CMO like JASRAC or NexTone) regarding the type of exploitation the applicant intends.
2. Information necessary to smoothly ascertain the copyright holder's intention regarding the work's usability (including conditions of use), as specified by the CAA Commissioner, has not been published using a method specified by the Commissioner.

In essence, the system targets works that are outside the major collective management systems and for which the rights holder has not made their licensing intentions clear through publicly accessible means (e.g., via explicit terms on a website, Creative Commons licenses, contact information clearly provided for licensing inquiries). Works managed by major CMOs or works where the rights holder has clearly stated usage terms (even if restrictive) or provided a clear contact channel for permissions are excluded.

Triggering Condition: Failure to Confirm Rights Holder's Intent

Unlike Article 67's focus on inability to contact an unknown rights holder, the trigger for the new Article 67-3 system is the inability to confirm the rights holder's intention regarding the proposed use, despite taking prescribed measures.

Article 67-3(1) requires the applicant to show they took "measures specified by the Commissioner of the Agency for Cultural Affairs as measures for ascertaining the intention of the copyright holder" but "was unable to ascertain that intention." The specific measures will be defined by CAA ordinance, but are expected to cover scenarios including:

• Cases where information about the rights holder is unavailable.
• Cases where contact information exists, but attempts to contact the rights holder (using those prescribed measures) result in no response within a certain period.

This explicitly broadens the scope beyond truly "orphan" works to include works whose owners are known but unresponsive, a significant practical improvement. Additionally, similar to Article 67, it must not be evident that the author intends to permanently withdraw the work from exploitation (Article 67-3(1)(ii)).

Procedure: Streamlining the Process

A key aim of the new system is procedural efficiency, achieved partly through the potential involvement of designated private organizations:

1. Application: The user applies for arbitration. If a "Registered Confirmation Organization" (登録確認機関 - tōroku kakunin kikan) is designated by the CAA Commissioner, the application is submitted to this organization instead of directly to the CAA (Article 104-33(2)). This organization would handle the initial checks for requirements and potentially calculate the preliminary compensation amount. This delegation is expected to speed up processing.
2. Review: The CAA Commissioner (or potentially the Registered Confirmation Organization, acting under delegation) reviews the application. Notably, unlike Article 67, consultation with the Council for Cultural Affairs is not required if a Registered Confirmation Organization handles the initial assessment (Article 104-33(4)), further simplifying the process.
3. Arbitration Decision: If the requirements are met, the CAA Commissioner issues an arbitration decision specifying the terms of use, the duration (up to 3 years), and the compensation amount.
4. Compensation Payment: Instead of depositing funds, the user pays the compensation amount to a "Designated Compensation Management Organization" (指定補償金管理機関 - shitei hoshōkin kanri kikan) if one is designated by the Commissioner (Article 104-21(2)). This organization is responsible for holding the funds and distributing them if the rights holder later appears. If no such organization is designated, the user would still need to deposit the funds (Article 67-3(1)). Crucially, the 2023 amendments also allow this payment-to-CMO mechanism to be used for the existing Article 67 system, eliminating the deposit requirement there as well, if a designated organization exists.
5. Commencement of Use: Upon payment (or deposit), the user can legally exploit the work according to the arbitration terms.

Effect: A Temporary License

The arbitration decision under Article 67-3 grants a temporary, non-exclusive compulsory license.

• Duration: The license duration is specified in the arbitration decision and cannot exceed three years (Article 67-3(5)). Users needing longer periods would need to reapply.
• Scope: Use is limited to the specific method and conditions outlined in the arbitration decision.

Cancellation Mechanism

A significant difference from Article 67 is the inclusion of a cancellation mechanism (Article 67-3(7)). If the copyright holder subsequently appears and takes necessary measures to make themselves contactable for licensing negotiations (as specified by CAA ordinance), they can request the CAA Commissioner to cancel the arbitration decision.

• Public Notice: To facilitate this, the CAA Commissioner must publish information about granted arbitrations (work title, author, user, usage method, duration) online (Article 67-3(6) applying Art. 67(8)).
• Effect of Cancellation: If cancelled, the compulsory license terminates. The user must cease exploitation unless they subsequently negotiate a direct license with the rights holder. This mechanism balances the need for easier access with the rights holder's ultimate control over their work once they become actively available.

Key Differences Summarized: Art. 67-3 vs. Art. 67

Handling Specific Issues

While offering a streamlined path, the new system still requires careful consideration of certain aspects.

Adaptations and Modifications (Moral Rights)

The new system, like Article 67, permits uses that may involve adaptation or modification (e.g., using a music clip in a new video, translating text). However, the arbitration only grants a compulsory license for the economic rights (e.g., reproduction, adaptation). It does not limit the author's moral rights (著作者人格権 - chosakusha jinkakuken), particularly the right to integrity (同一性保持権 - dōitsusei hojiken, Article 20), which protects against modifications contrary to the author's intent.

Therefore, users operating under an Article 67-3 arbitration must still be mindful of moral rights. While Article 20(2)(iv) allows modifications deemed "unavoidable in light of the nature of the work as well as the purpose and manner of its exploitation" (e.g., necessary technical adjustments), substantial creative alterations could still potentially infringe the right of integrity if the author objects later. Guidelines suggest interpreting this exception flexibly, but caution is warranted, especially for significant changes.

Determining "Unmanaged" Status

A practical challenge for users will be reliably determining if a work qualifies as "unmanaged" and lacks clear usage terms. This requires checking major CMO databases and searching for any publicly stated policies or contact information from the potential rights holder. The exact scope of search efforts required to satisfy this condition will likely be clarified through operational guidelines or practice.

Compensation Levels

The compensation is based on "an amount equivalent to the ordinary rate of royalty" (Article 67(5), applied mutatis mutandis). How this "ordinary rate" will be determined for diverse uses under the new system, especially for micro-uses or UGC contexts where standard rates may not exist, remains an implementation detail to be worked out, likely involving the designated compensation management organization and potentially referencing rates used in collective licensing.

Potential Use Cases

The "Time-limited Use Arbitration System" holds promise for facilitating various types of content use that were previously hindered by rights clearance difficulties:

• User-Generated Content (UGC): Platforms hosting UGC could potentially use this system to clear rights for short clips of music or video frequently incorporated by users, where contacting original rights holders is impractical.
• Digital Archives: Archives wishing to make digitized materials (e.g., photographs, documents, recordings) publicly accessible online, where rights holders are unresponsive or their intentions unclear, could use the system for temporary clearance.
• Derivative Works: Creators looking to build upon existing works (e.g., translating text, arranging music, using samples) where the original rights holder is unresponsive might find this a viable pathway for limited-term projects.
• Educational & Research Uses: While Articles 31 and 35 provide specific mechanisms, this system might offer an alternative route for using unmanaged materials in certain educational or research contexts for a limited duration.
• Broadcasting/Streaming: Incorporating background or incidental uses of unmanaged works in online streams or broadcasts.

Implementation and Outlook

The enabling legislation for the new system was passed in 2023, with implementation planned subsequently. The actual operational start date depends on the issuance of necessary ordinances by the Agency for Cultural Affairs and, crucially, the designation of the Registered Confirmation Organization(s) and the Designated Compensation Management Organization. Without these intermediary bodies, the system would rely more heavily on direct CAA processing and deposits, potentially reducing some of the anticipated speed and efficiency gains.

The establishment and effective functioning of these organizations will be key to the system's success. Their procedures, fee structures, and ability to handle applications and distribute compensation efficiently will determine whether the system fulfills its promise of being a truly simplified alternative to Article 67.

Conclusion: A Pragmatic Step Forward for Content Use

Japan's introduction of the "Time-limited Use Arbitration System" represents a pragmatic and significant evolution in its approach to copyright clearance. By specifically addressing the common problem of unresponsive (but potentially known) rights holders and aiming for a more streamlined procedure for temporary uses, it offers a valuable new tool alongside the existing system for orphan works. While it grants only a temporary license and includes a cancellation mechanism favoring the rights holder's ultimate control, it acknowledges the practical need for easier pathways to legally use the vast amount of "unmanaged" content circulating in the digital sphere.

For businesses involved in digital media, online platforms, archiving, education, or any field requiring the use of diverse copyrighted materials in Japan, this new system presents both opportunities and new compliance considerations. Understanding its scope, requirements, and limitations will be crucial for leveraging its potential to unlock content use while respecting the underlying principles of copyright. Its successful implementation, particularly the role of the designated intermediary organizations, will be closely watched as Japan continues to adapt its copyright framework for the digital age.

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