In the modern commercial world, copyright protection is assuming increasing significance and Myanmar is no exception. With time, copyright has expanded its domain from art and literature to information technology such that businesses invest immensely in its commercial value. Considering its intangibility, it is interesting to not only see whether it can be collateralised, but also to ascertain the best possible way to do so.
Copyright as a property right
In Myanmar, all property falls into two broad categories, (1) Immovable property or 2) Movable property. Immovable property is defined inclusively under the General Clauses Act, Registration Act and Transfer of Property Act to include land and all things permanently attached to the land. Movable property is defined under the General Clauses Act and Registration Act by expressly exempting immovable property.
This means that the any property not falling under the description of “immovable property” is “movable property” hence because copyright provides exclusive usage rights it falls under the characterisation as movable property.
Copyright defined under Myanmar law
Copyright is defined under §2 of the Copyright Act, 1914 as a right to produce or reproduce a work or any substantial part thereof in any material form or to perform an act or deliver a lecture in public. It also includes publishing, production, distribution, performance, publishing translations, convert a dramatic work into a novel, make any record, perforate roll or cinematograph film of a literary or dramatic or musical work by which the work may be performed or delivered, etc. Such rights are inherent upon authorship of a works and may be assigned, licensed, or otherwise conveyed.
Creation of security over copyright
Broadly, four forms of security can be created over movable properties: (i) assignments; (ii) mortgage; (iii) hypothecation/charge; or (iv) pledge. However, copyright being an incorporeal asset is incapable of delivery, which rules out security by way of pledge. Other appropriate forms of security over copyright are:
1 Assignment of copyright by way of security
Assignment is a mode of transfer recognised under Myanmar Copyright Act. It can either be absolute, i.e. the assignee becoming the full owner of the rights, or by way of security, where upon enforcement, the assignee becomes entitled to take over the rights secured thereby.
Assignment by way of security would involve a deed made in writing and signed by the owner of copyright or his duly authorized agent. As held in U Hla Win and Other vs. Daw Kyi Kyi alia Daw Yin Wae Lwin (1999 Myanmar Law Reports (Civil), 208), the owner of a copyright may assign the right either wholly or partially, with or without limitation.
Thus, in our view, assignment, seems to be the most prudent form of security which enables the assignee to obtain full ownership of the property upon default made by the assignor.
The definition of mortgage under the Myanmar Transfer of Property Act, 1882 (TP Act) does not factor mortgage of movable properties (including incorporeal properties). However, it is recognised under the Myanmar law through court rulings. In Webster vs Power, (1868) LR 2 PC 69, Privy Council had held that de hors TP Act, mortgage over movable property is legally valid. Similarly, as per Myanmar law, rights are considered to be a fit subject of mortgage. A persuasive judgement in that regard would be a case law from India: Saway Ram and Fattu Ram, 56 I.C. 489. § 6 of the TP Act which allows transfer of all properties, except those mentioned in the list that does not include copyright.
Mortgage of movable properties being outside the scope of the TP Act, Myanmar Courts may hesitate to apply certain provisions like § 69 of the TP Act (sale of mortgaged property without court’s intervention) may be unavailable unless the possession has been provided for, which is unlikely for an incorporeal asset. Similarly, the right to appoint a receiver without courts’ intervention as per §69A may also be unavailable.
However, if parties intend to create a mortgage over copyright the most suitable option would be an English mortgage, as defined under the TP Act. It may be created over a manuscript a compact disk, or an online data storage subject to a right to re-transfer on repayment of debt.
The security can be structured by way of a deed clubbing and creating mortgage over any immovable property and copyright. This would make the TP Act applicable upon the deed and consequently, the provisions under §69 and §69A may be available in respect to copyright.
§100 of the TP Act defines “charge.” The chargee has no legal right over the charged property but only a right to have the security made available. There is no transfer of property but a mere earmarking as security. The charge will only have the right to get the property sold and amount of sale appropriated toward its dues. However, this is not preferable since charge as a concept of security is not mentioned under the Copyrights Act.
The Myanmar Stamp Act, prescribes stamp duties at rates that can go up to 3% of the amount secured, based on the nature of the security. However, as assignment of copyright is exempted under Article 23 of the Act, a minimal amount of Myanmar Kyat 300 would apply.
In the case of a mortgage of copyright, the applicable stamp duty under Article 40 is 1.5% on the amount being secured. Therefore, it is advisable to create a deed of mortgage over copyrights by clubbing it with other immovable properties.
Given the recognition of the assignment under the Myanmar Copyright Act and the exemption from stamp duty under the Myanmar Stamp Act, copyright is best secured by way of an assignment. Mortgage may be a secondary option, whereby the copyright would require to be clubbed with a mortgage over immovable properties, if any.