Introduction

The law of copyright in our country has not been “happily worded”, remarks the Supreme Court of India in not one but at least two landmark precedent-setting cases. There have been at least 4 attempts to comprehensively amend the Copyright Act (1984, 1994, 2001 and 2012) – none more sweeping than the latest amendments in 2012. In this author’s view, however, the only ones that are “happy” with the changes in the “words” are the copyright lawyers.

For the creative industries, the euphoria around the amendments to the Copyright Act in 2012, has died down over the last 8 years. Instead of providing a clearer roadmap on various issues, including liability of users to pay authors and composers of underlying works when communicating a sound recording to the public; clearing the logjam to empower the Copyright Tribunal to take up and hear cases on a regular (and not ad-hoc) basis; introducing a system of Statutory Licensing; and the like, the amendments have resulted in creating further ambiguity, and resultantly, greater economic inefficiency.

Consequently, the growth in the copyright business is driven by factors that are short-term responses to the ambiguity created and have led to even more misinformation and litigation.

Such short-term responses have a further domino effect in giving rise to ambiguous and open ended clauses being inserted in licensing and assignment agreements that offer ad hoc band-aid solutions, interpretation whereof and liability arising wherefrom, is postponed to a time in the distant future where the drafters/negotiators of the agreement will not have to bear the burden of having taken such a position.

Some of the issues that had been crying for consideration and final resolution by the legislature and which issues ought to have been addressed through these amendments, are:

    • Whether the authors of musical works and literary works are entitled to a license fee or royalty when their works are created for and incorporated in cinematographic film and/or sound recording?
    • Whether a Performer’s right – a neighbouring right under the Copyright Act – extends to exploitation of a recorded performance, once the Performer has consented to incorporation of his/her performance in a film or a sound recording, i.e., is the owner of Copyright in the film or sound recording liable to share, with the Performer, monies earned from exploitation of the Performance recorded in a film/ sound recording, otherwise than as part of the Film exhibited in a cinema hall?
    • What are the contours of Statutory Licensing in India – i.e., is it available only to a Radio or TV broadcaster, or does it extend to streaming/other digital platforms communicating the works to the public?
    • Can an owner of copyright, license its rights, especially that of communication to the public, to third party users, not by itself, but via another entity that is not a Copyright Society registered under the Copyright Act, and if so, is there a distinction between the nature of works to which such a restriction applies?

Internationally, the answers to the above questions would be:

  • Underlying authors’ rights – An emphatic YES.
  • Performers’ Rights – Largely, No; since Performers’ Rights are available in Live Performances.
  • Statutory Licensing – Increasingly, Yes.
  • Control over administration of Rights – Largely, No, since CMOs are being encouraged the world over for their efficiency in collective administration of copyright business.

In India, however, the corresponding answers, even after the amendments in 2012, are:

Underlying authors’ rights – A reasonable NO, though the matter is still being litigated on the interpretation of the provisions in the post-amendment scenario.

  • Performers’ Rights – Reasonably, No; since Performers’ Rights are defined in relation to a Live Performance. However, on account of the fact that the Government has, pursuant to enactment of the Copyright Rules, 2013, sought to extend the protection of the Performers’ Rights, this matter is also in litigation. Statutory Licensing – The provision is ambiguous, especially because “broadcast”, to which the statutory licensing provision applies, is defined very broadly to encompass, potentially, even a webcast. However, at least one court has held that the provision was intended to be limited only to Radio and TV broadcast.
  • Control over administration of Rights – Language is vague and two different courts have decided this question differently.

In order to give the appropriate context to the possible answers to the issues in the Indian scenario, it is relevant to study the background, outlined below:

Authorship v. Ownership

  • In 1977, by way of a landmark judgment that distanced India from the rest of the world, the Supreme Court of India held that, as a matter of law, the producer of a film, as the owner of copyright in the film, can defeat the rights of the authors of musical and literary works, by engaging them to create the said works to be incorporated in the film.
  • By so doing, the Court negated the independent right of the authors to receive any licence fee or royalty, unless, of course, there was a contractual understanding to the contrary between the producer and the authors. This position vis-à-vis cinematography films, was extended to sound recordings in 2011 by the Delhi and the Bombay High Courts.
  • On account of there being a conflict in decisions between these two High Courts on the one hand and at least one other High Court on the other, the matter was heard by the Supreme Court again in 2016.
  • It was finally decided (though there is a disagreement on “what was finally decided”) that at least until the amendments were notified in 2012, no right existed in the authors; and therefore, no right for the Copyright/Performing Rights Society representing the authors to claim any license fee or royalty from entities that were communicating the said works to the public on the basis of a license from the relevant sound recording companies (record labels).
  • It was also mentioned in the said 2016 judgment of the SC that the position of law has changed after the notification of the amendments. However, there is still ambiguity as to the extent of such change, as the SC was not invited to offer an opinion on the said “modified” position, as the subject matter of the case concerned a dispute prior to the notification of the amendments.
  • Added to this confusion is a recent criminal proceeding that has been initiated by the copyright society administering the rights of authors against a big production house. The claim of the production house in the said proceedings – as also in the suit it has filed against the CMO – is that, as the owner of the underlying works, it has the right to collect license fees and royalties and make payment to the authors who are engaged by it, and that it is actually paying them after the amendments have come into effect. The Society, however, is holding on to its position that it alone can administer such rights. It also contends that all its members, regardless of their engagement with the said producer, have assigned all their rights – past, present and future – to the society and hence, nothing remains for the producer to receive from such authors, despite the engagement of such authors by the said producer.

An examination of the amendments raises the following interesting points for determination by the courts of law:

  • The exclusive rights under Copyright flow from Section 14 of the Copyright Act, 1957. This provision has not been amended in 2012. The Supreme Court in 1977 and the Delhi and Bombay High Courts in 2011, have interpreted this provision to hold that the separate right of communication to the public of the cinematograph film or the sound recording, as the case may be, is independent of the rights in the underlying works. Thus, once the sound recording or the cinematograph film has been created and subsumes the underlying work under an assignment/license/or any other mode of acquisition, then there is no further requirement to separately pay any license fee/royalty for simultaneous exploitation of the underlying work, by means of the sound recording or cinematograph film. This interpretation has been upheld by the Supreme Court in 2016. Interestingly, however, the amendments have brought in a concept of non-alienation of the right to receive royalty by the authors, vis-à-vis the assignees. The question that would have to be answered is as to whether the insertions in Sections 18 and 19 of the Act would have the effect of adding a further exclusive right in the form of the “right of royalty” for an author?
  • The provision dealing with first ownership of copyright has also not been amended in its original form, except that a proviso has been added at the end of the said Section 17. There is some debate as to whether this proviso overcomes the “mischief” of the 1977 Supreme Court judgment, which the authors’ society claims it does;
  • There are two provisos and two sub-sections inserted in Sections 18 and 19, respectively, dealing with assignments and mode thereof which seem to grant an additional right of “royalty” to the authors. However, it is unclear whether, once the Producer is the owner of all rights in works encompassed in the Film, as held by the Supreme Court as a matter of law, then is the author in a position to assign or retain any right that is seemingly “created” as a by-product of an assignment?
  • What has added to the conundrum is two decisions – 5 days apart – one from the (now defunct) Intellectual Property Appellate Board and another from the Delhi High Court.
  • Whereas the IPAB, in the first case under the statutory licensing provision, held, in its judgment dated 31.12.2020, in a case where radio broadcasters had requested fixation of a statutory license fee for the sound recordings only, that after the amendments in 2012, they are legally bound to pay the authors of musical works and lyrics (“underlying works”) as well and went on to fix a statutory license fee rate for the underlying works as well.
  • The Delhi High Court, on 04.01.2021, however, in a matter where the judgment was reserved for over two years, held that the amendments are merely clarificatory in nature and the position of law remains unchanged. Thus, when a sound recording is broadcast and paid for, no separate license need be taken in respect of the underlying works.
  • Both these decisions are in appeal and we should, in the next 6-12 months have a determination by the Division Bench of the High Court in this regard. However, it wont stop there and the litigants are likely to knock on the doors of the Supreme Court, yet again.

Statutory License

  • The amendments have introduced, for the first time, the concept of a statutory license for broadcasting organisations. This amendment was long overdue, as it sought to curtail/counter balance, the anti-competitive threats of criminal action being initiated against the broadcasters, if they failed to fall in line and take a license from the music owners upon terms that the music owners dictated.
  • As mentioned above, we have had a first decision in such a matter, where the IPAB, after a marathon day-to-day hearing for 32 days, arrived at a determination of the statutory license fee to govern the contractual relationship between radio broadcasters and sound recording companies for 1 year, i.e., between 01.10.2020 and 30.09.2021.
  • With the IPAB having been abolished earlier this month, and the jurisdiction having been passed on to the Commercial Divisions of the High Courts, the rate is likely to continue, even though on an ad hoc basis, for longer, at least till the High Court has the time to delve into this perplexing issue of IP valuation.
  • The other issue that has arisen, however, concerns the type of media that are encompassed within the scope of “broadcasting organisations” – i.e., whether it is limited to the radio and TV medium or also includes the internet. At least one court has given a limiting interpretation holding that the provision only applies to Radio and TV broadcasting organisations.
  • The supposed incongruity results from the fact that the definition of broadcast is very wide and includes all types of communications to the public by wire or by wireless diffusion and also includes re-broadcast. Thus, the understanding would be that it would include, within its scope, even communication to the public via the internet/digital means.
  • Interestingly, the new provision for Statutory License permits the undefined universe of “broadcasting organizations” to exercise this right, upon determination of the license fee payable by the Copyright Tribunal. Thus, at first blush, the interpretation to be accorded to such a provision ought to be that it is available to all entities that are engaging in “broadcasts” regardless of the nature of the medium.
  • However, one of the sub-sections categorically records that the license fee to be determined by the Copyright Tribunal would be different for radio and television, respectively.
  • Additionally, the factors that have been indicated in the relevant Rule of the Copyright Rules, seem to suggest that such right can be exercised only by a radio or a TV broadcaster and not by any other entity.
  • Upon some lobbying by the digital platforms, the concerned department of the Government, issued an Office Memorandum in 2016, seeking to extend application of the Statutory Licensing scheme to the digital platforms as well. The same was challenged and in a recent decision, the Bombay High Court has struck down such an Office Memorandum, correctly holding that the executive cannot, by such a document, seek to either amend the statutory provision, or even offer an interpretation thereof, as these are clearly outside the domain of its functioning and powers.
  • Additionally, the said judgment held that given the scheme of the amendments and the fact that the need for statutory licensing was pushed by the Radio and TV broadcasters, the intent of the legislature was to restrict it to these two media only, which is evident from the mention of these media in one of the sub-sections.
  • The Court went further to say that in 2012, when the amendments were being notified, digital platforms were very much in vogue as a technology platform offering musical content. The intent of the legislature to mention only Radio and TV in the provision makes it adequately clear that it deliberately left the said new media/digital platforms outside such scope of restriction of the exclusive rights granted under the Act. The matter is in appeal but offers a great opportunity to Courts and scholars alike to debate the consequences of the appellate court deciding either way.
  • Regardless of how the Court opines on this issue, the determination of what a statutory license fee ought to be – for one medium or another – is also a distant dream. Whereas the amendments brought with them the promise of a permanent Copyright Board, such an entity was never set up for lack of a Chairperson and members. Four years down the line in 2017, the Copyright Board was notionally merged into the functional Intellectual Property Appellate Board (“IPAB”), but even this Tribunal has had a truncated existence. As mentioned above, while the IPAB and the Copyright members appointed in September 2020, had the occasion to decide the first case of statutory license under the Act, however, their tenure has come to an abrupt end in April 2021, with abolition of the IPAB and merging such jurisdiction into the commercial division of the High Courts.

Copyright / Performing Rights Societies

  • Peculiar to India, there was a situation where the Copyright Societies were, between 2004 and 2012, effectively controlled by a set of persons/companies that were using these for their personal/corporate benefits. There was also a surge,
  • around this time, in the collections on account of a massive exploitation of music on phones, handsets and other digital platforms.
  • This led to widespread unrest among the authors who were effectively left without a remedy and certainly no portion of the royalties being collected by a society that was ostensibly set up to further their rights.
  • There were scathing remarks made by the parliamentary committees looking into this issue and a commission of inquiry was also set up by the relevant ministry to investigate the allegations. The inquiry commission confirmed the allegations made by the authors and it led to de-registration of existing societies and a mandatory requirement to apply for re-registration under the amended Act.
  • Both societies, after applying for re-registration, withdrew their applications, taking the plea that, as they were no longer registered societies, the Government could not initiate inquiry against them. This argument was negated by Courts and the inquiry proceeded, as mentioned above.
  • The amended Act, with a view to seek greater control over the administration of licensing of authors’ works, introduced a provision that seemingly makes it mandatory for all licensing of the underlying musical and literary works to be done ONLY THROUGH Registered Copyright Societies.
  • This seems to take away the right of an owner (as distinguished from the author) to administer its rights in the underlying works, acquired by way of commissioning or assignment, to exercise the right to administer the licensing of its works.
  • The Bombay High Court has taken a view that this provision needs to be harmonised with the right of an owner of copyright to grant voluntary licenses and that the same can be done through an agent as well. The Delhi High Court has,
  • however, held that the language of the amended provision seems to proscribe the attempt by an unregistered society to carry on the business of issuing and granting of licenses.
  • The situation on ground today, is that there is (i) one registered copyright society administering the underlying musical works and literary works that form part of a song/sound recording/film; (ii) an unregistered society administering the rights of communication to the public on behalf of its members, only limited to SOUND RECORDINGS; and (iii) a third entity, not registered as a Copyright Society, but administering the rights on behalf of its principals (some of these rights are licensed to it and some others are assigned).
  • Perhaps it is time that the Supreme Court sets foot into this domain as well.

Against the aforesaid backdrop, the answer to the question, “Can Indian copyright law be harmonised with international law, at least on the aforesaid four issues?” Is not an easy one to answer. Keep a look out for a more definitive response before we celebrate the 10th anniversary of the amendments in June 2022.

 

Abhishek Malhotra, Founding Partner

Abhishek Malhotra, Founding Partner, TMT Law Practice (having offices in Delhi, Mumbai and Bangalore), has two decades of experience in the primary areas of expertise, including intellectual property, commercial dispute resolution, technology, media and telecommunications. Mr Malhotra is a member of the Bar Council of Delhi and the State Bar of California, and also holds memberships of national and international professional associations. He has contributed to the policy realm by providing inputs to the Governments and think tanks on copyright issues, sports and fantasy gaming, Digital Health; and as a Principal Advisor to the Broadband India Forum on issues relating, inter alia, to satellite communication and data protection. Mr Malhotra is a guest lecturer at Indian Institute of Information Technology, the National Law School of India University, NUJS, Kolkata. He regularly speaks at conferences and forums of repute, including the National Judicial Academy in Bhopal, US India Business Council, Indo-American Chambers of Commerce, World Intellectual Property Office, The Observer Research Foundation, MediaNama, FICCI and CII. He has contributed to books and papers on intellectual property, commercial space and policy, sports and gaming, music business, Telehealth, Data Protection, Cybersecurity, Artificial Intelligence, Intermediary Liability and E-Commerce.

 

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