[Long post ahead]
In a momentous development, the Bombay High Court made a bunch of important interpretations concerning the rights of the authors of underlying literary and musical works in light of the Copyright (Amendment) Act 2012. The court passed a joint order in Indian Performing Right Society Ltd. v. Rajasthan Patrika Pvt. Ltd and Indian Performing Rights Society Ltd. v. Music Broadcast Ltd. (pdf) and clarified that post the 2012 amendment, communication of a sound recording to the public will mean utilization of the underlying literary and musical works therein. Thus, the authors of these works are entitled to receive royalties when the concerned synchronized work (cinematographic film or sound recording) is made available to the public, except when a cinematograph film is exhibited in a cinema hall. The court interpreted this right to arise from the proviso(s) to Section 17, 18 and Section 19 (9) and (10) that were inserted by the 2012 amendment.
Background
In 2001 Music Broadcast Private Limited, which runs the radio station ‘Radio City’, entered into a license agreement with the Indian Performing Rights Society (IPRS), a copyright society, to utilize its repertoire of literary and musical works for FM radio broadcast. Similarly, in 2006 Rajasthan Patrika Pvt. Ltd., which runs the station ‘Radio Tadka’, entered into another agreement with the IPRS for radio broadcast. However, things changed in 2010, when the Copyright Board set the compulsory license fee for radio broadcasting under Section 31(1)(b). This arrangement by the Copyright Board expired in 2020 after which the IPAB fixed the rate of royalties while deciding on the applications filed under Section 31D. Acknowledging the change in law, IPAB also fixed the royalty rates for underlying works in addition to the sound recordings licensed by radio broadcasters. (Adyasha has critiqued this aspect of this order in her post here.) [Side note: currently an appeal is pending before the Division Bench of Delhi High Court (pdf.)), against this order.]
Separately, after the establishment of the IPD, Entertainment Network India Ltd. approached the Delhi High Court for revision of the statutory license rates under Section 31D and sought an order of status quo. The court in Entertainment Network India Ltd. v. Phonographic Performance Limited India and Anr, and connected matters, clarified that the IPAB order, despite pending an appeal, continues to operate (para. 21). The court further noted that no payment towards underlying works has been made since the IPAB order was passed and held that if the IPAB order is not complied with, the Respondent (PPL and others) are within their rights to utilize the remedies available to them. Later on October 6, 2021 (pdf) the court published a public notice inviting suggestions from interested parties towards fixation of royalty rates wrt the underlying works. (This case is seeing its own set of legal action. For eg. See here (pdf), for the order by the court clarifying that the matter will concern with fixation of royalty for sound recording only and here (pdf) for the Supreme Court order requesting the DB to take up the matter at the earliest.)
With this action in the background, IPRS filed an application for interim injunction alleging that the defendants were broadcasting songs from its repertoire. IPRS argued that after 2012 the Copyright Act has undergone substantial changes regarding the rights of the authors of underlying works. The Defendants on the other hand argued that the 2012 amendment were merely clarificatory in nature and since no amendments were made to Section 13 and 14, no new substantive rights could have been granted by the amendment to the other provisions. Therefore, the key question that the court had to adjudge upon was “whether the addition of provisos to Sections 17 and 18, as also the addition of sub-sections (9) and (10) in Section 19 of the Copyright Act, has brought about a change that would result in recognition of additional rights in favour of authors of original underlying literary and musical works.”
The Order
In a lucid order, the court adopted a straightforward approach to this question. Importantly, the court noted that the nature of the amendments must be ascertained in the backdrop they were introduced. For this, the court dived deep into assessing the Statement of Object and Reasons of the Amending Act and the Parliamentary Standing Committee Report on the Copyright Amendment and held that these documents point towards additional protection of the rights of the authors of underlying works.
Rectifying the Past?
The court observed that via the amendment, the controversial interpretation of the Supreme Court in IPRS v. Eastern Indian Motion Pictures Association stands overturned. The Proviso added to Section 17 prescribes that the rights of an author of original literary, dramatic, and musical work will be unaffected by the Producer’s ownership of the copyright in a cinematographic film and ownership of the employer on the work made under a contract of employment. The court agreed with the IPRS’ argument that this proviso nullifies the effect of the 1977 Supreme Court order in IPRS v. Eastern Indian Motion Pictures Association where the court interpreted that once the underlying works become a part of the cinematograph film, the author of the underlying work loses their rights owing to Section 17 (b) and Section 17 (c). The Supreme Court judgement has been extremely controversial for its interpretation of the law and had a rather resounding influence on the subsequent orders concerning similar issues. For its interpretation, the Bombay High Court relied on the Parliamentary Standing Committee Report which too took note of this by remarking that “independent rights of authors of literary and musical works in cinematograph films are being wrongfully exploited by the producers and music companies by virtue of Supreme Court judgment in Indian Performing Rights Society vs. Eastern India Motion Pictures Association (AIR 1977 SC 1443).” and suggested for amendments to remove the infirmity.
Rights under Section 14 are not unfettered
On the defendant’s argument that by communicating the sound recording to the public, it is utilizing the exclusive right under Section 14(e)(iii) and the same cannot be interpreted as utilization of the underlying works, the court said that such communication is utilization of the underlying work as such literary and musical works form an intrinsic part of the sound recording. The court held that even though Section 14(e)(iii) does indicate the defendant’s exclusive right to communicate to the public, such exclusive rights are subjected to the “provisions” of the Copyright Act and on a conjoint reading of Section 13(1)(a), Section 13(4), proviso to Section 17, third and fourth proviso to Section 18 and Section 19 (9) and (10) it interpreted that the exclusive right to communicate sound recordings to the public is subjected to the right of authors of underlying works to collect royalties.
The court refused to accept that since the underlying works get subsumed in the sound recordings, the right to receive royalties would be taken away, as such an interpretation will take away the entitlement guaranteed to the authors of underlying work in the 2012 amendment.
Right to receive royalties as a copyright? (!)
Another interesting facet the court had to deal with is the nature of the ‘right to receive royalty’. Yash Raj Films (YRF) (plaintiff in commercial IP Suit 21 of 2021) made a submission, arguing that the right to claim royalty cannot be classified as a copyright. YRF’s argument was that the right to collect royalties in the proviso to Section 18, was another statutory right that does not arise out of ownership of copyright. As per Section 14, “copyright” is the exclusive right, as per the provisions of the Act, to do or authorize the doing of certain specific things regarding the work. To substantiate this argument, YRF relied on Section 33(3-A) of the Act to argue that the proviso to this section mentions the right to receive royalty and copyright separately. In response, the plaintiff had expressed that the right to receive royalty was “nothing but a form of copyright.”
The debate on the nature of the right to receive royalty is long-standing. Prashant in his 2012 paper had mentioned that on a joint reading of the third and fourth proviso to Section 18 and 19 (9) and (10) clarify that copyright and the right to receive royalties are different. Abhilasha Nautiyal and Aditya Gupta in their guest post here, explained that provision of Section 18 and 19 merely regulates the contractual terms of the parties. Unfortunately, the Bombay High Court has not responded to the question in a direct manner, but rather said that the right to receive royalty arises from the copyright and thus the obligation to pay royalties cannot be defeated by claiming that such a right is not a “copyright.”
Other interesting observations
The defendant relied extensively on the Delhi High Court’s order in Indian Performing Right Society v. Entertainment Network (India) Ltd. and Phonographic Performance Ltd. v. CRI Events Private Ltd. for the court’s observation that the 2012 amendment is only clarificatory in nature. Interestingly, on this, the Bombay High Court made a scathing remark “the use of the words ‘subject to the provisions of this Act’ in Sections 13 and 14 read with the provisos introduced to Sections 17 and 18 and sub-sections (9) and (10) in Section 19 of the Copyright Act, was not considered or was perhaps not brought to the notice of the Delhi High Court in the said case.” Presently, the Delhi High Court order has been appealed against and it will be exciting to see if the Division Bench agrees with the reasoning of the Bombay High Court and set aside the impugned order, or if will it stick to the interpretation adopted by the Single Judge.
Another interesting observation by the court was its finding about radio broadcast in India and the use of sound recordings from cinematographic films. While holding that the plaintiff has made a strong prima facie case regarding utilization of the underlying work by the plaintiff, the court took note that most of the sound recordings communicated to the public through radio stations are a part of the cinematograph film and thus, the third and fourth proviso to Section 18 r/w Section 19 (9) and (10) will come into operation.
Fixation of the rate of royalties
The court thus passed an interim injunction directing Rajasthan Patrika Ltd. and Music Broadcast Ltd. to pay up the royalties as quantified by the plaintiff. The court further held that “the plaintiff IPRS can demand royalties in terms of the quantum already determined in proceedings initiated in that regard and as per the rates presently in vogue as per orders passed in such proceedings, which may be revised in accordance with law during the pendency of the present suit.” which as per this post by Ameet Datta and as reported in other media outlets (see here, here) means the 2020 order by the IPAB. The court further clarified that the restrictions under the interim injunction will come into force if the defendant fails to pay the royalties within 6 weeks from the date of receipt of these rates from the IPRS.
The issue of royalties to the authors of underlying work has been a hotly discussed/ debated/ adjudicated topic in the Indian copyright regime. As Prof. Basheer highlighted, it started with the 1977 Supreme Court Judgement in IPRS v. Eastern Indian Motion Pictures Association and its interpretation regarding the fate of the authors of the underlying works was later carried in a plethora of orders and judgements most notably International Confederation of Societies of Authors and Composers (ICSAC) v. Aditya Pandey that went up to the Supreme Court (see here for Prashant’s post on the DB Order and here for Vasundhara’s post on the Supreme Court order; additionally here are the links for the Single Judge Order (2011), Division Bench Order (2012), Supreme Court Order (2016)), the Bombay High Court order in Music Broadcast Private Limited v. Indian Performing Rights Society Ltd. (2011) (see here for Prof. Basheer’s take on the order, also, it is important to note that IPRS appealed against this order wherein the operation of judgement was stayed but the decree was not stayed.), the Kerala High Court Decision in Mathrubhumi Printing and Publishing v. Indian Performing Rights Society (2011), Delhi High Court Order in Indian Performing Right Society v. Entertainment Network (India) Ltd. and Phonographic Performance Ltd. v. CRI Events Private Ltd. (2021) (see here for Adyasha’s post on the order and here for Adarsh’s take on it. Also, it is pertinent to note that an appeal is pending before the Division Bench against this order.)
However, even with these unanimous interpretations on the law pre-2012 amendment (barring the stayed Delhi High Court order in Indian Performing Right Society v. Entertainment Network (India) Ltd. that interpreted the 2012 amendment narrowly) there have been undercurrents of a liberal interpretation within these orders that held otherwise. For instance, in the 1977 order, Justice Krishna Iyer in a footnote acknowledged the need for a policy change to help the authors of the underlying works. The Supreme Court’s 2016 order expressly notes that since the dispute arose before the 2012 amendment, it was bound by the law as it was then, however, it acknowledged that the 2012 Amendment has changed the law for the good. The Bombay High Court order takes note of these subtle observations regarding the need to change the status quo regarding the rights of the authors of the underlying works.
This order is perhaps the second order recognizing the rights of the authors of underlying works in clear terms, something which the amendment originally intended to do. However, the practical implications of the order are yet to be seen. For instance, the order has allowed the plaintiff to fix the rate of royalties according to the IPAB order, and as Delhi High Court in Entertainment Network India Ltd. v. Phonographic Performance Limited India and Anr has said that the IPAB order stands applicable right now. However, the order is awaiting appeal presently and can be overruled if the appellate authority determines that the IPAB overstepped by fixing the royalty rates for underlying work. Adyasha in her post here too argues that fixing royalty rates under Section 31D was rather a dubious interpretation of the law. In light of this, certainty on the issue seems miles away.
Another issue here is the relevance of the order in the context of several pending appeals before different courts as pointed out above. Will this be a solid precedent to rely on? Or not? Well, theoretically it cannot act as a precedent considering that it’s an interim injunction order. The order itself acknowledges it in para 69. However, we have seen it in the past where the courts have relied on the previous interpretations made in an interim injunction (Aditya Pandey case) and regardless of the question of whether the order can be a precedent or not it surely can have a persuasive value before the courts in these appeals and maybe can set up the Bombay High Court as the go-to court for disputes around rights in the underlying works.
