This article has been written by Adyasha Das, pursuing a Certificate Course in Media and Entertainment Law from LawSikho.
Table of Contents
Role of copyright in the entertainment industry
With the rise of media consumption over the past couple of decades, the media and entertainment industry is expanding with each passing day and adapting to newer times and technology. Sources on which the media and entertainment industry rely on are: films, TV series, music, news channels and other forms of audio or video entertainment formats.
Intellectual creativity and property is something that is the centrepiece of the entertainment industry. With changing times new regulatory mechanisms around copyright have been enforced to protect such intellectual properties and safeguard the rights of their owners. Around 80% of the copyright cases that exist in the industry are contributed by the film and TV world. To safeguard the interests of the owners and the authors of the works, the Copyright Act, 1957 has been enacted in India.
According to the laws in India, the owner of the copyrighted work need not necessarily be the author of the copyrighted work. The courts have also established this time and again. An author is someone who creates the work, and the owner is someone who owns the copyright to such work. Across a span of a year, several films and other sources of entertainment are being produced and released. These productions are backed by an average of 1000 crore worth of investment. Acts such as piracy and infringement lead to heavy losses to the producers and others involved with the project. Therefore, a robust mechanism around copyright is required to protect such people and their works.
Author’s rights to consideration
Copyright ownership
Section 17 of the Copyright Act explains that the author shall be recognized as the first owner of the copyrighted work unless the person is in employment and the work is created in the course of such employment and within the scope of such employment. In such cases, the employer becomes the owner of such copyright.
An author can commission or share copyright or have joint authorship or contractually assign such copyright and its ownership, in writing, to a publisher or a third party, either for a specific period of time or completely transfer the ownership for perpetuity.
Moral rights
Moral rights have been given greater importance in India as compared to other countries. Moral rights of an author involve paternity right (droit a la paternite), i.e., authorship of over the work and right of integrity (droit au respect de l’oeuvre). Right of integrity involves the right to object to any modification, distortion or mutilation to the work that would be prejudicial to the reputation of the author. What must be understood is that moral rights stand independent of the economic rights associated with the copyrighted work. Economic rights can be transferred but moral rights shall always remain with the author and are not transferable.
When it comes to the right to integrity, the Indian Courts have seldom analyzed and explained the precise meaning of “distortion, mutilation or modification” as mentioned under Section 57 of the Act. In the case of Manu Bhandari v Kala Vikas Pictures, the plaintiff was the author of a novel, which was being adapted into a film. The plaintiff had assigned some of the rights to the production company. When the ending of the film turned out to be something different from that in the novel, the plaintiff filed a suit claiming damages to her reputation and honour. The court held that remedy of a restraint order and damages can be claimed even after assignment of rights.
Moral rights are set for the authors to protect their honour and reputation. In India, paternity rights and integrity rights are acknowledged as moral rights, under the statutes and judicial pronouncements. Though the legislation has provided limited scope, the Indian courts encourage wider interpretation of such moral rights.
Enforcement rights
This right includes the right to take legal actions against someone who infringes the copyrighted work and uses it without prior permission.
Consideration in the industry
Owners of the copyright do not enjoy the above-mentioned rights. Authors of creative works assign their work to a publisher or a production company or record label in a traditional publishing agreement. It is the duty of the publisher to distribute or publish such a piece of creative work. The interests received from the distribution or publication shall be distributed between the production or record label and the author or the artist in form of royalties.
To get a better portion of the royalty, the author may engage in several other agreements such as co-publishing agreements, which allow the artist to have some control over copyright and a greater share in royalties; sub-publisher agreement for better distribution of the work; and administration agreement, through which the publisher is not assigned with author’s copyright but is responsible for all administrative duty associated with the copyright, which gives the author full control over the copyright while the publisher can get some share in royalties.
When it comes to the monetary value of the consideration, it generally does not concern anyone who isn’t party to the contract. Even when a suit is before the court, it is not the concern of the court to analyze if the value of the consideration was reasonable.
Royalties, copyright and consideration
Prior to the 2012 Amendment, Copyright Act, 1957 acknowledged the following rights:
- Copyright u/s 14 of the Act;
- Broadcast reproduction u/s 37 of the Act;
- Performer’s right u/s 38 of the Act; and
- Moral rights of the performer/ artist/ author u/s 38A and 57 of the Act.
Under the practice of the Act of 1957, most authors and artists associated with musical and literary works assigned their rights to the producers or the music label and received a lump sum amount of money in consideration. But this was not fruitful for the author or artist or composer in the long run. When the creative work becomes a success, the authors don’t get to enjoy the benefit from the success and all such benefits were ultimately available to the owner of the copyright, i.e., the producers or business owners.
With the 2012 amendment, Sections 18 and 19 [refer Section 18(3), 18(4), 19(9) and 19(10)] were amended to end such plight of the authors. The said amendments protected the interests of the authors by guaranteeing them a share in the royalties in the event their works were utilized by the producers or music labels. The said right to receive royalties includes the following features:
- It is inalienable and incapable of being waived;
- The right to royalty shall always rest with the author irrespective of the fact that the work has been assigned to or licensed to some other party. It can be devolved only on legal heirs and copyright societies can also claim such royalties;
- If the underlying works are incorporated as a sound recording in the parts of films, the royalty can be exercised only when the underlying work is exploited beyond the cinema halls. In other words, royalties from any non-cinema hall used shall be shared with the authors;
- If the underlying work is not a part of a film sound recording and is incorporated in non-film sound recordings, such right to royalty can be exercised with regards to any exploitation of the underlying work.
There have been arguments concerning the fact if “right to receive royalty” is a part of “copyright” under Section 14. There are two interpretations of the same. One way to it is that the right to receive royalty is an incidental right to the rights under Section 14.
If such interpretation is accepted, it would mean that a suit of copyright infringement could be filed for the failure of payment of royalty under Section 51 r/w Section 55 of the Act. But we consider the other side, it can be argued that the right to receive royalty is not mentioned under Section 14; therefore it cannot be considered under the purview of copyright. Further, under Section 18 and 19, the said right is regulated through contractual obligations. Thus, in my view, the right to receive royalty is not copyright but it can be considered to be a consideration for creative work.
How does this process work?
To understand how copyright and royalties benefit the authors and the licensee, let’s take the example of Harry Potter.
K. Rowling, whilst being inspired by other authors, wrote the first Harry Potter book in an Edinburg café. She licensed her copyright to Bloomsbury Publishing Plc, who then published the book and remunerated her financially. She was further paid an advance to continue the story and complete it as a seven-book series. Rowling was able to succeed because copyright gave her exclusive rights to protect her work. Bloomsbury had the permission to print and distribute her stories in return for royalties.
Rowling and Bloomsbury further sub-licensed the story of Harry Potter to encourage more creative works out of it, which led to the creation of the Harry Potter film series by Warner Bros Entertainment Inc. Other such derivative works include audiobooks, translation of the books into other languages, video games, amusement parks etc. for the same, license needs to be obtained from the copyright owners. This way, Rowling and Bloomsbury continue to receive royalty payments. Warner Bros own the copyright to the Harry Potter films. Electronic Arts had to obtain a license from Warner Bros in order to use the characters and the backgrounds from the film in their video games. Warner Bros earned royalty payment from the sales of the game.
With the above-mentioned example, it is easier to understand how copyright protects the rights of the copyright holder while giving space for further creative works to be derived out of the copyrighted work.
Why is consideration important?
Copyright laws have been enforced not just to protect the creative works but also the interest of the parties associated with it, especially the authors. With a source of income from the consideration and acknowledgement of them being the author of their creative works, it encourages the authors and artists to foster more such works. The authors and artists might withdraw from giving away their ownership if the consideration for the same their work is valued to be less and if they are not given their due credit. There are times when the intended consideration is found to be worth lesser than the copyrighted work; or the creative piece of work exceeds expectations and the value of the work increases after it is published. To get benefits from such profits that are earned after the publishing of the work, in addition to the advance paid before the publishing of the work, royalty payments are made to the authors with the sale of their work.
One of the primary reasons why considerations are important in the film industry is because it enables authors to benefit from their creative work and encourage further innovation. The media and entertainment industry is completely dependent on such creative works. This would also be crucial for the economy and flourishing of the media and entertainment industry.
Conclusion
Copyright law regulates creative media productions. With authors licensing their copyrights, they enjoy a wide spectrum of creative and financial incentives. To get the financial benefit out of the transaction, there needs to be a consideration that is worth the value of the creative work. Royalty-free work provides a direct compensation to the authors of the creative work, direct compensation being just the consideration for the work.
This may seem as a valuable consideration at the time but the work may be worth more. When the creative work becomes a success after publishing, the authors don’t benefit from the success and benefits ultimately rests with the owner of the copyright, i.e., the producers or business owners. For this reason, authors and the publishers enter into a royalty agreement along with the primary contract. Therefore, the financial benefit to the author is an essential component of copyright licensing. Higher the level of protection given to the artists and the authors, higher the number of intellectual creations enriching the prosperity of the industry.
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