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This article is written by Sanjana Sen, pursuing a Diploma in Intellectual Property, Media and Entertainment Laws from Lawsikho.com. Here she discusses “Constitutionality of the Provisions on Compulsory and Statutory Licensing in the Copyright Act”.

Introduction

  • Intellectual Property Rights (IPR) is a right given to the creator for a creation, who enjoys exclusivity over such creation for a specified period of time or as mentioned in the respective laws under which such product falls. The laws that govern IPR in India are as follows: (i) Trade Marks Act, 1999 (ii) The Patents Act, 1970  (iii) The Copyright Act, 1957 (iv) The Designs Act, 2000 (v) The Geographical Indication of Goods (Registration and Protection) Act, 1999 (vi) The Protection of Plant Varieties and Farmers Rights Act, 2001 (vii) The Information Technology Act, 2000 and the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement which is administered by World Trade Organization (WTO).
  • Copyright Act was enacted with the intention to protect the original works of a person. Such original work shall relate to literary, artistic, dramatic, musical works, sound recording & cinematographic films. To motivate creation and make use of such creativity, Copyright Act gave rights in toto to the owner/ author of the work.
  • These rights are transferable and assignable. Once the owner/ author assigns, transfers or license his right to any person, such person is deemed to have rights to make copies of the original work, reproduce the work in any material form, perform the work in public/ communicate to the public, to make any translation or adaptation of the work and so on.
  • However, with the growth of Intellectual Property Rights, the complexities also tend to increase. When a default takes place, we not only look into the law that governs the defaulting issue but also other related laws from where we can either sue or get relief from. One such topic that has been making news nowadays is with regards to the Constitutionality of the provisions relating to Compulsory and Statutory Licensing in the Copyright Act, 1957.
  • Constitution is the supreme law in India and all the Acts (Central or State) falls under the purview of the Constitution. 
  • Let us discuss in detail how and why the provisions of Compulsory and Statutory Licensing under the Copyright attracted the constitutionality aspect.

Distinguishing Compulsory Licensing from Statutory Licensing

  • Licensing a work means the Licensor (owner) giving rights to the Licensee to use his work by following a procedure and paying a statutorily prescribed fee.
  • There is however no proper distinction between Compulsory and Statutory License. Both the terms are often used interchangeably in various jurisdictions. However, the Indian Copyright Act tries to make a slight difference between them in terms of fee. In case of Compulsory Licensing, the royalty is kept to be negotiated by the parties whereas in Statutory Licensing, the royalty is prescribed by the Copyright Board. In Statutory Licensing, no permission is required to be taken from the owner to use his work as the permission is given by the Statute unlike in Compulsory Licensing.
  • This can be derived from the Act itself under sections 31 to 31 D.

Provisions Relating To Compulsory And Statutory Licensing Under Copyright Act

  • Chapter VI of the Copyright Act covers the provisions relating to Licensing. Let us discuss the provisions in order to understand the difference between statutory and compulsory licensing.
  • Section 30 deals with Licenses by owners of copyright
  • The owner of any existing or future work may grant any interest to another person by way of licensing, made in writing by him or his duly assigned agent.
  • If the license related to future work then the interest is deemed to be granted only when the work comes into existence.
  • Further, if the licensee dies before the interest is granted to him (in case of future works), then his legal representative shall, in absence of any provision contrary in the license, be entitled to any benefit arising out of the license. For example: A, the Licensor contracts with B, the Licensee for a future work i.e. B can commercially exploit A’s work for a specified period and give a certain amount of royalty to A as agreed between them after A’s work has been in public for a period of 2 years. After 1 year of the contract, B dies. The work will then be taken care by the legal representative and the contract shall be performed in the same way as it would be performed by B if would be alive.

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Compulsory Licenses

  • Section 31 deals with compulsory license in works withheld from public
  • Meaning – Compulsory license means that the use of owner’s rights against payment is either set by law or determined through some form of adjudication or arbitration. In other words, prior permission from the right owner is not required if the mandate provided by law is met with.
  • The section states that if the owner of the rights has refused to republish or allow republication or allow performance or allow communication by way of broadcast to the public, the aggrieved person may reach out to the Appellate Board. The Appellate Board, after giving reasonable opportunity of being heard to the owner, may hold an inquiry. If the Board is satisfied that the grounds put by the owner are not reasonable then it shall direct the Registrar of Copyrights to grant the license to the complainant upon payment of such fees to the owner.
  • Section 31 A deals with compulsory license in unpublished or published works
  • In case any (i) unpublished work, (ii) published work or (iii) work communicated to the public is withheld from public in India and; the author/ owner is (i) dead, (ii) unknown or (iii) cannot be traced, any person shall approach the Appellate Board for a license to publish or communicate to the public such work or a translation in any language.
  • Section 31 B deals with compulsory license for benefit of disabled
  • Any person working for the benefit of disabled persons on a profit basis or for business may apply to the Appellate Board in such form and manner as prescribed in the Act and rules, for a compulsory license to publish any work in which copyright subsists for the benefit of such persons.

Statutory Licenses

  • Section 31 C deals with statutory licensing to make cover versions 
  • A person desirous of making cover versions, being a sound recording in respect of any literary, dramatic or musical work, where the sound recording of that work has been made by or with the license or with the consent of the owner, may do so in accordance of the provisions of the Act and rules 23 – 28 of the Copyright Rules, 2013 that talks about the procedure which needs to be followed to get the license.

For example: If S is desirous of making cover version of a musical work with the license of the owner, he may do so by following the procedure. He has to first serve a notice mentioning the intention of his work, provide copies of all the covers and labels with which such sound recording will be sold, shall pay in advance to the owner(s) of the copyright the fee as prescribed by the Appellate Board. The cover version shall not be changed to such an extent where the original meaning or composition is lost in entirety. S has to also follow all such procedures as mentioned in the Act and Rules. 

  • Section 31 D deals with broadcasting of literary, musical works and sound recording
  • Any broadcasting organization desirous of communicating to the public by way of broadcast or by way of performance of sound recording, musical or literary works, which has already been published may do so by giving prior notice of its intention to broadcast such work and by paying royalty fee to the copyright owners at the rate fixed by the Intellectual Property Appellate Board (IPAB).

Case Studies

    • Petitions have been filed challenging the constitutionality of section 31 D of the Copyright Act as per which a broadcasting organization desirous of communicating any sound recording to the public, may obtain  statutory license to do so, provided royalty is paid to the copyright owner(s) at the rate fixed by the Intellectual Property Appellate Board (IPAB).
    • With the ever-increasing growth of digital world, lot of aspects of legality relating to online streaming, broadcasting and rights of the owners are coming in picture. This attracted more news due to the “Office Memorandum” issued by the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry (Government of India) on 5th September 2016 which created a controversy.
    • It stated that “the words ‘any Broadcasting Organization desirous of communicating to the public..’ may not be restrictively interpreted to be covering only Radio and TV broadcasting as definition of ‘Broadcast” read with ‘communication to the public’ appears to be including all kinds of broadcast, including Internet Broadcasting. Thus Section 31 D not only covers Radio and TV Broadcasting but also Internet Broadcasting.”
    • The Hon’ble Supreme Court has made certain observations in Entertainment Network (India) Limited vs Super Cassette Industries Limited (2008) SCC 30 as under:
    • “The Copyright Act seeks to provide a balance between the rights of the owners to protect their original works and interest of the public at large to have access to the works.
    • The freedom to contract is the basic element of economic activity and an essential aspect of several Constitutional rights including The Freedom to Carry on Trade or Business (Art 19 (1)(g)) and Right to Property (Art 300 A) of the Constitution of India. But the said rights are not absolute; they are subjected to reasonable restrictions.” 
    • Hence, on the above mentioned ground, the Supreme Court held that various steps and principles have been laid down in order to strike a balance between the rights of the owners and the interest of the public; the interpretation of the statute should include the doctrine of “Purposive Construction” i.e. the law should be read keeping the purpose in the mind and thus, Section 31 and 31 D of the Copyright Act is not unconstitutional. 
    • This has been reiterated by the Bombay High Court in Tips Industries Ltd vs Wynk Music Ltd. Commercial Suit (L) no. 113 & 114 of 2018 Bom High Court. Justice Kathawalla has given a detail clarification pertaining to online streaming and statutory licensing and has ascertained that Section 31 D does not include Internet Broadcasting.

The case background is as follows

  • Tips Industries Ltd. (Plaintiff), a music label in India, which controls copyright over a significant storehouse of popular music. In 2016, such storehouse was licensed to Wynk Music Ltd. (Defendant), an online music streaming service launched by Airtel. After expiry of the license in 2017, both parties attempted to renegotiate licensing terms for allowing Wynk to offer downloading and streaming of musical works owned by Tips. After negotiations broke down, Wynk took refuge by invoking Section 31D of the Copyright Act. 
  • As such, Section 31D has been much a point of friction between online music service providers and music publishers and labels and in view of this, Tips challenged Wynk’s invocation of Section 31D and sued Wynk for infringement of their exclusive copyrights in sound recordings under Section 14(1)(e). 

Judgement

  • Justice Kathawalla systematically knocked down defendant’s defenses to the claim for infringement and prima facie found Wynk to be guilty of direct infringement on two counts – 
  1. for ‘selling’ works under Section 14(1)(e)(ii), for allowing downloading and offline listening of the plaintiff’s works; and 
  2. under Section 14(1)(e)(iii) for communicating the plaintiff’s works to the public through their streaming service.
  • The Bombay High Court clarified certain ambiguities pertaining to online streaming and statutory licensing under section 31 D. They are as under:
  1. Section 31 D does not cover ‘downloading/ purchase’ of works – The court stated that Wnyk’s feature of allowing users to download songs and store it for unlimited period constitutes “sale” and not “communication to the public” and hence does not constitute “broadcast” under section 31 D of the Act. If it is streamed without an option to download, only then it will refer to be as broadcast.
  2. Section 31 D does not cover internet broadcasting – Wynk contended that Wynk’s streaming services get subsumed under ‘radio broadcasting’ and very confidently stated that internet broadcasting is included under section 31 D upon relying on Department of Industrial Policy and Promotion (DIPP) Memorandum of 2016.
    The court rejected the above contention and stated that section 31 D was an exception to copyright and must be strictly interpreted. Section 31 D (3) and the rules framed thereunder specifically covers statutory licensing for radio and television broadcasting and not internet broadcasting. The court further relied on Rajya Sabha Parliamentary Committee on Copyright Amendment Act, 2012 and stated that the committee was well aware of internet streaming but it intentionally chose to cover only radio and television broadcasting under the scope of section 31 D.
  3. Section 31 D cannot be invoked without prior fixation of royalty rates by IPAB – the Court firstly negated the powers of IPAB in fixing royalty rates for internet broadcasting as the section provides for only radio and television broadcasting. Secondly, the court indicated that according to section 31 D and the rules 29 – 31, fixation of rates by IPAB is necessary before invoking this section. Hence, the defendants don’t have a substantial case.
  • Justice Kathawalla awarded Injunction to Tips Industries Ltd and ascertained that Section 31 D does not cover internet broadcasting.

Conclusion

The Owners and the public, both have their own interests and rights because of which the Copyright Act has been implemented but it won’t serve the purpose if the statutes are not interpreted correctly. Different lawyers will have different view but food for thought is that in the end, both the owner and the public get to such an understanding whereby they both get to enjoy their interest. It’s not that the Owner does not get his royalty or someone is not able to view certain works; it’s just the tendency of getting more which has led to such a debate.


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