This article is written by Nehal Wagle, pursuing a Certificate Course in Trademark Licensing, Prosecution and Litigation from LawSikho.
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The entertainment industry in India has grown leaps and bounds in the last few decades. The age of the internet has revolutionised almost each and every sector be it industrial, educational, financial or entertainment.
Easy access to internet services has provided a robust platform for the creators to not only showcase their talents but has also provided a conducive platform to exploit their talents or creativity.
The music industry is at the forefront of the evolving digital marketplace. Consumers can access music easier than ever. A new market for digital music has developed and diversified over a period of time. The popularity of download services, while still high, is reducing while streaming services such as Amazon Music, Apple Music, Spotify, etc are growing. Streaming services have become an increasingly important sales channel and source of revenue for record labels and artists.
The online streaming services gathered a great deal of momentum during the current Covid-19 pandemic situation where the #NewAtHome environment replaced live concerts with online streaming services. As per a survey, more than 68% of the Indian population resorted to online music streaming services to cope up with the situation. In the month of March, the Indian music community in association with Instagram presented a virtual music festival – ‘Live In Your Living Room’- where artists such as Armaan Malik, Naezy and Lisa Mishra performed live on Instagram.
Apart from the artist, several online music streaming platforms like Gaana, Amazon Music, Spotify, YouTube Music and so on committed themselves to cater to the increasing cravings for online music of the consumers by expanding the music library and content for the consumers.
While the broad availability of online streaming of music is an excellent product of digitalisation and a marvel of internet services, it has been realised that not many benefits are enjoyed by the artist in the music industry. They often do not receive requisite amounts of royalties for their hard work.
Licensing of music is one the most important links in the music industry as it provides a two-way benefit, one being the music right holders-receiving royalties and other being the customers having easy access to a wide range of music. But now the question arises: what happens if the music streaming online is not licensed? What happens if music streaming online is not licensed? Would it amount to copyright infringement?
To adapt to the changing situations and to ensure maximum benefits possible the Government of India introduced Section 31 D in 2012 by an amendment to the Copyright Act. This section deals with provisions pertaining to Statutory licenses for the broadcasting of literary and musical works and sound recording. The section permitted the broadcasting organisers to broadcast any literary and musical works and sound recording by giving a prior notice of its indication to broadcast the work and shall also pay to the music right owners royalties in a manner and at a rate fixed by the Intellectual Property Appellate board. But the question that comes to one’s mind is do the provisions of Section 31D of the Copyright Act, 1957 applicable to online streaming of music?
This question can be better analysed with reference to some of the judgements delivered by courts in India observed:
The Defendants own and operate WYNK, an Over the Top Service available on the internet, smartphones and smart media. Through this service, upon payment of a subscription fee, the Defendants’ customers/ subscribers can access numerous sound recordings and audio-visual recordings including, inter alia, the Plaintiff’s Repertoire.
A recent Bombay High Court judgment in the matter of Tips Industries Ltd. v. Wynk Music Ltd. decided on April 23, 2019 has resulted in discussions regarding the status statutory licensing of online streaming services under Section 31D of the Copyright Act.
Facts of the case
Plaintiff- Tips Industries Ltd. (“Tips”) is the owner of one of a popular music label in India which controls the copyright over 25,000 sound recordings.
Whereas the defendant- Wynk Music Ltd. (“Wynk”) an Over top service available on the internet, smartphones and smart media. The customers on payment of subscription fees can access a wide range of audiovisual recording along with Plaintiff`s repertoire of songs.
The Plaintiff`s music repertoire was licensed with the defendants by Phonographic Performance Limited (PPL) through a written license agreement in 2014.
In 2016, a dispute arose between two parties in respect of license fees and accordingly the license which was due to be renewed for a further period of 2 years came to an end and the plaintiff thereafter sent a cease and desist notice to the defendant instructing him to deactivate/remove the Plaintiff’s repertoire from the defendant`s platforms.
In this regard, the defendant invoked and sought protection under the blanket of Section 31D of the Copyright Act claiming that they were broadcasting organisers and hence were entitled to a statutory license under Section 31-D of the Copyright Act, 1957 whose main function involves communicating the work to the public by broadcasting the Plaintiff’s musical work and sound recording. Thus, the Petitioner in 2018 filed a copyright infringement suit before the Bombay High Court.
The Honourable court after analysing the legislative intent behind the creation of article 31-D of the Copyrights Act held-
- Internet broadcasting organizations cannot enjoy the benefits of a Statutory License under Section 31-D. The intention of the Legislature while enacting the amending legislation viz. the Copyright (Amendment) Act, 2012, was to restrict the grant of Statutory License under Section 31-D to radio and television broadcasting organisations. The facts of the matter do not occasion the application of the doctrine of Contemporaneo expositio.
- To exercise rights in respect of statutory license under Section 31-D of the Copyrights Act, 1957 it is necessary to pre-determine the royalty rates. A holistic reading of the Act and the Rules, including Rules 29, 30 and 31 of the Rules, indicate the Legislature’s intent to make a fixation of royalty rates a mandatory step before granting of license under Section 31-D.
- The court while analysing the new trends within the music industry and the rise of over the top service providers such as the Defendants held that:
“Those who seek safe harbour to exploit copyrighted works, through either internet broadcast or download features, without seeking/obtaining a license from the owners thereof. In my view, such use of the copyrighted works, through internet broadcast or download features, without obtaining a license from the owners of the copyright amounts to a usurpation of the exclusive rights of the owners to commercially rent, sell or communicate to the public their sound recordings.”
- The Honourable court while granting an interim injunction in favour of the plaintiff thereby held that the defendant is no entitled to receive protection under the provisions of Section 31-D of the Copyright Act,1957 for two main reasons-
- The fact that the defendants are not carrying on ‘radio’ and ‘television’ broadcasting functions as stated under the section 31-D.
- The defendants interpretation of Section 31D and rules not only sanctions the exercise of Statutory License under Section 31-D without any fixation of royalty but also releases the service provider of any obligation to approach the Appellate Board to fix the royalty, which defeats the very purpose behind the said legislation.
Another case came before Bombay High Court in 2019 -Warner/Chappell Music Ltd v. Spotify Ab
Facts of the case
The Petitioner Warner Chapple Music Ltd. (WCM) is a music record label licenses as well as music producers. Whereas the defendant Spotify is an international audio streaming service company. Spotify wanted to enter the Indian music industry in order to acquire a license from the record labels as well as production houses to stream the music online. The discussions for striking a license deal between the parties failed to reach a conclusion. Eventually, Spotify in absence of any license agreement went ahead and launched their application and provided the users with songs including that of the Petitioners. The public saga began when Spotify expressed its intention to subscribe to the statutory license provided under Section 31D of the Copyrights Act,1957. In February 2019 Spotify invoked compulsory licensing scheme under the provisions of Section 31D with Intellectual Property Appellate Board (IPAB) with an intention to broadcast the works of the Petitioner as an Internet broadcaster. In Spite of objections, Spotify went ahead and continued to stream songs of the plaintiff and other users without any licenses. The defendant failed to realise one of the important precursors to the compulsory licensing scheme and that being the determination of royalty rates by IPAB. On 26th February 2019, the situation got unclear when royalty rates were not yet decided by IPAB and in spite of this Spotify went ahead and launched their services and enforced their statutory licenses.
Petitioner then filed a suit of infringement against Spotify.
Bombay High Court disposed of the leave petition dates 26th February 2019 and directed Spotify to deposit a sum of Six Crore Fifty Lakhs with the High Court without giving any clarifications.
Defendant’s application under Section 31-D of the Copyright Act, 1957 was held to be not maintainable. The court further held that the order pertaining to exploitation of Plaintiff`s work will be decided post conducting a hearing between the parties. The defendant was also directed not to proceed with the application before IPAB until the royalty rates are decided.
However, eventually, the two parties to the Dispute arrived at a settlement in January this year and have asked the courts in India to dismiss the pending litigation between the parties.
The decision of the Bombay High Court in Tips Industries v. Wynk Music is a sound judgement which brings forth the limitations in Copyright Act, 1957. Online streaming services in need for an hour and a major source of revenue for the economy and the copyright holders. The Post COVID-19 world seems to be more reliant on internet services and everything that breathes on the internet. This situation calls for a necessity to change the way we look at the world. The legislators hence should consider the changing situations and must incorporate provisions governing statutory license schemes to include online streaming services. Failure to do so may drastically affect the rights of the copyright holders in the music industry.
 Shreya Mazumdar. Online Music Streaming and Indian Laws. Journal of Intellectual Property Rights Law. 2019; 2(1): 34–37p and https://www.thehindubusinessline.com/info-tech/spotify-settles-case-with-warner-chappel-in-india/article30567092.ece
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