Statutory Licensing of Copyrights in India-Scope Demarcated
After
waking up Since the introduction of statutory licensing of copyrights in 2012
through an amendment to the Copyright Act 1957(“the Act”), the provision has been attracting controversy and time
and again the scope of the provision and its constitutionality has been
questioned. The recent tussle between Spotify and Warner Music Group has again
brought this provision to the forefront and has raised issues regarding its
scope and applicability. In the current dispute Spotify is trying to make use
of the statutory license provision granted under Section 31D of the Act and
expand it to cover streaming of music on the internet. Spotify is relying on an
Office Memorandum issued by Central Government which expanded the scope of
Section 31D to include broadcasting on the internet. However, Warner Music
Group has filed suit to restrain Spotify from being able to play music from its
catalog on the streaming service. In the light of the dispute we seek to
analyse the scope of the statutory license granted under the Act.
Interpretation
of the Statutory Provision:
Section 31D of the Act gives right to any broadcasting
organisation desirous of communicating to the public literary, musical work or
sound recording that has been published already, to broadcast the work after
giving prior notice indicating the duration and territorial scope of the
broadcast. The organization shall pay royalties to the owner of the copyright
at the rate fixed by the copyright board. Further, while stating the rates of
royalty, this provision only talks about television and radio broadcast.
Over the years, the definition of “broadcast”[1] has not
changed and since the enactment of the Act in 1957 has been defined as
“communication to the public (i) by any means of wireless diffusion, whether in
any one or more of the forms of signs, sounds or visual images; or (ii) by
wire, and includes a re-broadcast ” In September 2016, the Indian Copyright
Office issued a memorandum[2]
expanding the definition of “broadcast” in 31D, stating that “the provisions of
section 31D are not restricted to radio and television broadcasting
organizations only, but cover internet broadcasting organizations also.”
However, the HRD Minister, at the time of passing
the bill introducing section 31D in the Parliament in his speech had stated
that:
“The Copyright Board, as a matter of law, under the
statute will actually decide on the quantum of money that will be required to
be paid by the TV companies to the music companies who have bought over those
rights. Therefore, there was some debate as to whether it should be limited
only to radio and TV should be kept out of it. But ultimately, we decided that
TV should be included in it.”
From a reading of the above-mentioned speech it is
explicit that the debate was about including TV broadcasters and the inclusion
of internet broadcasters was never contemplated.
Moreover the relevant rules[3] of the
Copyright Rules 2013 (“Rules”) also
prescribe the procedure for obtaining statutory license for radio and TV
broadcasters and there is absolutely no mention of broadcasting through the
internet. This interpretation is also used by the Bombay High Court in the case
explained below in detail.
Recent
Judicial Ruling:
The Bombay High Court has put to rest the
controversy raised by the Office Memorandum of the Central Government and
clearly demarcated the scope of Section 31D of the Act and held that it covers
only radio and TV broadcasting. The Judgment was passed on April 23rd
2019 in the dispute between Tips Industries(“Tips”) and Wnyk Music India Pvt Ltd[4](“Wynk Music”).
A detailed analysis of the case is necessary to understand
the reasoning of the court.
Matrix of Facts:
Wynk Music is an online music streaming application
which allowed its registered users upon payment of monthly rent, to listen to
music directly online and download songs and store it in the application.
Further, upon remitting one-time charge, the users could also permanently
purchase the songs and store it in a device of their choice. It had entered
into a license agreement with Tips for the streaming of the recordings of Tips
on its application, once the license expired the parties tried to renew it but
could not reach an agreement. Hence Wynk Music invoked Section 31D of the Act
claiming that it was an internet broadcasting organization and can obtain
statutory license by giving notice to the copyright owner being Tips and no
separate license agreement is required. Wynk Music continued to store the
recordings of Tips on its application leading to Tips filing suit for
infringement of copyright.
Issues Involved:
i) Whether the actions of Wynk Music infringe upon
the exclusive rights of Tips as copyright owner of a sound recording granted
under Section 14(1)(e)[5]
of the Act?
ii) Whether the statutory license under Section 31D
extends to broadcasting on the internet?
Contention of Parties:
Wynk Music claimed
that its ‘on demand streaming service’, whereby public can listen to any songs
of their choice from the application, and the same does not amount to
‘commercial rental’ or ‘sale’, and was ‘broadcasting’ covered under Section
31D, as it was simply ‘communicating to the public’. It relied on the use of
expression “any” broadcasting organization in the provision to
contend that online streaming is also covered.
Tips opposed this by contending that Section 31D is
available only to radio and TV broadcasting. Internet Broadcasting is not
covered by the provision.
Analysis of the Court:
a. Intent of Legislature:
The court noted that Section 31-D acted as a
statutory exception to the rule that a copyrighted work is the exclusive
property of its owner, and should therefore be construed narrowly in
“conformity with the specific intention for which it was enacted”.
The court perused the reports of the Rajya Sabha Standing Committee, and the
Statement of Objects and Reasons of the 2012 Amendment Act, and opined that the
Section was intended only to address radio and TV broadcasting. The Standing
Committee understood ‘broadcast’ to mean radio and TV broadcast. The court held
that the absence of express words in Section 31-D providing for a Statutory
License in respect of internet streaming and / or downloading, was a conscious
legislative decision and should be adhered . In view of the above and in the
absence of an express statutory provision including internet broadcasting
within the purview of Section 31-D, its scope cannot be expanded to include the
same. Further, a review of the Rules 29
and 31 of the Rules also supported the view that Section 31-D is a statutory
licensing regime meant only for ‘radio’ and ‘television’ broadcasting and not
internet broadcasting. The court also
rejected the Office Memorandum issued by the Central Government by observing
that Central Government did not have power to make such interpretations. The
court held “The said Memorandum lacks a ‘statutory flavour’ and cannot
prevail over interpretation which is drawn under the Act and the Rules. The
interpretation of Section 31-D in the said memorandum is inconsistent with the
interpretation drawn by this Court and this Court is not bound by the said
Memorandum”.
b.
Online services amount to ‘commercial rental’ and ‘sale’:
The Court held that Wynk Music’s download services
amounted to ‘commercial rental’ and ‘sale’. It observed that “the
Defendants through their outright purchase / download services are enabling
their subscribers to actually store electronic files of the Plaintiff’s sound
recordings on their devices. Storing the files of the Plaintiff’s sound
recordings in electronic medium by the Defendants is nothing but making of
another sound recording embodying the Plaintiff’s sound recording. This right
is an exclusive right granted to the owner of the copyright in the sound
recording under Section 14(1)(e)(i) of the Act and the Defendants cannot be
allowed to continue the same without any permission or authorization of the
Plaintiff”. Wynk Music’s services enabling their customers to permanently
download sound recordings and have a permanent access to the same clearly
amounted to sale of sound recording violating the exclusive right of Tips to
sell or offer for sale its sound recordings as provided in Section 14(1)(e)(ii)
of the Act. The Court also noted that the ‘download’ services were not covered
by the ‘non-profit library or non-profit educational purpose’ exception to the
definition of ”commercial rental” as per Section 2(fa) of the Act.
“the activities of the Defendants enabling their customers to download
sound recordings and access them offline in lieu of a monthly subscription fee
clearly do not fall under the exclusions provided in the said definition of
‘commercial rental’ and would therefore amount to ‘commercial rental’”,
observed the Court. Hence the court held that internet broadcasting is not
contemplated under Section 31D of the Act.
Conclusion:
A balance needs to be achieved between public interest and interest of the copyright owners. The very purpose of granting copyright protection should not be defeated and statutory licenses should be interpreted in a narrow manner and their scope has to be limited to promote creativity and encourage artists, commercial exploitation and economy of the country. This decision confirms the Indian music industry’s consistent stand that internet streaming services are not covered under Section 31D of the Act and thus throws light on the outcome of the dispute between Spotify and Warner Music Group.
Contributed by – Bhavani Navaneedhan
[1] Section
2(dd) of the Act
[2] https://dipp.gov.in/sites/default/files/OM_CopyrightAct_05September2016.pdf
[3]
Rules 29, 30 and 31 contain the procedure for availing statutory license
[4] https://bombayhighcourt.nic.in/ordqrywebcoram_action.php
[5]Under this provision the owner of a sound recording has the right to make any other sound recording embodying it and to store it in electronic or other means. Further, the owner also has the right to sell or give on rent a copy of the sound recording.
King Stubb & Kasiva,
Advocates & Attorneys
New Delhi | Mumbai | Bangalore | Chennai | Hyderabad | Kochi
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