Directorship, employment and copyright ownership

By Dheeraj Kapoor, LexOrbis
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Delhi High Court in August dealt with a highly contentious matter pertaining to the ownership of copyright in a work involving the aspects of fiduciary duties of a director and work done in the course of employment.

Dheeraj KapoorAssociateLexOrbis
Dheeraj Kapoor
Associate
LexOrbis

In Neetu Singh v Rajiv Saumitra & Ors, ownership of copyright in the book English for General Competitions, which was authored by Singh in 2012, was in question. Singh authored the book while she was a director of Paramount Coaching Centre (defendant No. 2). Saumitra (defendant No. 1), Singh’s then husband, was also a director of the company. Singh had also obtained a copyright registration certificate in her name for the book, which remained unchallenged. Since 2012 the book authored by Singh had been published by the company’s key publishing house and sold and marketed by the company.

In June 2016 defendants 1 and 2 had an identical book published, with no mention of the author’s name. This book was priced at half of the original price. Singh then filed a suit to restrain the defendants from infringing the copyright in her book.

The defendants argued that Singh was not the sole author of the book as it was authored in her capacity of a director of the company, akin to work done by an employee in the course of employment, and the director also has a fiduciary duty towards the company and cannot claim ownership against it. The defendants relied on Ram Pershad v The Commissioner of Income-tax, New Delhi (1972), in which it was held that a director’s terms of employment are to be determined from an agreement, if any, or the articles or memorandum of association of the company.

Singh argued that she had obtained copyright registration for the book in her name and there was also no contract of service as per section 17 of the Copyright Act, 1957, nor were the rights to publish the book ever licensed, transferred or assigned to any person including defendant 1 or 2. Singh claimed to be the exclusive owner of the copyright and also asserted that the book was copied verbatim as the printing errors were reproduced without any corrections.

The court held that there was nothing on record to show that Singh authored the book as part of her duties and obligations as a director. Thus, the defendants could not rely on Ram Pershad. As it was also undisputed that the copyright was registered in Singh’s name, the court held Singh to be the owner of copyright in the book.

The court further differentiated this case from one of “fair use” of a copyrighted work for the purpose of teaching or studies.

As Singh also happened to be a director of the company responsible for the marketing and sale the book, whether she authored the work in the capacity of an employee of the company or outside of it was debated. If the work had been authored by a director in the course of employment then ownership, under section 17(c) of the Copyright Act, would vest with the company. However, it is essential to establish that the work is done in the capacity of an employee to invoke this provision. Clarity has been provided that in such cases the terms of employment of a director can be determined from an agreement or the articles or memorandum of association of the employer. It may also be noted that having a copyright registration in the author’s favour can prove useful in rebutting the presumption of ownership having vested with an employer or company as against the author/employee/director.

Section 166 of the Companies Act, 2013, sets out fiduciary duties of directors such as the duty to act in good faith in order to promote the objects of the company, act in the best interests of the company, not be involved in a situation with an interest which conflicts with the company’s interests, etc. However, in the present case, there was no evidence to show that the book was authored by Singh as part of her fiduciary duties as a director of defendant No. 2.

The reproduction of a work in the course of instruction while imparting education has been held to amount to fair use of the copyrighted work, under section 52 of the Copyright Act. However, in the present case, copies of books were being made by the defendants to sell them purely for commercial profit. Thus, the defendants’ use of the copyrighted work was restrained by an order of interim injunction in favour of Singh.

In the present case Singh’s rights as the author were also infringed since her name was not even mentioned in the books sold by the defendants, thus infringing her moral right to be recognized for the work.

Dheeraj Kapoor is an associate at LexOrbis.

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