Clarity from the Intellectual Property Appellate Board is required to lessen tensions between music labels and broadcasters, writes Sachin Kalra

The relationship between radio broadcasters and music labels has always been contentious, due to rights and royalty issues. Although the Supreme Court has tried to settle royalty disputes, in cases such as CISAC v Aditya Pandey (2016), the litigation between the two sides has seen an increase due to the non-functioning of the Intellectual Property Appellate Board (IPAB), which was earlier known as the Copyright Board, until 2016. The IPAB is vested with the power under the Indian Copyright Act to deal with compulsory and statutory licensing issues.

Sachin Kalra

After the Copyright Amendment Act, 2012, the then Copyright Board was to be reconstituted, but despite directions from various high courts, this was not done on time. Proper functioning of the IPAB could have addressed the royalty dispute issues between the radio broadcasters and music labels. Compulsory licence applications pending since 2010 are yet to be heard by the IPAB. During this period of non-functioning, aggrieved parties have approached the high court under writ jurisdiction for redressal. However, the high court has refrained from passing any order that transgresses the law or sets an inappropriate precedent.

Ownership of copyright

A copyright is a right in an original work of authorship such as literary, musical, artistic, photographic, a film or computer program fixed in any tangible medium of expression, giving the holder the exclusive right to reproduce, distribute, adapt, display and perform the work. Prior to the 2012 amendment, the Supreme Court, in ENIL v Super Cassette Industries Ltd (2008) observed that a copyright is a property right that is parallel to the right to property under article 300A of the constitution, and is subject to reasonable restrictions. It is also a natural extension of the freedom of speech, and expression protected under article 19(1)(a) of the constitution.

It is necessary to identify the copyright owner in order to know who has the right to license use of the copyright, whose rights are to be protected, and who has the power to take action for infringement. The author of the work is the first owner of the copyright, with the exception being when the author is an employee, or the author has a contract of service.

In IPRS v Eastern Indian Motion Pictures Assn (1977), the Delhi High Court held that once the author of a lyric or musical work parts with a portion of his copyright by authorizing a film producer to make a film in respect of his work, and thereby have his work incorporated or recorded on the soundtrack of a film, the latter acquires it by virtue of section 14(1)(c) of the Copyright Act, 1957, on completion of the film – a copyright that gives him the exclusive right of performing the work in public.

Under section 30 of the Copyright Act, 1957, the owner of a copyright in any existing work, or the prospective owner of the copyright, may grant a licence in writing of any interest in the copyright. But, where the owner of a copyright has refused to allow a public performance of his/her work, that work is thereby withheld from the public. The IPAB, on a complaint from an aggrieved party, has the power to direct that the complainant be granted a licence to republish the work, or perform the work in public, or broadcast the work on payment of compensation, as determined by the board.

These compulsory licences are an exception to the general freedom of the owners over their copyright. In fact, the Supreme Court has held that unreasonable terms could be construed as implied refusal on the part of the copyright owner, as the parties have unequal bargaining power.

Chequered past

The institution of the Copyright Board has a chequered history. With the notification of the amended copyright act and the Copyright Rules, 2013, the Copyright Board became operational as a permanent tribunal for the first time. Section 31D of the Copyright Amendment Act, 2012, allowed broadcasting organizations to play any previously published musical work or sound recording by invoking a compulsory licence through a unilateral notice, and paying royalty rates as determined by the IPAB.

Post notification, the amended copyright act faced multiple challenges across high courts. The fixation of the royalty has been contested by music labels. Other challenges pertained to the Copyright Board’s jurisdiction, its power to grant licences, and the public rights of copyright owners. Petitions challenging section 31D of the Copyright Amendment Act, 2012, were filed before various high courts including the Delhi, Calcutta and Madras high courts, and also the Supreme Court.

Later, writ petitions were filed challenging the constitutional infirmities in the composition of the Copyright Board, as the act did little to streamline the appointment and functioning of the body.

In 2016, the government shifted the reins of the Copyright Office from the nodal Ministry of Human Resources Development to the Department of Industrial Policy & Promotion (DIPP), which functions under the Ministry of Industry and Commerce (now known as the Department for Promotion of Industry and Internal Trade, or DPIT).

In 2017, with the enactment of the Finance Act, 2017, the jurisdiction of the Copyright Board was vested with the IPAB. For a brief period of time, there was a lack of clarity with respect to the ability of the IPAB to hear copyright matters in the absence of the necessary technical members with expertise in copyright matters.

The judgment and order dated 29 September 2018, passed by the Delhi High Court in Radio Next Webcasting Private Limited v Union of India & Anr, clarified the confusion to a certain extent by ruling that, despite the vacancy of the technical (copyright) member, the IPAB is functional and required to exercise the jurisdiction, powers and authority conferred on it.

Further clarity was brought by the judgment and order, dated 20 August 2019, of Delhi High Court in the case of Mylan Laboratories Ltd v Union of India and Ors, where the court held that the IPAB could hear matters pertaining to all categories of intellectual property rights, even in the absence of a requisite technical member for the relevant subject.

The clarification had barely provided respite to stakeholders when the retirement of the then chairman of the IPAB, former justice Manmohan Singh, placed the next roadblock in the way of the body’s functionality. The possibility of extending the tenure of the chairmanship of Singh was rejected by the division bench of the Delhi High Court. The Supreme Court vide an order dated 18 December 2019, in the matter of International Association for Protection of Intellectual Property v Union of India, extended Singh’s tenure by a year from the date of his retirement i.e., to 23 September 2019, and is now hearing matters pertaining to copyright.

The scope of the licence under section 31D is to eliminate the cumbersome process of obtaining private licences individually from a number of music labels; the provision of statutory licensing exists. The first part of the section does not refer to the nature of broadcasting organizations eligible for the licence. A subsequent clause (clause 3) mentions that royalty rates for radio and television broadcasting must be different.

Significantly, the constitutional validity of section 31D has been challenged by Lahari Music, in the Supreme Court, and the radio broadcaster has intervened in the writ petition, which has been kept in abeyance due to a pending challenge against section 31D in Calcutta High Court, in another matter.

Exclusion of internet broadcasting

In Tips Industries Ltd v Wynk Music Ltd & Anr, the court dealt with the question of whether section 31D of the act, read with rules 29 and 30 of the Copyright Rules, 2013, applies to internet broadcasting. Section 31D of the act, read with rules 29 and 30 of the Copyright Rules, 2013, enables broadcasting companies/service providers to broadcast or perform any literary or musical works, or sound recordings, by issuing a prior notice of such intention to broadcast the said works, and by paying a royalty to the rights holder, as fixed by the IPAB.

A similar question was raised in the case of Warner Chappell Music Limited v Spotify AB, where Bombay High Court found that: “The provisions of section 31D, read with rules 29 to 31, coupled with the legislative history preceding the passage of Copyright Amendment Act, 2012, clearly support the submission that section 31D contemplates only television and radio broadcasting, and not internet broadcasting.”

It was further categorically held that on a strict interpretation of section 31D(3), as well as the rules, the statutory licence was intended to cover only radio and television broadcasting, and not internet broadcasting. Wynk Music cannot claim statutory licence, as section 31D does not cover downloading of copyright work and internet broadcasting. The court held that Tips Industries was entitled to an interim injunction. However, the above-mentioned order was stayed by the division bench.

Now, with the functioning of the IPAB, it is highly likely that either the broadcaster or the music labels will attempt to invoke section 31D for fixation of statutory licence rates, as the compulsory licences issued in 2010 are set to expire from 2020. It will be very interesting to see the approach of the IPAB when dealing with these issues, in view of the fact that section 31D is under challenge. A new round of litigation is on the cards between music labels and broadcasters.

Sachin Kalra is the deputy general counsel (group) at HT Media. The views expressed in the article are personal.