Ownership of the Copyright in Sound
Recording – An Illusionary or Actual
Right
Praveen Agrawal, Advocate on Record, Supreme Court of India, New Delhi.
INTRODUCTION
The recent past has seen remarkable change in the Indian eco-legal scenario, intellectual
property rights being one of them. A neglected branch a law suddenly assumed great
importance in the eyes of corporates, legal professionals and even law students. It is a
common phenomenon to find large number of persons pursuing their career in the Intellectual
Property Rights and its demand and importance has increased manifold during the last few
years. The obvious reason is fierce competition at the market place and imitation duplicate
products resulting in the need for better protection of their trade marks, copy rights and
patent rights.
LEGAL PROVISIONS
Copyright in India is governed by the Copyright Act, 1957, section 13 where of provides that
Copyright in the property subsists in (a) original literary, dramatic, musical and artistic
works; (b) cinematograph films; and (c) sound recordings.
It will be worth mentioning that copyright in respect of computer program have been recognized
for the first time by the amendment Act of 1994. The purpose of the Copyright Act is to grant a
statutory right and protection to the author/owner of the work in which copyright subsists, as
recognisitions of his efforts and further to grant him monopoly rights for its exploitation
(Commercial or otherwise). The Act also restrains all other persons from exploiting the work in
which copyright subsists without the permission of the owner thereof. Interestingly this Act
does not require compulsory registration of the copyright for availing the benefits and protection
available to the owner under the Act and the registration of copyright has been made optional.
The Legislative intent behind the whole exercise is to afford all possible protection and
recognition to the owner of the copyright. Owner of a Copyright work has been empowered to
grant license to various persons for use of its work (Section 30). The Act further provides the
remedy in case of infringement of the copyright which may be in the form of injunction,
damages, accounts and the likes. The infringement of the copyright has also been made an
offence punishable with the minimum imprisonment for a term of 6 months to 3 years and also
punishable with a minimum fine of Rs. 50,000 ( Section 63).
Nonetheless, in the interest of the general public the Copyright Board has been empowered
to grant compulsory license (i) where the copyrighted work is withheld from the public
(Section 31) (ii) in case of unpublished Indian work (Section 31A) (iii) produce and publish
Translation (Section 32) (iv) reproduce and publish work for certain specified purposes
(Section 32A).
The understanding of the industry experts on the subject was that under the provisions of
section 31 Copyright Board can grant a compulsory license on the satisfaction of the following
conditions :-
(1) The work in respect of which the compulsory license is sought is withheld from the
public.
(2) Owner has refused to make the work available to the public.
Whether the owner of
copyright in respect of sound
recording is entitled only for
the royalty and loses all other
rights in respect of the sound
recording it owns, whether the
ownership is illusionary and
not real and whether the legal
position is same for the
broadcasters of televisions
programs are the important
questions analyzed in this
article.
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(3) The ground(s) for refusal by the owner is/are not
reasonable.
(4) Owner is being afforded an opportunity of being heard.
(5) The license is granted subject to the payment of royalty
fixed by the Copyright Board.
The basic ingredient for the grant of compulsory license under
section 31 was withholding the work from the public. In other
words if the work is not being withhold from the general public,
then there is no reason or occasion for the Copyright Board to
grant the compulsory license. In fact grant of compulsory license
in such cases is liable to be struck down. The contractual rights of
the copyright owner is not only recognized but also given proper
effect to. In other words, it is the prerogative of the owner to
continue to make commercial exploitation of the copyrighted
product by himself or to grant a license to the third party to do
so. But once he has exercised his choice of exploiting the copyright
himself or through the license and the work is made available to
the public, Copyright Board will have no jurisdiction to grant
any compulsory license.
For better appreciation of the legal provisions, it would be useful
to take a look at Section 31 of the Copyright Act, 1957 which
reads thus :
“31. Compulsory licence in works withheld from public.-(1) If at
any time during the term of copyright in any Indian work which has
been published or performed in public, a complaint is made to the
Copyright Board that the owner of copyright in the work- (a) has
refused to republish or allow the republication of the work or has
refused to allow the performance in public of the work, and by reason
of such refusal the work is withheld from the public; or
(b) has refused to allow communication to the public by broadcast, of
such work or in the case of a sound recording the work recorded in
such sound recording, on terms which the complainant considers
reasonable;
The Copyright Board, after giving to the owner of the copyright in the
work a reasonable opportunity of being heard and after holding such
inquiry as it may deem necessary, may, if it is satisfied that the grounds
for such refusal are not reasonable, direct the Registrar of Copyrights
to grant to the complainant a license to republish the work, perform the
work in public or communicate the work to the public by broadcast, as
the case may be, subject to payment to the owner of the copyright of
such compensation and subject to such other terms and conditions as
the Copyright Board may determine; and thereupon the Registrar of
Copyrights shall grant the license to the complainant in accordance
with the directions of the Copyright Board, on payment of such fee as
may be prescribed.
Explanation. - In this sub-section, the expression “Indian work’
includes-
(i) an artistic work, the author of which is a citizen of India; and
(ii) a cinematograph film or a sound recording made or manufactured
in India.
(2) Where two or more persons have made a complaint under subsection
(1), the licence shall be granted to the complainant who in the
opinion of the Copyright Board would best serve the interests of the
general public.
SUPREME COURTíS LANDMARK JUDGMENT
The Supreme Court in its landmark judgment in M/s Entertainment
Network (India) Ltd. v. M/s Super Cassette Industries Ltd. 2008 (9)
SCR 165 ; 2008 (9) SCALE 69 ; 2008 (7) JT 11 delivered on 16th May
2008 by a Bench comprising Justices S.B. Sinha and Lokeshwar
Singh Panta has clarified the legal position in this respect. The
core issues which arose for the consideration were:
(i) Whether the Copyright Board has jurisdiction under Section
31 (1)(b) of the Copyright Act, 1957 to direct the owner of a
copyright in any Indian work or a registered copyright
society to issue compulsory licenses to broadcast such
works, where such work is available to the public through
radio broadcast?
(ii) Whether in any event such a compulsory license can be
issued to more than one complainant in the light of Section
31(2)?
(iii) What would be the relevant considerations which the
Copyright Board must keep in view while deciding on; (a)
whether to issue a compulsory license to a particular person;
and (b) the terms on which the compulsory license may be
issued, including the compensation?
JUDGMENT AND REASONS
The Court after taking stock of the legal position and also the
international treaties entered into by India and the Legal Position
obtaining in different countries of the world held that there cannot
be any doubt whatsoever that an artistic, literary or musical work
is the brain-child of an author, the fruit of his labour and, so,
considered to be his property. A copyright, unlike a trade mark
is a right created under the Act as is evident from Section 16
thereof.
The legal position of the copyright in original work and sound
recording stands on different footing as copyright in original
literary, dramatic, musical and artistic works not only remains
protected during the entire life time of the author but also until
60 years from the beginning of the calendar year next following
the year in which the author dies. In case of sound recording the
right subsists only for 60 years. Nonetheless, it does not mean
that the right in respect of sound recording is in any way inferior
to that of right in original literary work etc. There are indications
in the Act that sound recording and literary, dramatic or musical
work operate on different fields and cannot be equated.
India being a signatory to the International Covenants, the
Copyright law should have been amended in terms thereof. Only
because laws have not been amended, the same would not by
itself mean that the purport and object of the Act would be allowed
to be defeated. Though the copyright law has not been amended
Ownership of the Copyright in Sound Recording – An Illusionary or Actual Right
Articles Articles
in terms of the International Conventions the Supreme Court
has on several occasions applied the International Conventions
to interoperate domestic Laws.
The Supreme Court has also taken note of the fact that both
“Berne” and “Rome” Conventions provide for the liberalized
process of the broadcasting of the sound recordings.
INTERNATIONAL POSITION
Under Section 109 of the Australian Copyright Act, a free to air
broadcaster of a sound recording requires a license and all that is
to be done is to give an undertaking to pay a royalty for
broadcasting of published sound recording.
China follows the Berne Convention for International recordings.
Domestic recordings can be broadcast on the radio or television
without any license or payment. However commercial broadcast
requires a license and all that is required to be done is to give an
undertaking to pay a reasonable sum which in the event of dispute
will be decided by a competent tribunal.
In Japan the Director General of the Cultural Affairs Agency will
determine the compensation required to be paid by a Broadcaster.
Non-profit transmission of works already made public is exempt
from payment of any royalty.
In U.K. statutory licensing and compulsory licensing exists.
In respect of Sound recording, only because an offer is made for
negotiation or an offer is made for grant of license, the same per
se may not be sufficient to arrive at a conclusion that the owner
of the copyright has not withheld its work from public. When an
offer is made on an unreasonable term or a stand is taken which
is otherwise arbitrary, it may amount to a refusal on the part of
the owner of a copyright.
When an offer is made by an owner of a copyright for grant of
license, the same may not have anything to do with any term or
condition which is wholly alien or foreign. An unreasonable
demand if acceded to, becomes an unconstitutional contract which
for all intent and purport may amount to refusal to allow
communication to the public work recorded in sound recording.
A de jure offer may not be a de facto offer.
LAW LAID DOWN BY SUPREME COURT
Sound recording stands on a different footing than that of other
literary, dramatic or musical work and there is no statutory
requirement that a compulsory license can be granted only once
when the work is withhold from the public.
Compulsory License can be granted even if the work is not
withheld from the public and is made available to the public, but
on owner’s refusal to permit a broadcaster to broadcast the work.
Refusal also means demanding of the royalty or compensation
which is high or imposing unreasonable restrictions therein.
Only because the compulsory license has been granted to one
person it will not take away the jurisdiction of the Copyright
Board to grant compulsory license to another person or other
persons.
QUESTIONS BEFORE THE INDUSTRY
Will it mean that in the present economic scenario, the
contractual rights of the owner of sound recording are non
existent. Does the owner lose his rights to decide as to whom he
should issue the license and whom he should not? Does the
owner also lose his rights to decide as to the terms and
conditions on which he ought to issue the license? Is the owner
not free to quote different prices to different persons for the
issue of license? Are we reverting to the price and supply control
regime qua sound recording rights where the owner lose his
rights to choose the buyer and the price which he wants to
charge? Is the ownership illusionary? Is there really any
requirement to curb the rights of the copyright owners of sound
recording to the extent mentioned above in the economy which
has traveled from the highly controlled era (Pre 1990) to the
deregulated era as of now? Is there any need or reasons to curtail
the contractual rights of the copyright owner to such an extent
in an economy where potato chips are being sold @
Rs. 200/- per kg. More important than all these is the question
whether the judicial thinking is slowly moving towards the
area where the contractual rights of all the copyright holders
will be restricted or curbed to the same extent? This view gains
support from the reasons in the abovementioned judgment
where for the interpretation of the domestic law of copyright,
aid of law prevalent in other countries and International
Conventions has been taken.
CONSEQUENCES OF THE DECISION
Various music companies are members of the PPL (Copyright
society) which affords them a platform for entering into
contractual relations with the broadcasters. Few of the music
companies which have not taken the membership of the PPL
have to face difficulties in entering into individual contract with
each of the broadcasters. They are faced with dual problem i.e.
(1) difficulty in entering into individual contract with various
players resulting in improper exploitation of their music track
rights and (2) improper and insufficient recovery of price. The
decision has a positive as well as negative impact on the
copyright society as well as the music companies. It will further
rationalize the royalty payable by the broadcasting companies
to the music companies, as unfair price quote amounts to
“refusal” under the Act empowering the Copyright Board to
determine the royalty payable. By this proposition the role of
the Copyright Board will increase multiple times and it will
function more like an executive office than a quasi judicial body
and the evils associated with the executive office will also creep
in. This will also diminish the role of the PPL and the status of
its members. The rates commanded by the members of PPL
ought to be better than what they could have commanded
through one to one contract, because of the Power of cartel/
Association.
Persons who are not members of any copyright society, (except
those who are in good bargaining position) will not be affected
Ownership of the Copyright in Sound Recording – An Illusionary or Actual Right
Articles
much except to the extent that few of the broadcasters may
approach the Copyright Board after holding an initial round
of discussion with them and get the prices of their music fixed
by the Board. They may not be affected much as they are not in
a position to command fair prices for their product due to
their weak bargaining power. But the persons/companies who
are not the members of the Copyright society and are in the
strong bargaining powers will be hit most as, because of their
strong bargaining power they were commanding better
prices which will be put at rest by the Copyright Board
exercising powers as enumerated under the above-mentioned
Judgment.
CRITICAL ANALYSIS
Though the right to property has been deleted from the
Constitution as a “Fundamental Right”, still the contractual
rights of the persons and freedom to enter into a contract find
places in the statutes (Contract Act- Formation of contract by
offer and acceptance – Acceptance to be the absolute discretion
of the party to the contract). Besides, except in exceptional
circumstances (Few of the Sections of Essential Commodities
Act imposes certain restrictions) the right of the owner to deal
with the property in the manner in which he likes is not
curtailed. Besides, we are moving towards the market driven
economy in which all the market forces are permitted to play
their role for the determination of demand and supply and we
have traveled much on such road since 1991 when India has
slowly started deregulating its economy. In such a scenario
will the Judgment act as a catalyst or accelerator for the industry.
Is it necessary to curtail the contractual rights of an owner of
the sound recording of the copyright on the premise that the
owner enjoys monopoly powers and therefore even though the
work is available to the general public but since the owner has
refused to allow the broadcast through a particular channel,
Copyright Board has the power to grant compulsory license to
the broadcaster.
It is worth mentioning that the contractual powers of even the
monopolistic establishment in respect of its dealing with the
customers/buyers/purchasers were not taken away under the
MRTP Act. If the legislature thought it prudent not to place any
restraint on the contractual powers of a mopolistic undertaking
which, obviously, controls a sizable portion of trade and
commerce in the field in India, is there any justification for doing
so in the case of music company. It is also worth noting that in
the case of restrictive trade practices Section 38 of the MRTP Act,
provides for a gateway, i.e., if the restrictive trade practice
adopted by the persons / company is not of any material decree
there is no requirement for the MRTP Commission to exercise its
Jurisdiction and curtail the practice. If this be the legal position,
the concept of monopoly ought not have influenced the minds of
the judges to impose restriction on the contractual rights of the
owner of the copyright. Besides, had it been only the monopoly
rights which the owner of the sound recording enjoys, there
would not have been any reason as to why the owner of other
copyrights (who also happen to enjoy the monopoly powers)
ought to have been exempted. Or, are we in a transition phase
and the concept of monopoly powers will be carried forward to
curtail the contractual rights of all the copyright owners, in times
to come?
The Copyright Act has not been amended in line with the
International conventions signed by India. The law on the statute
book is the same as that of 1957 (subject to the amendment from
time to time). Nonetheless, India has come out with the
International Copyright Order of 1999. The International
convention signed by India as well as the legal position
prevalent in other countries of the world have been taken note
of by the Supreme Court in deciding the issue. It further held
that only because the Law, in accordance, with the international
conventions, has not been amended, it does not mean that the
purport and object of the Act would be allowed to be defeated.
It seems that when the Court has pointed out “purpose and
object of the Act” it does not restrict itself with the object and
purpose of the Act as provided in the Act itself, as for their
interpretation there was no requirement of reference to
international conventions and the laws prevalent in other
countries. What the Court meant, in all probability, is the object
and purpose of the Act vis-à-vis the international conventions to
which India is a signatory. It should be remembered that the
Court has also taken note of the law prevalent in various parts
of the world. In the judgment it is pointed out that the Court
has sought the aid and assistance of international conventions
while interpreting the domestic laws earlier also. But
interpretation of the domestic law by use of international
convention so as to make them more meaningful and
incorporating the terms of international conventions in the
domestic law stands on two different footings.
CONCLUSION
The law of the land is that the ratio laid down by the apex Court
has to be adhered to. But the question of the competence of the
Supreme Court to legislate is still a debatable issue. The last
but not the least is whether the proposition laid down in the
matter of broadcasting of sound recordings will also hold good
for the broadcasting of programs by televisions channels.
Unfortunately, the obvious answer seems to be, yes. The factors
which resulted in the delivery of the judgment in issue are
many, whatsoever the reasons may be. It is an undoubted
position that the sound recording industry will be hit by the
judgment to a large extent. For other industries which are
copyright protected, the threat in that the concept of monopoly,
international convention and applicable laws in various other
countries may, at some point of time, take away their contractual
rights and confer the Copyright Board the power to grant
compulsory license. 􀂉
Ownership of the Copyright in Sound Recording – An Illusionary or Actual Right
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