The Bombay High Court last month decided an important point of law that was raised in a suit filed by Novex Communications and Phonographic Performance Limited. The issue was raised by the defendants in the suit, a group of more than 100 establishments and hotels, that plaintiffs Novex and PPL cannot carry on the business of issuing licenses without being registered as a Copyright Society under Section 33(1) of the Copyright Act, 1957.
Senior Advocate Darius Khambatta began the arguments on behalf of Novex, he referred to the meaning of the term “Copyright” and the rights associated with it covered in Chapter III of the Act, under Section 14.
This defines a Copyright to mean the exclusive right to reproduce a literary, dramatic or musical work in any material form including storing by electronic means, to make copies of such a work to perform it in public and in the case of a sound recording it includes the right to sell or give on commercial rentals or to communicate the sound recording to the public. The rights of the owner of copyright and its associate rights are covered in Chapter IV of the Act, Mr Khambatta submitted. He explained that the ownership of the copyright can be acquired in 4 broad ways. These are as under:-
a) By the author himself, being the first owner under Section 17
b) Through situations in which the author creates a work in the course of his employment etc. for the benefit or on behalf of someone else, also under Section 17;
c) Through an assignment under Sections 18 and 19 and
- d) Through testamentary disposition under Section 20.
Now, the aforementioned categories confer full and absolute ownership on the author/owner/assignee, as the case may be. Thus, the owner of the copyright could be an assignee. All the incidents of rights that are available to an owner are also available to an assignee. The rights are not higher or lower merely by virtue of the ownership rights being acquired through assignment, Mr Khambatta submitted.
Finally, Mr. Khambata argued that what is significant to note in the second proviso is that there is a complete embargo on carrying on the business of issuing or granting license in respect of the underlying work and this business can be carried out “only” through a copyright society. Therefore, it is clear that when the legislature specifically wanted rights of owners/authors to be curtailed, there was a specific, clear and unambiguous provision. This language is absent in Section 33(1).
On the other hand, Senior Advocate Mr. Ravi Kadam, appeared on behalf of the PPL and submitted that PPL owns and controls (by Exclusive Licenses) the public performance rights of various music labels which include both, international and domestic recordings. The repertoire of the recordings in which rights are assigned to PPL extend to around 400 labels and more than 45 lakh recordings. PPL issues licenses for public performances/communication to the public of sound recordings on the basis of exclusive rights assigned to it under various assignment agreements by these music labels.
He further submitted that PPL has assignment agreements with 60% of the labels in its repertoire whereby the following rights have been assigned exclusively to PPL. These agreements can be found on the official website of PPL. Moreover, with respect to 11 labels, PPL is the ‘Exclusive Licensee’ of the copyright in the sound recordings. Barring these 11 labels, for all the other labels i.e. 393 of 404, PPL has assignment deeds executed for the copyright in the sound recordings.
One of the objections raised by the defendant is that PPL cannot sue without joining the owner in respect of the exclusively licensed works, Mr
Kadam said. He then referred to Section 54 of the Act, which provides that unless the context otherwise requires, the expression “owner of copyright” shall include an “exclusive licensee”. Furthermore, Section 55 provides that where the copyright in any work has been infringed, the owner of the copyright shall be entitled to all such remedies including an injunction.
Also, Section 61 of the Act which provides Owner of copyright to be party to the proceeding. Mr Kadam submitted that in the present case, the infringement by failure to obtain license by the various defendants is not only in relation to works of which the PPL is an exclusive licensee but also in respect of works of which it is itself an owner. Thus, and for that reason, Section 61(1) would not apply.
In conclusion, Mr. Kadam submitted that PPL’s repertoire has a majority of works over which it is the owner. These are two compelling reasons and factors because of which the Court ought to exercise its discretion under Section 61(1) to hold that it is not necessary to make the 11 music labels who are Licensors/Owners of the works as party Defendants to the Suit.
Senior Counsel Dr. Virendra Tulzapurkar, appeared for the defendants and submitted that the prohibition imposed by Section 33(1) applies if the following two conditions are satisfied:
(i) Plaintiff is a “person or association of persons”; and
(ii) Plaintiff carries on business of issuing or granting licenses.
Both PPL and Novex in the above suits are limited companies and therefore, fall within the meaning of “persons”. There is nothing in the language of Section 33(1) to suggest that the word “persons” excludes owners of copyright. On the contrary, “persons” as used in Section 33(1) must include owners because Section 33(1) refers to issuing of licenses. Admittedly, only an owner can issue a license under Section 30 of the Act, Dr.Tulzapurkar argued.
Countering Mr. Khambatta’s argument, Dr.Tulzapurkar submitted that the Second Proviso to Section 33(1) has no relevance to the present matter. It was brought in by way of amendment in 2012 to correspond to the changes made to Section 18 to protect owners of underlying works. It does not impact Section 33(1), which has been on the statute books since 1994, he said.
Finally, after hearing the extensive arguments and submissions made on behalf of both the plaintiffs and the defendants, Justice Riyaz Chagla referred to the relevant definitions in the Act. He observed-
“In my considered view carrying on business of granting licences cannot be excluded from section 30 of the Act, particularly when such granting of licenses is by the owner of the copyright. The word “business” would include the grant of Licenses. If the interpretation of the Defendants on business is to be accepted then in that case 99% of the ownership rights would be taken away and the only right left with the owners would be to license its rights for philanthropy. Thus, this interpretation of the Defendant cannot be accepted.”
The Court further noted –
“Merely because PPL was at one time registered as a copyright society will make no difference to the above findings as PPL is granting Licenses as an owner and thus entitled under Section 30 of the Act to grant its interest in the copyright by license. Further, it will not make any difference that Novex is carrying on the business of granting licenses of their works as there is no restriction placed on an owner to grant any interest in the copyright by License. Thus, in my view the power under Section 30 to grant license by an owner has in no manner been denuded by section 33(1) of the Act. Accordingly, PPL and Novex as owners of copyright in respect of their works are entitled to file the present suits and seek reliefs sought for therein.”
Finally, Justice Chagla concluded that prima facie, there is much merit in the submission on behalf of PPL and Novex that the above suits have been filed against the defendants “who are rank infringes as they have failed to obtain a license in respect of the works which they are exploiting.”
Answering the issue as to whether sought for in the plaint without being registered as a copyright society under section 33(1) of the Act, in the affirmative, Justice Chagla observed-
“I further find no merit in the submission of Dr.Tulzapurkar on behalf of Defendant that the cause of action in the above suits is on an illegal act or amounts to transgression of a positive law as the plaintiffs have been generally assigned the business of granting licenses which activity they seek protection without having themselves registered as copyright society and thus violative of the statutory protection in Section 33(1) of the Act.
The decisions relied upon on the well settled principle of ex turpi causa non oritur actio or ex dolo malo non oritur actio are inapplicable in the present case. This is in view of my finding that PPL and Novex have the power as owners to grant interest in the copyright by license under section 30 of the Act irrespective of whether they are carrying on the business of granting licenses or not. Further, there is no bar under section 33(1) of the Act from an owner carrying on the business of licensing, or collecting license fees. Accordingly, I do not find that the Assignment Agreements and/or Exclusive License Agreements are illegal as contended on behalf of Defendants.”
Author: Nitish Kashyap
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