Madras High Court dismisses violation of licensing rights cases

Madras High Court dismisses violation of licensing rights cases

Business of issuing licenses to be routed only through copyright societies

The Madras High Court has analyzed the ambit of a statutory embargo on the business of issuing licenses for on-ground performance rights in sound recordings. This is when the entity issuing the licenses does not fall within the meaning of a copyright society under the Copyright Act

The single bench of Justice N Anand Venkatesh has ruled, "There is no doubt that an owner need not necessarily join a copyright society. The first provision in the Copyright Act makes it clear that the right of an owner to issue licenses in his individual capacity remains un-impacted. It is subject to the fact that the right must be consistent with his obligations as a member of any copyright society.

"However, once the grant of license moves from the owner in his individual capacity, and transcends into the realm of a business, another provision applies. The legislative intent is manifestly clear that the business of licensing must be routed only through a copyright society," he said.

The court held that the plaintiff's cause of action would "crumble like a pack of cards" when it was clear that he was subject to the statutory bar on issuing licenses under the Act. When the response to the preliminary question of law indicated that the plaintiff did not have the authority to issue licenses, there could not be any consequence for his claim that the defendants had failed to obtain licenses. Therefore, they did not have to pay license fees for on-ground performance rights of the sound recordings concerned.

The case pertained to Novex Communications, the plaintiff, which entered into various assignment agreements with defendants DXC Technology and Cognisant Technologies Solutions, the owners of sound recordings, especially the songs in the films. The plaintiff had contended that the acquired rights bestowed upon them the absolute copyright for granting licenses to others for on-ground performances of the songs concerned.

At this, Justice Venkatesh asked, "Was the plaintiff legally permitted to issue or grant a license without being the copyright society under the Copyright Act, 1957?"

In the two suits filed before the court, the allegations leveled by Novox against the defendants were the same. Novex contended that despite its absolute copyright over ground performances of some songs the defendants played those songs in the events conducted by them without obtaining a license from Novex.

The plaintiff also claimed that it had become the owner of the 'sound recordings' within the definition of 'work' under the Copyright Act. It was submitted that the owner was different from the original content creators, who were the authors of the underlying literary, musical or artistic work. Only the latter would be subjected to the constraints of the Act. Therefore, according to Novex, joining the copyright society was a voluntary act having no bearing on its right to grant the licenses.

However, the defendants argued that the plaintiff had admitted it was in the business of granting licenses in sound recordings for all forms of exploitation of copyrights in sound recordings. The Copyright Act did not permit Novex to grant licenses or claim license fees on the assigned rights, as it was neither a copyrights society nor a member of the society.

The defendants also claimed that the plaintiff had only claimed rights over on-ground performances and that did not make it the owner of the sound recordings.

The court had framed the preliminary issue under the Code of Civil Procedure, 1908. While tracing the genesis of copyrights societies and their transformation over time, the court noted that the Copyright (Amendment) Act of 1994 had introduced the concept of 'Copyright Society.'

The court observed, "Though envisaged with an intent to benefit authors of the work, the Act placed these societies under the collective control of the owners with little or no room for authors. By 2008, these copyright societies were completely under the control of the owners, who ignored the interests of the authors and composers."

Thereafter, the judge relied on the 227th Report of the Parliamentary Standing Committee on the Copyright (Amendment) Bill, 2010 that paved the way for the 2012 amendment. According to this, the 'authors' were placed on par with the 'owners of copyright' in the control over the copyright society.

Additionally, the court perused the after-effects of the amendments on granting licenses.

While dismissing both suits, Justice Venkatesh also imposed a fine of Rs.1 lakh each to be paid to the respective defendants by the plaintiff.