Most commercial establishments often play popular music as a form of entertainment for their patrons. Step into any mall, hotel, pub, restaurant, or gym, and there is a high chance that they will be playing a song that you know. Since music falls under the scope of copyright as intellectual property, any commercial establishment playing music must obtain a license from the appropriate rights holder in order to play such music.

Having said this, thinking about it, obtaining licenses from each rights holder in respect of a popular song can be extremely time-consuming and onerous. The Copyright Act, 1957 (“the Act”), has therefore envisaged the establishment of societies (termed Copyright Societies) in order to streamline the licensing process as well as keep tabs on unauthorized use of licensed works. A copyright society may be registered as per Section 33 of the Act, as long as there is a minimum of 7 members. Section 33(3) further provides that ordinarily, only one society may be registered to do business in respect of the same class of work.

The Act also allows for rights holders or their authorized agents to grant licenses to third parties in order to use any copyrighted works. This right is granted under Section 30 of the Act.

Who grants public performance of music licenses?

With respect to music, the two biggest rights holders for popular music in India are Phonographic Performance Ltd (“PPL”) and Novex Communications Private Limited (“Novex”). Between these two entities, they have been recognized as the authorized agents for the rights to the majority of popular music in India. Both these entities have set up online application systems for prospective customers to obtain licenses.

However, there is some controversy regarding these two entities’ ability to grant licenses, considering that neither of them is currently registered as a copyright society. Section 33 of the Act states that only a registered Copyright Society can be engaged in the business of issuing or granting licenses. Following this school of thought, Novex, as an entity not being registered under Section 33, should prima facie not be allowed to issue or grant licenses or seek the payment of royalties. In the case of PPL, it was earlier registered as a copyright society but did not renew its registration. The matter has been brought up in Court numerous times since then.

It is pertinent to mention however that notwithstanding the above, in Leopold Café & Stores & Anr. vs. Novex Communications Pvt. Ltd. [2014(59) PTC 505], the Bombay High Court clarified that Sections 30 and 33 may coexist. The Court had drawn a distinction between the act of ‘granting’ a license as opposed to ‘issuing’ one and held that an agent may issue (but not grant) a license. The ruling of the Court concluded that the “factum of agency must be disclosed so that the licensee knows that it has a valid license from the copyright owner; i.e., that it is made known by the agent that it is acting on behalf of the holder of copyright in the works in question, even though the licensee may throughout deal only with the agent and never directly with its principal.” The Court further clarified that there was nothing in the Act to prevent Novex from acting as an authorised agent of any copyright holder under Section 30 of the Copyright Act. Accordingly, both Novex and PPL issue licenses in their capacity as agents, not as Copyright Societies.

Numerous Courts have granted injunctions to Novex against commercial establishments using such copyrighted works without obtaining the appropriate licenses, including one as recent as December 2019. In Novex Communication Pvt. Ltd. vs Lemon Tree Hotels Ltd. & Anr. [RFA No. 18/2019 & CM Nos. 786-789/2019], the Delhi High Court had held that a suit by Novex seeking both an injunction and damages from a commercial establishment due to their failure to obtain necessary licenses from Novex while playing music owned by YRF was indeed maintainable. It was further clarified that the commercial establishment (a hotel) was not to use such copyrighted works until the necessary approvals had been obtained from Novex.

The Madras High Court in Novex Communication Pvt. Ltd. vs Hotel Sunway Manor [C.S.No.881 of 2018], has also granted a favourable order towards Novex in respect of obtaining an injunction against another hotel which did not obtain the appropriate licenses from Novex prior to conducting events and playing music. It, therefore, appears that there is ample precedent established by the Courts in India allowing Novex to issue licenses and duly collect royalties.

Further, media reports from December 2019 also indicate that numerous other injunctions were obtained by Novex and other similar agents from the Bombay and Karnataka High Courts, further establishing that current jurisprudence appears to support the idea that Novex is indeed entitled to restrain third-parties from using such copyrighted works without the appropriate permissions.

Both these entities also display a list of the songs in which they have rights as agents on their respective websites, Novex and PPL and therefore interested persons may peruse the list before determining which license to obtain.

When do you need a public performance license?

As mentioned above, any commercial establishment that is playing music (or indeed any other copyrighted work) would have to obtain a license from the appropriate rights holder. Playing such works without the appropriate licenses would likely be considered copyright infringement, and would carry the penalties as mentioned in the Act. Of course, whether an instance of use amounts to infringement is a question of fact to be determined by a competent Court in each such instance.

The definition of a commercial establishment for the purposes of determining what constitutes a public performance may be open to interpretation. While the above-mentioned case laws have established that entities in the hospitality industry are indeed within the ambit of being considered venues for public performance, the situation with respect to corporate offices is less clear. Many corporate entities choose to obtain blanket annual licenses from PPL/Novex for their premises to avoid any scope for claims of copyright infringement. However, arguments could be made that the use of such works for small corporate events such as in-house birthday celebrations of employees would not constitute an infringement of copyright. Till date, however, there is no established case law specifically addressing corporate offices, and thus there is some scope for interpretation as to how corporate entities are to address this matter in India. However, given the body of case law in favour of Novex/PPL with respect to the hospitality industry, it is likely that any litigation in respect of corporate offices would have a similar outcome. We would therefore recommend that any corporate office that is looking to play music at their events or on their premises obtains a license, in the interest of prudence.