In a recent judgement, the Bombay High Court had clarified an issue of copyright law that is likely to have an immediate impact on the rise in popularity of music streaming services. Justice Kathawalla, in his order in Tips Industries Ltd. vs. Wynk Music Ltd. & Anr., had categorically rejected the notion that online streaming services are eligible to be granted statutory licenses for broadcasting under Section 31D of the Copyright Act, 1957 (“the Act”).

Background :

The Plaintiffs are a reputed music label, owning the copyright to thousands of songs. The Defendants are a music streaming service, who also provide their subscribers the ability to download songs. The Plaintiffs and Defendants had an existing business relationship wherein the Plaintiffs had licensed their music catalogue to the Defendants. The license expired in 2016, and the Parties were negotiating the renewal of the license. Due to a breakdown in the negotiations, the Plaintiffs issued a Cease & Desist Notice requesting the Defendants to remove their catalogue from the Defendants’ platform. The Defendants refused to comply with the request, and replied to the Notice invoking the provisions of statutory licensing under Section 31D of the Copyright Act, claiming that they were a ‘broadcasting organisation’ desirous of communicating sound recordings to the public. The Defendants relied on a Central Govt. circular stating that internet broadcasters could be considered broadcasting organizations. Being aggrieved, the Plaintiffs filed suits for copyright infringement before the Bombay High Court.

Issues framed:

Justice Kathawalla, after hearing arguments on both sides, framed the following major issues:

  1. Were the Defendants infringing on the copyright of the Plaintiffs?
    • Did the Defendants’ use of the Plaintiff’s copyright constitute ‘fair use’?
    • Is the storage of songs on the Defendant’s subscriber’s devices transient or incidental to their business model?
    • Are the Defendants entitled to a statutory license under Section 31D with respect to their download business?
  2. Are the Defendants entitled to a statutory license under Section 31D with respect to their streaming business
  3. Can a license under Section 31D only be exercised upon fixation of the royalty rate by the IPAB?
  4. Is the Govt. circular relied on by the Defendants, applicable to the present case?
  5. Are the Plaintiffs entitled to an injunction?

Order

The Court answered the above issues as follows:

  1. The Court held that the Defendants were indeed infringing the copyright of the Plaintiffs. The Court gave weight to the fact that the Defendants, by permitting their subscribers to download songs for payment of a fee, constituted the facilitation of making electronic copies of the works in which the Plaintiffs owned copyright, and therefore were not operating with a non-profit motive as considered by the Act. The Court also answered all three of the sub-issues in the negative. It was held that the Defendants could not claim fair use as their usage of the Plaintiff’s copyrighted works was a commercial competitor to the Plaintiff’s business. The Court also held that the download model was a core aspect of the Defendants’ business, and therefore they could not claim the benefits of Section 31D of the Act.
  2. The Court considered the legislative history of the Copyright Amendment Act, 2012, and the Copyright Rules, 2013. After examining the same, the Court held that Section 31D provided exemptions from copyright, and therefore had to be interpreted strictly. The Court also put forth that the Legislature was aware of modern technologies such as the internet, downloading, and streaming, and had made a conscious decision to exclude such services from the purview of granting statutory licenses under Section 31D. The Court further held that the relevant provisions only apply to radio and television broadcasts, and internet broadcasters could not apply for a statutory license under the purview of the Act.
  3. After considering the relevant provisions, the Court held that the IPAB only had jurisdiction to fix rates for TV and radio broadcasts, and hence internet broadcasting was outside the purview of the IPAB’s authority. The Court also considered the relevant Rules to Section 31D, and held that the IPAB was required to fix the applicable royalty rates for copyrighted works before a license under Section 31D could be issued. Therefore, even if internet broadcasters were entitled to obtain statutory licenses, the Defendants were not entitled to invoke a statutory license in the present case as they did not have the necessary clearances from the IPAB.
  4. The Court held that the Government circular relied upon by the Defendants was not to be considered binding. The Court’s rationale for the same was drawn from the fact that the circular was contrary to the legislative mandate of the Copyright Act. The Court also considered India’s representations made to the WIPO General Assembly earlier and found that the circular was contrary to the same. The Court also noted that the circular did not have a ‘statutory flavour’ and therefore the Court was not bound by the same. Accordingly, the Govt. circular was found not to have any validity and the same could not be applied to the present case.
  5. The Court answered this in the alternative, holding that the Plaintiffs had certainly made a strong prima facie case for irreparable losses of revenue if the said injunction was not granted. The Court further held that the fact that Section 31-D was not applicable to internet broadcasters meant that the Defendants could not seek refuge against the injunction by virtue of a license.

Conclusion

The said judgement would certainly come as a big relief to music labels and publishers, who have recently had numerous disputes with online streaming providers as a result of the ambiguity over Section 31D. However, it is important to state that while Justice Kathawalla held that the Legislature had considered the advent of technology while framing the 2012 Amendment, the landscape of entertainment consumption was vastly different in 2012. Streaming services were far less common than they are today, and there are a number of other considerations that have not been addressed as well.

For example, a number of streaming services offer non-interactive broadcasts (i.e. where the user cannot pick what songs are being played, effectively functioning as an internet-based radio station). While other jurisdictions have allowed statutory licenses to extend to such service providers, it remains to be seen whether the same would manifest in India. Another consideration is whether caching of the streamed music constitutes making an electronic copy, and how such matters have to be addressed. We would be discussing some of these issues in greater detail in a future blog post.

 

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