India: To P(L)AY Or Not To P(L)AY. Delhi High Court And Bombay High Court Tell You.

Last Updated: 16 January 2017
Article by Vikrant Rana and Tulip De

It is no secret that the wrath of copyright societies like IPRS, PPL, Novex and the recent ISRA have been faced by all major hotels and event organizers in the past few years, especially during the festive seasons and around Christmas-New Year's Eve. The recent turn of events in the Delhi High Court and the Bombay High Court may be a relief for few as issues related to the much long-sought clarity to and transparency in the functioning of these societies/ alleged associations have been finally addressed.

In a writ petition being W.P. (C) No. 12076/2016 titled M/s. Event and Entertainment Management Association (EEMA) V. Union of India & Ors., EEMA (hereinafter, 'Petitioner') approached the Delhi High Court for issue of a writ of mandamus, directing the Union of India (hereinafter, 'Respondent No. 1') to hold an enquiry against other Respondents, namely, Indian Performing Rights Society/ IPRS (hereinafter, 'Respondent No. 3'), Phonographic Performance Ltd./ PPL (hereinafter, 'Respondent No. 4') and Novex Communications (hereinafter, 'Respondent No. 5'), for the alleged violation of Section 33 of the Indian Copyright Act. The Indian Copyright Office was the Respondent No. 2 herein.

Submissions of the Petitioner

  • Section 33 of the Copyright Act requires no person or association of persons, to take part in the issue of licenses of any copyrighted works on behalf of copyright owners. Copyright societies are essentially entities, which administer issuing of licences for copyrighted works on behalf of copyright owners.
  • Respondent nos. 3 & 4 were once registered Copyright Societies as per the Copyright Act, but are not registered anymore and are hitherto liable for acting in contravention of Section 33 of the Copyright Act, because of the fact that they have continued to take part in the business of issuing licenses even after lapse of their registration in 2013.
  • Petitioner also submitted that Respondent no. 5 was never registered as a Copyright Society.

Submission of the Respondents

  • Respondent no. 1 submitted that they have already initiated appropriate enquiry against Respondent nos. 3, 4, and 5 on having received complaints of violation against them.
  • Respondent no. 1 also submitted that, as an interim measure, a public notice has been displayed on the website of the Department of Industrial Policy and Promotion (DIPP) informing the public that Respondent nos. 3 and 4 are no longer registered as Copyright Societies.

(The said public notice as available on the DIPP website is available here.)

Decision of the Court

Hon'ble Mr. Justice Sanjeev Sachdeva, of the Delhi High Court, vide his interim order dated December 23, 2016, restrained the Respondent nos. 3, 4, and 5 from acting in contravention of Section 33 of the Copyright

Act, i.e. from issuing or granting licenses in breach of S.33 of Act, till the next date of hearing. The Court also directed Respondent nos. 1 and 2 to take action in accordance with the law for any breach of provisions of Section 33 by Respondents nos. 3, 4, and 5. The relevant order can be found here.

Further Proceedings

The above injunction order dated December 23, 2016 passed by Justice Sanjeev Sachdeva was challenged by IPRS, PPL and Novex (the Respondents/ Applicants), who sought for the said order to be vacated. The matter was heard by Hon'ble Mr. Justice Najmi Waziri of the vacation bench of the Delhi High Court.

Submissions by the Respondents/ Applicants

  • The Respondents/ Applicants relied upon some orders passed in their favour by the Delhi High Court such as (i) CS(COMM) No. 328/2016 Novex Communication Pvt. Ltd. V. Hotel Crowne Plaza decided on April 7, 2016; (ii) CS(COMM) No. 385/2016 Novex Communication Pvt. Ltd. V. The Royal Plaza decided on April 22, 2016; (iii) CS(COMM) No. 1086/2016 Novex Communication Pvt. Ltd. V. M/s. Sky Lounge Bar-Svenska Design Hotel decided on August 8, 2016; (iv) CS(COMM) No. 1150/2016 Novex Communication Pvt. Ltd. V. M/s. Pegs Down & Ors. decided on August 28, 2016; (v) Novex Communication Pvt. Ltd. V. M/s. Hype, New Delhi & Anr.; (vi) Novex Communication Pvt. Ltd. V. M/s. The Lodhi Hotel & Anr.; and (vii) Novex Communication Pvt. Ltd. V. M/s. The Suryaa Hotel & Anr. (all dated August 30, 2016); (viii) TM No. 13795/16 Novex Communication Pvt. Ltd. V. M/s. ITC Maurya, New Delhi & Anr.; (ix) TM No. 13793/16 Novex Communication Pvt. Ltd. V. M/s. Holiday Inn Hotel & Anr.; (x) TM No. 13794/16 Novex Communication Pvt. Ltd. V. M/s. Pride Plaza Hotel & Anr. and (xi) TM No. 13792/16 Novex Communication Pvt. Ltd. V. M/s. Dusit Devarana & Anr. (all dated September 19, 2016); (xii) Order dated September 24, 2016 passed in Novex Communication Pvt. Ltd. V. M/s. Park Plaza & Anr.; and (xiii) order dated October 18, 2016 passed in CS No. 3325/16.
  • The Government of India's inquiry is only against IPRS and not PPL, however, the latter's request for withdrawal of the application for re-registration as a Copyright Society has not been conceded as yet.
  • The Respondents/ Applicants are legitimate assignees of copyrighted works or are duly authorized agents of copyright owners and seek to enforce their rights under Section 18(2) and Section 30 of the Copyright Act. The websites of Respondents/ Applicants show that they are the owners of approximately one million songs and other copyrighted works. The Copyright Act protects the rights and interests of an owner of a copyright; that insofar as such owner exercises its rights under Section 18(2) and/or Section 30 read with Section 19 of the Copyright Act, there is no bar to the copyright owner or his agents or an assignee from monetizing the copyrighted works.
  • First proviso to Section 33(1) of the Copyright Act secures the rights of a copyright owner to continue to have the right to grant licenses in respect of his own works consistent with his obligations as a member of the registered copyright society.

Submissions by the Petitioner

  • The order dated December 23, 2016 of the Single Judge of the Delhi High Court restrained the respondents/ applicants from carrying on or issuing or granting licenses of copyrighted works as a Society, therefore, they cannot carry out similar activity by subterfuge, in any other method.
  • The Government of India has rightly initiated proceedings against them in terms of its Office memorandum dated October 16, 2016.
  • The Respondents have all along refused to disclose any documents to substantiate their claim of assignments of copyrights or shown any documents to substantiate their claim of assignments of copyrights or shown any documents that they are authorized agents of specific works by copyright owners. Further, the assignment deeds would have to be in the mode prescribed under Section 19 of the Copyright Act. Consequently, in the absence of any such document or assignment deed showing their rights as assignees or authorized agents, the Respondents/ Applicants cannot seek to exploit or monetize or otherwise recover monies of the copyrighted works from the public at large.
  • Petitioner relied upon the judgment of the Bombay High Court in Leopold Café & Stores V. Novex Communications Pvt. Ltd. (decided on July 17, 2014) to urge that the present Respondents cannot carry out the business of issuing or granting licenses for copyrighted works which was exploited under Section 33 of the Copyright Act. However, the Petitioner fairly conceded that a legitimate assignee under Section 18(2) of the Copyright Act or a duly authorized agent under Section 30 can exploit and monetize the copyrighted works or otherwise seek protection of copyright.

Decision of the Vacation Bench of Delhi High Court

Vide its interim order dated December 29, 2016, the vacation bench of the Delhi High Court comprising of Hon'ble Mr. Justice Najmi Waziri did not vacate the earlier order dated December 23, 2016 passed by Justice Sachdeva. However, the learned vacation bench, relied on the decision in Leopold Café & Stores

v. Novex Communications Pvt. Ltd. of the Bombay High Court to observe that the right under Section 30 is not obliterated by the prohibition in Section 33 and both must exist harmoniously. Thus, a copyright owner or his "legitimate" agent/ assignee is entitled under Section 30 of the Act to issue licenses and collect license fees. As an interim compensatory arrangement, Justice Waziri directed EEMA to pay copyright fees/ royalties to IPRS, PPL and Novex under Section 30 of the Copyright, which is reserved for owners of copyrights, with the express rider directing IPRS, PPL and Novex to prove their ownership over the copyrights when called upon to do so, and also providing a process for issuing licences and obtaining royalties in the immediate interim period as under:

  1. EEMA members/the event organizer will provide PPL/IPRS/Novex a list of songs that they intend to play BEFORE the event on mail. Accordingly, the respondents are to issue their invoices.
  2. The respondents (PPL/IPRS/Novex) will need to confirm in writing if they own the tracks mentioning the assignment no./details on the invoice.
  3. The event organizers will pay the amount before the event as per mutual negotiation with the copyright owner.
  4. The license issuing company/entity shall provide proof by way of legal agreements within 7 days of the invoice, to the satisfaction of the event organizer.
  5. In case the event organizer is not satisfied by the proof provided, a refund can be claimed through the courts. The money will not be appropriated till such time that the matter is mutually resolved.
  6. Additionally, PPL/IPRS/Novex are required to put up a detailed list on their website listing all songs they own including the names of the authors/producers they have acquired them from, along with the dates of validity of the contract until December 31, 2016.
  7. In addition to this, the licensing companies, without fail, also need to upload the valid legal agreements by which they claim ownership of these tracks, by December 31, which will be available for all to see and check.
  8. The Court instructed PPL/IPRS/Novex to set up an online payment gateway within 1 month of this hearing wherein stakeholders will be able to easily obtain permissions online.

IPRS was given a period of 15 days to complete this entire process.

The order dated December 29, 2016 of Justice Najmi Waziri is available here.

Concluding Remarks

Miscellaneous reporting of the above order dated December 29, 2016 by various newspapers caused much confusion as to whether it dilutes the injunction granted by Justice Sachdeva on December 23, 2016. The cumulative effect of the above discussed two orders is to maintain the status quo as it existed prior to their passing. The entire drift of things is clearly to bring higher standards of transparency in the system by requiring the collecting societies to publish the complete list of songs along with the assignment deeds.

Pursuant to the Court's orders, PPL has now uploaded a list of entities who have entered into assignment deeds with it, alongwith copies of the assignment deeds, and also the list of works over which it claims rights. IPRS has also uploaded a list of its assignment deeds. This is definitely a positive step as prospective licensees can now go through these websites to ensure that they are paying the right entity and hence, avoid multiple payments for the same works.

The case is fixed for further proceedings on April 24, 2017.

Proceedings before the Bombay High Court

In Phonographic Performance Limited (PPL) V. Manuj Agarwal & Ors. [Suit (L) No. 1190 of 2016 and Notice of Motion (L) No. 3623 of 2016], the vacation bench of the Bombay High Court comprising of Hon'ble Mr. Justice A. K. Menon dealt with a similar issue, in context of the highly popular Sunburn Festival 2016 which is usually held during the New Year's celebration period. In this case, the Respondents gave an undertaking to pay to the Plaintiff (PPL) any amount that may be determined to be payable to the Plaintiff in respect of the said events. The relevant order dated December 27, 2016 is available here.

Meanwhile, in a combined order dated December 21, 2016 in the cases PPL V. Welcom Hotel Rama International (ITC) & 4 Ors., PPL V. Corum Hospitality & 4 Ors., PPL V. Mynokos Blu & 4 Ors., PPL V. British Brewing Company Pvt. Ltd. & 4 Ors., PPL V. YMCA International Centre & 4 Ors., PPL V. Neon The Disc & Ors., PPL V. Impresario Entertainment & Hospitality Pvt. Ltd. & 4 Ors., PPL V. J.W. Marriott & 4 Ors., PPL V. Titos Resorts & Hospitalities Pvt. Ltd. & 4 Ors. and PPL V. K-2 Club and Lounge & Ors., Hon'ble Mr. Justice G.S. Patel of the Bombay High Court demanded more transparency in the dealings of collecting societies and emphasized upon the need to make available all details related to copyrighted works to prospective licensees. He observed that in matters of copyright enforcement, it is necessary especially in this digital age with its proliferation of material to ensure the maximum possible transparency, and "a person who needs a license must know for what he needs that license and from whom, and at what rate".

Justice Patel further made it clear that event organizers and hosts cannot use copyrighted works without paying the license fee to the owner, whosoever that may be. Even while stating so, he agreed with the suggestion on behalf of the event organisers/ hosts to deposit the sum against the proposed license fee in court rather than directly paying the collecting societies till the suit is disposed off. The said order dated December 21, 2016 is available here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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