In an application under Order VII Rule 11 of the Code of Civil Procedure, 1908 for a rejection of the plaint two fundamental questions with regard to the maintainability of the suit came up for consideration. These questions included:
- Whether, in view of the provisions of sections 33 and 34 of the Copyright Act, 1957, a suit for infringement of copyright would be maintainable at the instance of a registered copyright society in the absence of the owner of the copyright?
- Whether, in view of the provisions of section 61 of the Copyright Act, 1957, inasmuch as the owner of the copyright has not been made a party to the present suit, the same would be liable to be rejected on the ground of non- impleadment of a necessary party?
To elucidate, S. 33 of the Copyright Act deals with the registration of a copyright society while S. 34 deals with Administration of rights of owner by copyright society. S. 61 deals with the owners of copyright to be party to the proceeding. The impact of these provisions dealing with licensing in copyrights came up for debate in Phonographic Performance Ltd. v. Hotel Gold Regency & Ors. [2008 (37) PTC 587 (Del.)] at the High Court of Delhi.
Phonographic Performance Ltd., a company incorporated under the Companies Act, 1956 is a copyright society as under section 33 of the Copyright Act. By virtue of being the said society, the Phonographic commenced and carried on its business in sound recordings. They are also owners of copyrights in different sound recordings in respect of recorded music and vide an agreement, have administered their rights by issuing licences in respect thereof. One such agreement is with Saregama India Ltd.
The recitals in the agreement state
that Saregama India Ltd is the owner of the copyright in various
sound recordings and that by virtue of its membership of the
Phonographic society, they agreed to authorize /grant in respect of
its sound recordings, rights of communication to the public
(including broadcast/telecast and public performance rights) on the
terms and conditions mentioned in the
agreement. The agreement also included the authority to license, collect distribute revenue and conduct other functions on behalf of the owner itself or through authorized agents. The agreement also dealt with enforcements and stipulated that Phonographic could affidavits, institute, commence or conduct civil, criminal and/or administrative proceedings, in case of any infringement of the right to communication to the public of any of the recordings which constitute the subject matter of the agreement.
Hotel Gold Regency and its co-parties are hotels, lounges, bars and restaurants. It was alleged that they played recordings in respect of which Phonographic had entered into agreements with the owners of the copyrights, and that no licence had been obtained and therefore committed an act of infringement of the owner' copyright. Phonographic contended that by virtue of being a registered copyright society and the various agreements with the owners, they are entitled to file the present suit seeking an injunction restraining Hotel Regency from playing the sound recordings without obtaining annual licences for the same. They also stated themselves to be entitled to a money decree for the sum of money as calculated on the basis of the applicable tariff charts of Phonographic for using and/or communicating the sound recording of the copyrighted work. Hotel Regency took the plea of non-maintainability of the use in as much as Phonographic lacked locus standi to do so.
The Court opined that only an owner of the copyright or an exclusive licensee could maintain a suit for infringement and, in case a suit was filed by the exclusive licensee, the owner of the copyright has to be made a party to the suit. It was contended that section 33 of the said act contemplates the establishment and formation of a copyright while looking into the provisions to it. According to Hotel Regency, Phonographic Society being a registered copyright society did not have exclusive rights to grant a licence much less an exclusive ownership in respect of the copyright. They stated that the rights of a copyright society were limited to issuance of licences and administration of copyrights and did not extend to the filing of suits for infringement. With reference to section 34, they submitted that the copyright society, at best, is a society for administration of rights conferred on the society. The submissions enunciated as to what could be included in the purview of administration of rights. Further, they asserted that the right to seek civil remedies for infringement of copyrights has been limited to the owners and that the copyright society did not have any such right to seek remedies for infringement
Phonographic also contended that the word ``business'` was a very wide term, including the right to institute a suit for the enforcement and protection of rights granted to the society by its members. The object of registration is to aid individual copyright owners so that they are not made to prosecute tortuous proceedings in different parts of the country for the enforcement of the rights against the same person violating their rights. The usage of the word "authorization" in the 1957 Act was also deliberated upon, while Section 188 of the Contract Act, 1872 was also referred to define the extent of an agent's authority. They also contended that the authority to collect licence fee implied that the authority to retain a counsel and institute suits .They stated such rights and actions to be implicit in the rights of administration.
The Court opined that in view of the
strong arguments placed, whatever the agreement between the parties
may provide, only that which is permitted by The Copyright Act,
1957 would be permissible and enforceable. They noted that Section
34 provided vide exclusive authorization by
the owners to the copyright society for grant of licences, collection of fees and distribution thereof amongst the owners and that the Act did not permit the grant of any authorization for moving an infringement action of copyright. It was also clarified that the authority granted to a copyright society for the collection of fees related only to the fees in respect of the licenses and not collecting fees from those to whom the copyright society has not granted any licences.
The Court also deciphered that the situation was entirely different where persons, to whom no licence has been granted by a copyright society, use the works, in which the owner has copyrights. The Court opined that in such a case, the copyright society had no authority to file a suit against such persons either for infringement or for recovery of fees or damages. The Court differentiated the two on the basis that where the copyright society seeks to recover or collect fees from persons to whom licences have been granted, it is doing so in terms of the licences, but while doing so from persons to whom no licences have been granted, it would be doing so on the basis of infringement. In this light, the Court rendered the suit not maintainable and stated that it was open to the owners to sue for infringement and other consequential civil remedies.
As regards the second question pertaining to Section 61, the Court stated that Phonographic was not an exclusive licensee and therefore the Section would be inapplicable to them. They concluded stating that the suit could not be maintained not by virtue of the provisions of Section 61, inasmuch as the owner of the copyright had not been made a party to the suit, but because a copyright society had no right to sue seeking civil remedies of injunction, damages, accounts, etc. founded upon an action of infringement of copyright. Following this rationale, the plaint was stated to be liable to be rejected as under Order VII Rule 11 of the Civil Procedure Code, 1908.
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