India: Renting Unauthorized Original Imported DVDs Constitute Copyright Infringement

Last Updated: 4 June 2009
Article by Jayant Kumar

The Delhi High Court has come up with yet another landmark judgment in copyright enforcement case. The Court, in Warner Bros. Entertainment Inc. and Ors. v. Mr. Santosh V.G. (CS (OS) No. 1682/2006), reaffirmed that importing original DVDs and renting them out in India constitutes copyright infringement under the Copyright Act, 1957 (hereinafter referred to as "Act").

Warner Bros. (hereinafter referred to as "Plaintiff"), in the instant case, alleged that defendant was the proprietor/partner of a concern by the name and style of, Cinema Paradiso, which carried out the business of offering movie titles on rental basis. The defendant was also offering original DVDs of movie titles, that he had imported from the USA. Plaintiff contended that he is the copyright owner of the rental titles by virtue of International Copyright Order, 1999 read with section 40(a) of the Act. Plaintiff further claimed that under section 14(d)(ii) of the Copyright Act, 1957; copyright owner has the exclusive right to do or authorize "to sell or give on hire or offer for sale or hire, any copy of the film, regardless of whether such copy has been sold or given on hire...". The defendant had not obtained any license from the plaintiff for offering the DVDs on hire and therefore, liable for copyright infringement.

The Court held that under section 2(m) (ii) of the Act, which defines "an infringing copy", as a copy which is "made or imported in contravention of the provisions of this Act"; infringement is not restricted to the act of "making" but also extends to "importation" in contravention of the Act. Section 30 of the Act deals with licensing of copyright; like Section 18, licensing has to be through agreement in writing. Infringement of copyright, by Section 51, includes an act, when any person-

  1. makes for sale or hire, or sells or lets for hire, or by way of trade displays or offers for sale or hire, or
  2. distributes either for the purpose of trade or to such an extent as to affect prejudicially the owner of the copyright, or
  3. by way of trade exhibits in public, or
  4. imports into India,

any infringing copies of the work.

The definition of "infringing copy" under Section 2(m) makes it clear that the reproduction, copy or sound recording,...made or imported in relation to a copy, is deemed to be an infringing copy.

The Court, thereafter, moved on to the issue of exhaustion of rights, as defendant contended that the DVDs at issue were purchased legitimately, "long arm" restrictions expressed on the concerned copies are of no consequence; it lost or "exhausted" the right to control further sale or commerce in that copy. The Court held that application of the phrase "copies in circulation" (in sec. 14(a)(ii)) is limited to literary, musical and dramatic work and the same can't be applies to other classes. None of the owners of other classes of work are subject to that limitation. This limited "exhaustion" negates the applicability of the principle in regard to other classes of copyrights. Thus, Parliament having intervened in one category of copyrights to grant a limited kind of "exhaustion" and consciously chosen not to extend it to others, sleight of judicial reasoning cannot extend its application. The Court, therefore, held that, importation of rental copies for purpose of rental use or hiring, and in respect of CDs, DVDs, etc of cinematograph films for which the plaintiffs have not issued rental licenses, without the plaintiffs' license or authorization, for commercial use, or profit, or for hiring or rental, constitutes infringement under Section 51 (a)(i) as well as Section 51 (b) (iv).

Defendant further contended that India permits 'parallel importation' and the DVDs and VCDs procured legally, and meant for rentals, and therefore, could be imported. The Court notices that the proviso to Section 51(b)(iv), provides the key to Parliamentary intention. It carves only one exception, permitting "import of one copy of any work for the private and domestic use of the importer". It was further held that the effect of the proviso to section 51(b)(iv) is plainly, not to relax the importation of genuinely made cinematographic films but to allow for the importation of one copy of any work "for the private and domestic use of the importer". This would mean that the proviso allows for the importation of an infringing work, for private and domestic use of the importer, and not commercial use. Importation of DVDs for any of the purposes under Section 51, other than the one spelt out in it the proviso is in contravention of the Act. The Court finally confirmed the ad-interim injunction in favor of the plaintiff. Pursuant to this judgment, DVD Rentals across the country are likely to come under pressure and may face frequent raids to curb outlets without proper licenses.

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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