Right to Royalty for Underlying Works: Conundrum in Law and Underlying Issues
Introduction
Section 18 of the Copyright Act, 1957 ("Copyright Act") deals with the assignment of copyright. Such assignment can either be by an owner of an existing work or the prospective owner of the future work to any person, either in whole or in part. By way of the Copyright (Amendment) Act, 2012 ("Amendment Act") two provisos were inserted by the legislature to Section 18 of the Copyright Act.
The provisos1 essentially prohibit an author of literary or musical work forming part of either a cinematographic film or a sound recording from waiving his/her right to receive royalties (and any such waiver if done will be void) for utilization of the underlying work. The royalties so received is to be shared equally with an assignee of the copyright (if any and as applicable). This rule prohibiting waiver and entitling authors to at least 50% royalty does not apply to assignments made to: (a) communicate the underlying work as part of a cinematograph film in a cinema hall; (b) the legal heirs of such authors; or (c) a copyright society for collection and distribution.
This piece delves into the principle issue arising out of the provisos, whether the utilizer or the assignee (i.e. a producer) is liable to pay the royalties to the authors. This issue (and the underlying liability) continues to haunt the media and entertainment industry. A deeper look into this issue gives rise to several sub-issues, for instance: (a) whether the royalty paid under a contract by a utilizer of the principal work (i.e. sound recording or a cinematographic film) to an assignee by itself includes the royalty entitlement of the author; and (b) whether the author (who is a non-signatory to a contract between an assignee / producer and the utilizer / broadcaster) can claim benefits arising from such contract.
In addition, this piece also discusses a conundrum created by the rulings of the Hon'ble High Court of Delhi ("DHC") (single judge) in the case of The Indian Performing Right Society Ltd. vs. Entertainment Network (India) Ltd. ("Entertainment Network Case") and Phonographic Performance Ltd & Anr vs. CRI Events Private Limited & Ors.2 ("PPL Case")
Historic Exploitation Of Authors
Prior to the Amendment Act, the Copyright Act (by way of Section 17(i)(b)) provided that the artistic works belongs to the owner, subject to the contract to the contrary. This led to the prevalent practice in the industry, wherein the assignee / producer used to get the rights of the artists unconditionally assigned in its name, making the producer sole author of the copyright instead of the artist. Even all the profits accrued from the utilization of the artistic work were reaped by the producer, depriving the author of the artistic work of any share in the profits.
The aforesaid issue was also addressed in the debate in Lok Sabha[3] (lower house of the Parliament of India) wherein Mr. Kapil Sibal (then Minister of Human Resource Development), described the above as -
"But, unfortunately, there was a provision in Section 17 (i) (b) of the Act under which it was said that the artistic work belongs to the owner, subject to a contract to the contrary. So, what used to happen is that if in a film, a song was to be sung, the producer of the film would go to the artist and say that you have assigned your rights to me unconditionally and you have assigned them was that under forever. The result the Copyright Act, instead of the artist, the producer became the sole author of the copyright. The result of that was, he produced the film, the artist got the benefit of whatever he could get in the film but he sold those rights of which the producer became the owner through other medium. He sold it to music companies; he sold it to telecom companies; and he made all the profits. The result was that the poor author and the poor creator of the copyright did not get any share of the profit. According to me, this is a historic injustice to the creators." The Amendment Act therefore, sought to curb the above stated injustice of not receiving any benefit / royalty by the authors of the underlying works. However, it did not change the manner in which the flow of royalty should happen i.e. from the utilizer / broadcaster to the assignee / producer to the authors of the underlying works.
Click here to continue reading . . .
Footnotes
1. Proviso 3: Provided also that the author of the literary or musical work included in a cinematograph film shall not assign or waive the right to receive royalties to be shared on an equal basis with the assignee of copyright for the utilisation of such work in any form other than for the communication to the public of the work along with the cinematograph film in a cinema hall, except to the legal heirs of the authors or to a copyright society for collection and distribution and any agreement to contrary shall be void.
Proviso 4: Provided also that the author of the literary or musical work included in the sound recording but not forming part of any cinematograph film shall not assign or waive the right to receive royalties to be shared on an equal basis with the assignee of copyright for any utilisation of such work except to the legal heirs of the authors or to a collecting society for collection and distribution and any assignment to the contrary shall be void.
2. MANU/DE/0002/2021.
3. Lok Sabha Debates, Fifteenth Series, Vol. XXVI, Tenth Session, 2012, No. 34, (May 22, 2012 ).
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.
