Fair Play Questioned: PPL Faces Setback In Licencing Fee Dispute

The Court holds not making copyrighted work available on unreasonable terms could amount to refusal. The court emphasised the balance to be drawn between the interest of the owner of the copyright in protecting their works and the interest of the public to have access to the works

This interesting copyright case involves a petition filed by Al Hamd Tradenation, an event management company (Petitioner) against Phonographic Performance Limited (Respondent) under Section 31 of the Copyright Act, 1957, seeking a compulsory license and the determination of fair and reasonable license rates. Section 31 of the Copyright Act, 1957, provides for the grant of compulsory licenses in cases where the owner of the copyright has refused to republish or allow the performance of the work in public, or has refused to allow communication to the public by broadcast of the work or sound recording, on terms which the complainant considers reasonable

Facts and Background

1. The Petitioner intended to play the music at the corporate event that it was organizing for 50 persons at Hotel Lutyens in Delhi and was informed that it requires a license from the Respondent. The license fee for 1-150 persons was quoted as Rs. 49,500/-.
2. The petitioner offered to pay 1/3rd of the old license fee of Rs. 49,500/- that is 16,500/-, on the basis that the event was only for 50 people.
3. As the negotiations failed the Respondent filed a suit for copyright infringement against the Petitioner. The Petitioner claims that the license fee demanded by the respondent is unreasonable and prohibitory, effectively refusing to publish or allow the performance of its works in public.
4. The Respondent contends that it is the owner of the copyright in its repertoire and is entitled to grant licenses for public performance. The Respondent argues that its repertoire is freely licensed to the public and is not withheld. The Petitioner, however, argues that the Respondent's demand for unreasonable license fees amounts to withholding the works from the public.

Issue before the Court

1. Whether the respondent's refusal to grant a license at the rate offered by the petitioner constitutes a refusal under Section 31 of the Copyright Act.
2. whether the terms offered by the respondent are reasonable and whether the petitioner is entitled to a compulsory license.

Respondent/ PPL argued that

1. Ownership and Licensing Rights: They are the owner of the copyright in the sound recordings in their repertoire and are exclusively entitled to grant licenses for communication to the public. They argued that they are entitled to license the sound recordings at the rate they have determined.
2. Public Access: The Respondent contended that Section 31 of the Copyright Act is applicable only to cases where the work in question has been withheld from the public. They claimed that their repertoire is being freely licensed to the public for consumption by multiple entities, such as restaurants and hotels, and thus, the works are not withheld from the public.
3. Willingness to License: The Respondent argued that they had not refused to allow the performance of their works in public. They were willing to license their works to the petitioner upon payment of the license fees as per their publicly published tariffs. They claimed that the petitioner specifically denied paying the appropriate fees, intending to exploit the sound recordings without any license.
4. Reasonableness of Offer: The Respondent maintained that their offer was neither unreasonable nor arbitrary. They highlighted that over 9100 entities had obtained over 32,000 copyright licenses for communication of sound recordings at various events across the country since April 2023.
5. Scope of Compulsory License: The Respondent argued that the right to "perform the work in public" is limited to literary, dramatic, and musical works and does not extend to sound recordings. They contended that the petitioner could not be licensed the right to communicate the respondent's sound recordings to the public under Section 31(1) of the Copyright Act

Court's Ruling

1. Unreasonable License Fees: The court noted that the license fee structure by the Respondent, PPPL, was not commensurate with market standards and placed an undue burden on the Petitioner, AL HAMD, and the general public. The court highlighted that the Respondent's offer to make copyrighted work available on unreasonable terms could amount to refusal.
2. Fair and Reasonable Terms: The court emphasized that the Respondent cannot be given a free hand to procure arbitrary and unreasonable license fees. The Respondent must be held accountable for ensuring that it charges fair and reasonable license fees for its repertoire. The court referred to the principles laid down by the Supreme Court, which stated that monopoly is not encouraged in the constitutional scheme of statute, and artistic work, if made public, should be made available subject to reasonable terms.
3. Public Access: The court recognized the rights of the public to republish, perform, and have access to published works on fair and equitable terms. The Respondent cannot be allowed to take advantage of its market leadership in having ownership of a repertoire of songs to create an arbitrary licensing regime.
4. Statutory Framework: The court referred to Section 31(a) of the Copyright Act, which highlights that refusal to allow republishing or performance in public by the owner of any copyrighted works would attract the provisions of compulsory license. The court also noted that the prevailing standards of royalties with regard to the publication of works or performance of the work in public can be taken into consideration at the time of determining the quantum of compensation or royalty.
5. Compulsory License Principles: The court cited the Supreme Court's judgment in the case of Entertainment Network (India) Limited Versus Super Cassette Industries Limited, which delved into various aspects of compulsory licenses. The Supreme Court emphasized the balance between the interest of the owner of the copyright in protecting their works and the interest of the public to have access to the works.
6. Reasonableness of Terms: The court rejected the Respondent's contention that the court cannot go into the issue of reasonableness of the terms of providing copyrighted work while dealing with cases covered under Section 31(a) of the Copyright Act. The court stated that if the terms offered by the Respondent are not reasonable, the court is not precluded from adjudicating on the issue and can proceed to determine the terms and conditions of the license for the copyrighted work.
7. Obligation to Charge Fair Rates: The court noted that the Respondent holds a vast repertoire of sound recordings and has an obligation to charge fair and reasonable license rates.

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