The Bombay High Court recently ruled that statutory licence can be claimed to play copyrighted songs only over traditional platforms like television, radio etc. and not over the internet [Wynk Ltd & Anr. Tips Industries Ltd.].

In other words, the provision for statutory licenses under Section 31D of the Copyright Act is restricted only to traditional non-internet-based broadcasting services like radio, television and stage performances and not internet-based services.

The judgment was passed on October 20, 2022, but uploaded on the High Court website on September 29, 2023.

In the judgment, a division bench of Justices GS Patel and Gauri Godse upheld an order of a single-judge which ruled that Airtel-owned digital music app Wynk Limited cannot store or use music owned by Tips Industries without its consent, merely by claiming the shield of statutory broadcasting rights under Section 31D (statutory licencing) of the Copyright Act.

In certain circumstances, Section 31D allows anyone wanting to broadcast content publicly to do so upon informing the copyright holder of the same (notice) and after payment of royalties prescribed by the Copyright Appellate Board.

The division bench opined that services like radio and television provide content where the user could only tune in to access the content and had no control over the same. 

Meanwhile, internet-based services like Wynk provide for downloading digital audio files without purchasing them, though this feature was available only to users who paid additional fees to purchase the application. 

The division bench also noted that making an audio file available offline (through downloads) fit the definition of commercial rental.

The bench thus concluded that the statutory licenses under Section 31D would have no application to any internet-based service.

“We affirm the finding that statutory licenses under Section 31D are restricted to traditional non-internet based radio and television broadcasting and performances alone. Section 31D has no application to any internet-based offering,” the division bench held.

The dispute before the High Court arose after negotiations between the Wynk and Tips for the use of copyrighted songs on Wynk’s portal failed in April 2017.

Tips, therefore, demanded that Wynk stop using songs whose copyright lay with Tips. A cease and desist notice was issued demanding that Wynk deactivate these songs from its portal from May 10, 2017 onwards.

Wynk did not follow this and allegedly exploited these songs for 10 more months. 

In November 2017, Tips demanded a royalty of ₹2.83 crores for the exploitation of its copyright. In response, Wynk invoked its rights as a ‘broadcaster’ under Section 31D and unilaterally decided that the royalty payable for the period between September 2016 to November 2017 was only ₹1.41 crores.

Tips, therefore, moved the High Court to restrain Wynk from hosting Tips songs on its platform. A single judge earlier ruled in favour of Tips, prompting Wynk to file an appeal before a division bench.

Senior advocate Dr Birendra Saraf (now Advocate General) appeared for Wynk and argued that Section 31D did not have a concept of case-to-case determination of royalty. According to him, only an advance payment was required to obtain a statutory license under this provision. 

Tips, meanwhile, maintained that the application of Section 31D was limited to traditional broadcast platforms like radio and television. Wynk was not a such broadcaster, and therefore it had to take express contractual consent from the copyright holder of those songs (Tips) and pay royalty, Tips contended.

Senior advocate Ravi Kadam appeared for Tips and pointed out that if Saraf’s argument were accepted, no party would ever be required to enter into any kind of contract with any holder of copyright for using copyrighted contended.

The division bench agreed with Kadam’s submissions.

It also noted that Wynk was no charitable organization to accept Saraf's arguments that it would be in the public interest to allow Wynk to continue using Tips' songs.

“It has an avowed commercial profit motive. It simply does not want to pay the license fees that Tips demands. It wants to be able to determine what fees Tips should receive and it seeks to do so unilaterally on some basis that it has conjured up for itself. It does so only to further its own business ... Wynk is not a service that is available to the public. It is available to those who sign up for Wynk," the Court pointed out.

The Court proceeded to uphold the single-judge ruling against Wynk.

"There is, therefore, no question of Wynk attempting to obtain a statutory licence for its private profit motives in this fashion. That is a perversion of the statutory intent. It was not what Section 31D was intended to achieve at all," the Court said.

Saraf along with advocates Ankita Singhania, Vanditta Malhotra Hegde, Rishi Mody, Sandeep Rebari and Sanjana K briefed by Singh & Singh and Malhotra & Hegde appeared for Wynk.

Kadam with advocates Rohan Kadam and Sanjay Chadha appeared for Tips.

Note: An initial version of the story said compulsory license instead of statutory license. The same has been corrected and the error is regretted.

[Read Judgment]