Copyright societies and the business of issuing licenses: To be, or not to be?

Every year, as New Year’s Eve approaches, copyright litigation is just around the corner. The bone of contention is the playing of songs by various restaurants and hospitality ventures without authorization from the owners of the sound recording in question.

The defence oft resorted to by the alleged infringers of the copyright in sound recording is that the person suing them has no locus to issue a license, as such licensing is proscribed by the copyright ;aw in India. Before the adjudication of any relief sought like perpetual injunction, it is incumbent to first decide the preliminary objection raised by the alleged infringers as to the locus of the plaintiffs. 

Such a preliminary objection of “whether the business of licensing of copyrighted works can be carried out only by copyright societies or can an owner also license copyrighted work in his individual capacity?" came up before the Bombay High Court in a clutch of petitions referred to as Novex Communications Pvt Ltd v. Trade Wings Hotels Limited.

Factual backdrop and arguments

Briefly stated, Novex Communications and Phonographic Performance Limited (PPL), the plaintiffs, are two entities which own a repertoire of sound recordings which they license to users without being registered as copyright societies under the Copyright Act, 1957. Both these entities have a proprietary right in the sound recordings by virtue of assignment deeds.

The main thrust of the arguments put forth by the plaintiffs related to ownership of copyright and how ownership can be transferred. Ownership of copyright can be acquired in four broad ways as stated in Sections 17, 18, 19 and 20. Section 30 states that an owner of copyright may issue a license for an existing or future copyrighted work. This right to issue a license by an owner falls under Chapter VI of the Act which is titled “licences”.

The plaintiffs argued that the right of copyright societies to administer copyrighted works is derived by either being an authorized agent of the owner or being an owner (assignee) itself. The right of owners under Section 30 and the right of copyright societies under Section 33 to issue licenses operates in independent spheres and this right by one is not subservient to the right of another. Even though Section 33 of the Act states that no person can carry on the business of issuing licenses without being registered as a copyright society, the plaintiffs have the right to issue a license as owners of the copyright under section 30.

The defendants argued that Section 33, which prohibits any person or association of persons to carry on the business of copyright licensing, would directly restrict the licensing activities of the plaintiffs. Given the plain and literal meaning of the provision, it would operate as a bar against the plaintiffs to claim any relief for alleged infringement. The defendants, relying upon the litigation history of PPL for registration as a copyright society, asserted that since PPL failed to register themselves as a copyright society, they are circumventing the law to carry on the business of issuing licenses.

The issue of law before the Court was whether Sections 30 and 33 are conflicting. If they do, which section should take precedence over the other, or do the two need to be construed harmoniously?

Determination by the Court

Agreeing with the contention of the plaintiffs regarding the mode of acquisition of ownership of copyright by assignment deeds, the Court relied upon Section 18(2) to hold that an assignee is to be treated at par with the owner of copyright and the provisions relating to ownership have to be construed accordingly. The Court held that the owner of the copyright would not be prohibited by operation of Section 33(1) to issue licenses, as that would be contrary to the intention of the legislature and emasculate the power of an owner under Section 30.

The Court was of the opinion that Chapter VI “Licences” and Chapter VII “Copyright Societies” operate in different spheres. Section 33 deals with registration of copyright societies and Section 30 deals with licensing of copyrighted works. Licensing by owners is necessarily of the works in which they have ownership, whereas copyright societies issue licenses for works of others. Thus, a license under Section 30 is issued in the capacity of an owner, whereas under Section 33, a license is issued in the capacity of either an owner (assignee) or an agent/administrator. So, a copyright society doesn’t need to own a copyrighted work to issue license, whereas under Section 30, an owner can issue a license in his own capacity.

Relying on the well settled rule of harmonious construction, the Court held that in case of apparent conflict between two distinct provisions of a statute, the same have to be reconciled by restricting each provision to its object or subject. Thus, Sections 30 and 33 are reconciled by drawing a distinction between the issuance of licenses by an owner in his individual capacity and that by a copyright society.

Copyright societies and licensing - role and relevance in the legislative scheme

The role of copyright societies generally is two-fold – to help artists and creators receive adequate remuneration through commercialization of their rights, and to enable the users to access such works. A copyright society is essentially a body to help individual creators administer their rights effectively by providing a mechanism which is collective in nature. It furthers a common good whereby an individual owner of copyright without giving up ownership can be a part of a collective framework where his rights, mainly economic, are enforced without requiring the owner to navigate the administrative and legal labyrinth. Copyright societies are also beneficial for users since they provide a single point of contact to get authorization to use the work. A copyright society pools works from different owners and offers them to the users at a fee.

Copyright societies exist to increase the monetary value of a work by commercializing it and the Act provides for a democratic functioning of a copyright society in accordance with the Rules as laid down under the Act. This order of the Bombay High Court may be perceived as an existential crisis for the relatively nascent concept of copyright societies in India. Licensing entities like PPL and Novex, which have a large repertoire of works including those of major labels, may function parallel to the copyright societies and may even affect the consumers as they may not be necessarily informed as to whom to approach to seek a license to use a work.

Governance of copyright societies is another issue, as it is presumed that their functioning will be fair and transparent, which may not necessarily be the case. With this order paving the way for owners to issue licenses for works – irrespective of whether the work is authored by the owner or assigned to it by some other person it may impel copyright societies to introspect on their existence. PPL and Novex already have a large market share and issue licenses for a large number of sound recordings. This may also compel other authors or owners to seek monetary value for their work through entities like PPL and Novex.

The curious case of legislative intent

Law is codified for the primary purpose of certainty. Yet, much of the legal arguments and the exercise of interpretation as in the present case harp on the “legislative intent” of a statute. This exercise of decoding or understanding what the legislature intended while making a provision or inserting a section is not very reliable, for the reason that there may not be adequate material available in the form of deliberations which should ideally take place when a bill is under consideration. Legislative intent as such is not codified in any statute beyond the statement of objects and reasons provided.

What is required is greater lingual clarity, coherence and the lack of any conflicting or antithetical provisions. In the instant case, the proscription on carrying copyright business is under the heading of “Registration of Copyright Society” whereas the conditions required for fulfilling the criteria of registration are contained in the Copyright Rules, 2013. This drafting style of the legislature seems to have been interpreted in favour of the plaintiffs, as Section 33 is positive in nature and not negative in terms of prohibiting an owner from issuing licenses. On the other hand, Section 30 is titled “Licences by owners of copyright” which was interpreted to bestow a right in favour of an owner to issue licenses. The ensuing ambiguity would have been avoided with precise drafting.

To borrow from Justice Scalia of the Supreme Court of the United States, “we are governed by laws, not by the intentions of legislatures." The exercise of relying on legislative history is “the equivalent of entering a crowded cocktail party and looking over the heads of the guests for one's friends,” remarked Justice Leventhal of the United States. These opinions have been reproduced not to canvass for the doctrine of “textualism” but to endeavour for impeccable drafting of statutory provisions.

The intention of a legislature is best illustrated in the language of a statute and the judicial exercise of decoding the legislative intent may not always be reliable since legislative intent cannot always be deduced with certainty. A codified statute should serve the purpose for which a deliberative, rigorous and participative legislative process is carried out – to state with certainty and clarity what the law is!

Amar Patil is a lawyer based in Mumbai.