This post has been authored by Anamika Kundu, a fourth year student at West Bengal University of Juridical Sciences (WBNUJS), Kolkata. It discuses Section 31D of the Copyright Act (put year), introduced in the 2012 Amendment.

Introduction

With the advent of smartphones and numerous interactive mobile applications, listening to music through apps have become a common phenomenon across the world. However, this has created a number of issues pertaining to intellectual property in various jurisdictions including India. Section 31D of the Copyright Act was inserted through the Amendment of 2012. The provision essentially deals with statutory licensing for radio and television broadcasting of literary and musical works as well as sound recordings. Broadcasters are required to pay royalties to the copyright owner, at a rate fixed by the Copyright Board. A broadcaster wishing to communicate published work should do so by notifying copyright holders in advance. This notice includes information such as the broadcast content’s length and coverage region. Because of the restrictions placed on parties from entering into commercial negotiations to determine royalty rates, there has been huge criticism of this provision. Moreover, the owners of copyrights too are not given any mechanism to negotiate the terms of royalty with broadcasting agencies, which appears to be in violation of Article 19(1)(g) of the Indian Constitution.

The need for statutory licensing in India: The 2012 Amendment

The objective of Copyright Law is to protect the public interest while disseminating knowledge. To encourage further creativity, the author needs to be rewarded. However, these interests must also be controlled in order to balance competition. Non-voluntary licensing is a statutory licensing system that increases the accessibility of data while at the same time maintains the interests of the author. The Copyright (Amendment) Bill, 2010 was introduced in the Rajya Sabha. It added Section 31D to the statute at a moment when radio broadcasters were suffering losses and there was still no access to television broadcasting for a large population of Indians. The Indian Broadcasting Foundation indicated that pre-decided terms and conditions would allow broadcasters to be certain about terms and expenses. It also indicated that there would be a reduction in the amount of conflicts as writers could no longer impose unreasonable and arbitrary requirements in a court. By contrast, organizations like the Indian Music Industry vociferously protested against such licensing being imposed. They argued that it is discriminatory since it did not give the copyright owner any decision-making powers to fix royalty rates. They also stated that broadcasting facilities are in the private sector. According to them, radio broadcasters are running on profit and are already receiving concessions from the government, while television broadcasters were stable enough and did not require concessions from the government.

However, by asserting that radio and television broadcasting relied on unfair voluntary licensing, the Committee rejected these arguments. The Committee mentioned the problem of immense disputes between different High Courts over the interpretation of Section 31 when dealing with statutory licensing. In a nation with a rapidly increasing broadcasting sector, the Committee observed an effective need for simple access to works. The amendment’s fundamental goal was to align the Indian copyright system with the international treaties to which India is presently a signatory.^[1] The amendment ensures that fair use remains applicable through unique clauses dealing with the digital era in order to remain in sync with technological advances. However, in view of online dissemination, the amendments take a step beyond that of treaties dealing with statutory impediments.

 

The perspective of different stakeholders on Section 31D

Section 31D has been constitutionally challenged by the Supreme Court in Lahari Recording Company, as well as by the Calcutta High Court in Eskay Video Pvt Ltd on grounds of being ultra vires Articles 14, 19(1)(g), 21 and 300A as it does away with the commercial understanding between the copyright owners and the broadcasters.

The office memorandum (‘OM’) issued by the Department for Industrial Policy and Promotion (‘DIPP’) includes ‘internet broadcasting’ by using the definition of ‘communication to the public’. It even states that satellite communication and other methods of simultaneous communication to more than one household fall within this definition. It assumes that the section enables distinct broadcasting methods, in contrast to the simple interpretation of distinct broadcasting classes. In addition, the DIPP also fails to take into account that all broadcasting methods do not follow the same set of rules. Both the Act and the Rules distinguish between distinct broadcaster methods in terms of notice delivery, setting distinct royalty rates, etc. Therefore, owing to its arbitrary nature, the DIPP’s logic of all internet broadcasters’ following identical guidelines runs counter to Article 14.

The provision is challenged on grounds of Article 19(1)(g) and 21, as it affects the freedom to contract of the parties. The petitioners further claimed that an unnecessary price control has been put on licenses through non-voluntary licensing. In instances of essential commodities and public purpose, the price control mechanisms seem justified. It does not seem, however, that either requirement is met by copyrights. Nevertheless, it is argued that the aim of such permits is to improve access to works that are copyrighted and serve a public purpose. However, this justification does not clarify whether an essential commodity can be the subject of a copyright.

For the Article 300A challenge, the petitioners argued that depriving the copyright owners of their property without due process does not fulfill any public purpose. However, this has been considered to be a weaker argument.

In a recent Bombay HC judgement regarding the Wynk music application, it has been held that online streaming services do not fall within the purview of traditional broadcasters, especially under Section 31D. The plaintiff, Tips Industries, a music label in India owns the copyright over a significant music repository which was licensed to Wynk. The licensed terms could not be renegotiated due to some payment issues and Wynk took the support of Section 31D to state that they were allowed access to the repository as they were broadcasters. According to the Court, Section 31D does not contain works downloaded and bought.

In addition, they stated that the OM released by the DIPP was of a directory nature and did not have a statutory backing, so the explicit text could not be superseded. The Court noted that the Legislature was well aware of the presence of such broadcasters, but the statutory system still did not include them which meant they could not go beyond the legislative intent.  Addressing more ancillary arguments, the Court indicated that the defendant could not invoke the provision because the Board had not fixed any royalty rates. Rules 29, 30 and 31 explicitly state that prior fixation of royalty rates is necessary for Section 31D to be invoked. It can also be argued that because of the inherent qualitative differences, ‘on-demand streaming services’ cannot fall within the broadcasting sphere. In the former, the user can select what they want to play for on-demand, whereas in broadcasting services the user can only access something depending on when the network wants to broadcast it.

Spotify India has also been entangled in a legal battle with Warner Chappell Music over the use of the latter’s music repository. For now, the Bombay HC has passed an interim order restricting their pursuance of a Section 31D and depositing a large sum of money with the HC. The Court even permitted the temporary use of the repository and the money deposited would be offset from the final disposition. As the Wynk case was adjudicated before the Bombay HC, there are speculations that the Spotify judgement will be on similar lines in terms of ‘internet broadcasting’.

With disputes regarding internet broadcasting being under the purview of Section 31D, the Department for Promotion of Industry and Internal Trade (‘DPIIT’) has responded by formulating the Copyright (Amendment) Rules, 2019. Once in force, these rules will facilitate the acquisition and uploading of material for music streaming organizations easily. The DPIIT has invited stakeholders’ comments on the draft and many have responded negatively. It has been argued that neither Section 78, nor any other provision of the Act does not permit the Central Government to alter the scope of any provision. Therefore, the draft Rules altering the scope of Section 31D are ultra vires the Copyright Act which in turn make them void. Moreover, these draft rules raise an eyebrow on its constitutionality concerns similar to those expressed on the 2016 OM due to its statutory overstepping. These internet broadcasters cannot be seen as undertaking the function of ‘communication of public’ as anyone can broadcast through these platforms over the internet. This broadcasting cannot be equated with traditional broadcasters, as it will give them undeserved property rights.

There are further doubts regarding rights contained in recordings in relation to the musical works. As per IPRS v Aditya Pandey, musical works that are licensed for sound recordings have rights existing within those sound recordings. Thus, there is no requirement of separate licenses for the work making them a bundle of rights. If this principle is incorporated, then Spotify can merely use these as precedents instead of going through elaborate statutory licensing which is worrisome.On the other hand, the Copyright Office has issued interim licenses under Section 31D (1) to Kuku and Koyal Internet, Ludhiana as per the order passed by the Punjab and Haryana HC. This highlights the divergence of opinions among the HCs with regard to such statutory licenses, requiring SC interference.

Conclusion

Although the Government is attempting to keep Copyright Law in tune with technological developments, there is a long way to go. The Legislature must form the law in a manner that balances the demands of the music industry and copyright owners. The distinction between establishing a copy and communicating to the public is insignificant as information in any model needs to be copied. This opens up larger issues such as the country’s need for Digital Rights Management. In addition, there has been a clear distinction between interactive and non-interactive licenses in other jurisdictions such as the USA. The former being required in all kinds of streaming whereas the latter is required for apps such as Apple Music where you can select the kind of music you would like to listen to. The American Congress adopted the Music Modernization Act (‘MMA’) last year, which made it simpler for copyright owners to obtain royalties when they stream their creations online.^[2] Under the MMA, owners will be paid through a single mechanical license database to be overseen by songwriters and labels, and digital streaming services will be responsible for the costs. In order to introduce fair pay and competition, India too should embrace such legislations while maintaining the law in line with technology. In the statutory structure, therefore, there is a necessity for revision, not just particular regulations that could supersede the parent act.

 

^[1]The internet treaties are the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty.

^[2]Dani Deahl, The Music Modernization Act has been signed into law, October 11, 2018, available at  https://www.theverge.com/2018/10/11/17963804/music-modernization-act-mma-copyright-law-bill-labels-congress(Last visited on August 17, 2019).