By, Urshila Pandit & Sanah Javed
Justice Peckham in the case of United States v. Trans-Missouri Freight Association[i] appositely stated “Nor is it for the substantial interests of the country that any one commodity should be within the sole power and subject to the sole will of one powerful combination of capital.” Section 33 of the Copyright Act, 1957 stipulates that the business of issuing or granting licences in respect of any work in which a copyright subsists shall only be carried out by a copyright society.[ii] Copyright societies are de facto in a dominant position by virtue of Section 33. Therefore, it is not surprising that these bodies are prone to abusing their dominant position.[iii]
The Amendment to the Act in 2012 brought about far-reaching changes to Section 33-36, which was aimed at reining in issues that ensued as a result of the dominant position that copyright societies occupy. It mandated the publication of the tariff scheme of the society[iv], submitting reports of its returns[v] and ensuring equal representation to both authors and owners[vi]. Additionally, a proviso to Section 33 (3-A) was inserted via the amendment. As a result of this any previously existing copyright society was required to re-register itself within a period of one year from the date of the Amendment.
The Amendment, however, seems to have done more harm than good, as it brought about ambiguity in the law which paved the way for already existing copyright societies such as IPRS, PPL and Novex Communications to continue to carry on the “business” of issuing or granting licences without registering as a copyright society. These bodies often claim that they are agents as per Section 30 or that the copyright has been assigned to them in terms of Section 18 for licensing purposes and administration of the same.
Unfortunately, High Courts have in a slew of judgements upheld such claims[vii] while granting injunctions restraining the defendant from using the copyrighted work without obtaining the requisite license. The Bombay HC has sought to provide a solution to this inconsistency that subsists.
The Court in Paragraph 13 of the much-scrutinised Leopold Judgement, elucidated that “carrying on business” by Collective Societies as under section 33 of the Copyright Act is different from the activities of the agent while “carrying on business” under section 30.[viii] The court stated that the solitary means of interpretation of the two provisions in order to reach congruity is by understanding that an agent is precluded from issuing a license in his/her own name, whereas a copyright society is authorised to grant the said license in its own name and is not required to disclose the holder of the copyright. The effect of the following difference lies entirely in the capacity to sue; the agent cannot sue in its own name. The Copyright society, however, does have the right to ensure that the terms and conditions of granting the license are adhered to by enforcing them before the court of law. Novex had taken the defence of acting merely as an agent for YRF and Shemaroo.
The court stated that by applying the harmonious means of construction, one can differentiate between an agent and a copyright society; in case the entity acts on its own name without disclosing agency, then the restrictions under Section 33 will be applicable.
The authors believe that this mode of interpretation does not address the fundamental issue – by acting under the guise of an agent, these entities flout the requirements under Sections 33 to 35. There exists no functional difference between the acts of an agent and that of a copyright society. The only handicap faced by the agent is his inability to sue in his own name; which may be forgone for the advantage of not being bound by the restrictions imposed by the Act.
The key takeaway from the decision of the Bombay HC is that statutory interpretation is and must be a dynamic process,[ix] its fundamental purpose lies in its capability to assist in solving current problems and circumstances.[x] The Apex Court in Shailesh Dhairyawan v. Mohan Bal Krishna Lulla[xi] had emphasized on the process of statutory interpretation always being dynamic; giving more value to the purposive interpretation mechanism than literal interpretation, especially where it leads to an absurdity. The following is applicable to the case before us. A literal interpretation of Sections 30 and 33 leads to a contradiction and absurdity making two bodies performing essentially the same function liable to different constraints. Hence, considering the purpose of bringing in the 2012 Amendment – to regulate copyright societies and to prevent them from abusing their dominant position, an entity that grants licenses and acts as a monopoly must be subjected to authorization and control mechanisms.[xii]
It is pertinent to note that not all agents are monopolies and hence are not in a similar position as copyright societies usually are, however, some that are similarly circumstanced must be regulated. In the judgement, the court decided to address the following by looking at the licensing agreements. However, entities can still issue license agreements without falling within the restrictions imposed by the Act. In order to tackle the following problem, it is suggested that an ‘obligation to contract on equitable terms’ be brought in.[xiii] The Copyright Society masking itself as an agent will still be required to maintain the best interests of all parties concerned, hence, not putting the consumers in an adverse position.
[i] United States v. Trans-Missouri Freight Association,166 U.S. 290.
[ii] The Copyright Act, 1957, No. 14, Acts of Parliament, 1957, §2(ffd).
[iii] AKKA/LAA v. Konkurences padome, (C-177/16);, Ministère public v. Tournier, (C- 395/87);, Kanal 5 v. STIM (C-52/07) and OSA v. Léčebné lázně Mariánské Lázně (C 351/12);, BRT v. SABAM, C-127/73  ECR 315;, IPRS v. Union of India and Ors. & Hasan Kamal v. Union of India 2015, SCC Online Bom 4279.
[iv] The Copyright Act, 1957, No. 14, Acts of Parliament, 1957,§33A.
[v] The Copyright Act, 1957, No. 14, Acts of Parliament, 1957,§36..
[vi] The Copyright Act, 1957, No. 14, Acts of Parliament, 1957,§35.
[vii] Indian Performing Right Society Ltd. v. Harsh Vardhan Samor, 2015 SCC OnLine Bom 7333., Phonographic Performance Ltd. v. Avion Hospitality Pvt. Ltd. & Ors., Commercial Appeal (L) NO.100 OF 2017, High Court of Judicature at Bombay.; Novex Communications Private Limited v. Serveall Land Developers Private Limited, 2018 SCC OnLine Bom 19540.; Novex Communication Pvt. Ltd. v. Lemon Tree Hotels Ltd. and Ors. 2019 SCC OnLine Del 6568. .
[viii] M/S Leopold Café and Stores & Anr. v. Novex Communications Pvt. Ltd., 2014 SCC OnLine Bom 1342. .
[xi] Shailesh Dhairyawan v. Mohan Bal Krishna Lulla, (2016) 3 SCC 619.
[xii] Adolf Dietz, Legal Regulation of Collective Management of Copyright (Collecting Societies Law) in Western and Eastern Europe, 49 J. Copyright Soc’y U.S.A. 897 (2002).