By, Neha Uppin
The convergence between Competition Law and Intellectual Property Law is so inevitable that conflicts are common in this digital era. The main object of Intellectual Property Law is to promote innovation by granting the creator exclusivity to exploit their creations for a specific period, which might lead to a monopoly. [] On the other hand, the main object of Competition law is to prohibit the abuse of such monopoly [] and to bring fair competition in the market so that consumers can have access to the protected works at reasonable prices. Statutory licensing has been the most challenging and debatable topics at the intersection of Intellectual Property rights and Competition law. The central idea of statutory licensing of copyrighted works under Section 31(1) of the Indian Copyright Act, 1957 is to safeguard the public’s right to have access to the work. It is a competition law tool to prevent that monopolistic behaviour of copyright owners who tend to foreclose the market by setting unreasonable licensing terms. However, before adopting a statutory licensing regime, the current economic conditions of the market and the repercussions it may have on the music industry should also be gauged by the policymakers. []
The Indian Music Industry is struggling to earn reasonable returns on their investments [] as the Internet streaming giants pay less than 2%-3% towards the use of music.[]This highlights the increasing value gap between the revenues the internet streaming platforms obtain from the use of recorded music and the revenues the music industry receives[].In spite of all the struggles the music industry is facing, an Office Memorandum was issued by the Department of Industrial Policy and Promotion (DIPP) wherein the term “any broadcasting organisation” was interpreted to include internet broadcasting along with radio and television broadcasting, for statutory licenses under Section 31D of the Copyright Act []. This development poses danger to the music industry as the music companies will be compelled to license music at cheaper rates set by the Intellectual Property Appellate Board.[] The internet streaming giants have used this as a leeway to use music without negotiating fairly with the music labels and insisting on statutory licensing of music to obtain music at low prices. []
RECENT JUDGEMENTS ON STATUTORY LICENSING OF MUSIC
Recently in the case of Tips Industries v Wynk Music [], the Plaintiff Tips Industries Ltd had licensed its songs to the Defendants Wynk Music Ltd. However, when the negotiations failed, Wynk Music turned to Section 31D of the Copyright Act to invoke a statutory license. The Bombay High Court examined the legislative intent of Section 31D by relying on the Rajya Sabha Parliamentary Committee Report on the Copyright Amendment Act, 2012. It reasoned that statutory licensing scheme under Section 31D was inserted through an amendment with an intention to encompass television and radio broadcasting alone and not online broadcasting by applying the strict rule of interpretation. Therefore, the defendants’ contention that as per the Office Memorandum issued by DPIIT in 2016 online broadcasting comes under the purview of statutory licensing under Section 31D was refused by holding that they are only guidelines not having the statutory authority. Therefore online music streaming platforms were held not eligible to obtain statutory licenses for broadcasting under Section 31D of the Copyright Act. .[]
Similarly, in the case of Warner Music Ltd v Spotify []; Spotify which is an online music streaming platform invoked the statutory licensing scheme under Section 31D of the Copyright Act, 1957 to stream music held by Warner Music. However, the Bombay High Court ordered Spotify to deposit 6.5 crores with the Court as a penalty for copyright infringement and also restrained Spotify from invoking statutory licensing before the Intellectual Property Appellate Board.
These judgments came as a relief to the Indian Music industry, however, the recently issued Draft Copyright Amendment Rules, 2019[] proposes to extend the statutory licensing scheme to include internet broadcasting as well. Therefore the Indian music industry is still placed at a crucial point. If statutory licensing in music copyrights is granted it will compel the music record labels to reduce their investments in the production of music in future due to low prices they receive, which in turn will chill innovative creations in the music industry to the ultimate disadvantage of consumer welfare. [] The music industry has already suffered huge losses due to digital piracy of music [] therefore voluntary licensing done in good faith becomes all the more important.
ROLE OF COMPETITION COMMISSION OF INDIA
The Competition Commission of India (“CCI”) is assigned the responsibility of investigating anti-competitive behaviour of business entities. [].In case the exploitation of intellectual property rights by the right holders impedes competition in the market, CCI scrutinises the matter under Section 4 of the Competition Act, 2002.
The monopoly of an entity in the market in itself does not attract investigation by the CCI but the abuse of such monopoly would. One such instance is the case of In the case of M/s HT Media Limited v. M/s Super Cassettes Industries Limited [], CCI held that the music label T-Series which held a dominant position in the market had abused its dominance under section 4(2)(a)(i) of the Act by imposing unreasonable license terms on HT Media Ltd, a radio Company with regard to music licensing and decided to impose a penalty of INR 2, 83, 28,000. Therefore, CCI has dealt with the anti-competitive behaviour of Music record labels stringently by imposing penalties.
A balanced approach should be taken by the lawmakers so that music record labels continue to create new music and compete in a fair manner. This can be done by allowing the music industry to negotiate voluntary licensing terms with the music streaming platforms as per their true market value. This will not only promote fair competition in the market but also protects consumer welfare by allowing access to the protected works [].
In cases where the music record labels in India unreasonably withhold the work from public or abuse dominant position in the market, the courts should refrain from imposing statutory licensing as a remedy because it has the potential to stifle innovation in the already struggling Indian Music industry. Since the innovators take huge risks in creating new music, over-aggressive anti-trust remedies like statutory licensing further acts as a deterrent for the smooth progress of the music industry. Instead, the competition authorities and courts should eliminate the anti-competitive behaviour of the Music right owners through other preferable intervention mechanisms such as injunctions and penalties. Perhaps, this is the time where India should look up to U.S.A where royalty rates are set through market-based standard i.e. willing buyer/willing seller standard which gives a fair revenue to right holders and users. []
[] Vision 2022: India’s Roadmap to the Top 10 Music Markets in the world by 2022, (Nov. 13, 2018), http://indianmi.org/be/wp-content/uploads/2018/10/VISION-2022.pdf
[] D. Joshi, Bombay High Court Rules against Statutory Licensing for Online Streaming Services, (Feb.2, 2019), https://spicyip.com/2019/02/breaking-the-background-music-to-spotifys-india-launch-is-a-crucial-legal-battle-on-music-copyright.html
[] Forcing Firms to share the Sandbox: Compulsory Licensing of Intellectual Property Rights and Antitrust, ( Mar.3, 2004), https://www.justice.gov/atr/speech/forcing-firms-share-sandbox-compulsory-licensing-intellectual-property-rights-and