June 14, 2019
Statutory licensing under the proposed Copyright Amendment Rules: A cart before the horse situation?
On May 30, 2019, the draft Copyright (Amendment) Rules, 2019 (“Draft Rules”) were released for public comments. The press release accompanying the Draft Rules indicated that they were introduced to upgrade the existing Copyright Rules, 2013 (“Copyright Rules”) in light of technological advancements in the digital era1. The substantive amendments are with respect to extending the provisions on statutory licensing to encompass ‘all modes of broadcasting,’ in lieu of traditional television and radio broadcasting. However, the Copyright Act, 1957 (“Copyright Act”) has not been amended. This appears to be a cart before horse situation, as explained hereafter.
The statutory licensing provisions under Section 31 D of the Copyright Act allow ‘any broadcasting organization’ to obtain a license to broadcast works to the public subject to (1) providing notice in the prescribed form to the owner of the copyright and to the Registrar of Copyright2 of its intention to do so; and (2) paying royalties to the owner of the copyright in those works, at the rates fixed by the Intellectual Property Appellate Board. The section itself contains reference to only radio and television broadcasting.3
Earlier. an Office Memorandum was issued by the Department of Industrial Policy and Promotion (“DIPP”) in 2016, which sought to clarify that the existing provisions on statutory licensing under the Copyright Act and the Copyright Rules were not to be restrictively interpreted to cover only television and radio broadcasting, but was to be read to include internet broadcasting as well4 (“the Memorandum”).
However, the High Court of Bombay had confirmed last month, in the case of Tips Industries Ltd. V Wynk Media Ltd.5 that the existing provisions on statutory licensing under the Copyright Act and Copyright Rules did not include internet broadcasting by means of internet streaming and/or downloading6. The court held that the Memorandum was inconsistent with the Copyright Act and the Copyright Rules, and therefore was not binding as law.
After this judgment, the Copyright Rules were amended by the Draft Rules to expressly include all modes of broadcasting. However, as no corresponding amendments were made to the Copyright Act, the question which arises is whether, in light of the judgment of the Bombay High Court, the Draft Rules can travel beyond the contours of the Copyright Act to include internet broadcasting as well?
We will briefly deal with this case in the paragraphs below.
Facts and Issue
Two of the key issues before the court, therefore, was (1) Whether Wynk was entitled to invoke the provisions on statutory licensing in respect of their download/purchase business and (2) whether Wynk was entitled to invoke the provisions on statutory licensing in respect of its on-demand streaming service?
The court held that Wynk could not invoke the provisions on statutory licensing under the Copyright Act in respect of their download/purchase business. The reasoning of the court can be summarised as follows:
The court held that these features amounted to a (1) commercial rental and (2) sale, respectively.
Next, the court considered whether Wynk’s on-demand streaming services (i.e., internet broadcasting), fell within the purview of the statutory licensing regime under the Copyright Act and the Copyright Rules.
The court held that the provisions on statutory licensing were restricted to only television and radio broadcasting, and did not include streaming services.. The reasoning of the court can be summarised as follows:
It appears that the Draft Rules have attempted to hastily remedy the basis of the decision in Tips v Wynk by expressly including all modes of broadcasting within the statutory licensing regime. However, as pointed out by the High Court, the Copyright Act in its present form only contemplates traditional broadcasting by means of television and radio. The nature of the issues which the introduction of the statutory licensing regime was meant to address are also exclusively associated with these means of broadcasting. The Committee Report noted that access to copyright work by broadcasters was severely restricted by a system of auction of licenses for FM operators, which allowed copyright owners to set unreasonable terms and conditions for licensees. The statutory licensing regime was specifically introduced to remedy these issues.
Therefore, it can be argued that the Draft Rules are travelling outside the scope of the Copyright Act by attempting to include internet broadcasting within its ambit. It is well settled law that rules which are ultra vires the Act under which they are issued, are required to be quashed as void.12
Although the court did not substantively deal with this aspect, it can also be argued that ‘on demand streaming services’ cannot be construed to be ‘broadcasting,’ due to the inherent distinction between the two. On-demand streaming is in the nature of a ‘pull’ service, i.e., it allows a user to choose when they want to watch a movie, or listen to a song, whereas broadcasting services are in the nature of ‘push’ services, i.e., a user can only watch/listen when the network decides to air a particular program or song.
– Tanisha Khanna, Aarushi Jain & Gowree Gokhale
You can direct your queries or comments to the authors
2 Rule 29, Copyright Rules
3 Section 31 D (3) of the Copyright Act prescribes that ‘the rates of royalty for radio broadcasting shall be different from television broadcasting and the Appellate Board shall fix separate rates for radio broadcasting and television broadcasting.’
5 Notice of Motion (L) No. 197 of 2018 IN Commercial Suit IP (L) No. 114 of 2018
6 Paragraph 67
7 The right to commercially rent/sell sound recordings was a separate right under Section 14(1)(e)(ii) of the Copyright Act, and was independent from the right to communicate to the public as provided for under Section 14(1)(e)(iii) of the Copyright Act.
8 For instance, Section 52 (1) (b) and Section 52 (1) (c) of the Copyright Act
9 Super Cassettes Industries Ltd. V Music Broadcast Pvt. Ltd. 2012 5 SCC 488, Union of India and Ors v Board of Control for Cricket in India & Ors 2018 (73) PTC 31 (SC), State of Madhya Pradesh & Ors v Vishnu Prasad Sharma & Ors. AIR 1966 SC 1593
10 For instance, Rule 29 (3) provided that separate notices were to be given by a licensee for communication to the public by way of ‘radio broadcast’ or ‘television broadcast’
11 (2007) 13 SCC 606
12 It the case of General Officer Commanding-In-Chief & Anr. V Subhash Chandra Yadav & Anr. the Supreme Court has held that before a rule can have the effect of a statutory provision, two conditions must be fulfilled, namely, (1) it must conform to the provisions of the statute under which it is framed; and (2) it must also come within the scope and purview of the rule making power of the authority framing the rule. If either of these two conditions is not fulfilled, the rule so framed would be void. In Laghu Udyog Bharati & Ors v Union of India AIR 1999 SC 2596, as well, the Supreme Court quashed certain rules in the Service Tax Rules, on account of being ultra vires the Finance Act