Tips Industries Vs. Wynk Music Ltd. & Anr.
FACTS
The plaintiffs licensed its repertoire of about 25000 songs to the defendants by Copyright Society under a license agreement on 22nd August 2015. The license fee was paid, and license was valid till 31st October 2016. After the expiration of license both the parties went on for some rounds of negotiations for the renewal of licence; however, the talks failed.
Wynk was asked to deactivate the repertoire but they didn’t comply with it. Tips then sent a legal notice to Wynk to which Wynk replied that they are invoking Section 31D of the Copyright Act claiming themselves to be a broadcasting organisation. In short, Defendants claimed that they are a broadcasting organisation and that they are entitled to a statutory license under Section 31-D of the Act to communicate the work to public by way of broadcast.
ISSUES:
Broadally the following issues were adjudicated and decided upon by the Court:
Issue A: Whether the Defendants are infringing upon the Plaintiff’s copyright in the Plaintiff’s Repertoire as provided for in Section 14(1)(e) of the Act?
HELD: The Hon’ble High Court has opined that storing files of the Plaintiff’s sound recordings in electronic medium by the Defendants is the same as making of another sound recording embodying the Plaintiff’s sound recording which right is an exclusive right granted to the owner. Therefore, the Defendants cannot be allowed to continue the same without any permission or authorization of the Plaintiff.
In so far as the exclusive rights of the Plaintiff to sell or offer for sale any copy of the sound recording as provided in Section 14(1)(e)(ii) of the Act is concerned, it is evident that the activity of the Defendant’s enabling their customers to permanently download sound recordings and have a permanent access to the same once paid for clearly amounts for sale of the sound recording. This amounts to violation of the Copyright of the Plaintiff and therefore the Defendants do not have any right to sell or offer for sale the Plaintiff’s sound recordings without any authorization or permission of the Plaintiff.
Issue A (i): Whether use of the Plaintiff’s Repertoire by the Defendants’ customers be considered “fair use” under Section 52(1)(a)(i) of the Act?
HELD: The Hon’ble Court held that the defence provided in Section 52(1)(a)(i) with respect to fair use is not available to the Defendants at all. The defence of fair use may be available in a given case, to an individual user. The activities of the Defendants can never be termed as ‘private’ or ‘personal use’ or ‘research’. The Defendants are clearly selling and/ or commercially renting sound recordings including, inter alia, the Plaintiff’s Repertoire for their own commercial benefit. Thus the Defedants use of the Plaintiff’s Repertoire cannot be termed as fair dealing for the purpose of private/ personal use or conducting research.
Issue A (ii): Whether the storage of sound recordings upon the Defendants’ customers’ devices can be considered transient or incidental to the services provided by the Defendants as provided in Section 52(1)(a) (b) of the Act?
HELD: The Court opined that the nature of the Defendant’s activities of offline storage permanent or temporary is the unique selling point of the Defendant’s business. The said activity can neither be termed as transient or incidental and neither does it occur purely in the technical process of technical transmission or communication to the public. It also noted that Section 52(1)(b) would generally be applicable in case of Internet Service Providers and not to the activities of the Defendants. Therefore, the defence under the aforesaid Section would be not available to the Defendants.
Issue A (iii): Whether the Defendants can invoke Section 31-D of the Act to exercise a Statutory License in respect of their download/purchase business?
HELD: The Court observed that, “the services rendered by the Defendants through their download and purchase features amount to commercial rental and. Or sale of the Plaintiff’s copyrighted sound recordings. Since the right to commercially rent and/ or sell a sound recording is a separate and distinct right as against the right to communicate the sound recording to the public, the Defendants cannot exercise a Statutory License under Section 31-D in respect of the download and purchase features provided by them.
The Court further went on to hold that a bare perusal of Section 14(1)(e) of the Act, makes it clear that the Legislature intended to keep independent the right to commercially rent/ sell a sound recording from the right to communicate the sound recording to the public. The distinction drawn by the Legislature clarifies the position that the exclusive right granted to the owner of copyright in a sound recording under S. 14(1)(e)(ii) does not overlap with the exclusive right of communication of the sound recording to the public.
The Court held that definition of Broadcast under S.2(dd) of the Act makes it clear that the same is a specie of ‘communication to the public.’ Hence the right to commercially rent or to sell a sound recording is separate and distinct from the right to broadcast. Section 31-D is only applicable to broadcasting organisation which are desirous of communicating to the public by way of broadcast. Since the services (download/ purchase feature) provided by the Defendants are in the nature of commercial rental and/ or sale of sound recordings, they do not fall within the purview of Section 31-D of the Act and the Defendants are prohibited from exercising a statutory license apropos thereto.
Issue B: Whether the Defendants can invoke Section 31-D of the Act to exercise a Statutory License in respect of the Plaintiff’s Repertoire for internet broadcasting?
HELD: The Court stated that this issue of the judgment is of prime importance in the current subject matter and held that the provisions of Section 31-D read with Rules 29 to 31 coupled with legislative history preceding the passage of Copyright Amendment Act, 2012 clearly support the submission that Section 31-D contemplates only television and radio broadcasting. The Court stated that statutory licensing provided under Section 31-D is an exception to the owner’s exclusive right and is therefore expropiratory in nature. Therefore, Section 31-D being an expropriatory legislation must be construed strictly in conformity with the specific purpose for which it was enacted. It was further stated that the legislature was well aware of the existence of prevalent digital technologies and trends (including sharing, streaming and downloading of music over the internet) during the time of Copyright Amendment.
Therefore, the act of omittance on the part legislature for providing Statutory Licensing in respect of internet streaming and / or downloading shows that Section 31-D cannot be construed to include the same within its ambit. Further, the Rules 29 and 31 of the Copyright Rules, 2013 also indicate that the statutory licensing regime is only meant for radio and television and not internet broadcasting.
The Court also stated that a prior determination of royalty rates by the Appellate Board is a necessary precondition for exercise of rights in respect of a statutory license under Section 31-D. In view thereof, the Defendants could not have exercised statutory licensing under the said Section in the absence of pre-fixation of the rate of royalty by the Appellate Board.
Issue C: Whether Rule 29 of the Copyright Rules, 2013 and the third proviso thereto are invalid?
HELD: The Court held that where rates are fixed prior in time, a broadcaster is put to notice of the rate for broadcasting the work which prompts a conscious decision by the broadcaster keeping in mind its financial capabilities. Section 31-D is an expropriatory legislation and the interest of the expropriated copyright owners must be considered while interpreting the said section. The court held that the Defendants interpretation of the said section would push the copyright owners into a perilous position where ‘internet broadcasting organisations’ could override the copyright owner’s exclusive right over their copyrighted works granted under the Act and use the works without their prior authorisation/ licence. According to Defendant’s prior fixation of royalty rates is not a necessary pre- condition to the exercise of Statutory License under Section 31-D. The Court held that if this argument is accepted there would be no obligation upon internet broadcasting organisation to pay royalty to the owners until the Appellate Board decided to fix the royalty rates. Holding that this is a fit case for the application of doctrine of harmonious construction the Court held that Defendant’s challenged to Rule 29 of the Rules and its third proviso does not stand and the same are held valid.
Issue D: What is the bearing of the Government of India’s office Memorandum dated 5th September, 2016 on the present matter?
HELD: The Court opined that the said Memorandum does not draw its power from any legislation. The Hon’ble Supreme Court in the matter of State of Haryana v. Mahender Singh has held that guidelines without any statutory aid are merely advisory in nature. Thus the Court held that the said Memorandum lacks ‘statutory flavour’ and cannot prevail over the interpretation which is drawn under the Act and the Rules. The interpretation of Section 31-D in the said Memorandum is inconsistent with the interpretation drawn by this Court and this Court is not bound by the said Memorandum.
Issue E: Whether pending the suit, the defendants may be permitted to use the plaintiff’s repertoire upon payment of deposit?
HELD: In this regard, the Court opined that although Section 31-D of the Act is not applicable to internet broadcasting, however, for argument sake if it were to be considered as applicable even then the Defendants cannot be permitted to do so, since the manner and the royalty for internet broadcasting was not fixed by the Appellate Board till date. Further the Court held that even for the sake of argument, if it was to be assumed that internet broadcasting is covered under Section 31-D of the Act, it would not enable the Defendants to broadcast the Plaintiff’s Repertore by depoisiting any sum of money with this Court at this stage, since the manner and the rate of royalty for internet broadcasting has not been fixed by the Appellate Board till today. The power and jurisdiction to decide the manner in which the Rpyalty is to be paid and the rate at which it is to be paid is vested exclusively with the Appellate Board and this Court does not have the jurisdiction to permit the Defendant to broadcast the repertoire of the Plaintiff before such manner and rate of royalty has been fixed by the Appellate Board.
Issue F: Whether the plaintiff is only interested in money and thus injunction should not be granted?
HELD: The Court held that even after the negotiations between the parties failed the Defendant continued to use the Plaintiff’s Repertoire without paying for the same. Further, the Plaintiff did not claim any monetary damages in the said suit and therefore the Plaintiff’s action for infringement cannot be termed a motivated by money. As regards the balance of convenience the order against the Defendant would not bring the Defendant’s business to a standstill or cause any irreparable injury, however, on the other hand the exploitation of the Plaintiff’s entire Repertoire without payment of royalty tilts the balance of convenience in the favour of the Plaintiff. In view of the aforesaid, the Court held that since the Defendants are knowingly infringing upon the Plaintiff’s copyright without payment of any royalty a grant of interim injunction is the appropriate remedy.