The Exclusion of Statutory Licensing in Internet Broadcasting by Anuradha R. Chowdhary

Introduction

The Internet has revolutionized the way we live. Practically every area of life has become easier, quicker and more accessible; the music industry is no exception. Music stores, once stocked with LPs, then cassettes and CDs have had to close down (note the shutting down of Bombay’s iconic Rhythm House [forever]) and music lovers are always chasing new digital media to access content. Any change in the way an industry operates necessitates constant review in the laws that govern it, and India’s copyright regime was in dire need of a digital revolution. As a response, the Copyright Act, 1957[1] was amended in 2012 (“Act”) to bring our copyright laws in line with international standards of the same and in tune with the ever-changing digital landscape.

Section 31-D, which was introduced by way of an amendment to the Act, provides that any broadcaster desirous of broadcasting any previously published copyright works to the public by way of television or radio can do so by invoking a statutory license. To avail a statutory license, the broadcaster is required to intimate the copyright holder by sending a notice of intent and paying the prescribed royalties. By this process, it is clear that Section 31-D provides for the broadcast of copyright works by simple intimation to the copyright owner without actually requiring their consent.

Section 31-D only covers broadcasting over radio and television; there is no clarity whether this section includes internet broadcasting as well. However, the Bombay High Court (“Court”), in its recent decision in Tips Industries Ltd. v Wynk Music Ltd. & Anr (“Tips vs. Wynk”) has clarified that internet broadcasting is not covered under the statutory licensing provisions of the Act.

 Facts

In this case, Tips Industries Ltd. (“Tips”) filed an injunction against Wynk Music Ltd. (“Wynk”) to restrain Wynk from providing access to Tips’ music repertoire of 25,000 songs (“Content”) on Wynk’s online platform and app (“Platform”).

Wynk’s Platform allows it subscribers to (a) stream music on the app while connected to the internet; (b) download music which remains stored on the users devices for offline use as long as they are paying the subscription fees; and (c) pay a one-time fee to purchase the music forever for use on any device.

Tips and Wynk entered into a licensing agreement in 2014 for Wynk to provide access to the Content on its Platform. The deal for renewal of the licensing agreement fell through in 2016 as Wynk did not agree to the revised license fees. Tips issued a cease and desist notice to Wynk to deactivate access to the Content on its Platform. In retaliation, Wynk invoked Section 31-D of the Act and Tips filed an injunction in Court against Wynk.

 Judgment

The Court granted the injunction against Wynk and took the view that, “use of the copyrighted works, through internet broadcast or download features, without obtaining a license from the owners of the copyright amounts to usurpation of the exclusive rights of the owners to commercially rent, sell or communicate to the public their sound recordings”[2].

While ruling against Wynk, the Court clarified that:

• Wynk’s business model is in violation of Tips’ proprietary rights to commercially rent/sell the Content and to communicate the Content to the public. These rights are exclusive to Tips and cannot be licensed without Tips’ authorisation[3];
• The defense of ‘fair use’ cannot be made available to Wynk since Wynk is in violation of Tips’ right to commercially rent/sell the Content. Also, Wynk using the entire Content for its own commercial benefit amounts to excessive taking of copyright works;
• The definition of ‘commercial rental’[4] under the Act excludes only rentals/lease/lending for non-profit purposes by non-profit libraries and non-profit organisations and therefore, by implication, rental/lease/lending of sound recordings by any other persons, and in this case by Wynk, would amount to ‘commercial rental’[5];
• The right to commercially rent/sell any copyright works is completely separate from the right given to broadcasters under Section 31-D. Since the services rendered by Wynk amount to commercial rental/sale of the Content, which is not covered under Section 31-D, Wynk cannot invoke a statutory license against Tips;
• Section 31-D only covers statutory licensing for broadcast over radio and television and the rules detailing the particulars of the notice to be served[6]under this section and the manner in which royalty is prescribed[7] also exclude internet broadcasting. Therefore, a statutory license does not cover internet broadcasting and the power to prescribe the rate of royalty for internet broadcasting is not within the jurisdiction of the Copyright Board; and
• A statutory license does not automatically ‘kick-in’ after sending notice to the copyright holder. The requirement to send notice and get the rate of royalty fixed by the Copyright Board are both pre-conditions to invoking a statutory license.

Analysis

The introduction of Section 31-D in 2012, by which time internet access to music was absolutely in existence, is evidence of the Legislature’s intent to discount internet broadcasting from the ambit of statutory licensing and limit the provision only to radio and television broadcasting. Warner Music Group has also filed an injunction against Spotify in a similar case where Spotify has claimed a statutory license. Although the verdict in Tips vs. Wynk is just a grant of injunction (for now), the final ruling of the Court in this case will certainly be a deciding factor in the Warner vs. Spotify case and will likely have a ripple effect on many such cases to follow. The Legislature will also be required to look into formulating laws more specific and relevant to internet broadcasting and the rights and restrictions that accompany it.

While the Legislature must be commended for its modern intentions along with the Judiciary for its prospective interpretation of Section 31-D, the provision still proves turbulent. Expropriatory statutory licensing, especially with regard to copyright works, not only deprives copyright holders of their rights, but also bestows power solely upon the Copyright Board to prescribe the royalty fees. Not subject to even basic discussion, not only is statutory licensing (in India) in copyright works against the very essence of copyright law (which is to protect the holders of copyright) but is also against the principles of natural justice which include the reasonable opportunity to be heard.

The very concept of statutory licensing, which is based on the premise that knowledge must be made available to the public for which intimation without receiving consent is sufficient, is inherently flawed as it cannot uniformly be applied to all forms of intellectual property. Statutory licensing in copyright works does not have any outright public purpose; and this argument cannot and should not be applied to copyright law or should at least be reviewed on a case by case basis. Any argument in favour of statutory licensing in copyright works must be subject to discussion and taking away the opportunity to be heard with regard to the same cannot be justified.

Further, this expropriatory provision also takes away the morale and incentive to work towards creation of original and good content. The creative field is already subject to constant criticism and taking away rights of copyright holders without even permitting them the sanctity of negotiating the terms and conditions of the hostile takeover of their work is against basic ethics. Although (surprisingly) legal to do so, the mentality behind invoking a statutory license under section 31-D requires as much revision as the provision itself.

?Bibliography

Why the Bombay HC ruled against Wynk in its licence dispute with Tips. (2019). Retrieved from https://barandbench.com/bombay-hc-wynk-licence-dispute-tips-music/

Judge Rules Against Indian Streaming Service Wynk In Case With Big Repercussions For Spotify & Warner Music. (2019). Retrieved from https://www.billboard.com/articles/business/8510492/judge-rules-against-indian-streaming-service-wynk-case-big-repercussions-warner-spotify

India, l. (2019). Intellectual Property Rights, Statutory Licensing In India. Retrieved from https://www.legalservicesindia.com/article/1675/Intellectual-Property-Rights,-Statutory-Licensing-In-India.html

Opinion | The country’s copyright law requires a digital reboot. (2019). Retrieved from https://www.livemint.com/opinion/online-views/opinion-the-country-s-copyright-law-requires-a-digital-reboot-1555529741237.html

India, l. (2019). Intellectual Property Rights, Statutory Licensing In India. Retrieved from https://www.legalservicesindia.com/article/1675/Intellectual-Property-Rights,-Statutory-Licensing-In-India.html

[1] The Indian Copyright Act, 1957

[2] Tips Industries Ltd. v Wynk Music Ltd. & Anr (2019, p.103).

[3] Section 14(1)(e) of the Act.

[4] Section 2(fa) of the Act.

[5] Tips Industries Ltd. v Wynk Music Ltd. & Anr (2019)

[6] Rule 29 of the Copyright Rules, 2013

[7] Rule 31 of the Copyright Rules, 2013