STATUTORY BACKGROUND- INTRODUCTION OF SECTION 31D IN THE COPYRIGHT ACT 1957:
Section 31D was introduced into the Indian Copyright Act, 1957 (the “Act”) in the year 2012. This Section was introduced in compliance with Article 11(2) and 134 of Berne Convention, Article 9(1) of the TRIPS Agreement and Article 15(2) of the Rome Convention (for sound recordings) and deals with statutory licensing for broadcasting of literary and musical works and sound recordings. Section 31D of the Act read with Rules 29 and 30 of the Copyright Rules 2013 enables broadcasting organisations to broadcast or perform any literary or musical works and sound recordings by issuing a prior notice of such intention to broadcast the said works and by paying royalty to the rights holder, as fixed by the Intellectual Property Appellate Board (IPAB).
SCOPE OF SECTION 31D- DIVERGENT VIEWS:
Since the introduction of Section 31D in the Act, divergent views started emerging on the aspect of whether Section 31D covers within its ambit, statutory licensing vis-à-vis internet broadcast and streaming services as well. This was owing to the fact that the scheme of provisions under Section 31D read with Rules 29 and 30 of the Copyright Rules 2013 does not explicitly include references to the term “internet broadcasting” in the context of statutory licensing.
While the opinion of legal and industry experts on the matter seemed to be divided, the Department of Industrial Policy and Promotion (DIPP) through an office memorandum (OM) dated 5th September 2016, sought to clarify the scope of section 31D, by construing that the term ‘any broadcasting organisation desirous of communicating to the public’ as appearing under the said Section, may not be restrictively interpreted to cover only radio and television broadcasting and thereby also purported to include within its fold internet broadcasting and streaming services by attempting to read down the provisions of Section 31D along with the definitions of ‘communication to the public’ and ‘broadcast’. The said clarification was sought to be provided through the OM owing to the reason that the definition of “broadcast” read with “communication to the public” ex facie appears to include all kinds of broadcasts including internet broadcasting and streaming services.
In the above background, the recent launch of the audio streaming platform Spotify in India had once again brought the scope of statutory licensing under Section 31D of the Copyright Act into the limelight wherein Spotify made an application to the IPAB for seeking a statutory license on musical works and sound recordings from Warner Chappell Music Limited in relation to its operation of internet music streaming broadcast services. However, a recent interim order of the Bombay High Court in April 2019 in the matter of Tips Industries Ltd v. Wynk Music Ltd & Others, seems to put to rest the divergent views that had emerged on the subject matter, wherein the Bombay High Court categorically held that the OM lacked statutory validity and hence cannot override the provisions in Section 31D and further held that internet music streaming and broadcast services are not covered under the statutory licensing contemplated under Section 31D.
RECENT JUDICIAL DEVELOPMENTS - SCOPE OF STATUTORY LICENSING UNDER SEC. 31D CLARIFIED?
We analyse here the above judicial developments concerning the ambit of statutory licensing contemplated under Section 31D.
Warner Chappell Music Limited v. Spotify AB
The Swedish company Spotify Technology S.A has launched its audio streaming platform Spotify in India this year (2019). Prior to its launch in India, the company started negotiations with music companies including Warner Chappell Music Limited (WCM) for obtaining licenses over the various music labels on which WCM holds licensing rights. However, obtaining licenses from WCM was not a smooth ride for Spotify. Spotify was unable to strike a deal with WCM, and consequently the following events transpired:
- Spotify invoked the provisions of Section 31D of the Act as the way out to secure the streaming and broadcasting rights over the music owned by WCM in its streaming platform in India and filed for a public notice under Sec. 31D with IPAB to invoke the statutory licensing provisions under the said section.
Spotify also deposited 5,28,000 Euros with the Copyright Office as an advance royalty in relation to the exploitation of such rights on its audio streaming platform in India.
WCM sought for an injunction at Bombay High Court to stop the exploitation of its music by Spotify inter-alia on the grounds that the provisions of Section 31D does not apply to internet broadcasting service providers.
The Bombay High Court passed an interim order whereby it directed Spotify to deposit 6.5 crores with the court and to keep a record of the use of WCM owned works, the advertisement and subscription revenue earned by Spotify until final disposal of the matter.
The Court also instructed Spotify not to proceed with IPAB application for issuing the statutory licensing for four weeks from 26th February 2019.
Immediately upon the interim order passed by Bombay High Court, Spotify launched its internet audio broadcast and streaming services in India that also included WCM owned works.
Tips Industries Ltd v. Wynk Music Ltd & Others
The Bombay High Court also recently ruled upon a very similar matter in the case of Tips Industries Ltd v. Wynk Music Ltd & Others (“Wynk”). Wynk, an internet audio streaming platform also recently invoked the provisions of Section 31D for grant of statutory licenses for internet broadcasting of the works owned by Tips Industries Ltd (Tips), when it failed to negotiate with Tips for securing the license over certain works. Tips filed an infringement suit against Wynk and also challenged Section 31D in Bombay High Court. One of the important issues that was considered in this matter was whether internet broadcasting and the rental and download option provided by Wynk in its platform comes under the definition of “communication to public” and thereby does statutory licensing regime under section 31D also cover internet streaming services. While the counsel of Wynk relied on the OM issued by DIPP, which clarified that the definition of “broadcast” included internet broadcasting also, the Court held that such OM of the DIPP lacked statutory validity and hence cannot override the provision in Section 31D.
The Court while issuing an interim injunction in favour of Tips held that Section 31D was an exception to copyright and must be strictly interpreted and further opined that statutory licensing under Section 31D applies only to television and radio broadcasting and not internet broadcasting. Though the above matter is yet pending for a final disposition, it is likely that a final judgement will flow from the principles contained therein.
In the light of the above statutory provisions and judicial interpretations that have flown therefrom, the Department for Promotion of Industry and Internal Trade (DPIIT) has now proposed an amendment only to the Copyright Rules and not the provisions of Section 31D, in order to widen the ambit of statutory licenses that are currently restricted to television and radio broadcasting. It will be interesting to see whether this will actually stand the test of law, given that the Bombay High Court has already observed that statutory licensing under Section 31D does not apply to internet broadcasting services.
In our view, there is an urgent need for the principal Act to also be amended to cover internet broadcasting services, rather than trying to stretch the existing law, via delegated legislations, to internet media and streaming services. Such an amendment needs to take into account the genuine rights of the copyright owners, and the larger public interest involved in communication of such works to internet users by the internet broadcast service providers.