Indian Copyright Collecting Societies and Foreign Royalties: Whither Transparency?

Nikhil’s post raises some serious issues about whether or not Phonographic Performance Ltd (PPL: a sound recording collecting society registered under the Indian copyright act) has the right to collect licence fees on behalf of foreign sound recording copyright owners. His own investigation revealed a total lack of transparency on the part of PPL.

Despite his repeated email requests, they never bothered divulging the extent of administrative authority that they had vis a vis foreign sound recordings. As most of our readers may know, collecting societies are meant to reduce transaction costs involved in the administration of copyrights i.e. rather than a bar owner (X) going to separate copyright owners to play their respective music in his/her bar, X has to merely approach a collecting society that administers the copyrights of several copyright owners. Typically, a collecting society enters into arrangements with copyright owners (both Indian and foreign) to administer copyrights on their behalf i.e license out their copyrighted content, collect royalties on their behalf and then disburse royalties amongst such copyright owners. But unless the collecting society has express permission from a copyright owner to collect on his/her behalf, they cannot do so.

PPL’s website is likely to make even the most ardent nudist blush in terms of how “bare” it really is. It does not even bother spelling out licensing rates–so much for transparency and good governance! Being a society registered under the Indian copyright act, the government must take immediate steps to force PPL to disclose licensing rates and other material particulars that are central to its operations. After all, PPL has been gung ho about going after every establishment that makes the mistake of playing recordings without paying royalties : shouldn’t there be a n obligation on them to disclose their rates of licensing and other particulars to the public, so that the public are better informed?

Interestingly, the rumour mill has it that in a PPL litigation, one of the counsels referred to PPL as “Pornographic Performance Ltd”. Particularly relevant I must say, given our reference to PPL’s website and nudity.

Compare PPL’s non transparent functioning with IPRS (Indian Performing Rights Society), another collecting society under the Indian copyright act. The IPRS website details out licensing rates and other particulars and one can easily see how much one needs to pay for playing music in a bar or other commercial establishment, doing a live concert etc . Unlike PPL, they also have their annual reports up on their website and a list of their sister societies from around the world. PPL must take a cue from IPRS and reflect better governance and transparency norms.

Nikhil also points to a serious lapse in the law itself. Our copyright regime is premised on the notion of reciprocity. In other words, if the US copyright act does not provide copyright protection to Indian authors, then we do not need to provide any copyright protection to US authors. Reflecting perhaps the biblical saying: “Do unto others what you would have them do unto you”.

There is no copyright protection for the public performance of sound recordings in the US–therefore Indian copyright law need not provide such protection to sound recording companies from the US. Unfortunately, our copyright order which deals with reciprocity does not make this distinction. Since such a distinction is mandated by the parent Copyright Act, the copyright order ought to be amended immediately to rectify this inequity.

Anyway, I must let Nikhil do the talking now. He has several accomplishments to his credit, but here is a brief bio:

Nikhil Krishnamurthy is a Senior Partner of KLAW/ Krishnamurthy Co., headquartered in Bangalore, and having offices in Mumbai and Chennai. Nikhil specializes in Intellectual Property law with a focus on Entertainment Law. Nikhil initiated the first Compulsory License application before the Copyright Board, to set reasonable rates of royalty for the broadcast of sound recordings by private FM Radio Stations. He has represented various players in the entertainment industry including T-Series, Buddha-Bar and Deep Emotions Publishing. Nikhil has authored several articles on Intellectual Property issues and is regularly invited to speak at national and international conferences. He is presently a Consulting Editor for the Manupatra Intellectual Property Reports.

I’ve laid down his guest post below, but for those interested in a more comprehensive discussion of these issues, see his article posted on SSRN (titled “Sound Advice – Or What You Always Wanted to Know About Phonographic Performance but were Afraid to Ask”, published in the June 2007 issue of the Manupatra Intellectual Property Reports).

SpicyIP hopes that both PPL and the government will take serious note of the concerns raised by Nikhil.

vox PoPuLi

By: Nikhil Krishnamurthy

It’s quickly approaching that time of year again.
The time for Christmas and New Year parties.

And of course the time hotels, nightclubs, bars and restaurants can expect to receive a visit from their friendly neighbourhood copyright inspector with a letter demanding the payment of license fees towards the Phonographic Performance Ltd. (PPL) “Event License”.

Those of you not familiar with the Event License, and especially those in the hotel and restaurant business, should be aware that PPL, the copyright society administering the public performance right in sound recordings in India, issues a separate license to users of music, such as hotels, restaurants, bars and discos every time some event is held, such as Christmas or New Year parties. This license is in addition to the yearly license fee already collected from such establishments.

Under copyright law, a license fee is payable for the public performance of music. In the case of live concerts, this fee is generally payable to the Indian Performing Right Society or IPRS, and in the case of recorded music, the license is generally payable to both the IPRS and the PPL. I use the word “generally” here since IPRS and PPL must both be in a position to substantiate that the music publicly performed is within their repertoire.

PPL has around 150 Indian record labels as its members and represents that these members have assigned the right of public performance in sound recordings produced by them to PPL. PPL in turn has a mandate to set Tariffs, identify places where its members’ recordings are publicly performed, collect royalty from such places, and disburse royalties to its members.

Users normally pay an annual license fee to PPL which generally allows the public performance of any recordings within their premises (but see below). If a user/ establishment proposes to have any special event, then, in recent times, PPL has started issuing an additional “Event License” for an extra charge, as already indicated above.

This post is not concerned with legality of the “Event License”, but is concerned with the payment of license fees to PPL for public performance of foreign music at one’s establishment, whether it is all year-round, or on special events/ occasions. Is PPL entitled to collect license fees for such foreign content ? Or does it only have the authority for Indian content produced by its members? Does it in turn distribute the collected royalty to foreign right owners ? Does the same thing happen when Indian music is being played abroad – i.e., does a foreign copyright society collect royalty when, say a Saregama-owned recording is played at a nightclub in, for example, the USA, and then send that money to PPL to disburse to Saregama ?

PPL claims to have the authority to collect royalty for foreign recordings. However, unlike the IPRS website which lists in detail every foreign sister society with which it has reciprocal arrangements, there is little or no indication on the PPL website to suggest that it has any affiliation with any foreign copyright societies whatsoever.

On PPL’s website, there is one mention of the expression “International music” at http://www.pplindia.org/licenses.html, and another in its FAQ portion [under the title “When a PPL License is required] at http://www.pplindia.org/faq2.html which is being reproduced here for a better understanding of what follows next.

“Q: What if I use imported recordings?

A: Most foreign recordings are copyright protected in India. International licensing agreements often exist between PPL’s member companies and the foreign producers; such recordings are then subject to PPL’s control. In any case, the overwhelming majority- over 95%- of International music is owned by PPL members like Universal, Sony, Crescendo and Virgin.”

PPL does not appear to have ever filed these “international licensing agreements” which “often exist” between its members and foreign producers to establish its right to collect for performances of foreign records within India, in any court proceeding. Are such “international licensing agreements” restricted to the manufacture and sale of foreign sound recordings within Indian territory, or do they also allow for the licensing of such foreign sound recordings for public performance and collection of royalty in this respect ?

Leaving PPL’s purported authority to license foreign sound recordings for a moment, there is another more important issue at hand which requires a short legal background for better understanding. The issue is one of national policy rather than merely proving a license agreement and its ambit.

Indian copyright law recognizes the principle of reciprocity. This principle is a means to encourage countries that do not offer a higher level of protection to increase the level of protection under their respective laws and to correct the level of imbalance between laws of respective countries.

So for example, in the context of copyright, US copyright law does not recognise a general performance right for sound recordings. If a record is played on FM radio, in a hotel, disco, restaurant or bar in the USA, the record label does not receive any royalty.

Therefore while the record label that owns copyright in an Indian sound recording, is entitled to get performance royalty if that record is played in India, or most other countries, it will not be entitled to any royalty in the USA for a similar performance. The principle of reciprocity simply states that in such a situation, a US record label whose record is publicly performed in India must also not receive any royalty for the public performance of the record in India, in the hope that the loss of such performance revenues will encourage the USA to change its laws and bring it level with the standard of Indian protection.

PPL has taken the stand that since the Indian subsidiaries of the majors, being Universal, Sony, Virgin etc. are also exclusive licensees of their respective parent corporations in respect of their respective repertoires, PPL is entitled to collect royalties even for foreign recordings [over 95% of international music, no less].

How does that tie in with the principle of reciprocity ?

It is a fact that a large proportion of popular music played around the world is produced in the USA. PPL’s stand would seems to indicate that it is entitled to collect royalty for recordings originating from the USA and played in India, while their own members are not entitled to the same courtesy in the USA.

I would suggest that a matter of national interest becomes immediately apparent in this fact situation. Bottom-line – Indian author-producers are being denied their public performance revenues under US law, while US labels seemingly are receiving public performance royalties in India, quite clearly a very unfair state of affairs.

It is interesting to note that in Australia, US recordings are known as “unprotected” recordings for the purpose of airplay. This means that US labels are not entitled to royalty when played within Australia. Similarly, in Canada, a neighbour of the USA, US recordings are “ineligible” for performance royalties. In point of fact, when the Phonographic Performance Company of Australia or PPCA, which is the PPL equivalent there, sought to increase the percentage of royalty to be charged to commercial broadcasters, the broadcasters imposed a ban on the PPCA, stopped playing recordings controlled by the PPCA and switched over exclusively to US “unprotected” recordings for several months till a settlement was reached with PPCA. This has happened on more than one occasion.

Denmark, Norway, France, Germany, Netherlands and Norway are other countries which do not appear to accord the public performance right to recordings originating in the USA.

Even if PPL members have “international licensing agreements” with US labels, the question is, does the law allow for PPL to collect public performance license fees for US recordings played in India ? Our law clearly recognizes reciprocity. Our Indian labels clearly do not have any public performance right in the US. It is in the interest of Indian labels, including the members of PPL to themselves advocate the application of reciprocity in this situation.

Therefore, if FM radio stations, hotels, nightclubs, and other users in India switched to playing only recordings originating from the USA, would PPL have any authority to issue radio licenses, annual licenses or event licenses to such places at all ?

Much has been said, and is being said about whether Indian laws offer adequate protection for intellectual property of foreign right owners, but it must be realized that there is glaring imbalance under US copyright law that deeply affects Indian economic interests.

There is therefore an urgent requirement in national interest, for the Government of India to clarify the International Copyright Order 1999, to the effect that sound recordings originating in the USA will not be entitled to the general public performance right in India until a similar right is afforded to Indian recordings.

(c) Nikhil Krishnamurthy ([email protected])