SpicyIP Guest Post: Copyright, Arbitration and a Feted Film

Introduction

The recent Delhi High Court judgment of Dr. Justice Muralidhar in Tandav Films [downloadable file] makes for an interesting study. It involves disputes relating to the Hindi film “Khosla ka Ghosla”, and raises important issues in copyright law and arbitration law. The judgment seems a bit sketchy in parts, and it is difficult to fully flesh out the facts. Perhaps, this may be a result of it being an order arising out of an interim application to refer the parties to arbitration under S. 8 of the Arbitration and Conciliation Act, 1996. However, given the importance of the issues raised in this case for both copyright law and arbitration law, Tandav Films merits a detailed analysis.

Facts

It is important to note the following facts relevant to the judgment in the case –

a. The Plaintiff (in collaboration with another company) were the Producers of the movie “Khosla ka Ghosla” and held all the underlying intellectual property rights (to start off with) in the movie.

b. The Plaintiff/Producer entered into an agreement to licence exclusive rights in the “musical works and accompanying lyrics as well as the sound recordings embodied in the sound track [of the said] film” to Living Media (one of the defendants) for five years. (“Agreement 1”)

c. The Plaintiff/Producer later entered into another agreement to licence “exclusive rights, excluding music rights in the film” to UTV (another defendant) for fifteen years. (“Agreement 2”) This contained an arbitration clause.

d. Upon the success of “Khosla ka Ghosla”, UTV soon released its remake in Tamil, titled “Poi Solla Porom”. This was objected to by the Plaintiff/Producer on what appears (from the judgment at least) on three main grounds –

i. Infringement of music of the film “Khosla ka Ghosla”.

ii. Infringement of copyright in the literature and dramatic works created for the Plaintiff/Producer underlying the film “Khosla ka Ghosla”.

iii. Infringement of the Plaintiff/Producer’s special rights as author of the film “Khosla ka Ghosla”.

Potential legal issues

The case had a lot of potential for clarifying technicalities in copyright law. In relation to the argument on moral rights (to my mind, atleast) the set of facts gave enough scope to entertain a discussion on the following questions: the scope and extent of moral rights; whether and under what circumstances are moral rights available to a “first owner”, as opposed to an author; and, who can be said to be a “legal representative” of the author. Similarly, in relation to scope and nature of rights in “musical works” and “dramatic works” the following issues were implicated and these questions could have been addressed – to what extent do rights in “musical works” and “dramatic works” subsist independently of the rights in the underlying cinematographic film; how do rights in the “musical works” and “sound recordings” differ from each other and from the rights in the underlying “synchronized music” to a “cinematograph film” (as arising out of Agreement 1 above); what is the effect of assignment of “music rights” (as used in Agreement 2 above), and how far does this impact other related rights in relation to the cinematographic film.

As will be seen later, Muralidhar J in Tandav Films did not direct his enquiry into these issues at all, instead preferring to refer the disputes for determination by way of arbitration.

Decision of the Court

Copyright issues

The Court did not go much into the above identified issues, other than laying down (albeit, on a prima facie basis) that the disputes revolve around an interpretation of the terms “musical rights” and “musical works” as used in Agreement 2 between the Plaintiff/Producer and UTV. Prima facie, the court ruled that to the extent there was an assignment of the “musical works” under Agreement 2, this also covered any “musical work” as defined under S. 2(p) of the Copyright Act. However, since this agreement contained an arbitration clause, the disputes relating to the scope and interpretation of the underlying intellectual property rights were left for determination by the arbitrator.

It may be noted, that in so holding, the court did not address the moral rights issues at all. Also, to the extent it did rule on an interpretation of the phrase “musical rights” and “musical works”, the analysis by the Court is only on a prima facie assessment. On this basis, it appears doubtful whether the decision in Tandav Films can be said to lay down any authority for a proposition of copyright law.

Reference to Arbitration

The Supreme Court has held in the famous Sukanya Holdings case reported in (2003) 5 SCC 531 [Also available here], that the entire subject-matter of the suit should be subject to the arbitration agreement for the Court to refer the disputes to arbitration. The underlying reasoning behind this rule is based on the consensual nature of arbitration. Only those ex post disputes can legitimately be referred to arbitration, in relation to which parties ex ante agreed to do so.

Using this authority, it was contended by the Plaintiff/Producer that the disputes in this case related to issues that went beyond Agreement 2 between the Plaintiff/Producer and UTV. There were other defendants to the suit that were not signatories to Agreement 2. For instance, claims were made against Four Frames Pictures, the producers of the Tamil remake and Big Music, which had released the music of the Tamil remake.

The Court, and it appears rightly so, had no hesitation in rejecting this argument. The case of Sukanya Holdings was distinguished on the ground that the other defendants in Tandav Films, unlike Sukanya Holdings, were either pro forma parties, against whom no claims were made (for instance, the author of the script and some songs, or Living Media which had been earlier assigned some rights by the Plaintiff/Producers through Agreement 1), or were those who derived their rights from UTV (for instance, Four Frames Pictures and Big Music). In essence, it appears that the Court recognised that one must look at the “substance” of the claims, and not merely the form in which the Plaintiff has cast the disputes. To this extent, Tandav Films follows a long line of decisions that have recognised this principle and adds a needed degree of sophistication to the plain vanilla Sukanya Holdings rule.

Clarifications

It seems to me that the following questions could potentially arise upon a reading of the judgment to persons not familiar with arbitrations. Some of these questions were posed to me when I was discussing the effect of this judgment with some lawyers. These therefore deserve further clarification –

First, what is the effect on the underlying Suit of the order to refer the parties to arbitration? Can the court dismiss the suit?

The order of the court to refer parties to arbitration under S. 8, it seems, has the effect of dismissing the underlying suit, as opposed to a mere “stay of proceedings”, which was the position under the earlier 1940 Arbitration Act. There is however authority to suggest that the suit continues to be in suspended animation, and institution of a fresh suit at a later date (if required) will not be necessary. In Tandav Films, Muralidhar J followed the first approach and dismissed the suits as not maintainable. Of course, a suit for copyright infringement can still be maintained (as discussed in the answers to the fourth and fifth question below), but this will be dependent upon the decision of the arbitral tribunal.

Second, how can the third parties, who are not even party to Agreement 2, be referred to arbitration?

It is necessary to clarify here that the effect of such a decision is not to force the other Defendants to arbitration. Rather, to the extent their rights are derived from Agreement 2 (with the Plaintiff/Producer), these Defendants will be bound by the consequent arbitral award.

Third, even assuming that the Plaintiff/Producer wins at arbitration how does it enforce its award against the other defendants?

If the Plaintiff/Producer wins at arbitration, it can, as per the terms of the award, enforce it against UTV. Also, the award is deemed a decree of the court and to the extent that it sets out the entitlement of the Plaintiff/Producer to the copyrighted works, an action for infringement can be instituted before the District Court under S. 62 of the Copyright Act, 1957 on the basis of the award/decree obtained at arbitration.

Fourth, regardless of the nature of relationship between UTV and the other defendants, don’t the Plaintiff/Producers still have a right to institute an action against them under the Copyright Act?

It would appear to me that this will indeed be the case. However, since the dispute before the District Court that hears the infringement action will revolve around whether the Plaintiff/Producers actually own the copyright that they claim is being infringed, the Court will defer its judgment pending decision of the arbitral tribunal.

Fifth, while a licensing dispute over copyrights may constitute an arbitral subject matter, can a pure copyright infringement suit be the subject of arbitration?

It seems a pure copyright infringement dispute cannot form an arbitral subject matter especially given the mandate of S. 62 of the Copyright Act, 1957 that gives this power only to the District Court. However, in this case, the copyright licensing dispute lies at the heart of the Plaintiff/Producer’s entitlement to the copyrighted works themselves. Thus, theoretically, even though the Plaintiff/Producer is at liberty to pursue a claim for copyright infringement, since this will be contingent upon a decision on whether the Plaintiff/Producer is entitled to those copyrights in the first place, the District Court will look to the decision of the arbitral tribunal before reaching any conclusion.

Conclusion

Although the court was not bound to satisfy itself to a degree greater than that it arrived at in the judgment (i.e. on a prima facie basis), it leaves the underlying copyright law issues tantalizingly open. Perhaps a decision with greater judicial analysis would have gone a long way to resolving these issues. Although the court cannot be faulted for honouring the agreement of the parties to resolve disputes extra judicially, perhaps, clarity on the underlying intellectual property law issues would have been appreciated by practitioners.

However, to the extent that Tandav Films is an endorsement of the agreement of parties to refer their disputes to arbitration; and to the extent it recognizes that in deciding whether to refer parties to arbitration, the court must look at the substance and not the form in which the Plaintiff casts the disputes, it is, in my opinion, a welcome addition to existing jurisprudence.