SpicyIP Guest Post: From “Hire” to “Commercial Rental” Scope, Inadequacies, Implications & Recommendations

Sai Vinod Nayani, a third year student at the National University of Juridical Sciences, Kolkotta has sent us this very interesting guest post on the proposed amendment in the Copyright Amendment Bill, 2010 inserting the term ‘commercial rental’.

From “Hire” to “Commercial Rental” Scope, Inadequacies, Implications & Recommendations


Sai Vinod Nayani

The Copyright (Amendment) Bill, 2010 proposes to replace the word “hire” with “commercial rental” in Sections 14(d)(ii), (e)(ii) and 37(3)(e) dealing with the meaning of copyright. The authors of Cinematographic works and sound recording have the exclusive right to give on hire offer to give on hire copies of their work. Now, the Amendment proposes to replace “hire” with “commercial rental”. The Amendment also inserts a definition for commercial rental. Unfortunately “Commercial rental” is defined in a fairly expansive terms leading to uncertainty. In my opinion a narrow definition should be adopted vis-à-vis the holders of the rights to make the provision fair.

Commercial rental is not something new to the Copyright Act, 1957. The 1999 amendment to the Act authorized the author of a computer programme, right to give on “commercial rental”, instead of “hire”, copies of their work. The Amendment, as claimed in the Statement of Objects and Reasons of the bill, is predominantly intended to make the Act in compliance with the two WIPO Internet treaties. The WIPO Copyright Treaty (WCT) confers on authors of Computer programme, cinematographic work and works embodied in phonograms exclusive right to give on “Commercial Rental” to the public copies of their work. The WIPO Performances and Phonograms Treaty (WPPT), also confers to performers and producers of Phonograms exclusive right to give on “Commercial Rental” to the public original and copies of their work. Even the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) as part of Rental Rights gives the authors the Right to authorize “Commercial Rental” copies of their work. However, not many countries have preferred to use “commercial rental”. Also, there are no notable laws around which use “hire” either.

Scope of “Commercial Rental”
The Amendment inserts a definition to “Commercial Rental” which reads as follows:
“(fa) “Commercial rental” does not include the rental, lease or lending of a lawfully acquired copy of a computer programme, sound recording, visual recording or cinematographic film for non-profit purposes by a non-profit library or non-profit educational institution.”
The proposed definition is more like an exception to copyright infringement. Instead of explaining and ascertaining the ambit of “Commercial rental” it excludes giving on rent, lease or lending of the work by non-profit library and non-profit educational institution for non-profit purposes. However, certain inferences relating to its scope can be drawn from the above definition:
(i)Legislative Intent: The exclusion of giving copies of Copyrighted work on rent, lease or lending by non-profit libraries and educational institutions, is a step forward towards encouraging research and scholarship. The “commercial” preceding rent implicitly takes “non-commercial” or “non-profit” renting out of its scope.

(ii)With the proposed definition it can be inferred that “commercial rental” means giving on rent or lease or lending of a lawfully acquired copy of the work. It is unlikely that it would encompass something more and would not permit such organizations from distributing in such ways.

United Kingdom
The UK Copyright, Designs and Patents Act, 1988 grants owner of the Copyright, the exclusive right to rent or lend the work to the public. The act further qualifies “rental” as making a copy of the work available for use, on terms that it will or may be returned, for direct or indirect economic or commercial advantage and “lending” as making a copy of the work available for use, on terms that it will or may be returned, otherwise than for direct or indirect economic or commercial advantage, through an establishment which is accessible to the public. Irrespective of nature of the work, i.e. literary or dramatic or sound recording or computer programme or cinematographic, rental and lending rights are granted to authors of the work.

United States
Title 17 of the United States Code grants the owner of Copyright the exclusive right to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease or lending. The US law also does not use the word “Commercial Rental”.
It is noted that both UK and US legislations does not restrict rental rights to computer programmes, sound recordings and cinematographic films as in India (with the Amendment). Similar rights are given to authors of literary, dramatic and artistic works. The UK law doesn’t include right to give on “lease”. It can be safely concluded that Commercial Rental includes least rent, lease or lending of the work.

(iii)The “Commercial rental” exemption is permitted only for non-profit purposes and to non-profit library or educational institution alone. The scope of rental rights has been decreased as this exception was earlier not present. On a stricter interpretation of this might entail lending or renting of personal copy of a work as infringing of copyright.

The proposal is laudable to the extent that it permits non-profit libraries and educational institutions to rent, lend and lease copyrighted works. However, the provision does not adequately address the following concerns:
(a)Non-commercial Lending: The present terminology suggests that lending of the work other than by non-profit libraries and educational institutions would amount to infringement of the right of the holder. Lending need not always involve “profiteering”; hence, by this definition lending of a personal copy without any consideration is not permitted. Such non-profit lending lacks the “commercial” element and any prohibition would be unjust.

(b)For Non-profit Purposes: If any non-profit library purchases a cinematographic works for Rs. 1000/- and rents it for Rs. 100/-, after ten such transactions it would recover the cost and any subsequent transaction would entail profit. The purpose of the provision is thus defeated given that the definition permits renting solely for non-profit purposes.

(c)Non-Profit Libraries: The scope of the term ‘non-profit libraries’ is ambiguous. For instance, on a strict interpretation of ‘library’, the lending of a work from a personal library without any consideration could amount to copyright infringement. This might be because the personal library under consideration may not fulfill the necessary criteria for being legally classified as a non-profit library. On the contrary, a liberal construction would permit the lending of such work by interpreting ‘non-profit libraries’ as places which has a collection of books and other materials.


a.Commercial rental exception to libraries or educational institutions was earlier not permitted to computer programmes. Now, with the proposed definition this exception is extended to computer programmes along with cinematographic works and sound recordings.

b.Recognition of Exhaustion of Rights in a Limited Sense: The deletion of the words “regardless of whether the copy has been sold or given on hire on earlier occasions” from Section 14 and amendment to the definition of “infringing copy” has been viewed as application of exhaustion of rights. However, such is exhaustion is not complete as renting or lending or leasing of a legally acquired copy is not permitted without a license.

c.Performance & Rental Rights Exception: Section 52(1)(i) permits communication of cinematographic films and sound recordings in the course of activities of an educational institution. Playing a sound recording in public without profit as per Section 52(1)(k) is permitted. With the additional rental exception the scope of rights of the holder is further reduced.

The rental exception should not just be restricted to non-profit libraries and educational institutions alone. Instead the exception should be extended to all non-profit purposes as lending is not always intended for profit. The UK legislation defines renting and lending of work. The definition of the latter clearly lacks the “commercial” character. According to the definition lending for commercial purpose is nothing but giving on rent. The purpose of the proposed definition would be self defeating if a similar meaning is attached. Hence, it is recommended that the words “by a non-profit library or non-profit educational institution” in the definition be deleted. However, it is reminded that copies made out of the legally acquired copy for non-commercial personal use, for instance in Section 52(1)(ad)1, would not be permitted to give on rent or hire or lend for any purposes as this exception is applicable only to legally acquired copy. In addition, in order to maintain consistency in the scheme of the Copyright Act it would be appropriate to have this provision under Section 52 dealing exceptions to copyright infringement rather than under definitional clause.

Apart from the above, the following changes need to be brought in so as to eliminate ambiguity:

a.Rent and lease can be for a period which can exceed the term of copyright. Hence, it is suggested to have an explanation to clarify the same.
b.Section 51 of the Act makes unauthorized hiring of copy of the work as infringement of Copyright. This has to be replaced with “Commercial Rental” so as to ensure uniformity in the Act.

Prashant Reddy

Prashant Reddy

T. Prashant Reddy graduated from the National Law School of India University, Bangalore, with a B.A.LLB (Hons.) degree in 2008. He later graduated with a LLM degree (Law, Science & Technology) from the Stanford Law School in 2013. Prashant has worked with law firms in Delhi and in academia in India and Singapore. He is also co-author of the book Create, Copy, Disrupt: India's Intellectual Property Dilemmas (OUP).

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