Sholay scores interim victory in landmark ‘ringtones’ litigation

The Delhi High Court has recently passed interim orders in the copyright infringement lawsuit filed by Sholay Media & Entertainment Pvt. Ltd. against Vodafone over the sale of ringtones of songs and dialogues from the super-duper 70s Bollywood blockbuster Sholay. We had blogged about the dispute earlier over here. The judgment of the Delhi High Court is available over here. The Plaintiffs were represented by Mr. Jagdish Sagar, Partner at Anand and Anand who briefed Senior Advocate Sudhir Chandra Agarwal. The defendants were represented by Ms. Prathiba Singh. [Clarification: Ms. Prathiba Singh was representing only Vodafone and not all defendants as was initially reported. The first day interim injunction against Vodafone was vacated in this order. Universal & PPL were represented by other counsel.]

The movie Sholay was initially produced by Sippy Films which then transferred all rights in the movie to the Sholay Media and Entertainment Pvt. Ltd. In 1978 the ‘predecessor of the plaintiff’ granted ‘certain rights’ in Sholay , for Rs. 10,000 + future royalties, to Polydor which is now known as Universal Music India Pvt. Ltd. Universal then entered into an agreement with PPL to administer these rights. PPL subsequently licensed these rights to Vodafone. After the first day ex-parte order, PPL and Universal impleaded themselves in the suit and were the main parties arguing the case for the defendants.

The dispute between the parties in this particular case pertained to the precise scope of the ‘certain rights’ in Sholay that were assigned to Universal. Universal had assigned these ‘certain rights’ to the copyright society, Public Performance Ltd. (PPL) which collected royalties and passed them on to Universal which in turn would pass on the relevant share of royalties to the Plaintiff.

The Plaintiffs argued that the ‘certain rights’ assigned to Universal pertained to “(i) the right to make records for sale and distribution and (ii) the right to communicate the sound-recordings by way of radio broadcast”. In pertinent part the clause which assigned the record and broadcast rights states that “Save as aforesaid the Assignor reserves to himself the copyright in the said work.” This could be interpreted to mean that new mediums like ringtones were reserved to the Plaintiffs and not transferred to Universal. As a logical corollary, the plaintiffs argued that residual rights in future mediums such as ringtones were never transferred in the impugned assignment deed.

Universal obviously interpreted the contract the other way round to argue that the Plaintiffs had assigned away even the rights to exploit the copyright in future mediums such as digital platforms and ringtones.

Justice V.K. Jain, the presiding judge, was of the opinion that the contract could be interpreted in both ways and the crux of the issue was the definition of ‘record’ which was defined in the contract to include ‘disc, tapes or any other device in which sounds are to be embodied’. The entire case thus boils down to ‘any other device’ and whether the definition could be extended to ringtones and digital medium. Given that this would require the leading of evidence and cross-examination, Justice Jain did not record any findings as to ownership and instead passed only interim orders leaving the main issues for trial.

Justice Jain’s interim orders included a stern reminder to Universal that it was required to pay royalties to the plaintiffs on a regular basis. As for the profit that Universal was making from the ringtone royalties (i.e. the money that Universal makes after giving Sholay their share of the royalties) Justice Jain ordered it to be deposited with the Court until conclusion of the trial. The result – Universal doesn’t make any money off Sholay until the dispute is finally settled after trial. Vodafone has escaped unscathed from the entire issue.

This case promises to one of the most watched copyright cases in India because if Sholay succeeds in arguing that the 1978 assignment deed did not cover ringtones and more importantly if it could argue that contracts covering future assignments were inherently unfair and hence invalid, it would mean that music publishing companies like Universal etc. would be susceptible to similar claims from other producers who may have assigned away their rights in the era before the world even knew of ringtones. Given that PPL is expected to earn about Rs. 165 crores in ringtones on behalf of its members, this lawsuit by Sholay could easily be billed as the top copyright case of the year.