Delhi High Court dismisses yet another petition against IPRS & PPL

In a well-reasoned judgment dated 25th May, Justice S. Murlidhar of the Delhi High Court dismissed a petition by Event and Entertainment Management Association seeking directions to the Central Government for framing of ‘appropriate and objective standards towards the determination and levying of royalties of various copyrighted works administered’ by Phonographic Performance Limited (PPL) & Indian Performing Right Society Limited (IPRS). The petitioners also wanted directions on the ‘mode of enforcing and administering such royalties’. The Event and Entertainment Management Association ‘comprises of members from all over India who are engaged in the business of organizing events, functions and entertainment shows like road shows, music concerts/shows, brand promotion, dealers meet and other social events like marriages and get-togethers etc.’

Justice Murlidhar’s judgment comes close on the heels of another judgment by a Division Bench of the Delhi High Court dismissing a similar petition by the Federation of Hotels & Restaurants Association of India against IPRS and PPL. We had blogged about it over here. Both judgments have concurred on the point that IPRS and PPL have the right to fix their own tariffs and that if there was a grievance against the tariff scheme the petitioners were free to approach the Copyright Board for fixing a reasonable royalty rate. Unlike the case before the Division Bench which was decided after 12 years, the petition before Justice Murlidhar was decided in less than three years despite the delays caused by the Central Government.

According to me both petitions, by the Event Management Association & the Federation of Hotels and Restaurants were completely flawed and ill-conceived, especially by the standards of the otherwise IP savvy Delhi lawyers. Anybody who has read the Copyright Act would have referred these associations to the Copyright Board for compulsory licences. After all this is what the radio companies did.

The only way hotels, restaurants and event management companies are ever going to be able to tackle mammoths like PPL and IPRS is if they collectively bargain for a reasonable tariff failing which they should drag PPL and IPRS to the Copyright Board for reasonable royalties. Given the fact that most event management companies conduct their events in hotels and restaurants it makes immense sense for them to join forces against the Copyright Societies. Given the stunning success that radio companies achieved before the Board (i.e. the Board fixed a 2% royalty rate instead of the 20% demanded by PPL) I would not be surprised if the petitioners in both the above cases met with a similar level of success. The only problem with the Copyright Board is that it is currently not staffed and is also facing a serious constitutional challenge before the Madras High Court. The IPAB too was vacant until the Asian Patent Attorneys Association (APAA) knocked on the doors of the Delhi High Court. Will the Copyright Board have a similar saviour?

The Competition Commission angle: This is more of an academic point but worth a discussion nevertheless, atleast according to the geek within me. The Competition Commission of India (CCI) recently delivered an order in the dispute between multiplex theatre owners and Bollywood producers who withheld the release of films for a period of about 2 months. Amlan had carried a succinct post on this case, over here. An interesting point of the CCI’s order is that it is the first order on the interaction between the Competition Act, 2002 and the Copyright Act, 1957. The producers had tried arguing that the CCI did not have the jurisdiction to try the case because it involved cinematograph films protected under the Copyright Act, 1957 and that Section 3(5) of the Competition Act, 2002 exempted actions relating to rights under the Copyright Act, 1957. The CCI however disagreed with this interpretation. It pointed out that Section 3(5) was restricted to those actions taken to either ‘restrain infringement’ or ‘reasonable conditions’ necessary for protecting any rights under the Copyright Act, 1957. However since the Director General managed to establish that the producers had created a cartel which used the threat of non-supply of films in order to negotiate a more favourable revenue sharing agreement which in turn adversely affected the consumers who bore the brunt through the resultant price-hike of tickets for consumers. Given the strong evidence against the producers the CCI was of an opinion that none of their actions of collusion to withhold the release of films were necessary to protect the producers from infringement and as a result the producers were liable for action under the Competition Act, 2002.

This brings us to the question of IPRS & PPL. While the actions of IPRS and PPL to prevent copyright infringement are within the purview of Section 3(5) of the Competition Act, 2002 and therefore exempt from the CCI, what about the ‘collective bargaining’ on behalf of the members of PPL and IPRS to fix royalties with users? Would this ‘collective bargaining’ amount to the members of PPL and IPRS functioning as a market distorting cartel, liable for action under the Competition Act, 2002? Also how does one resolve this with the statuory right to create copyright socieites under the Copyright Act, 1957?

Well the very idea behind the Competition Act, 2002 is to ensure a climate of free competition which would benefit consumers. The Copyright Act, 1957 allows for the creation of Copyright Societies for the very same purpose i.e. to provide for a single window for copyright licensing because this would drastically reduce the transaction costs involving in licensing and enforcing copyrights, benefits of which would eventually pass on to the consumer.

However what happens when the Copyright Society in question begins to abuse its monopoly powers as alleged by the Event Management Association and the Hotel and Restaurant Federations? Going by the whopping difference between the royalty rates determined by the Copyright Board (2%) and the royalty rate demanded by PPL (20%) would it be reasonable to conclude that the Copyright Societies are engaged in cartel like behaviour/abuse of their dominant position? While the Copyright Board only has the power to fix royalties, the CCI has powers to impose some pretty stiff penalties against PPL and IPRS for an abuse of their dominant position in the market. Anybody game for filing a complaint with the Competition Commission? Atleast for the sake of academic curiousity? 😉