Copyright

‘Chennai Live’ 104.8 calls PPL’s bluff on U.S. Sound Recordings – Finally!


We recently received information that Muthoot Broadcasting Pvt. Ltd., which owns the English music radio station – ‘Chennai Live’ 104.8, had moved the Copyright Board back in April of this year, questioning the right of PPL to collect royalties, for the public performance of U.S. sound recordings. 
‘Chennai Live’ is being represented by Advocate Prathiba Singh who was one of the main attorneys for the radio stations in the mega-compulsory licencing dispute which was decided by the Copyright Board in August, 2010. 
Chennai Live’s, compulsory licencing application is available for download over here. Apart from challenging PPL’s right to collect royalties for U.S. sound recordings, the radio station is also requesting the Copyright Board to issue a compulsory licence on the terms of its August, 2010 judgment mandating a mere 2% royalty. If the 2% royalty judgment of the Copyright Board is implemented with retrospective effect, PPL will have to actually refund ‘Chennai Live’ a sum of Rs. 28 lakhs for the excess royalty charged over the last few years. 
Coming back to the main issue of the challenge against the U.S. sound recordings, I would like to redirect our readers to this post, by Nikhil Krishnamurthy, back in 2008, in which he very lucidly explains how PPL does not have any right to collect royalties for U.S. sound recordings. The basic issue is very simple. The U.S. does not recognize a public performance right for sound recordings and according to Section 40 of the Copyright Act, 1957 the Indian Government can provide only reciprocal rights to foreign sounds recordings. This basically means that unless the U.S. recognizes a public performance right for Indian sound recordings in the U.S., the Indian Government cannot provide a similar right to U.S. sound recordings in India. Image from here.
The more important question over here is whether PPL is even authorized by the owners of foreign sound recordings to collect royalties on their behalf. PPL or the Phonographic Performance Ltd. is a copyright society with only Indian companies as its members. Under the law, PPL can collect royalties on behalf of foreign music companies, only if it is specifically authorized for this purpose by the foreign music companies. However it is unknown as to whether PPL is authorized to collect such royalties. A look at PPL’s Annual Reports reveals that PPL is hardly remitting any money to foreign music companies. So why then is PPL collecting royalties for these foreigners? 
If ‘Chennai Live’ succeeds before the Copyright Board, it will clear the way for other English music radio stations to mount similar challenges against PPL. Since most English music is owned by American companies, it is likely that English music radio stations in India will not have to pay a dime for most of the music that they broadcast. 
The biggest impediment to the success of the petition is the fact that the Copyright Board is adjourned due to a lack of quorum
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).

7 comments.

  1. AvatarAnonymous

    Some thoughts:-

    1. PPL’s members are Indian music companies which are subsidiaries of International music labels so surely it is reasonable to expect that the label’s own subsidiary can collect in India via its membership of PPL as opposed to PPL HAVING to remit the money to a US or European Co?

    2. The ability to “restrict” the copyright in sound recordings in India re the International Copyright Order appears to be a policy decision left to the executive so what role does a court have in such decisions? Recall the EU claim against the US before the WTO on this issue.

    3. The danger of confusing the compulsory licensing principle with statutory licensing is lost on all- sure in compulsory licvensing the determination of royalty cannot be same for every applicant as the test of reasonableness would have to be related strictly to the facts in each case (read here – revenues, profits, overheads etc.) and considered on a case by case basis unless the applicants pushed a representative action based on data, evidence covering each class, party in the representative action/complaint.

    Reply
  2. AvatarAchille Forler

    Anonymous is right: all majors are present in India and collect directly from PPL, to whom they have assigned the performance right in their sound recordings.

    Also, it is inaccurate to state that “most English music is owned by American companies”: Universal, and now EMI, are both owned by the French group Vivendi while Sony is Japanese… This leaves only Warner, which is not in India but is distributed here through EMI.

    1. Radio companies are riding piggy-back on the investment of the film and music industries (radios play only songs that have become hits through film/music producers’ promotional investments) as they have never promoted a single new artist or non-film music;

    2. They have bee, gifted a minuscule royalty rate by the Copyright Board for sound recording performance;

    3. Through very bizarre, unique-in-the-world decisions in the Kochi, Mumbai and Delhi courts they don’t have to pay royalties to authors-composers; if upheld by the SC, it will dry up all global royalties for the Indian entertainment industry: how can that be beneficial to the radio industry which depends entirely on the health and the quality of these industries?

    4. they managed to introduce in the Copyright Amendment Bill a tailor-made statutory license clause which was never discussed by the JPC;

    5. now an IP blog displays glee as they try to chip away even from the pitiful performance royalties they have to pay!

    Seriously!

    Reply
  3. AvatarPrashant Reddy

    @Anon (12:55 PM)

    (i) You’re right. If PPL members have been authorized by their parent companies to collect royalties in India then the question of PPL remitting money by itself does not arise. As I’ve pointed out in the post, we are not sure if PPL members have received such authorization from their parent companies. From the few lawyers that I’ve spoken to PPL has never given a clear answer to this question and hence the speculation in the post.

    2. With specific regard to the International Copyright Order, 1999 I’ll disagree with you to the limited extent that although the order in itself is Executive Order, it has to remain within the boundaries of Section 40 of the Copyright Act and that Section seems to say that only the principle of reciprocity will apply. Technically 104.8 may have a stronger case if it challenges the constitutionality of the Order itself before a writ court.

    3. You are right about the dangers of confusing compulsory licensing and statutory licencing. A lot of people do make that question. With specific regard to the current royalty dispute between radio stations and music companies,I have been told by some lawyers that most radio stations and music companies who were not parties to the disputes have entered into some kind of MOU to abide by the terms of the Copyright Board decision once that was out. If this true, the radio stations have a right to enforce that contract subject to applicable caveats.

    Cheers,
    Prashant

    Reply
  4. AvatarPrashant Reddy

    @ Forler:

    Rule 14I or 14H requires PPL to disclose any such assignment agreements to the Copyright Registrar. From what I’ve heard they have not done so. If they have done it, let them publicly declare it, whats their to hide?

    Apart from the nationality of the company, you also have to determine the nationality of the author and the terms of the assignment. If the author is American and the same is licensed to a Japanese company, the sound recording in question would be disqualified.

    1. So what?

    2. That minuscule royalty rate has been set by the Copyright Board after hearing the evidence of both sides.

    3. How is this point even relevant to this discussion?

    4. which clause is this and I seriously doubt the TRIPs/Berne compatibility not to mention the constitutionality of such a provision.

    5. Please save your outrage for somebody else. I’m not interested in it. You have every right to cry murder when PPL doesn’t give IPRS its dues but it is okay for PPL to mess around with radio stations and other content users?

    Seriously!?

    Prashant

    Reply
  5. AvatarAchille Forler

    @ Prashant:

    No polemics and no animus: I am a avid reader and supporter of this outstanding blog and of your militant posts. But, with due respect, knowing the law is not sufficient: an entertainment lawyer must have an intimate understanding of how the industry works.

    Take another instance of your post: you want to apply ruke 14 to the Societies. What has rule 14 got to do here? What “assignment agreements” do you want the Societies to disclose? Let me explain:

    To become a member of IPRS or of PPL, the applicant company has to assign – out of the bundle of rights that it owns/controls – the performing right of all the works. I control 2.7 million works for SAARC territories: do I disclose all these agreements fo IPRS? No. If IPRS – or any other Society – asks me to disclose them, I’ll refuse. They’re confidential agreements!

    So the way it works is like this, both for IPRS and PPL or any other Society:

    To become a member of any Society in the world, the applicant – author, composer or publisher – has to give a blanket assignment for all his performing rights to the Society for the duration of his membership. Then he registers his old and new works with the Society.

    The day a Society receives a counter-claim for a particular work or catalogue, it suspends immediately the payment of the income from this work and asks the Parties to submit “proof of claim”, which cannot always be elucidated by the agreement. If one of the Parties do not accept its decision, it is free to move the courts. (At least, this is the way the best Societies in the world function.)

    Also, it is exaggerated to describe my reaction as “outrage” at the sight of a copyright lawyer displaying happiness when content users debase the value of content creators. “Disbelief” would be the appropriate noun. Keep in mind that radios don’t generate any copyrights, they only use them; in fact, use of music copyrights is the foundation of their business!

    The point all protagonists in this mess seem to be missing is this:

    While the songwriters (lyricists, composers, arrangers, adapters) are the fountainhead of the music industry, talent is not sufficient. For a song to find its widest public, a chain of essential creative and business partnerships must be formed: audio and film producers, singers, musicians, sound engineers, managers, lawyers, PR agencies, advertisers, distributors, broadcasters, exhibitors, touring agents, venues operators, sponsors, etc. Those who record their songs and those who communicate them to the public are invariably corporates, who generate their own copyrights in the process. Their copyrights are referred to a ‘neighboring rights’ or ‘derived rights’ because their existence is predicated on the existence of the publishing rights.

    The equal protection of the economic rights of all links in this chain maintains a delicate balance between creation and commerce. This requires above all the protection of the rights of the individuals at the head of the chain – authors, performers, musicians – and of all the economic players downstream that enabled their creations to exist and to be communicated to the largest public. When the rights of one link in this chain are weakened to the benefit of another link, then this balance is tilted. Fair remuneration for all players in the creative industries alone makes possible the investment needed to launch and develop new talent.

    I understand that radio companies have been provoked by the music producers, but their present strategy is upsetting the delicate balance that I referred to above and will be harmful to the whole entertainment industry, including the radio companies themselves.

    Here, I believe, you and I are on the same wavelength.

    Reply
  6. AvatarPrashant Reddy

    Hi Mr. Forler,

    On the point of public disclosure of ‘Assignment deeds’, please note Rule 14I of the Copyright Rules, 1958: http://copyright.gov.in/Documents/CopyrightRules1958.pdf

    As you will see the Rules requires the disclosure of the nature of the rights held by content owners. Any confidential details maybe redacted. But the name of the work, the nature of rights assigned etc. will have to be disclosed.

    In fact if you see Rule 14-I(iv) you’ll see even a ‘Disbursement Register’ which contains details of disbursements made to each owner of copyright, category-wise.

    I’m sure you’ll agree that full and free information is one of the key requirements of a free market economy. Content users have a right to know what rights PPL has and if PPL does have to administer sound recordings it should publicly disclose the same without revealing any of the confidential commercial information.

    If Shamnad or me were to move a writ petition before a High Court asking for the enforcement of Rule 14-I, I can guarantee you that it will be allowed.

    Coming to your point on the nature of the industry and the royalties, you may have a point, I’m no expert on the economics of the industry but I do know that these royalties rates differs from market to market depending on the nature of the music industry. Replicating foreign royalty rates in India may not be practicable.

    Having that I must say that a lot of find it quite surprising that the appeals against the Copyright Board are virtually grounded. Why aren’t PPL & Co. making more noise about this? We’ve hardly heard a squeak from them.

    Cheers,
    Prashant

    Reply

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