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Guest Post: Will the amendments to the Copyright Act serve their purpose?


Arun Mohan, a practising IP lawyer before the Madras High Court sent us this interesting piece exploring the possible complexities in enforcing the recent amendments to Indian copyright law and also the larger question of whether the amendments will serve their purpose?
Guest post: Will the amendments to the Copyright Act serve their purpose?
by,
Arun Mohan
Many an IP lawyer representing the entertainment industry would have spent several hours grappling with the new Copyright Act, and its consequences. In working with the same especially on assignments and agreements, many issues seem to arise for which solutions don’t seem to appear in the statute itself. My focus on this blog would be on musical works in movies, which have in any event garnered the lion’s share of the amendments (atleast in the media).
I have had the experience of representing both sides of the table, the composers and the record labels/producers, and hope to get inputs on the various queries I have raised in this blog.
The provisos to secs 18 and 19 are the most relevant, which in substance state that an author (in this case the composer and lyricist) cannot give up his rights to demand equal royalties on his works for any purpose apart from a theatrical screening of the film in which the musical works form a part. To ensure the same, the proviso goes on to say that any agreement to the contrary would be void (note not voidable but void). The language of the provisos is far-reaching, to include “utilization..in any form”. Further, the agreements cannot run contra to the rules of any copyright society of which the author forms part of. Does this include only the Indian copyright society or even the international ones, like Performing Rights Society, UK? The Act does not elaborate on that front.
In the light of the above provisions, which have bloated the size of many an agreement, the non-problematic areas are:
1. Radio broadcasts
2. Internet broadcasts
3. TV broadcasts of the songs only
4. Endorsements (which use the musical work)
I call these non-problematic because the revenue that is accruing from the songs per se are calculable. With IPRS being in hyper-drive, collection of revenues has become rather efficient. However, it has to be pointed out that the Act does not provide the manner in which the royalties are to be collected and by whom. Composers are tending towards putting the responsibility on the producers and also inserting an indemnity clause in the case the producers are unable to recover the royalties due. The downside to this being that the composers do continue to remain at the mercy of the producers albeit to a much lesser degree. There are also clauses stating that copyright reverts to the composer upon non-payment of any royalty to stabilize the financial claim of composers.
The tricky part comes in the provision which enables the author of a musical work to claim royalty on any utilization of the work, which is a non-theatrical screening. This would include:
1. Satellite broadcast of the movie
2. DVD sales of the movie
3. Pay per view such as in Tata Sky
In such circumstances, the Act does not prescribe the royalty that would accrue to the author of the musical works which would be broadcast with the movie. How does one calculate it? Based upon the length possibly i.e. the length of songs vis-a-vis the length of the movie? Given the several crores the movies are sold for, even a 8-10% claim on the basis of length could potentially be rather substantial, depending on the scale of the movie in question. To put it in perspective, Salman Khan has sold the satellite right of Dabaang 2 for a whistle-inducing/cringe-inducing (depending on if you love or hate Sallu bhai) 45-50 crores. Given the numerous songs which one would presume to be found in such a commercial movie, the music director may well be set to claim the highest remuneration for a musical director in India on the basis of such satellite rights alone.
The Act becomes even trickier on a bit more probing. The record labels sell the CDs of the songs and the songs are offered on iTunes/FlipKart etc for digital downloads. Can the music composer and lyricist claim royalty on the same? Assuming they have assigned the copyright to the producer, who in turn has sold the same for a healthy amount to the record company, what are the rights which accrue to the composer and lyricist? Can royalties be claimed on the same as the Act states that “utilization..in any form” apart from theatrical screening of the songs as a part of the film?
The challenge now is working out an appropriate revenue model to pay music directors. The earlier model of a single payment has become antiquated in this law. The up-front payments given to composers are dramatically being reduced to allow for such royalties. This in turn increases the pressure on composers to give out songs which would have a huge commercial following, as their earnings are now heavily dependent on royalties. While this may be good for established commercial composers and lyricists, what about the newer ones? Debutants are already paid a pittance, and this pittance is further reduced on the basis of a royalty which may or may not accrue. I also believe this law would tend to influence (some naysayers say even corrupt *gasp*) artists to produce music that is exclusively mainstream as this may be their only source of income, as they do not receive a decent sum upfront, as was the case till date. If the album becomes a success, everyone is happy but if the album does not succeed, the composer would have ended up working almost for free. Does this not seem to be in the favour of record companies and producers, who needn’t pay upfront and can hedge their payments upon success of the album. Such contingency seems to have the potential to backfire. Even artists who would want a single-shot payment are not given this option by record companies, as the companies would throw up their hands and say such payment would be illegal under the amendment. Is this possibly why the record labels and producers are not making as big a noise as expected?
This brings me to my primary question, does this amendment support all artists? Or is it for the benefit of the bollywood club seeking a larger share of the mythical 100 crore box-office pie?
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).

5 comments.

  1. AvatarAnonymous

    The Copyright Amendment 2012 provisions are quite confusing and are definitely going lead to more litigation. I have not understood how some of the provisions or intention of parliament will be implemented.
    – What about Performers Rights (Singers/ Musicians etc) because in section 38A says that rights are assignable unless there is a contract to the contrary with the performer Works for Hire) for a Cinematograph Film and will not object to enjoyment by the Producer, but royalty needs to be paid for commercial exploitation (which exploitation is not clear).
    – What on Performers Right in Sound Recording.
    – Then in section 39A you bring in provisions for performer that give them rights granted to author of the work in 18 & 19. Does this mean that the Performer will claim equal royalty from the sound recording. This is contrary to specific provision 38A were in rights are defined for Performer.
    – Authors of Literary and Musical Works can assign the copyrights but will get equal share(50%) for all utitisation of the work by its cinematograph film (except in cinema hall) and sound recording in any form. The agency to grant license for musical & literary work in its film & sound recording has been given to the copyright society, but if the Owner of the work is not a member of the society then the society will be unable to license such performance of the cinema film and or sound recording as the owner has to be a member of the society, as only an owner or his assigns can grant license.
    – This intention of parliament that authors to get equal share could be met only if the copyright society has extended arm licensing i.e. license for all works, even if owner is not a member and give the money to the owner or hold it for him.

    All this will lead to chaos and legal disputes. Seek expert comments

    Reply
  2. AvatarAchille Forler

    For the sake of clarity and brevity, I will restrict myself only to the rights in literary and musical works and not talk about the new performers’ rights.

    The Act does not reinvent the wheel; it only seeks to enforce ‘best global practices’ on entertainment industries – music, film, broadcast – that have been not only reluctant to adopt them for their own good but defiant towards change.

    The present confusion arises because the Act moves creators from a feudal bonded labour system (work-for-hire/one time payment) which favored a very few to an accounts-based royalty system. Here are some examples:

    When a film producer henceforth sells his music publishing rights to a music label, all he does is transfer his 50 percent share in future income to the Buyer (Publisher); the lyricists/composers will have no claim on this sale because it is only a change in the ownership and not an exploitation of their Works. They will continue to be paid by the new Owner their share of all publishing income from the exploitation of their Works.

    The Act says that all ‘collective licensing’ (i.e. licensing of more than one work) can be done only through a Collective Society, such as IPRS and PPL. This should be music to the ears to everyone! Users, big and small, of music will now have a 2-windows clearance for all the music in the world while the two Societies will do all the massive numbers crunching for all the rights owners, big and small. In fact, the challenge to recover accurately the royalties from such giant users as iTunes or Spotify or Deezer is beyond 99 percent of owners. The real task before everyone is to professionalize these Societies and ensure that they do not fall into the hands of a small coterie that exploits them to its own advantage.

    And what if the Author is not a member of IPRS or any other Society? According to CISAC standards (which follow the Berne Convention and govern all Authors’ Societies globally), a song cannot be registered unless the Author is registered. Which is fair because a Publisher does not create the copyright to a literary and musical work, he only acquires it from the lyricist/composer. So any publisher who owns a song whose authors are not members of a Society cannot register this song nor can he license it, except individually.

    While some provisions of the Act are ambiguous or draconian (i.e. for making cover versions), this part at least seems unassailable and will remove much of the friction in licensing. Television broadcasters, for example, will be happy at the prospect of being able to use any music (with some caveats) on their channels on payment of an annual blanket fee.

    In fact, nobody should be unhappy with these provisions except the very few who benefitted from the old system.

    Reply
  3. AvatarArun C Mohan

    @Achille Forler, the experience of artists getting a raw deal irrespective of such arrangements continue, as they are often left to the mercy of the producer to collect and remit their royalties. Sample this, http://www.digitalmusicnews.com/permalink/2012/120919jamestaylor. I would imagine we would need companies now to professionally monitor royalties ala Hollywood. Do these exist? How do they work?

    As for calling the old system feudal bonded labor might be stretching things too far, it did have its faults but I do see quite a few artists who have been rather enriched from it, while record labels continue to cry murder over the continual dilution of their revenues from piracy et al. Atleast now the impetus shifts to the artists too to fight piracy, when earlier it was always a problem producers or labels dealt with.

    Any insights on the revenues to be paid for songs when the movie is broadcast on television?

    @anonymous, have to agree, very confusing. The drafting leaves much to be desired. Given the target audience, it ought to have been self-explanatory, and unless disputes arise, been dummy proof to allow self administration of rights and royalties without requiring lawyers.

    Reply
  4. AvatarAnonymous

    I some what do concur with thoughts of Achille but what Cisac does or recommend will not be law.

    Producers (Films)/Music Companies and Now TV Channels(See Film Writer Assciation site) are refusing to become members of the society or asking authors to sign all away for fixed royalty. I fail to understand how the authors / performers can force the Owners (be it Producer or Music Companies or TV Channels) to being members of Societies so that the society can collect royalty and distribute 50% to author / performer or how will they enforce the right to royalty through a copyright society.

    Reply

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