Copyright

The constitutional challenge by film producers to the Copyright (Amendment) Act, 2012


As we had blogged earlier, the constitutionality of several provisions of the Copyright (Amendment) Act, 2012 is being challenged by music labels and film producers. We earlier had a guest post by Chaitanya, who explained in detail the petitions filed by T-Series before the Delhi High Court challenging the constitutionality of the statutory and compulsory licensing scheme of the copyrights in the music owned by music labels. 
In this post, I will (very) briefly explain the constitutional challenges mounted by film producers (Bharat Anand & Sir JVM Movies Ltd.)  against the amendments to Section 17, 18, 19 & 33 of the Copyright Act. I’ve already dealt with the petitions challenges to the Copyright Board over here.

(i) The second proviso to Section 17: The amendments to the second proviso of Section 17 were aimed at over-ruling the Supreme Court’s judgment in the 1977 IPRS case where it was held that the producer of a cinematograph film would be the first owner of the music and lyrics that were commissioned for incorporation in the soundtrack of a movie.
Section 17 in general, deals with the concept of first ownership and identifies a number of situations where the person who commissions a work owns a copyright in the work. The purpose of such a provision is to make business simpler and reduce the transaction costs for several scenarios. As detailed in Bharat Anand’s petition, the production of a cinematograph film is complicated business with thousands of people involved and a provision like Section 17 makes it easier for the producer to claim a copyright in the movie to the exclusion of everybody else.
The amendments however, waive the principles of first ownership enshrined in Section 17, for all original literary, dramatic, musical and artistic works. Prior to this amendment, an author of the works mentioned above could claim ownership of the copyright in the case of a commissioned work only in a case where he had entered into a contract expressly stating the same. However the amendment, exempts the above mentioned works, from the principles of first ownership laid down in Section 17. In my understanding (and I’m not sure whether the Bharat Anand petition says the same thing) this means that now onwards in order to claim first ownership of a contract, the producer of a film will expressly have to enter into a contract with the authors of the original literary, dramatic, musical and artistic works.
There has been some talk, by people in the industry, including in Bharat Anand’s petition that Section 17 prohibits the producer from first ownership of a copyright in entirety. I don’t think such an interpretation of the law is correct. Section 17 does not expressly prohibit or void such contracts which would mean that producers can enter into contracts of employment with the staff on their rolls expressly claiming copyright in all works created by the staff. Of course this involves transactions costs of negotiating with employees.
The Bharat Anand petition challenges the constitutionality of this provision alleging that the amendments violate their right to equal protection under Article 14, since they discriminate unfairly against only the producers of cinematograph films, while maintaining the status quo for other copyright owners. This is a weak argument since Article 14 does allow Parliament to create special classes or categories which can be treated separately from others, provided that such classification has a rational nexus to the overall objectives of the legislation. In the present case, Section 17 already creates special classes and provides them with special treatment and Parliament has complete liberty to amend this classification further to provide for a more level playing field between producers and authors of certain works. The petition also mentions Article 21 (Right to Life and Liberty) as a ground of challenge but I think it was more of a formality than a focussed challenge.
 
(ii) The provisos to Section 18 & 19: These provisions basically create a right which allows lyricists and composers to receive equal share of all royalties earned by the producer through the exploitation of their works. This amendment was the most contentious point of debate since it changed the practice wherein the composer or lyricists would assign away their copyrights for a one-time lump-sum payment. I have to agree with the producers, that these particular amendments are delightfully vague and are likely to lead to a lot of litigation.
The core constitutional challenge against this provision, by the film producers, is that such provisions create special rights for only lyricists and composers and unreasonably discriminates against other classes of authors.
Once again this is a weak ground for challenging the amendments, since the classification of lyricists and composers of works incorporated in cinematograph films, is based on intelligible criteria and more importantly, such a classification bears nexus to the final aims of the amendments, which is to protect the interests of composers and lyricists who were being exploited by producers. Moreover, the entire idea of copyright is a creation of Parliament and Parliament has a considerable leeway in deciding how to structure these rights. If Parliament wants, it can even do away with copyright law completely. Unlike the U.S., there is no provision in the Constitution requiring Parliament to protect the copyrights of authors.
The petition also complains that these amendments place all composers and lyricists on an equal footing regardless of their track record or status in the industry instead of allowing the petitioners to exercise their fundamental rights in Article 19(1)(g) to conduct their business. However all fundamental rights are subject to reasonable restrictions and in the circumstances, these amendments would be considered as reasonable restrictions.  
 
 (iii) Section 33: The amendments to the proviso of Section 33(1) required that the entire business of issuing copyright licences for soundtracks incorporated in cinematograph works, be administered only through a copyright society. The aim of this amendment was to force all music labels into copyright societies to ensure that they could be regulated under a stricter regime of transparency.
The film producers argue that such a provision violates their fundamental right under Article 19(1)(c) to form associations and unions since the Supreme Court has held that the right to form association, includes the right to not join an association. I think that this is a strong argument, since it makes intuitive sense, to forbid the state from forcing a company into business with a bunch of other companies with which it may not want to conduct business. In the context of copyright societies, royalty distribution can be an exceptionally tricky business, especially with unlogged royalties where the formula for distribution depends on a vote of the majority. In the circumstances it is simply unfair to force a company into copyright society where it does not trust the majority of members.
This argument presupposes that the Registrar of Copyrights allows the creation of only one copyright society. If this is the case, the High Court is almost certain to strike down the amendment as unconstitutional but it is also possible that the High Court may just interpret the provision to conclude that the Registrar will have to register multiple copyright societies. Of course, having multiple copyright societies can destroy the very purpose of creating copyright societies, which is to create a one stop shop for all licensing. The advantage however is that we have more transparency and more competition between the different copyright societies.
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).

4 comments.

  1. AvatarAnonymous

    I disagree on the views posted on section 33. The basic intention of the amendments were to grant rights and protect the economic interests of the authors. That is why the amendments to section 33 only say licensing of musical & literary works incorporated in its cinematograph film and or Sound recording will be licensed thru a copyright society, for the other rights viz. sound recording, cinematograph film the owner has the liberty to license himself or thru the society. If the owners of the musical & literary works are allowed to do licensing on their own, then authors right to royalty will be a challenge as the author will have to chase numerous owners to get royalty and the purpose of the amendments by parliament will be defeated. Also in case authors are owners and not members of a society licensing will be a nightmare separate license from lyric writer, music composer or the legal heirs and in case more than one composer (duos or trios) and what if each wants a different royalty rate / structure. Then you will again complain that licensing has become difficult. Probably that is why for authors rights i.e. lyrics and compositions it is best governed thru a copyright society and the owner will be entitled to his share of royalty.

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  2. Avataranushree rauta

    Prashant has succinctly covered the critical challenges. There are varied interpretations floating in the market with respect to these amendments. The IPRS judgment extended the scope of Section 17 (b) to include underlying works incorporated in cinematograph films within “work for hire”/ “commissioned work” concept. The idea was that the producer of a film who bears the entire financial brunt of the film and has to alone bear the losses should have the right to deal with his film as his property (unless otherwise agreed). If the intention of the Parliament was to take away this right from the producer then the amendment should have been to Section 17 (b) and (c). Wrt to S.17 proviso Mr. Kapil Sibal had mentioned in his speech “In the past what has happened is that those who have money power have sought the assignments of their intellectual property unconditionally to themselves and, then, use that assignment for the purposes of exploiting that work, not just in cinema, but through other mediums, the result of which has been that the artist who is the creator of intellectual property gets no share of the profits. That has been the legacy of this industry in the past. We want to correct that thing. We want to ensure that the author, the music composer and the artist have equal share in the profits that the Assignee makes through other mediums, and it is in that context that we have amended Section 17 of the Act.” Therefore a logical interpretation of S.17 proviso would be that “the right of author” referred therein should be understood as “right to receive royalty” and not the copyright of the authors in their respective underlying work.
    In this regard it may also be relevant to consider S. 21 of the Copyright Act, which provides for a right to relinquish any right in the copyright, vis a vis the amendments to Section 18, which prohibit an author from waiving his right to receive royalty. If the right to receive royalty is treated as a copyright or part of the copyright, then there could possibly be a conflict between the S. 18 amendment and S.21. However, if the right to receive or claim royalty available under the amended S. 18 and 19 of the Act is treated as a right separate and independent of copyright, then there may not be any conflict between the aforesaid provisions, since S. 21 only provides for relinquishment of right comprised in a copyright in a work.

    The Amendment will however lead to a situation where the producer by virtue of being the assignee of copyright will be required to be a member of several societies which are formed by script writers, screenplay writers, dialogue writers, music composers, lyricists, sound designers, background sound designers, choreographers, set designers, singers, actors and the list goes on. It would be interesting to see the Parliament achieve its objective in practicality.

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  3. AvatarSwati

    Can you please xplain me the concepto of “Work For Hire’ in case of Software Development. I am client availing services of develoment of softeware, doing business in India. Service Provider Company is Non Indian , however is having office ste up in India. Kindly guide by considering all teh aforesaid as shortly.

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  4. AvatarSayak

    Can you please tell me if an actor has claim over copyright of the movie and that his consent is essential for the release of the movie as he owns copyright.

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