A quick look at Venus & PPL’s challenge to copyright amendments

As reported earlier, Venus Worldwide Entertainment Pvt. Ltd. and Phonographics Performance Limited (PPL) have jointly filed a writ petition challenging the constitutionality of Sections 31(1)(b), 31D and 33A(2) and their corresponding rules under the Copyright Rules, 2013. The petitioners initially filed this petition before the Supreme Court (W.P.(C) No. 122 of 2013), however, withdrew the challenge with leave to approach the High Court. The petition is more or less similar to Super Cassettes Industries Ltd. (T-Series) challenge to compulsory licensing and statutory licensing scheme affecting music companies. With PPL joining the fight, this petition also challenges the right to appeal against tariff scheme prescribed by copyright societies under Section 33A(2). Our guest blogger, Chaitanya, has analyzed the substantive grounds of challenge to Sections 31(1)(b) and 31D raised by T-Series here.
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Needless to say, the common underscore to both petitions are claims of high risk in content creation, huge production costs and soaring piracy. The role of Copyright Board in determining royalty rates and removing ‘unreasonable’ elements in prescribed tariff scheme is seen as unwarranted and unreasonable interference to freedom of contract. It denies any public utility in the favourable treatment meted out to radio broadcasters who operate on purely commercial basis. Consequently, the provisions are challenged as violation of Articles 14, 19(1)(c), 19(1)(g), 21 and 300A. The contentions against Sections 31(1)(b) and 31D are similar to the ones raised by T-Series. Below is the gist of arguments raised in the petition:
Section 31(1)(b): As per the provision, the Board can grant a compulsory license over sound recordings for refusal to communicate works to the public after hearing the copyright owner. The latest amendments grant powers to the Board to extend the license not only to the complainant but also to such ‘other persons’ who in their opinion are qualified to obtain the license. Venus points out the absence of right to be heard against ‘other persons’ and thereby violating principles of natural justice. Furthermore, it contends that the lack of any guidance fixing ‘reasonable’ royalty rate gives the Board unbridled and arbitrary powers. It fears that the provision encourages licensees to abandon contractual agreements with music companies despite not applying for any license under Section 31(1)(b).
Section 31D: The newly inserted statutory licensing scheme allows broadcasting organization to communicate literary, musical works or sound recordings by merely giving a notice of broadcast to copyright owners in the manner prescribed in Rule 29. The Board will fix the royalty rate as per the procedure laid down in Rule 31. Similar to arguments raised against Section 31(1)(b), it contests the fixing of royalty rate as arbitrary. The petition denies any intelligible criteria in excluding other classes of works (namely, artistic, dramatic and cinematographic works) from the licensing scheme. Furthermore, it alleges discrimination in restricting the statutory licensing provisions to only one of the seven exclusive rights the copyright entails, i.e. public performance or communication to the public. Venus also points out the ambiguity in application of Sections 31(1)(b) and 31D as both provide for licenses to communication of sound recordings.
Section 33A(2): Section 33A(2) allows users to appeal against tariff scheme prescribed by copyright societies before the Copyright Board. The Board in turn has powers to remove any ‘unreasonable’ element in the prescribed tariff scheme. Again, the petition questions the competence and qualifications of the Board in determining ‘reasonableness’ in tariff scheme without legislative guidance. PPL argues that this provision causes prejudice to members of copyright society vis-à-vis music labels not part of any copyright society. Furthermore, it fears that it would discourage music labels from becoming part of copyright societies as the provision unfairly interferes with freedom to negotiate licensing terms. The petition also contends that Rule 56(3), (4) & (5) and Rule 57(3) & (4) as not only unconstitutional but also exceeds the scope of Section 33A. Rule 56 and 57 deals with the procedure for publication of tariff scheme and appeals to the Board, respectively.
In a nutshell, the petition argues that the above provisions confer arbitrary powers to the Copyright Board in determining ‘reasonableness’ in fixing of royalty rate and hence violates Article 14. The petition also raises alarm on the qualifications of Board members and their track record in adjudicating matters. However, does not raise any challenges to either Sections 11 and 12 or Rule 3. Furthermore, their claims on violation of Article 19(1)(g), 21 and 300A are based on the justifiability of favourable treatment to radio broadcasters in licensing sound recordings. It questions the public utility in licensing of works to commercial driven entities. Lastly, it argues that the provisions discourage music labels to join copyright societies and thereby violating fundamental right to form associations. Readers can soon expect a detailed analysis of the petition soon.

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