The interplay between S. 30 and S.33, Copyright Act

“This is the only manner in which both Section 33 and Section 30 [of the Copyright Act] can be harmonized. An absolute bar even on an agency, invoking Section 33, would undoubtedly run afoul of the plain language of Section 30 and render the words “or by his duly authorized agent” entirely otiose.”  Such goes the operative part of the Bombay High Court decision in  M/s Leopold Café Stores v Novex Communications Pvt Ltd which dealt with the issue of whether unregistered third parties can license music and other copyrighted works.

In this case, Novex Communications(hereafter ‘Novex’) was granting licenses and collecting license fees on behalf of the owners of the copyrighted works, principally Yash Raj Films Pvt Ltd.(hereafter ‘YRF’) and Shemaroo Entertainment Limited (hereafter ‘Shemaroo’).Novex claimed that it was legally permitted to do so by virtue of S.30, Copyright Act which states that the owner of the copyright or his duly authorized agent can grant any interest in the right by license. Novex argued that it was a duly authorized agent of YRF and Shemaroo and hence, could grant licenses on behalf of them and collect license fees. The other side contended that Novex was not a duly authorised agent  or a registered copyright society and therefore, was prohibited from carrying on the business of issuing or granting licenses under S. 33, Copyright Act.

The Court considered both the arguments and ruled that the prohibition under S. 33 does not extend to duly authorised agents of copyright owners. It stated that S. 33 prohibits the business of issuing or granting licenses by a party in its own name when the copyright in the same is held by others. However, if the business is one of agency, that is, if the party is functioning as an agent clearly indicating that it is acting on behalf of the copyright owner, then that would be permissible by virtue of S. 30, Copyright Act. Therefore, an agent can grant license and collect license fees without being hit by S. 33,. However, it can only do so for and on behalf of the copyright owner. A registered copyright society on the other hand, can issue or grant license and collect license fees in its own name. Hence, a third party  which is neither a registered copyright society nor a duly authorized agent is prohibited from carrying on the business of issuing or granting licenses and collecting license fees.

In the instant case, Novex was not a registered copyright society. Therefore, the Court had to determine whether Novex was a duly authorized agent which was exempted from the prohibition of S.33.  The Court examined the concerned documents and came to the conclusion that the documents did not demonstrate the relationship of agency. Even though YRF and Shemaroo had filed affidavits stating that Novex was its agent, the Court held that the relevant test was not the impression of the copyright owners but the contents of the documented agreement and other communications. Therefore, the Court held that Novex was not a duly authorised agent. Hence, Novex will be hit by the prohibition under S. 33 as it was carrying on the business of issuing or granting licenses and was neither a registered copyright society nor a duly authorized agent. The Court also stated that in order to qualify an agent, it is necessary for the agent to disclose that it is acting for and on behalf of the copyright owner in all the relevant documents.

The impact of this ruling will be felt on third parties in the licensing business who currently do not satisfy the Court’s interpretation of an agent under S.30. As Prashant notes, “it is easy for such companies to reclassify themselves as agents in line with the court’s ruling, but this may seriously hamper their ability to initiate legal proceedings because Section 55 of the Copyright Act allows only owners or exclusive licensees of copyrighted work to initiate legal proceedings for the infringement of a copyright.” Therefore, agents cannot initiate legal proceedings as an agent, even though it is not hit by the prohibition under S.33.