The archives of this blog are punctuated with disturbing regularity by the notorious misadventures of an organisation that calls itself the Indian Performing Rights Society. In the latest in that series, we bring to you an order from the Bombay High Court in IPRS v. Harsh Vardhan Samor. Delivered ex parte on 22 December 2015, it restrains the owners of a Mumbai restaurant, He Said She Said, from performing musical works in IPRS’s repertoire at its premises, including at its Christmas and New Year events without a license. (Buckle up, folks. This is going to be a long one!)
Before we get on with our criticism of the order, we must note that it removes any remaining doubt as to IPRS’s legal nature. It unequivocally records that IPRS is a company registered under the Companies Act, rather than a copyright society under the Copyright Act.
The court noted that IPRS had been assigned the performing and mechanical rights in the works of its members, and held that this would allow the organisation to license these works under Section 30 of the Act as the owner of the works in question.
The problem with this logic is that it flies in the face of the statutory intent behind the second proviso to Section 33(1) of the Act (inserted vide the 2012 Amendment), which reads as follows:
“Provided further that the business of issuing or granting license in respect of literary, dramatic, musical and artistic works incorporated in a cinematograph films or sound recordings shall be carried out only through a copyright society duly registered under this Act” (emphasis mine)
The court dismisses this provision in two pithy sentences:
“The second proviso to Section 33 (1) of the Act puts a restriction on any entity which is not a Copyright Society from doing business of issuing or granting license in respect of literary, dramatic, musical and artistic works incorporated in cinematographic films or sound recordings. Obviously second proviso to Section 33 refers to an entity which is neither an owner of copyrights nor a copyright society registered under the Act.”
Given the rich legislative history behind the 2012 Amendment, this lack of analysis on the second proviso appears to be a grave omission. By allowing organisations such as IPRS to carry out the business of licensing musical works in their capacity as owners, the court seems to have completely eviscerated the legislative intent behind the insertion of the provision.
Pre-2012, organisations such as IPRS and PPL were identified as being opaque and unduly privileging larger owners over smaller authors. In order to level the playing field for authors, the Amendment mooted a distinct shift towards vesting greater rights in authors vis-à-vis owners of rights, and one of the means employed to effect this shift was to restrict the ability of entities other than registered copyright societies to license underlying works.
Once we understand that the second proviso to Section 33(1) exists to remedy the mischief of large organisations exerting undue pressure upon authors (lyricists and composers), it becomes clear that an interpretation of Section 30 that allows the same mischief through the license/transfer of rights to a company would be entirely unsupported by legislative intent.
This is one justification for an interpretation that keeps unregistered copyright societies outside the scope of Section 30. Yet another comes from Prof. Basheer’s post last week, in which he argued that the “spirit and intent behind Section 33” would clearly be in conflict with the court’s logic, especially given that copyright societies perform quasi-public functions. For still another reason, consider the implications of this order.
Case 1: No Competing Copyright Societies
If entities such as IPRS are allowed to continue doing business (as they have been, through this interpretation of Section 30), then there exists no incentive whatsoever for copyright societies to register themselves. In the absence of such registration, the entire catalogue of protections legislated into play by the 2012 Amendment would never see the light of day, since equitable copyright societies, as envisioned in Section 33 of the Act, would be (have been?) replaced by companies such as IPRS that base their business models on the execution of deeds of assignment from authors, and the enforcement of performing rights as owners under Section 30. In the absence of a competing society that gets itself registered under Section 33, this would result in a fundamental change in the market for musical work – pre-2012 IPRS would be firmly at the top of this new food chain, with composers and lyricists planted firmly at the bottom. In effect, orders such as Harsh Vardhan Samor could herald a second wave of market oppression for authors of musical works, who would be forced to assign their work under near-exploitative arrangements. In effect, Harsh Vardhan Samor could end up emasculating not just the second proviso to Section 33, but the entire gamut of author-friendly amendments introduced in 2012. These include Section 33A, which provides for appeals by aggrieved persons to the Copyright Board, whose jurisdiction would effectively be ousted by the functioning of IPRS in its current form, and Section 35, which requires copyright societies to be controlled by authors as well as owners – a stipulation that simply does not apply to a company.
Case 2: Competing Copyright Societies Enter
Harsh Vardhan Samor doesn’t look great even in an unlikely counterfactual, in which (presumably) a group of authors pool their resources to form a new copyright society for underlying works, get it registered under Section 33, and gain enough traction on the market to emerge as a credible competitor to IPRS. In such a situation, the new society should be given a position of predominance (if not an outright monopoly) relative to IPRS. However, this would never happen, since Harsh Vardhan Samor seems to stand in the way of a frictionless licensing market insofar as the works already in IPRS’s repertoire are concerned. If, according to this order, IPRS can continue extracting royalties from establishments, then what becomes of our new copyright society?
Further, there is a case to be made for monopolistic copyright societies as an a priori good – royalty administration is one of the few instances where a monopoly performs (in ideal conditions) more efficiently than a competitive market environment. This only serves to render the fragmentation of the market for performing rights that would be brought about by Harsh Vardhan Samor all the more inexcusable.
Finally, the fact of the matter is that copyright societies in India today are expected to serve a social justice function, as Prof. Basheer rightly notes, in upholding the interests of the “little guy”. Even if a fragmented royalty administration market was desirable, the discomforts inherent in entrusting such a social justice function to market forces should serve as enough justification for protecting (at least for the moment) a well-regulated monopolistic model.
In this post, I have focussed on the biggest deficiency of the Bombay High Court’s order, but there seem to be other points of interest as well. For one thing, there appears to have been no disclosure by IPRS of its dodgy history – be it the Barasat orders, the official inquiry conducted (and later shelved) by the Registrar of Copyrights, or its dubious litigation history. For another, there could exist a strong argument to be made that even if Harsh Vardhan Samor’s reasoning were to be accepted, the Deeds of Assignment flashed around by IPRS ought to be invalidated, since a majority of them must surely have been executed before IPRS metamorphosed overnight from copyright society to company. A third point that deserves analysis is the fact that these problems do not emerge with respect to IPRS’s traditional companion on these pages – PPL. Since the proviso to Section 33(1) does not include sound recordings, it would seem that PPL would still be free to issue licenses under this business model. These stories, alas, must be left for another day.
As a post-script to an already lengthy post, Business Standard reports that a similar order has been passed by the Delhi High Court on 23 December 2015 in IPRS v. Great Indian Nautanki Company (pause for a moment, and ask yourself if you’ve ever come across a more appropriate case title). I could find only one order fitting this description on the Delhi High Court website, but it doesn’t seem to be the correct one, so I would be incredibly grateful if any of our readers can point me to the order being referenced here.
In their own way, our “copyright societies” seem to have caught an overdose of the Christmas spirit – little else can explain their persistent, annual effort to make the words “Silent Night…” ring truer than ever before.