In the realm of copyright law, one issue that has received significant attention on this blog is the manner of functioning of copyright societies and the modus operandi adopted by them to extract financial returns for the use of copyrighted works whose use they claim to be exclusively empowered to authorize.
In India, the 3 main collecting Societies are Indian Performing Rights Society (IPRS), Phonographic Performance Limited (PPL) and Novex Communications (“Novex”) whose actions form the subject matter of this post. In an interesting development, Novex has filed cases against a large array of pubs, hotels, casinos and the like in Goa for playing copyrighted music without obtaining its prior approval. According to the news report, Novex claims to be entitled to license rights over the musical works at issue that are owned by Yash Raj Music, Zee Music, Eros entertainment and Shermaroo entertainment. In order to understand the full import of this development, it would be instructive to briefly delve into the legal regime in accordance with which copyright societies are regulated in India.
A good starting point for our present discussion would be Professor Basheer’s post in which he discusses the wide-ranging ramifications of the actions of these societies and argues for the need to put in place an appropriate regulatory framework in order to ensure that they act in a fair and transparent fashion. Taking note of the propensity of these societies to engage in ‘copyfraud’, Professor Basheer highlights the need for the conduct of these bodies to be above board, given their quasi-public character.
Broadly speaking, the power of collecting societies to issue licenses and obtain royalties for the use of copyright works flows from two main provisions of the Copyright Act: Section 33, which empowers a registered copyright society to license copyrighted works, and section 30 which vests agents and assignees of copyrighted works with this power.
According to Justice Gautam Patel’s holding in Leopold Café versus Novex Communications, which Gopika analyzed here, Sections 30 and 33 operate in completely different spheres, in that section 33 applies when an entity acts as a registered copyright society and section 30 applies when it acts as a duly authorized agent. The only difference between these two sections is this: while a registered copyright society can issue licenses in its own name, an entity acting as an agent has to do so in the name of its principal viz. the copyright owner.
Courts have repeatedly recognized the proposition that societies cannot collect royalties de hors this statutory scheme and have either reiterated existing safeguards or put in place new ones to prevent these societies from functioning in a highhanded and opaque fashion. In an order issued late last year, which Balu covered here, a single judge of the Delhi High Court injuncted these societies from issuing licenses or collecting royalties without complying with the conditions statutorily engrafted in Section 33 of the Copyright Act.
Similarly, in a set of orders which were also covered by Balu, the Bombay and Delhi High Court have made it clear that while opting for the Section 30 route, these societies are duty-bound to publish on their website and disclose to prospective licensees details of the agreements by virtue of which they are empowered to act as agents and assignees of the copyright owner.
Against this backdrop, let us now seek to ascertain if the actions of Novex described above are legally tenable.
First and foremost, it is clear that Novex is not a registered copyright society within the meaning of Section 33 of the Copyright Act. This assertion is based on the fact that this was an admitted position in the Leopold case and is further fortified by the fact that it formed one of the premises upon which the order by a single judge of the Delhi High Court, alluded to above, issuing an injunction against the 3 copyright societies was based.
This being the case, Section 30 is the only provision that can serve as the repository of the powers that Novex is seeking to exercise in this case.
It would be pertinent to note at this juncture that in the Leopold case, Justice Patel arrived at the conclusion that the agreements between Novex on the one hand and Yash Raj Films and Shemaroo Entertainment Limited on the other did not indicate that the former was authorized to act as an agent of the latter.
In light of the above, it appears that Novex will find it exceedingly difficult to establish that it is the duly authorized agent of the 4 enterprises on whose behalf it claims to act and that its conduct falls within the four squares of Section 30 of the Copyright Act. Absent this showing, Novex’s illegal exactions would doubtless constitute copyfraud and raise further question marks about the propriety of the actions of collecting societies.
Ergo, I would submit that the only pathway open to Novex to ensure that its actions rest on a robust legal foundation is to get itself registered as a copyright society.
Indeed, it is widely believed that, after its recent overhaul which Inika covered here, the IPRS is also contemplating going down that route.
Only by subjecting themselves to the regulatory framework envisaged by the Copyright Act for copyright societies, I would submit, would such societies be able to imbue their actions with the legitimacy and credibility that they have hitherto lacked.