Copyright

Novex Goes After Hotels and Casinos in Goa; Accuses Them of Playing Copyrighted Music Without Due Authorization


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.

Rahul Bajaj

Rahul Bajaj is a fourth year law student at the University of Nagpur. His interest in intellectual property law began taking a concrete shape when he pursued Professor William Fisher's online course on copyright law in the second year of law school. Since then, Rahul has worked on a diverse array of IP matters during his internships. He is particularly interested in studying the role of intellectual property law in facilitating access to education.

14 comments.

  1. Achille Forler

    Good article. However, I have a problem with Justice Gautam Patel’s decision: it is based on pure legal extrapolation – owners MUST be able to license, one way or the other – and not on copyright practice, which of course the esteemed judge cannot be familiar with. But he should have defined “collective licensing” and hesitated before the consequence of his decision, i.e. that law can be used ‘à la carte’: today I fancy art. 33 but tomorrow I might fall for art. 30! Let me explain.

    There is “Collective licensing” whenever a licensor licenses more than one song. Only a licensed Copyright Society can engage in collective licensing and its tariffs must be published. And since 2012, collective licensing has become statutory for broadcast with rates set by the Copyright Board.

    Now you will notice that art. 30 uses the term WORK in singular and not in plural. Because there is one occasion in which only the right owner can decide the value of his property and not one else, certainly not a Society!, and that is when a song has to be used in a new context, i.e. synched to a moving image. That is where art. 30 comes in.

    The Legislators wanted to keep the right for an individual sync out of the ambit of collective licensing because it makes sense to do so; and because, after the heavy handed statutory licensing introduced by the Amendments, it salvages what is left of the right to property in the Copyright Act: the right to say “no”. To give you an example, a big TV network wanted to use a well known song that I control for a end-of-year promo and they offered 1.5 lakh, “this is our standard price”. I said ‘no’. Finally we agreed own 4.5 lakhs.

    For a music publisher, Art. 30 is the power of ‘No’. Obviously, licensing on a massive scale cannot lead to unending friction, hence Copyright Board approved (statutory) rates, under art. 30.

    Having an endless number of ‘agents’, or whatever they are called, roaming the streets and threatening music users is not what the Legislators envisaged. Justice Gautam Patel’s decision must be overturned, the sooner the better.

    Reply
  2. Rahul Bajaj Post author

    Hi Achille,

    Thanks so much for your insightful comment. Your perspective does make a lot of sense; I had not thought about the difference between section 30 and 33 from the standpoint of individual vis-a-vis collective licensing.

    Reply
    1. Achille Forler

      Sorry, there’s a typo in my reply: it should read “hence Copyright Board approved (statutory) rates, under art. 33” (and not 30).

      Reply
  3. Amit koshal

    Hi Rahul,

    Excellent expression. I wish to talk to you. Can you please call me or share your number? I am head of IP at Legasis, Pune. Thanks.

    9910394896.

    Cheers
    Amit

    Reply
  4. Rahul Bajaj Post author

    Hi, sorry for the delay – my number is 9890281068. Looking forward to interacting with you.

    Reply
  5. Vivek Anand

    There could be a possibility that companies such as Yash Raj Films and Shemaroo may have assigned these rights to Novex for a term (Maybe2 years or 5 years or whatever). In this case Novex becomes the Owner and can grant licenses to these Hotels and Casinos! What do you say Achille?

    Reply
    1. Achille Forler

      Art. 33 is pretty clear and detailed. Any licensing under Art. 30 has to be “consistent with his obligations as a member of a registered copyright society.” It is plain English and I don’t know how any ambiguity can be read into it from the point of view of industry practice. As far as I know, neither Yash Raj nor Shemaroo are members of a registered copyright society. And I am given to understand that they license only the sound recordings, not the underlying rights.

      Reply
      1. Vivek Anand

        As per Indian Copyright Act, Grant of License could be through the following:
        Art 30. By Owner or his Authorised Agent, Art.33 – By Copyright Societies. So if Yashraj or Shemaroo have assigned the rights for a term (say 5 years) to Novex, Novex becomes the owner and can license rights, There is no capping on the amount of licenses an owner can license. Also it is a known practice in the Industry that once license is granted by an owner to a licensee, that sub-licensee can also sub-license those rights to third parties and such arrangement is captured in their contracts, this is how business of syndication of rights works in the industry. Also there was a recent high court ruling that parties that are granting licences as owners/authorised agents are to put up a list of agreements on their websites confirming their title to those rights. Yah Raj and Shemaroo can license sound recording and underlying rights for lot of their works wherein they hold publishing rights as well and they have taken assignment of underlying works from the authors

        Reply
      2. anonycoward

        Achille, how do you propose a license be granted when there is no registered copyright society for underlying works? This interpretation of the Section 33, makes issuing of licenses in underlying works an impossibility in the current scenario, making everyone an infringer. Therefore, IMHO, an owner, at the very least, in present scenario can issue license for underlying works as well.

        Reply
  6. Achille Forler

    On 6 October 2016, DIPP issued an Office Memorandum – http://dipp.nic.in/English/Schemes/Intellectual_Property_Rights/copyright_om_07122016.pdf – clarifying the current status of IPRS and PPL. The Department states that both IPRS and PPL have re-applied for re-registration within the prescribed limit and the same is under examination. Hence there is no void and the same has not been challenged by anybody, let alone Novex.

    That said, I don’t think that Novex is licensing the underlying rights: their license that I have seen is only for the sound recording rights. Why does IPRS not collect its rights from the same licensees is a question that must be put to IPRS.

    Reply
  7. anonycoward

    “Hence there is no void and the same has not been challenged by anybody, let alone Novex.” is quite the gratuitous interpretation. BTW, None of these organisations are being run in compliance of the copyright rules, 2013.

    Unfortunate part, I am told, is that the link documents themselves create the ambiguity regarding the licensing and ownership of underlying works. The Owners have made modifications to their agreements so as to not mention underlying works. The validity of all these agreements will of course get tested in court but the question is who will bell the cat?

    Reply
  8. Vivek Anand

    Most people are not even aware that they need license for underlying works in addition to the license in the work! I know of instances wherein people have taken license from PPL to play sound recordings at events however they didn’t approach IPRS for license of underlying works in such sound recordings..

    Reply
  9. Vivek Anand

    What Novex is doing is not wrong as it has taken rights either as Assignment (hence, becomes the owner) or as Authorised Agent, For some of the content Novex only has sound recording rights and for some it has both sound recording plus underlying works rights. If Novex is catching hold of Hotels and Casinos playing its sound recordings, even IPRS should join it (Novex) as a complainant for underlying works in such sound recordings. Achille I request you to propose the same to IPRS. Do they have a vigilance team?

    Reply

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