Copyright

Novex Muzzled by Bombay High Court in a Recent Threats Action by Gulraj Hotels


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In a recent order, dated February 9, 2019; Justice S.J. Kathawalla has restrained Novex Communications from taking any coercive action against Gulraj Hotel which filed a threats action under Section 60 of the Copyright Act after receiving a legal notice from Novex. (COMIP (L) No. 163 of 2018). The plaintiff in this case was represented by a team from the law firm Wadia Ghandy consisting of Sameer Pandit, Ramesh Soni and Madhupreetha Elango and led by Senior Advocate Virendra Tulzapurkar. The plaintiff has however been instructed to maintain recordings of all the music it plays in order to ensure evidence is preserved for the purpose of trial.

As many of our frequent readers must already be aware, Novex Communications has been issuing legal threats to all the big names in the hospitality and events business on the grounds that the latter are infringing the copyright in the music owned by Novex Communication. As per the information available with me Novex is not a registered copyright society. Originally, the company was enforcing the copyright in music belonging to companies like Yash Raj Music, Zee Music etc. In 2014, Novex ran into trouble when the famous Leopold Café, represented by Wadia Ghandy had sued Novex for groundless threats under Section 60. At the time, Leopold had pointed out that Novex was not a registered copyright society and could therefore not be in the business of licensing copyrights because Section 33 is clear that only registered copyright societies can participate in the business of issuing or granting licenses for copyrights. Novex tried arguing that it could enforce these copyrights as an agent of the copyright owners because Section 30 of the Copyright Act allows owners or their duly authorized agents to issue licenses.

Justice Gautam Patel accepted the argument but pointed out that if Novex was acting as an agent it could only collect copyright royalties in the name of its principal and not in its own name. The larger problem with this argument was that Novex cannot sue for copyright infringement as an agent because Sections 54 & 55 of the Copyright Act are quite clear that only copyright owners and their exclusive licensees can sue for copyright infringements. Agents cannot sue for copyright infringement.

Novex then claimed to have changed it business model by becoming the assignee of some of the music that it was seeking to enforce against the hospitality industry. In specific, the company on its website claims that it is the assignee of all music owned by Zee, while it continues to remain only an authorized agent for music owned by Yash Raj Films.

Two specific questions arise in this backdrop:

  • The first is whether Novex, can engage in the business of issuing licences for its own music, when Section 33 is clear that this business can take place only through a registered copyright society;
  • The second is a more fundamental question – is Novex actually the assignee of the performing rights for the entire catalogue of the music owned by Zee? I find it difficult to believe that these valuable rights have been assigned away by Zee. The answer to this question lies in the terms of the assignment deed executed in favour of Novex. For an assignment to take place, all the rights have to be transferred from one party to another without any contractual condition for the revision of title to Zee. A reading of the terms of the assignment deed should make this fairly clear but given how transactions are done in India, a surer bet would be to study the amount paid for these rights and more importantly, the tax paid on these transactions. That’s a more convincing way to confirm whether the transaction in question was genuine or a sham.

Novex is ruffling several feathers across the industry – I’ve received more than a couple of angry calls from people in the hospitality industry complaining about Novex’s behavior. Most of these event managers are ready to pay for music since clients do have a budget for it but are upset with the tactics being used by Novex. The lack of transparency often leads to a situation where users lack trust in Novex and therefore feel that the money being demanded By Novex is extortionate. In addition, the same industry is also receiving notices from PPL and IPRS. This is not sustainable in the long run and the music industry needs to sort out this licensing business to ensure transparency.

Prashant Reddy

Prashant Reddy

T. Prashant Reddy graduated from the National Law School of India University, Bangalore, with a B.A.LLB (Hons.) degree in 2008. He later graduated with a LLM degree (Law, Science & Technology) from the Stanford Law School in 2013. Prashant has worked with law firms in Delhi and in academia in India and Singapore. He is also co-author of the book Create, Copy, Disrupt: India's Intellectual Property Dilemmas (OUP). He has recently been appointed as an Assistant Professor at NALSAR, Hyderabad, starting September 1, 2017.

3 comments.

  1. Achille Forler

    On its website, Novex states that it “is engaged in the business of giving public performance rights in sound recordings.” Since PPL surrendered its license in May 2014, there is no registered Copyright Society for this right; instead, 3 entities (including SIMCA) are engaged in this business.

    Whether Section 30 or 33 apply is, I my view, secondary if not academic; rather, we should address the core issue

    The Copyright Act has failed to define “Collective Licensing”, and so have the courts – hence the present mess. Globally, Public Performance is one area where collective licensing by a single Society has been the preferred solution by the industry itself – and not because an outside authority imposed it – for the simple reason that it is the best solutions for rights owners and for content users. Just as by paying a blanket Road Tax you can travel on any road, by paying a blanket fee to a Society you can play commercially any music under the sun.

    Whatever may have been the reasons that led to the present mess in the public performance of sound recordings, the existing situation is untenable and self-defeating for all rights owners, because it begs a third question :

    Whereas collective licensing is used especially in situations where there is impossibility to identified, track and log the music that is played, how can owners of partial repertoire (Novex controls not even 0.5 percent of the 45 million sound recordings available) substantiate economically any license fee? Or substantiate accurately the use, and percentage of overall use, of their repertoire in a particular restaurant or hotel? And, incidentally, without logs of the sound recordings that have been used, how can the partners in Novex distribute accurately the license fees amongst themselves?

    Anyone other than a registered Copyright Society will find it impossible to defend themselves on this count. For labels, as far as public performance is concerned, there is simply no viable option outside of a registered Society.

    Reply
  2. Achille Forler

    Two corrections in para 5:

    identify (not identified)

    and percentage of overall use vis-à-vis other rights owners, of their repertoire

    Reply
  3. Achille Forler

    Just saw that the Novex website lists a total of 7,939 sound recordings, which equals 0.01% of the global music repertoire and less than 1.5% of the Indian music repertoire…

    Reply

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