On June 5, 2023, the Bombay High Court, in a joint order passed in Super Cassettes v. RBEP and Hungama Digital Media v. RBEP clarified that the termination of an agreement because of non-payment of dues would in itself not result in the copyright being re-assigned to the original assignor. The Court also emphasized the need for a written document, i.e., the re-assignment deed executed in writing, as a pre-requisite for re-assigning copyright. The dispute involved some of the big players in the Indian entertainment industry – Super Cassettes Industries Pvt. Ltd. (T-Series), Hungama Digital Media Entertainment Private Limited (Hungama), and RBEP Entertainment Private Limited (RBEP), ZEE Entertainment Limited, Mad Man Film Ventures Private Limited and Reliance Creative. In this post, I will analyse the court’s order interpreting the terms of the Long Form Agreement (LFA) executed between T-Series, Hungama and RBEP and the claims made regarding the copyright re-assignment.
At the core of the controversy is a set of 2 agreements – first, a Long Form Agreement (LFA) between T-Series, Hungama and RBEP, and second, separate ancillary assignment deeds between T-Series and RBEP. The LFA was executed via a Memorandum of Understanding (MOU) wherein RBEP, T-Series and Hungama would become joint copyright holders, thereby being entitled to the copyright and publishing rights for the existing music titles as well as the unreleased future music titles of the subject films. As per this, RBEP was to assign 40 per cent and 20 per cent of the copyright and publishing rights of films to T-Series and Hungama, respectively. T-Series was also to hold an exclusive irrevocable license perpetually to make the most of the rights in the music of the films covered under the LFA. The agreement stipulated that RBEP cannot license or assign its right to any third party. With regards to termination, the LFA stated that the rights in the Fresh Music Catalogue would be re-assigned in favour of RBEP upon valuation.
The second ancillary assignment deeds were entered into between T-series and RBEP, due to which T-Series had acquired 100% copyright and rights to promotional exploitation of music of 6 films by paying a specific amount to RBEP. Additionally, T-series also acquired 100% copyright in musical, literary and sound recordings of 3 additional films on the basis of assignment deeds.
The dispute arose when RBEP terminated the LFA through its constituted attorney, defendant no. 2, alleging that the same was terminated owing to the non-payment of the amount due by T-Series, payable under the LFA. Consequently, defendant no. 2 also put up a public notice declaring that the rights of the films are “re-assigned” to RBEP after the termination of the LFA. Interestingly, the public notice also stated that this re-assignment is not only of the films under the LFA but also 9 other films assigned to T-Series over a period of time. Later, the rights of these films were assigned to Zee Entertainment Ltd. by the defendants.
Untangling the convoluted bowl of facts, the court granted an interim injunction in favour of the plaintiff with regard to the 9 films since T-Series and RBEP had entered into independent and distinct agreements for the films, independent of the LFA.
Whether the Termination of the Long Form Agreement can lead to the Re-Assignment of Copyright?
For rights in the films covered under the LFA, the question arose whether the termination of the LFA alone would result in the re-assignment of copyright to RBEP. This is especially crucial since the execution of such a written document signed by the assignor or his authorised agent is mandated under Section 19 of the Copyright Act.
On this, the Court noted that the copyright cannot be re-assigned in favour of the original assignor just because notice is given regarding the termination of the LFA. The court read the requirement for a written document under Section 19 as sacrosanct, despite clauses 6 and 6.1 of the LFA, which stated that upon termination, the copyright would be re-assigned to RBEP. In doing so, the Court emphasized on the phrase “copyright shall be re-assigned” in clause 6.1 of the LFA and clarified the same to not mean “copyright stands assigned.” Therefore, relying on Yennes Infotech (P) Limited v. Managing Director, eNoah Solution Pvt. Ltd., the court held that even when the conditions under Clause 6 and 6.1 are satisfied, and though there is a claim of money may be pending, there would still be a requirement to execute a re-assignment deed.
All in all, there seems to be a tricky situation here. The LFA prescribes the condition of “re-assignment” that the parties have agreed to. However, looking at Section 18 (2), the effect of the assignment is that ownership of the assigned copyright lies with the assignee. So, where is the question of automatic “re-assignment” coming from when the assignor has no ownership of the assigned work? By applying the conditions for modes of assignment under Section 19 and insisting on the execution of a “deed of re-assignment”, the court has clarified that regardless of the agreement in place, the conditions under Section 19 are mandatory.