Author Name:   Namit

In India, It is obligatory for the owners of a commercial establishment to obtain a copyright licenses to play music in the premises of the establishment. Such licenses are issued and granted by the Copyright Societies incorporated under Section 33 of the Copyright Act (Hereafter “Act”) which makes it easier to get the licenses. Nevertheless, there is also a provision under Section 30 of the Act by which the copyright owners can grant licenses on their own or through duly authorized agents.

Leopold Cafe and Stores v/s Novex Communications Pvt Ltd: A Case of Harmonious Construction of Loopholes in Copyright Act, 1957

In India, It is obligatory for the owners of a commercial establishment to obtain a copyright licenses to play music in the premises of the establishment. Such licenses are issued and granted by the Copyright Societies incorporated under Section 33 of the Copyright Act (Hereafter “Act”) which makes it easier to get the licenses. Nevertheless, there is also a provision under Section 30 of the Act by which the copyright owners can grant licenses on their own or through duly authorized agents.

Therefore, if one wants to play a song, in a restaurant, a hospital, a bar or pub or any other commercial establishment or public place or for a non-private use, he would need a license from a copyright Society, namely Phonographic Performers Ltd. (PPL). However big entertainment companies prefer issuing and granting the licenses through its authorized agents as it is more economical and convenient for their business model.

The court in the instant case, resolved the ambiguity between Section 30 and 33 of the Act, wherein, Section 30 gives express permission to owner of the work or its duly authorized agent to grant or issue license, while Section 33 of the Act provided exclusive right to deal in the business of granting and issuing of licenses. The irregularity of the law was done away by the court in the instant case.

Copyright Societies and Law of Agency

A copyright owner has complete freedom to enjoy the fruits of his labour by assigning the copyright for an agreed royalty through the issuance of license. The license can be issued by either a Copyright Society in accordance with Section 33 or through an agent in accordance with section 30 of the Copyright Act.

Copyright Society is a legal entity incorporated to bestow protection and safeguard the interest of owners in which copyright subsists. It does so by granting licenses on behalf of the owner for reproduction, performance or communication of the work and also to keep an eye on infringement of the work, however they cannot sue on their own name but only in the name of the owner.

A copyright society is formed by copyright owners in accordance to the scheme provided under Section 33 to 36 A of the Act and Rule13, 14 and 14A – 14 P of the Copyright Rule, 1958, wherein minimum membership of seven owners is requires.

Licensing of the copyright work can also be done by the owner directly, as provided under Section 30 of the Act, wherein the owner of the prospective work or the future work can grant any interest in the right by license in writing by himself or through his duly authorized agent.

Brief Facts of the Case
The facts of the case are not labyrinth, the dispute between the parties is limited to the validity of the manner in which the defendant grants license on behalf of the owners of copyright in various work. The defendant “Novex Communication” claims to be an agent for Yash Raj Films Private Limited and Shemaroo Entertainment Limited, hence legally allowed collecting license fees and granting license on behalf of the copyright owners, Yash Raj Films Pvt. Ltd. And Shemaroo Entertainment Limited in accordance with Section 30 of the Act.

The course of argument revolves around the question, whether the defendant is a duly authorized agent in accordance with Section 30 of the Act and hence permitted to collect licensee fee and grant license. And if it is not an agent, would it be a Copyright Society in accordance to Section 33 of the Act, if it is neither, would it be still allowed to collect the licensee fees and grant license on behalf of the copyright owners?

Another related question that was discussed was, would the defendant be barred by the restriction imposed by Section 33(1), which puts a restriction on carrying out the business of issuing or granting licenses in any work in which copyright subsists, except in the case where such business is carried by Copyright Society. The court observed that, this provision is contradictory to Section 30 of the Act, which allows issuing or granting of license by owner or his duly authorized agent. The court harmonized both the provision, interpreting them in such a manner as to remove the contradiction created by them.

Arguments on behalf of Novex Communication

Defendant argued to establish the fact that Novex Communications was an authorized agent on behalf of the owners of copyright; therefore it was entitled to grant any interest in the work by a written license on behalf of the owners of copyright work, in the fashion of Section 30 of the Act. It was also argued that Novex is not a society of the kind contemplated under Section 22 of the Act, therefore the prohibition in Section 33(1) would not apply to Novex.

Various samples of licenses issues by Novex was annexed to the affidavit to establish the argument that it was an agent and not a copyright society. Attention of the court was drawn to the fact that name of the principles or owners of the copyright work were clearly mentioned in the licenses issues by Novex. It was further shown that, the license issues by Novex were dissimilar to those issues by the Societies contemplated under Section 33 of the Act. It was argued that, the license by such societies does not disclose the name(s) of the owner of the work. For these reasons, it was contented that Novex was not a Copyright Society but a duly authorized agent.

Arguments on behalf of Leopold Café’ and Stores

It was argued that the prohibition in Section 33 would be applicable to the defendants as it was “carrying on the business of issuing or granting licenses in respect of”. It was observed that the license issues by Novex mentioned that it was acquired from “Novex”. It was argued that nothing in the licenses and invoices indicated that Novex was acting as an agent of copyright owners. It was argued that, if Novex was acting as an agent, it had to be indicated on the license. Since Novex demanded from various hotels and restaurants, that licensee should be obtained from it directly was a direct contravention of Section 33 and was not in tune to law of agency, as indicated under Section 30 of the Act. Therefore, it was contended by the appellants that none of the material produced by Novex to prove its contentions established the fact that it was an agent and nothing otherwise, in any other capacity.

Conflict and Harmonization

The court out rightly appreciated the conflict between Section 30 and 33 of the Act. The court gave an earnest attempt to harmonize both the conflicting provision of law, to derive legal sense out of both and to resolve the conflict resent before it, in the instant case.

The court looked into the understanding of an “agent” and a “copyright society” as ruminated by the Act. The court observed that the Section 30 of the Act is not limited to mere carrying on of business, but qualified the business to be that of issuing and granting of the license on behalf of another, one which holds the copyright. The court then looked into the legislative intent of Section 33 of the Act, which was to compel every copyright owner to set up a separate division to monitor the use of its work. The court then looked into the business of agency and observed that, for entities like Yash Raj Films and Shemaroo, which holds copyright in large number of works, it would be more efficient for them to appoint an agency to ensure that those who use their work have valid licenses and have made the appropriate license fees, which are to be issues and collected on behalf of the copyright owner by the duly authorized agent.

The court held that “The express permission in Section 30 cannot be occluded by an extension of the express prohibition in Section 33”. The court constructed both the Sections in harmonized manner and held that, to read both the sections together require that the factum of agency must be disclosed so that the licensee knows that it has a valid license from the copyright owner that is, that it is made known by the agent that it is acting on behalf of the holder of copyright in the works in question, even through the licensee may throughout deal only with the agent and never directly with its principal. The court further held that, the moment principal is undisclosed and the license is issues and granted in the agent’s own name, the prohibition in Section 33 comes into play.

Therefore, applying this construction, the court observed that Novex did not clearly disclosed is agency, if indeed there was any. There were no terms of agency, as it was consistently been demanding and charging fees on its own name, invoiced in its own name and issued license in its own name. The court further held that, “mere mention of the license being of the work of others does not sufficiently indicate any agency to take Novex out of the mischief forbidden by Section 33 and into the permissive regime of Section 30”.

Hence, Novex will be hit by the prohibition under S. 33 as it was carrying on the business of issuing or granting licenses and was neither a registered copyright society nor a duly authorized agent. The Court also stated that in order to qualify an agent, it is necessary for the agent to disclose that it is acting for and on behalf of the copyright owner in all the relevant documents.

Conclusion
The Bombay High Court’s ruining will most significantly affect the licensing business carried on by third parties, which are mainly the agents of the owner of copyrighted work. However, it wouldn’t be very difficult for such parties to reclassify themselves in the lines of court’s ruling as all they need to change is, to show the relationship of agency as enumerated under Section 30 of the Act.

Nevertheless, in practice, this is would significantly hamper the working of music industry, in context of licensing of musical work as most of the Indian music companies are not members of collecting societies and the ability of the agents to initiate legal proceedings for the infringement of copyright or the breach of terms of license as Section 55 of the Act qualifies only the owners of the work or exclusive licensee to initiate legal proceedings, even though they are not barred by Section 33 of the Act.

However, the court through its harmonious construction has removed the ambiguity in the law and clarified the stand of the both the provisions, independent of each other.

Entertainment Network (India) Limited v. Super Cassette Industries (2008) 13 SCC 30

Section 33: Registration of copyright society-

(1) No person or association of persons shall, after coming into force of the Copyright (Amendment) Act, 1994 commence or, carry on the business of issuing or granting licences in respect of any work in which copyright subsists or in respect of any other rights conferred by this Act except under or in accordance with the registration granted under sub-section (3): tc "33. Registration of copyright society.—(1) No person or association of persons shall, after coming into force of the Copyright (Amendment) Act, 1994 commence or, carry on the business of issuing or granting licences in respect of any work in which copyright subsists or in respect of any other rights conferred by this Act except under or in accordance with the registration granted under sub-section (3)\:" Provided that an owner of copyright shall, in his individual capacity, continue to have the right to grant licences in respect of his own works consistent with his obligations as a member of the registered copyright society: tc "Provided that an owner of copyright shall, in his individual capacity, continue to have the right to grant licences in respect of his own works consistent with his obligations as a member of the registered copyright society\:" Provided further that a performing rights society functioning in accordance with the provisions of section 33 on the date immediately before the coming into force of the Copyright (Amendment) Act, 1994 shall be deemed to be a copyright society for the purposes of this Chapter and every such society shall get itself registered within a period of one year from the date of commencement of the Copyright (Amendment) Act, 1994. tc "Provided further that a performing rights society functioning in accordance with the provisions of section 33 on the date immediately before the coming into force of the Copyright (Amendment) Act, 1994 shall be deemed to be a copyright society for the purposes of this Chapter and every such society shall get itself registered within a period of one year from the date of commencement of the Copyright (Amendment) Act, 1994."

(2) Any association of persons who fulfils such conditions as may be prescribed may apply for permission to do the business specified in sub-section (1) to the Registrar of Copyrights who shall submit the application to the Central Government. to "(2) Any association of persons who fulfils such conditions as may be prescribed may apply for

permission to do the business specified in sub-section (1) to the Registrar of Copyrights who shall submit the application to the Central Government."

30. Licenses by owners of copyright.—The owner of the copyright in any existing work or the prospective owner of the copyright in any future work may grant any interest in the right by licence in writing signed by him or by his duly authorized agent: tc "30. Licenses by owners of copyright.—The owner of the copyright in any existing work or the prospective owner of the copyright in any future work may grant any interest in the right by licence in writing signed by him or by his duly authorized agent\:" Provided that in the case of a licence relating to copyright in any future work, the licence shall take effect only when the work comes into existence. tc "Provided that in the case of a license relating to copyright in any future work, the licence shall take effect only when the work comes into existence." Explanation.—Where a person to whom a licence relating to copyright in any future work is granted under this section dies before the work comes into existence, his legal representatives shall, in the absence of any provision to the contrary in the licence, be entitled to the benefit of the licence. tc "Explanation.—Where a person to whom a licence relating to copyright in any future work is granted under this section dies before the work comes into existence, his legal representatives shall, in the absence of any provision to the contrary in the licence, be entitled to the benefit of the licence."

Phonographic Performance Ltd v. Hotel Gold Regency and Ors. AIR2009Delhi11

* See, http://www.pplindia.org/licctg.aspx

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