Tips Industries Ltd. v. Wynk Music Ltd.: Points to be noted!

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In the month of May this year, a single judge bench of The Bombay High Court in the case of Tips Industries Ltd. v. Wynk Music Ltd. (Airtel) held that music streaming on internet and digital downloads don’t fall under the statutory licensing provision of the Copyright Act. In this article we will be discussing the impact of this judgement on the music industry in India and the law with respect to copyright in the field of online music streaming and digital download

In an era where the number of internet users is skyrocketing and one is getting the cheapest mobile data in the world, it is quite obvious that demand for various services involving internet will grow manifold. Music streaming apps is one such service. In the past few years a number of music streaming apps has gained prominence in India with Gaana, Wynk, Saavn, being the market leaders amongst others. Recently Amazon and YouTube also launched its music streaming services and global market leaders Spotify also made an entry to the Indian Market.

However, the law is not clear in this regard and some provisions of Copyright Act dealing with these aspects need clarity. In this particular case the major contention was related to the statutory licensing provision under Section 31D of the Copyright Act, 1957. This judgement is a landmark of sort as it has very well summed up the requirements of Section 31D and what qualifies to fall under the ambit of statutory licensing.

What exactly was the dispute?

The plaintiffs licensed its repertoire of about 25000 songs to the defendants by Copyright Society under a license agreement on 22nd August 2015. The license fee was paid, and license was valid till 31st August 2018. After the expiration of license both the parties went on for some rounds of negotiations for the renewal of licence; however, the talks failed.

Wynk was asked to deactivate the repertoire but they didn’t comply with it. Tips then sent a legal notice to Wynk to which Wynk replied that they are invoking Section 31D of the Copyright Act and claimed themselves to be the broadcasting organisation who are entitled to statutory licensing under Section 31D. Hence Tips chose to file this suit in the Bombay High Court.

What were the legal questions involved?

The court went on to peruse various case laws along with the provisions of the Copyright Act. The major question that arose here was related to the statutory licensing provision of the Copyright Act, the court looked over the section in question in detail and then went on to discuss the various aspects associated with it. The following three points were majorly discussed which pertains to the statutory licensing provision under Section 31D.

  • No Communication to the public:

The defendant claimed to invoke Section 31D of the Act as against the right to communicate the sound recording to the public. However, the plaintiff contended that Section 31D does not enable or permit a person to sell or commercially rent out sound recordings and these services of defendant do not fall within the scope of ‘communication to the public’.

The Court stated that the right to commercially rent and/ or sell a sound recording to the public is a separate and distinct right as against the right to communicate the sound recording to the public and thus rejected the claim of the defendant and held that the defendant cannot exercise a Statutory Licence under Section 31D in respect of the download and purchase features provided by them.

The Court, while deciding the matter, considered the legislative intention behind including the relevant provisions in the Act. The Court stated that right to commercially rent or to sell sound recording and any right to communicate sound recordings to the public are mentioned in two different provisions of the Act i.e., Section 14(1)(e)(ii) and 14(1)(e)(iii) respectively.

Thus, it is clear that the Legislature was well aware while enacting Section 31D and intentionally excluded commercial rental/ sale of sound recordings from the purview of Section 31D. This interpretation was based on the rationale put forward in 227th Report of Rajya Sabha Parliamentary Standing Committee on the Copyright (Amendment) Bill, 2010. The report clarifies about the awareness of the fact that recording through internet or legitimately digital downloading of music or video recording by payment cannot be covered under the ambit of communication to the public.

  • Internet broadcasters cannot exercise Statutory Licence:

While the Court and plaintiff acknowledged the fact that ‘on demand streaming services’ offered by the defendants amount to communication to the public. However, the plaintiff contended that such communication of the sound recording to the public amounts to infringement of the plaintiff’s exclusive right provided in Section 14(1)(e)(iii) of the Act since such act is not authorized by the plaintiff. The main contention of the defendants was that they are a broadcasting organization and that they have a statutory licence under Section 31D of the Act to communicate to the public by way of broadcast to the copyrighted sound recordings.

The question that stems now is that, whether a Statutory License under Section 31D is available to internet broadcasters such as the present defendants?

The plaintiff objected to this claim and argued that the grant of Statutory License under Section 31D is only restricted to radio and television broadcasting organisations and the defendants’ on demand streaming services offered through internet as an ‘internet broadcasting organisation’ do not fall within the purview of Section 31D of the Act.

The court rejected the claim of benefit of Section 31D and held that while including Section 31D, the legislature was under full knowledge of the existence of digital technologies and trends, including the sharing, streaming and downloading which has been discussed  in the 227th Report.

Therefore, the absence of express words in Section 31D providing for a Statutory License in respect of internet streaming and/or downloading, was a conscious legislative choice. Moreover, the Court relied on the judgements by the Supreme Court in Super Cassettes Industries v. Music Broadcast (2012) 5 SCC 488; UOI v. BCCI SC 2017 and State of MP v. Vishnu Prasad Sharma 1966 AIR 1593 which were in respect of expropriatory legislations and reiterated that Section 31D must be construed strictly in conformity with the specific intention for which it was enacted. Thus, the Court held that internet broadcasters do not qualify as broadcaster for the subject under Section 31D.

  • Royalty fixed by the Appellate Board is mandatory for Statutory Licence:

The Bombay High Court however did not limit its decision to the bare reading of the provisions of Section 31D and Section 14(1)(e)(iii) to decide the fate of the defendant’s right to communicate the sound recording to the public. The Hon’ble Court also stated that Section 31D cannot be used in isolation and further discussed that whether License under Section 31D can only be exercised upon fixation of the rate of royalty by the Appellate Board.

The Court stated that the Appellate Board being the creature of the said Act is empowered by the provision of Section 31D (3) to fix the rates of royalty for radio and television broadcasting. Further, there are two basic conditions that are mentioned in Section 31D (2) regarding copyrighted sound recordings that have to be used by the broadcasting organization. They are:

  • the notice to the owner of the copyright, and
  • to pay the royalties to the owner of copyright as per the rate fixed by the Appellate Body,

as the conditions are necessary for exercising the right to use the copyrighted sound recordings by the broadcasting organization, the Court whereby concluded that the License under Section 31D can only be exercised after the payment of the royalties at the rate fixed by the Appellate Body.

In conclusion…

It was observed by Justice Kathawalla that the 2012 Act is a modern statute, and hence the legislature was well aware about the existence of prevalent digital technologies and trends which is quite evident from statement of object but to be honest the number of streaming services and the number of users using these services were far less in 2012 so such thoughts might not have passed through the minds of the legislature, also the fact that the statutory licensing provision of the copyright is attracting controversies since 2012 cannot be denied. Tips v. Wynk is one such case and another major tussle is going on between Spotify and Warner Brothers which is being keenly observed by IP enthusiasts around the globe.

As per this  judgement the stance is clear that the music streaming service providers are required to get a license from the copyright holders which according to us is totally justified. However, what stance will be taken in the pending disputes in other High Courts is something which will be keenly watched. It will also be exciting to see whether Wynk will prefer an appeal in the Supreme Court and if it happens what stance will be taken by Supreme Court in this regard. In our opinion since these streaming services usually charge subscribers for various service and is not totally free of cost, they should pay the requisite royalty amount to the copyright holders.

-This article is brought to you in collaboration with Raja Reeshav Roy and Aniket Raj from National Law University, Jodhpur.

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