The ownership of derivative works has been hotly contested by authors, composers and lyricists (collectively, “authors”) on the one end of the bargaining spectrum; and producers, music labels and broadcasters on the other. This tussle has raised certain rudimentary questions – first, will the author’s copyright in the underlying work continue to subsist after its incorporation in the final (derivative) work; and second, will authors continue to receive royalty for utilisation of their work as part of such final work. These questions turn the focus on whether the 2012 Amendment (“Amendment”) to the Copyright Act, 1957 (“Act”) “fundamentally changed” the treatment of authors’ rights with respect to original, underlying works created by them.
The industry practice pre-Amendment was a one-time payment by producers in exchange for authors assigning the entire bundle of rights forming the copyright in the underlying work. Owing to lack of collectivisation, authors in India have historically lacked bargaining power when negotiating assignment agreements, which correctly value the works being assigned to them for commercial utilisation. It was against this backdrop that the Amendment was introduced to secure the rights of authors in their capacity as owners of their copyright. This was achievedby affecting changes to Sections 18 and 19 of the Act, whereby a statutory restriction was imposed on the assignment and/ or waiver of authors’ right to receive an equal share of royalty payments for utilization of works, making any agreement to the contrary void.
In light of recent judicial interpretations of the Amendment, we aim to deconstruct the Indian copyright regime’s commitment to preserving the royalty rights of authors for their underlying works and further discuss whether a “fundamental change” has been affected to the regime post Amendment.
Deconstructing Authors’ Inalienable Right to Royalty
To solidify authors’ right to royalty in their underlying works, the Bombay High Court in its recent joint order in Indian Performing Right Limited v. Rajasthan Patrika Pvt Ltd and IPRS v. Music Broadcast Limited[1] (“Music Broadcast Case”)clarified that the right to receive royalties stems from the author’s copyright, and not any other right distinct from the copyright.[2] The Court opined that a harmonious construction of the provisions of the Act with the proviso to Section 33 of the Act indicates that upon assignment, a copyright society has the right to issue licences and collect royalties on the author’s behalf and therefore, ownership of copyright in underlying works includes the right to collect royalties on utilisation of such works. With this necessary clarification in place, it is important to ascertain whether an author’s copyright continues to subsist in the final/ derivative work or not.
Pre-Amendment, the first ownership of copyright over works created under contracts of service or apprenticeship, or against valuable consideration, vested with the employer instead of the author, unless an agreement to the contrary existed.[3] This operated as an impediment to authors seeking royalty pursuant to incorporation of their works in the final derivative product.[4]
The Amendment inserted a proviso to Section 17, which created an exception for subsistence of authors’ rights in underlying works under Section 13(1)(a) of the Act, notwithstanding the first ownership of persons who commissioned the work. This interpretation found favour with the Supreme Court in RDB & Co. v. HarperCollins Publishers India Pvt. Ltd.[5], where the Court held that the author’s separate copyright in the underlying work, created under contract and against remuneration, continues to vest with the author by virtue of Section 13(4) of the Act.
The Indian copyright regime’s commitment to securing an author’s inalienable right to royalty is further evidenced by India’s reservation toward payment of a ‘single equitable remuneration’ to performers and producers of phonograms under Article 15(1) of the WIPO Performances and Phonograms Treaty (“WPPT”).[6] The rationale behind this treaty reservation was that Indian law already conferred a right superior to the one-time payment envisaged by the WPPT i.e., the right to recurring and continuous royalties to performers.[7]
Did the Amendment fundamentally change the law?
Authors’ claims to royalty have previously been challenged on various counts – the derivative nature of the work, scope of ‘utilisation’ of the final work, the inalienable nature of royalty rights, and whether the rights emanate from copyright ownership. The most recent addition to this is the Bombay High Court’s interpretation of the Amendment in the Music Broadcast Case. Deciding in favour of the copyright society representing authors, the Bombay High Court restrained radio broadcasters from broadcasting songs without paying statutory royalties to authors of the underlying work. The Court’s judgement focussed on the “fundamental change” to the Act post-Amendment to hold that original authors are entitled to royalty when their work is shared with the public, except in cases where a film is being broadcast in a cinema hall. In doing so, the Court acknowledged the legislative departure from a catena of judgements, which had previously undertaken a restrictive approach to authors’ rights.[8]
The Court in this case also decided on the issue of selective amendments to certain sections of the Act, without introducing corresponding amendments to the initial sections defining the meaning and scope of copyright i.e., Sections 13 and 14 of the Act. Undertaking a harmonious construction of the Act and placing reliance on phrases subjecting Sections 13 and 14 to other provisions of the Act, the Court found that the Amendment introduced changes wherever necessary and in doing so, “fundamentally changed” the position of law with respect to the rights of authors.[9]
Subsequently, an ambiguity arose in the position of law, in a matter involving several petitions filed by radio broadcasting organisations seeking revision/ fixing of statutory license rates, vide a 2021 Single Bench decision of the Delhi High Court in Entertainment Network India Limited v. Phonographic Performance Limited India & Ors.(“PPLCase”)[10]. The batch of appeals arose from the erstwhile Intellectual Property Appellate Board’s (“IPAB”) common order dated December 31, 2020, prescribing license fee rates payable by broadcasters. The IPAB’s order endorsed the Amendment by delineating rates for both, sound recordings and the underlying works.[11] These rates, however, expired on September 31, 2020, and the cited petitions were filed to determine the applicable rates and clarify whether a change had been affected to authors’ right to royalty, post-Amendment.
While the Single Bench in the PPL Case directed status quo to be maintained pending adjudication by the Division Bench, it restricted the status quo order solely to royalty payments toward broadcasting sound recordings. It remains uncertain whether the Division Bench in its pending judgement will endorse the IPAB’s stance in consonance with the Amendment or agree with the Petitioner’s prayer for exclusion of royalty payments to authors for underlying works.
In the interim, the Bombay High Court in the Music Broadcast Case has taken the stance that original authors retain their separate copyright in the underlying works utilised to create derivative works and resultantly, are entitled to an inalienable claim to royalties when such derivative works are broadcast or communicated to/ with the public, with the exception of cinema hall screenings.
It is yet uncertain whether the Division Bench of the Delhi High Court will also take a similar or varying interpretation of the Amendment. Nonetheless, it is safe to conclude that there is a churn, with authors demanding their rightful share world over; but how and to what extent the industry in India will interpret and adopt the Amendment remains to be seen.
For further information, please contact:
Pallavi Rao, Partner, Cyril Amarchand Mangaldas
pallavi.rao@cyrilshroff.com
[1] Indian Performing Right Society Limited vs Rajasthan Patrika Pvt. Ltd. and Indian Performing Right Society Limited vs Music Broadcast Limited (2023) SCC OnLine Bom 944.
[2] Music Broadcast Case, para 57.
[3] Section 17(b) and Section 17(c), Copyright Act.
[4] Indian Performing Rights Society v. Eastern Indian Motion Pictures Association & Ors. (AIR 1977 SC 1443); IPRS v. Aditya Pandey (2012 SCC OnLine Delhi 2645); ICSAC v. Aditya Pandey (2017 11 SCC 437). The argument here was that copyright in the derivative work, which exists as a composite whole, cannot be delineated in a disembodied manner where the authors retain their separate copyright qua the underlying works protected under Section 13(4) of the Act.
[5] C.S. (COMM.) 246/2021.
[6]Notification No. 92, Accession by the Republic of India, available at – https://www.wipo.int/treaties/en/notifications/wppt/treaty_wppt_92.html; Article 15(1), WPPT. Right to Remuneration for Broadcasting and Communication to the Public.
[7] Section 38A, Copyright Act.
[8] Music Broadcast Case, para 49.
[9] Music Broadcast Case, para 38.
[10] C.O.(COMM.IPD-CR) 3/2021 and connected matters.
[11] In doing so, the IPAB departed from the Supreme Court’s 1997 judgement in Indian Performing Rights Society v. Eastern India Motion Pictures Association where the Court interpreted the law as it stood pre-2012 to hold that authors and composers, once engaged by a film producer, do not retain any right in their respective works.
