Facts:
The Plaintiff, Saregama India Limited, claimed to be the owner and assignee of the copyright in more than 1,20,000 sound recordings including underlying literary and musical works. Saregama had filed a suit against Zee Entertainment in 2017 and obtained directions for payment of license fees. The prior dispute involved a license from Saregama that permitted Zee to disseminate the works on its channels, which Zee had not renewed in 2017 but continued to illegally utilize the said works. Subsequently, Zee issued 63 legal notices for around 105 cinematograph films to Saregama and other third parties claiming that it was the owner of the copyright in the sound recordings as well as literary and musical works. Saregama replied to these notices and then filed the present suit in the context of these threats under Section 60 of the Copyright Act.
The present suit was filed seeking an injunction against Zee’s threats, as well as a declaration that Zee did not own rights in the said works, and Saregama was not infringing Zee’s copyright and also damages for losses sustained as a result of these threats. The parties filed their respective pleadings, following which Zee filed a suit for copyright infringement in 2018. Counsel for Zee then took an objection under the proviso to Section 60 of the Act, in that once the defendant had filed its suit, the plaintiff’s suit based on alleged threats by the defendant could not subsist and should be rendered infructuous. However, Zee did not take any steps to formally seek rejection of the suit.
Issue and Analysis:
The primary issue before the court was whether a suit filed by the plaintiff under Section 60 of the Act, in the context of groundless threats of legal proceedings, can subsist if a subsequent suit or proceedings are initiated by the defendant claiming infringement of copyright rights by the plaintiff.
Section 60 deals with remedy in the case of groundless threat of legal proceedings. The Court found the Section 60 proviso would entail that even if a subsequent suit is filed, albeit with due diligence, the initial suit filed challenging the groundless threats would not subsist.
Regarding the aspect of due diligence, the Court analyzed the various decisions relied on by both parties and observed that “none of these decisions seem to deliberate upon the aspect of due diligence, as to what it entails and what it does not.”
The Court held that proceedings initiated by the defendant had to be well-meaning, well-organized, and not unreasonably delayed, wherein the defendant did not really have a right and indeed was issuing the threats without any basis. Thus, the 6- month gap in the present case was not unreasonable in these circumstances.
Further, a reverse and reciprocal suit had been filed by Zee against groundless threats by Saregama. The order of the Single Judge in that suit declared the suit as infructuous, and parties were relegated to the suit filed by Saregama.
Decision:
The Court held that Zee’s suit for copyright infringement was well within the scope of the proviso to Section 60, and thus Saregama’s suit would no longer subsist and was rendered infructuous. Therefore, Saregama was at liberty to file a counter-claim in the above suit, and lead evidence, in accordance with the applicable law.
During the pendency of the suit, Zee was directed to not issue any letters/notices to Saregama or any third party, with respect to the rights claimed in the suit.
The Court further clarified that it had made no observations or comments on the rights and contentions of the parties vis-à-vis claim of copyright over the said works, which would be finally decided, post-trial, in terms of the applicable law.
Citation: Saregama India Limited vs Zee Entertainment Enterprises Limited, CS(COMM) 764/2017 & I.A. 12856/2017
Authored by Ashwini Arun, Innovation, Consulting and Strategy, BananaIP Counsels
Extracts of relevant paragraphs:
29.7 Chancery Pavilion (supra) -Court considered the decision of the Apex Court in Mac Charles (supra) and held as under:
“29. In the case on hand, according to plaintiff, alleged action of defendants is an empty threat. The defendants have shown that positive action has been initiated by filing a proper suit before the High Court of Delhi which is numbered as CS(OS)No.616/2013 on 02.04.2013. In other words, since a separate suit is filed by the defendants, after suit came to be filed by the plaintiff in O.S.No.617/2013 on 19.01.2013 at Bengaluru, the said suit filed by the plaintiff at Bengaluru would not be maintainable. In other words, right of the plaintiff to initiate action under Section 60 of the Copyright Act, 1957 would automatically terminate, in view of the positive action taken by the defendants in filing CS(OS) No.616/2013 on 02.04.2013 on the file of High Court of Delhi, whereby, proviso to Section 60 of the Copyright Act, 1957, comes into play.
30. On careful reading of the decision relied on by the counsel for appellant/plaintiff referred to supra in the case of Dhiraj Dharamdas Dewani supra, the High Court of Bombay, has held that only function of proviso to Section 60 of the Copyright Act is to prevent filing of suit by alleged infringer when owner of the copyright has earlier filed a suit under Section 55 of the Act. In the case on hand, facts are distinguishable, inasmuch as, the suit is filed by the defendants on 02.04.2013 after the suit filed by the plaintiff on 19.01.2013.
31. Per contra, the decision relied on by the counsel for respondents rendered by the Hon’ble Apex Court in the case of M/s Mac Charles (I) Ltd., supra, makes it clear that, “when once the positive action is taken by the copyright holder of infringement, action under Section 60 would no longer survive in view of proviso to Section 60”. Therefore, this Court is of the considered opinion that the grounds urged in the appeal memorandum are hardly sufficient to allow the plaintiff to continue with the suit in O.S.No.617/2013 at Bengaluru by setting aside the impugned Order, whereby, suit of the plaintiff came to be rejected under Order VII Rule 11(d) of CPC.
32. Further, it is always open for the plaintiff to have its defence filed before the High Court at Delhi and get the suit decided on the merits of the matter and scope of the present appeal would not permit to address the rival contentions with regard to merits of the matter. Accordingly, from the above discussion, the point No.1 is answered in the affirmative.”
(emphasis added)
- It is quite evident from the decisions noted above and the passages extracted that the point of law stands settled on section 60 and the play of its proviso. Arguments propounded by Senior Counsel for plaintiff in respect of distinguishing in these decisions cannot take away from the fact that the statement of law has been made clearly, succinctly, and determinatively by various courts, and a stamp of approval has been provided by the Hon’ble Supreme Court. It would be difficult for this Court to displace such a finding, having now found endorsement by the Hon’ble Supreme Court.
- Therefore, Section 60 proviso would entail that even if a subsequent suit is filed, albeit with due diligence, the initial suit filed challenging the groundless threats would not subsist.
- What remains is the consideration of the precondition of “due diligence”. None of these decisions seem to deliberate upon the aspect of due diligence, as to what it entails and what it does not. Some articulation is found in the decision in Manya Vejju (supra), a decision by the Single Judge of Bombay High Court, in para 21, which is extracted above in para 29.6. The learned Judge seems to suggest that due diligence connotes that the action is initiated in good faith and with care, caution, and foresight, as the circumstances of the particular case demand. What may not amount to due diligence can also be gleaned from the facts of the case in Mehta Unani Pharmacy (supra), a case relied rendered by Division Bench of the High Court of Madras and relied upon by the plaintiff. In this case, since the subsequent suit was filed 2 ½ years later, after a proceeding under Section 120 of the Trade and Merchandise Marks Act, 1958 [now Section 142 of the Trade Marks Act, 1999 and pari materia to Section 60 of the Act], it was considered as evidence of lack of due diligence and, therefore, relief was not given to the plaintiff in the subsequent suit.
- Facts in these cases involved a range of periods when defendant, as per the proviso to Section 60, filed a subsequent proceeding/ suit alleging infringement. From a few days, to weeks, to one month, to 2 ½ years is the sliding scale that is presented by all these decisions. The aspect of due diligence being a tabula rasa, the Court has to apply its own assessment to the facts of each case.
- It would not be correct to give a formulaic basis for assessment of due diligence, considering that the facts of each case may be quite different. The spirit of due diligence in a Section 60 proviso suit is premised upon the reasonably proximate and responsible assertion by the defendant of the copyright that it claims, and the infringement, that it seeks to remedy qua the plaintiff of the Section 60 suit.
- The essence is that if the defendant in Section 60 proviso suit proceeds ahead and ‘puts his money where his mouth is’, then the element of “groundless threat” dissipates. Section 60 is premised upon a remedy only in case of a “groundless threat” of legal proceedings. Clearly that forms the basis of the cause of action for any plaintiff in a Section 60 suit; it is a special sui generis remedy which is provided to a party under Chapter XII of the Act titled “Civil Remedies”.
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- The proceeding initiated by the defendant, therefore, has to be well- meaning, well-organized, and not unreasonably delayed. Unreasonable delay would seem to suggest that defendant does not really have a right and indeed was issuing the threats without any basis.
- It was in this context that a two-and-a-half-year delay in Mehta Unani Pharmacy (supra) was considered inordinate. In the present case, the time period between the filing of Section 60 suit and the suit by defendant is about 6 months.
- The defendant had filed its written statement on 11 th January 2018 and filed a suit thereafter on 16th April 2018. The reason given by defendant is that they had filed voluminous documents which they were collating since it involved various assignments that they had got from Shemaroo and other companies relating to the works in which copyright claim is disputed.
- This is a factual issue and does not need to be gone into deep dissection. The suit filed by defendant is a substantive suit claiming rights in their behalf and has also now proceeded ahead to recordal of evidence. The 6- month gap would, therefore, not be considered as unreasonable in these circumstances since the written statement was only filed in January 2018, the replication by the plaintiff in the present suit was filed on 09th April 2018. Issues are not yet framed in the present suit despite the passage of time.
- An Order VII Rule 11 application does not seem to be necessary where Section 60 proviso is triggered since the law as stated above seems to be that the suit automatically becomes infructuous. However, since in these proceedings an averment had been made on behalf of Zee that they would be filing an application under Order VII Rule 11 of CPC, the matter has been considered.
- Besides, an application Order VII Rule 11 of CPC requires a Court to look at averments in the plaint and decide on that basis whether it is barred under any of the sub-sections. This is in contrast to the situation which arises in Section 60 of the Act, which mandates the previous suit as infructuous by the filing of the subsequent suit. Therefore, a strict application of Order VII Rule 11 of CPC may not resonate with the proviso to Section 60. This has also been noted by the Predecessor Bench in order dated 10th November 2023.
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- The burden of proof, being on Zee to prove their rights, which forms the basis of the alleged infringement, would have to be discharged by Zee. Only if it is proven that Zee indeed had a right and had a legitimate grievance of infringement by Saregama, the right of damages may not subsist. On the contrary, if it is held that Zee does not have a right as it claims, the claim for damages by Saregama would kick in and would have to be adjudicated.
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- In light of the discussion above, defendant’s suit being CS(COMM) 811/2018 filed for infringement of copyright falls well within the scope of the proviso to Section 60. Hence, the present suit instituted by plaintiff shall no longer subsist and is rendered infructuous.
- The plaintiff is at liberty to file a counter-claim in CS(COMM) 811/2018, and lead evidence, in accordance with the applicable law.
- During the pendency of CS(COMM) 811/2018, which was consolidated with this suit, it is directed that the defendant [plaintiff in CS(COMM) 811/2018] will not issue any letters/notices to the plaintiff herein [Saregama India Ltd.] or any third party, with respect to the rights that are claimed in the suit.
- It is made clear that nothing observed herein is a comment upon the rights and contentions of the parties vis-à-vis claim of copyright over the said works, which may be finally decided, post-trial, in terms of the applicable law.
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