This post was first published on 4th August, 2014.
The primary purpose of a Copyright Society, also referred to as a Copyright Collective, is Collective Rights Management. A typical society acts as a middle man between authors/owners of copyrighted works and the Licensees of such works. Simply put, authors transfer all or some of their rights to the society and the society, in turn, licenses those rights, collects royalty and distributes the royalty among authors. The society also collects an administrative, management or facilitation fee for this activity. Such fee is normally in the range of 10-15% of the license fee.
Collective Rights Management Societies are either formed through voluntary agreements, like in the USA or by statute, like in India. These societies may administer work(s), or right(s), exclusively, as in Europe, or non-exclusively, as in India and the USA. Some countries, like Belgium and Hungary have mandatory collection societies, where authors have no choice but to work with copyright societies for licensing their works for certain purposes.
Copyright societies may issue a variety of licenses ranging from individual licenses to blanket licenses, where all works in the society’s catalogue are licensed for unlimited use. Customarily, different societies are constituted for collective management of different works. For example, the Indian Performing Rights Society (IPRS), that deals with licensing literary/musical works (on behalf of authors/publishers); Phonogram Performance Limited (PPL), that mainly deals with licensing sound recordings (on behalf of record labels); Indian Singer Rights Association primarily for licensing Performer’s Rights (on behalf of singers/performers), and so on.
The 2012 amendment brought about several changes to the Copyright Society provisions to further the interests of authors and to prevent detriment to authors by virtue of prior issues with respect to management in the societies and payment of royalties. Among the amendments, the meaning and scope of amendment to Section 33(1) puts forth questions, which may re-define how certain portions of the entertainment business might be run in India.
“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 on respect 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 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 the business of issuing or granting license in respect of literary, dramatic, musical and artistic works incorporated in a cinematograph films or sound recordings shall be carried out only through a copyright society duly registered under this Act; … “
The two questions that jump out at you from this provision are:
1. Can a company carry out the business of aggregating and licensing works?
2. Is it mandatory to license literary, musical, dramatic and artistic works incorporated in a sound recording/cinematographic film only through a copyright society?
Though the primary portion of Section 33(1) existed since 1994, the question was never litigated earlier or given its due importance, and was only recently analyzed by the Bombay High Court in the case of Leopold Cafe and others vs. Novex Communications, reported earlier on SiNApSE by Sharada. In the Leopold Cafe case, the Court held that Novex could function as an agent for copyright owners, (in this case, YashRaj Films and Shemaroo), but could not aggregate works and issue licenses using its name. Simply put, the answer to question 1 is that the aggregation is allowed only through an agency model and not through a licensing model with rights to sub-license.
With respect to the question 2, a bare reading of the second proviso, added by the 2012 amendment, read independently, can lead one to the conclusion that literary, musical, dramatic and artistic works, incorporated in a cinematographic film or sound recording can be licensed only by the Copyright Society, to the exclusion of even the owners of said works. In other words, the provision mandates collective management of literary, musical, dramatic and artistic works. This interpretation is proffered by a segment of authors and seconded by IPRS and several users/public performers of works, who are not happy with the royalty terms of copyright owners.
The interpretation might be convenient to a group of stake holders, but is problematic in several ways:
i. Except for an isolated reading of the proviso, a comprehensive reading of the Amended Act does not give any indication that mandatory collective management was the intent of the legislators;
ii. To the contrary, an integrated reading of Section 30, which gives a copyright owner the right to license his works directly or through his agents, with Section 33(1) leads one to the inevitable conclusion that the proviso is applicable to only members of a copyright society and not to all copyright owners;
iii. The fact that except for the bare proviso, no other change has been made to any provision to mandate membership of a copyright society, limit authorization or withdrawal of works from a society, guide and regulate the functioning of a mandatory society, and limit the assignment or licensing abilities of copyright owners, among others, once again makes one infer that the legislature did not intend for the creation of a mandatory collective management system in India; and
iv. Limiting mandatory collective management to only literary, musical, dramatic and artistic works incorporated in cinematographic films and sound recordings, allowing owners of the same works, which have not been incorporated in films or recordings to license in any manner they deem fit, will not only give rise to several practical problems, but will also add severe complexity to copyright transfer transactions prior to incorporation.
These issues, among others, drive one to the inevitable answer that the proviso does not mandate collective management of works through a society. This view is proffered by several copyright owners, production houses, record labels, and so on, who have been running effective licensing businesses.
How will the Courts perceive this? Only time will tell. Any thoughts or Comments from Readers are welcome.
