2020 – A Watershed Year for Media & Entertainment?

Abhishek Malhotra | September 2019

A. THE FIRST AND ONLY COMPULSORY LICENSE EVER GRANTED IN INDIA, EXPIRES IN SEPTEMBER 2020

In the first and only case of music valuation and compulsory license in India, the Copyright Board, after 9 years of protracted legal battle that involved proceedings before the Bombay High Court, the Delhi High Court and finally, the Supreme Court of India, directed the Registrar of Copyright to grant compulsory licenses in respect of the repertoire of sound recordings owned or controlled by Phonographic Performance Limited (“PPL”).

The license, issued on 3rd September 2010, was granted on complaints filed by 6 radio broadcasters, at the rate of 2% of net advertising revenue for each radio station. While PPL appealed against this order before the Madras High Court, and later, before the Supreme Court of India, however, this rate has not only remained valid for the last 9 years, but has also been applied by courts (as an in-rem rate) and adopted by other parties as an ad-hoc arrangement, thereby making this rate, at least for the radio industry, the euphemistic “market rate”.

The license will expire on 02.09.2020. What then? Time to move towards a statutory licensing regime?

With amendments to the Copyright Act in 2012, we now have a new provision, Section 31D, which provides for a right available to broadcasting organisations, to seek a license to the musical content that they wish to use. The only aspect that needs to be decided prior to exercise of such a right, is the determination of the royalty/license fee payable to the copyright owner/s. This task has now been entrusted to the Intellectual Property Appellate Board (“IPAB”).

What is the problem then? It should be fairly straightforward. You send a notice to the concerned copyright owner. They will, of course either refuse to entertain your notice or remain silent. Then you move the IPAB and seek determination of the license fee/royalty.

NO, IT ISN’T THAT EASY. WHY, YOU ASK?

Two reasons – arising out of two distinct issues that have cropped up since:

ISSUE 1: CAN AN INTERNET/WEB-BASED PLATFORM THAT – USES/STREAMS/MAKES AVAILABLE/COMMUNICATES TO THE PUBLIC – MUSIC, QUALIFY AS A BROADCASTING ORGANIZATION AND THEREFORE AVAIL THE PROTECTION OF SECTION 31D OF THE COPYRIGHT ACT?

Here’s a set of interesting nuggets to consider while answering the question:

The provision is ambiguous, as, while it does codify the right in favour of a “broadcasting organization” (which term is not defined under the Act), it also specifically uses the terms, “radio” and “television” in sub-section (3) of the provision, which seems to suggest that the section is limited for use by these two platforms;
The definition of “Broadcast”, however, suggests an open ended and unfettered means of communication to the public, inter alia, by wireless diffusion. The logical corollary is that it should include the internet.
The aforesaid apparent conflict was further muddied by the Department of Industrial Policy and Promotion issuing an Office Memorandum in 2016, which document seeks to extend, by way of an executive interpretation of a statutory provision (were the drafters of the Constitution of India even aware of such powers being creatively exercised by the Executive?), the cover of Section 31D, to internet “broadcasters”.
Such an office memorandum – and rightly so – has been frowned upon and disregarded by a Single Judge of the Bombay High Court in the recent decision in TIPS v. WYNK. v. The Government has, as of June 2019, circulated draft amendments to the Copyright Rules, that seek, in another attempt of Constitutional impropriety, to amend the Copyright Rules to accommodate the extension of Section 31D to the exploitation of music on the internet as well.

While the industry has debated this ad nauseum, and we will, in 2020, have further clarity on whether or not the Government intends to go through with the draft Rules and, if so, what fate the said Draft Rules would suffer, this is a great debate that, inmy humble opinion, can only be settled by an amendment to the provision itself, and not otherwise. In addition to being constitutionally improper (delegated legislation cannot seek to override the intent of the provision itself), the further impediment that such an amendment may suffer is that it shall strengthen the challenge that is currently pending, to the constitutional validity of the provision itself, as being an expropriatory action, in violation of the constitutional right to Copyright ownership.

ISSUE 2: IS SECTION 31D, IN THE ABSENCE OF A NON-EXISTENT COPYRIGHT BOARD FOR 5 YEARS AFTER THE AMENDMENTS AND AN IPAB IN FLUX THEREAFTER, A CLASSIC CASE OF VIOLATION OF THE AGE-OLD PRINCIPLE OF UBI JUS IBI REMEDIUM (THERE IS NO RIGHT WITHOUT A REMEDY)?

Section 31D is effectively non-functional without there being a determination of the royalty rate or license fee. The same is to be determined only by the Copyright Board or, now, the IPAB.

The IPAB – and the Copyright Board before it – have had their own set of issues. There was no validly constituted Copyright Board since 2011 and that continued to be the position till 2017, when, by way of the Finance Act, 2017, the Government of India, combined the jurisdiction of the Copyright Board with that of the IPAB. That did not resolve matters either, as there was no Chairperson appointed to the IPAB. In addition to the vacancy in the office of the Chairperson of the IPAB, it did not have a technical member to adjudicate Copyright matters.

The Chairperson came to be appointed in January 2018. And then, in July 2018, a writ petition was filed in the Delhi High Court seeking direction to the Government of India to either appoint a technical member for Copyright matters, or to permit the existing technical member of Trademarks to additionally deal with Copyright matters. The Writ was allowed and the IPAB took seisin of the matter.

You, the reader, would think that this would be the happy ending and now I would proceed to tell you what the new rate of statutory licensing is!! Alas, the drama does not end here.

While a couple of initial orders were issued by the Bench, however, the Member of Trademarks retired soon thereafter. “Ab Kya Karein?”

Enter, WRIT PETITION NO.2, seeking similar reliefs.

This time, the Petitioner sought a direction that the technical member looking after the matters relating to protection of Plant Varieties should hear patent matters as well. The writ was allowed employing the “Doctrine of Necessity”.

THE MATTER DOES NOT END HERE.

On 21st September 2019, the tenure of the Chairperson, Justice (Retd.) Manmohan Singh shall come to an end. Recognising this approaching deadline, the Writ Court mentioned above, asked the Government to either have a replacement appointed in place of Justice Singh or to give its views on extension of his tenure. While the Court has made its intent abundantly clear – that it intends to extend the tenure, however, as this is not a PIL court and continuity in the tenure of the Chairperson is a matter of public interest, hence the matter was referred, at the time of going to press, to the PIL Bench to take a final call and pass orders as deemed appropriate.

WHEW!!!!!!!

Will the Statutory License regime be implemented or turn out to be a dream that is, in the famous words of “Crime Master Go-Go”, in Andaz Apna Apna, “Haath Ko Aaya Aur Munh Na Laga”. Either way, 2020 promises to be a year where, at least the radio broadcasters and the internet platforms will have clarity on what they are likely to pay, at least in the short term, for use of music, on their respective platforms.

THE CONTOURS OF THE PERFORMERS’ RIGHTS WILL BE DECIDED BY THE DELHI HIGH COURT;

The debate on this one is yet to get an order from a Court of Record – the High Courts or the Supreme Court. The issues are summarised below:

Is the Performer’s Right limited, as the definition suggests, to a “Live Performance”, or does it extend to Performance, as recorded in a sound recording or cinematograph films.
What is the interpretation of “Live”? Does it also include a performance rendered in a studio, as has been opined by the Delhi High Court in a pre-amendment matter?
Once the Performer consents to incorporation of the Live Performance in a sound recording or a cinematograph film, does the Performer loose further control over exploitation thereof, or the Performer is still entitled to control the exploitation of the permitted recordings?

These questions are likely to be answered by the Delhi High Court in the ongoing proceedings involving the Indian Singers’ Rights Association (“ISRA”), Zee Music, SaReGaMa, Super Cassettes (T Series), Mashaal Sports (backed by Star TV) and King’s XI Punjab.

The interesting development, in the meanwhile, is that the Government, in the draft amendments to the Copyright Rules, mentioned above, is attempting to delete Explanations to the Rule pertaining to Copyright Societies for Performers, which shall limit some of the arguments sought to be advanced by ISRA.

Keep a look out for this interesting matter, as it will definitely set the roadmap for future of contracts being entered into by Performers.

THERE IS A LIKELIHOOD THAT THE MIB MAY REGULATE CONTENT ON THE OTT PLATFORMS – BY EXTENDING CENSORSHIP REQUIREMENTS TO THE SAID PLATFORM; WHILE ON THE OTHER HAND, THE TRAI MAY RECOMMEND REGULATION OF OTT PLATFORMS – OFFERING COMMUNICATION SERVICES AS WELL AS CONTENT;

There have been at least 5 writ petitions/PILs filed all over the country, including before the Supreme Court, demanding directions to the Government / MIB / MeITY, to regulate the content on OTT Platforms such as Amazon Prime, Netflix, Hotstar, etc. The demand is to seek censorship over content, ostensibly on the ground that this is a platform that is or is increasingly becoming a substitute for Television, if not the cinema. Thus, whereas there are regulatory requirements under the Cinematograph Act and the Cable TV Networks Regulation Act, why should there not be similar control on the OTT Applications.

The Government has, till very recently, in affidavits filed or submissions made before various Courts, taken the stand that it treats such OTT platforms as intermediaries, which are regulated under the IT Act, 2000 and the Intermediary Rules, 2011.

It is only recently that the Government has publicly announced that there may be a need to re-look at that position. Even so, in the view of this author, enough safeguards to regulate or take action against “objectionable” content already exist in the extant law – the IT Act as well as the IPC. These provide adequate authority to the Government to address any violatio of the law, in the name of exercise of the Right of Freedom of Speech and Expression. Accordingly, in my view, no further regulation or law is required to address this ubiqutous and dynamic technology.

THE BROADCASTING AND CABLE REGULATORY REGIME IS LOOKING TO UNDERGO ANOTHER CHANGE WITH A FRESH CONSULTATION PAPER SEEKING TO CAP THE MRP OF CHANNELS;

The latest Consultation Paper, on a misreading of the judgment of the Supreme Court of India which upheld the constitutional validity of the 2017 Broadcasting Interconnect Regulations, has proposed a re-introduction of a cap on discounting of Maximum Retail Prices of channels by broadcasters and Delivery Platform Operators. The CP also proposes capping of the MRP of channels, which were hitherto left under forbearance, if they were being offered as a-la-carte.

While the CP has already been challenged – unsuccessfully so – by one broadcaster, in my view, as soon as the proposed amendments – which in my opinion, are hasty, baseless and without authority – are notified, all other broadcasters shall definitely challenge the same and we may see another round of protracted battle in this already over-litigated sector.

The challenge to the Advertisement Cap Regulations is likely to be decided;
The liability of Prasar Bharti and MIB as enterprises under the Competition Act, may get determined;
There would be a determination of constitutionality of restrictions on dissemination of news on radio and also the exorbitant annual license fee being charged by MIB for the migrating channels from phase 2 to phase 3.

Keep a watch on this space for more interesting developments, as they unfold.

About Author

Abhishek Malhotra

Abhishek Malhotra is the Founding Partner of TMT Law Practice. He has nearly two decades of experience in the legal realm and is member of both the State Bars of California, USA and Delhi, India. His primary areas of expertise are Intellectual Property, Competition Law, Dispute Resolution and the Technology, Media & Telecommunications industries.