Recently, the Madras High Court in M/s Novex Communications Pvt Ltd. v. DXC Technology Pvt Ltd., (C.S No. 407 of 2020) and M/s Novex Communications Pvt Ltd. v. Cognizant Technologies Solutions India Pvt. Ltd., C.S No. 413 of 20201 (“Novex v. DXC ”) has held that the business of issuing and granting licenses in any copyrighted work can only be engaged into, by a registered copyright society as mandated under the Copyright Act, 1957. On the said finding of law, both suits were dismissed. Expectedly, Novex has appealed the decision, but there is currently no stay of the said dismissal.
Per contra, in another, subsequent order, the Delhi High Court in Phonographic Performance Limited v. Canvas Communications (C.S (Comm) No. 671 of 2021)2 (“PPL v. Canvas”), while disposing off the Plaintiff’s prayer for ad interim relief, returned a prima facie finding, that the business of licensing copyrighted works does not have to be necessarily performed by a copyright society and that it can also be done by an owner of copyright, either directly or by way of an assignment to another person/entity.
While both the above sets of actions were filed on a similar legal basis, however, the interpretation of Sections 30 and 33 in both the cases are diametrically opposed to each other and make for an interesting analysis, as is attempted herein.
M/s Novex Communications Private Limited (“Novex”) and Phonographic Performance Limited (“PPL”) are, independently, engaged in the business of licensing the copyrighted work of sound recordings for exploitation on behalf of copyright owners of sound recordings. Interestingly, neither Novex nor PPL is a registered copyright society as on date. An entity by the name of Recording Music Performance Limited (“RMPL”) has been granted registration as a copyright society by the Registrar of Copyrights on 18.06.2021.3 The said registration and denial of registration to PPL, respectively, are the subject matter of pending challenges in writ petitions filed by PPL before the Delhi High Court.
The Court held, as a matter of law, that Novex had no right to engage in the business of issuing or granting licenses for exploitation of sound recordings since it was not a registered copyright society within the meaning of Section 33 of the Copyright Act, 1957.
While the Hon’ble Court recognised the right of an owner to issue licenses (as an assignee) within the meaning of Section 30 of the Copyright Act, 1957, however it was held that the activity that was being carried out by the Plaintiff amounted to a “business” of issuing or granting licenses, which, in terms of the specific language of Section 33(1), could only be carried out by a registered copyright society. The Hon’ble Court further held that the presence of the word ‘only’ in the second proviso to Section 33 of the Copyright Act, 1957 made it abundantly clear that only a registered copyright society could carry on the business of issuing or granting licenses, and while the assignee could issue a license, it could not carry on the business of issuing or granting licenses.
In arriving at the above decision, the Madras High Court relied upon the Delhi High Court’s judgment in Event and Entertainment Management Association (EEMA) v. Union of India (2017 SCC Online Del 12740) (hereinafter referred to as “EEMA v UoI”) wherein it was held that any entity which is not a registered copyright society, including Novex Communications, is proscribed from doing so and there was a finding in the said judgment that Novex was carrying on the business of issuing licenses in direct contravention of the provisions of Section 33 of the Copyright Act, 1957. The Madras High Court also relied upon the Bombay High Court’s judgment in Leopold Café & Stores & Anr v. Novex Communications Pvt. Ltd. (2014 SCC Online Bom 1324) (hereinafter referred to as “Leopold Café v Novex”) wherein it was held that the prohibition contained in Section 33 squarely applied to Novex Communications as it was engaged in the business of granting and issuing licenses.
Contrary to the above judgment, the Delhi High Court, in the PPL v. Canvas case, while passing an ad interim order in favour of PPL, followed the “precedent” in Novex Communication Pvt. Ltd. v. Lemon Tree Hotels Ltd4 – 2019 SCC Online Del 6568, (“Novex v. Lemon Tree”). A single Judge of the Delhi High Court, in the said matter, held that the restriction of issuing or granting licenses sans registered copyright society was only for underlying works and not for sound recordings, and further that unless the right to issue or grant licenses was specifically assigned to a copyright society, any copyright owner / assignee could issue or grant licenses for exploitation of its works by virtue of first proviso of Section 33 (1) of the Copyright Act, 1957. It was further held that there is an independent copyright in a sound recording, distinct from the copyright in a cinematographic work or other work in which the sound recording may be included, and that independent right, subsists, unless and until the owner of copyright exclusively authorises a copyright society to issue or grant licenses. It is pertinent to reiterate that the said ruling of Delhi High Court in PPL v. Canvas case is only a prima facie view by way of an ad-interim order, and the suit is currently pending adjudication before the Delhi High Court.
Section 33 (1) of the Copyright Act, 1957 elucidates that no person can carry on the business of issuing or granting licenses unless it is registered except under or in accordance with the registration granted under Section 33 (3) of the Copyright Act, 1957. Therefore, it is abundantly clear that there is an explicit bar on the business of issuing or granting licenses unless registered in accordance with the Copyright Act, 1957. Furthermore, presence of the words ‘in respect of any work’ indicates that the intent was to not limit the proscription only to underlying works, but was to extend to sound recordings as well.
On the other hand, Section 30 of the Copyright Act, 1957 states that the owner of copyright can issue licenses qua any of its existing copyrighted work either on its own, or through an authorized agent. Pertinently, the word ‘business’ is absent in the said section.
It is noteworthy that the Copyright Act, 1957 not only prescribes compulsory registration but also prescribes certain other conditions such as authors must control the copyright society along with owners. All these factors indicate that the intent of the legislature was to provide that where a person/entity operates as an “aggregator” of rights and engages in the business of issuing or granting licenses, the same should be done subject to certain conditions, which are set out in the Copyright Act and Rules and hence only through a registered copyright.
In Novex v Lemon Tree, the Delhi High Court was concerned with a dismissal of a suit, where, as a matter of law, the trial court had held that Novex cannot engage in such activity of issuing and grant of licenses, as per the decision in the EEMA v UOI matter. Further, the Hon’ble Single Judge laid emphasis on the second proviso and did not delve into the interpretation of the holding provision of 33(1). Specifically, what was not considered is the interpretation of the first proviso to Section 33(1), which seems to limit the exception to an owner acting in his individual capacity for his work. Such language seems to militate against a finding that a “business” can be carried out by an owner and also that an assignee also qualifies as such owner. This aspect may be found to not control the interpretation of the provision, but certainly merited a review.
Thus, when the Ld. Single Judge in the PPL v Canvas matter, held that he was bound to follow the decision of the coordinate bench of the Delhi High Court in Novex v. Lemon Tree, he not only lost the opportunity to delve into this issue, but also, in my respectful submission, erred in “binding” nature of the Novex v Lemon Tree decision. Perhaps if the decision in the EEMA v UOI matter had been brought to the attention of the Hon’ble Court, the discretion exercised in favour of PPL may have awaited a more detailed hearing/consideration of the law.
In this regard, it is apposite to refer to the Bombay High Court judgment in Leopold Café v. Novex case, where a middle path was evolved by respecting an owner’s right, in his individual capacity to be allowed to continue to grant licenses, and in the event that the same was being done through a third party, it was clarified that the third party could do so, only as an agent of such owner.
Interpretation of the Copyright Act, 1957 has always seen different opinions being expressed by different High Courts. This is yet another minefield of an issue which needs urgent attention and resolution.
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