The Bombay High Court vide judgement dated April 23,
2019 in the case of Tips Industries Limited vs. Wynk Music Limited & Anr., held
that internet music streaming and digital downloads are not covered under the statutory
licensing provision of the Copyrights Act, 1957 (the “Act”). The Court said that the provisions of Section 31-D of the
Act are not applicable to internet broadcasting.
2019 in the case of Tips Industries Limited vs. Wynk Music Limited & Anr., held
that internet music streaming and digital downloads are not covered under the statutory
licensing provision of the Copyrights Act, 1957 (the “Act”). The Court said that the provisions of Section 31-D of the
Act are not applicable to internet broadcasting.
Facts:
Tips Industries Limited (hereinafter “Tips”) is the owner of copyright in
over 25,000 sound recordings and Wynk Music Limited (hereinafter “Wynk”) which is owned and operated by
Bharti Airtel, provides an Over the Top (OTT) service making it available on
the internet, smart phones and smart media. Wynk had licensed music from Tips under
a written license agreement dated August 22, 2014 for Rs. 1.31 crores per year
which expired on August 31, 2016. However, Wynk
extended the agreement till October 31, 2016, on a condition that a written
agreement would be executed by them, failing which they would stop using the
music of Tips, with a liability to pay for usage till this period. Tips
demanded a minimum guarantee of Rs 4.5 crores for 2 years and Wynk claimed that
this offer was rejected by them. After negotiations broke down, Tips subsequently
sent a cease and desist notice to Wynk, instructing them to remove Tips music
content. In reply, Wynk invoked Section 31-D of the Copyright Act, 1957,
claiming to be a broadcaster, insisting that they were “entitled to a statutory
license”, which allowed them to communicate the music work to the public via
broadcast. Tips denied Wynk’s right to invoke section 31-D and contended that
the invocation is wholly illegal and non-est.
over 25,000 sound recordings and Wynk Music Limited (hereinafter “Wynk”) which is owned and operated by
Bharti Airtel, provides an Over the Top (OTT) service making it available on
the internet, smart phones and smart media. Wynk had licensed music from Tips under
a written license agreement dated August 22, 2014 for Rs. 1.31 crores per year
which expired on August 31, 2016. However, Wynk
extended the agreement till October 31, 2016, on a condition that a written
agreement would be executed by them, failing which they would stop using the
music of Tips, with a liability to pay for usage till this period. Tips
demanded a minimum guarantee of Rs 4.5 crores for 2 years and Wynk claimed that
this offer was rejected by them. After negotiations broke down, Tips subsequently
sent a cease and desist notice to Wynk, instructing them to remove Tips music
content. In reply, Wynk invoked Section 31-D of the Copyright Act, 1957,
claiming to be a broadcaster, insisting that they were “entitled to a statutory
license”, which allowed them to communicate the music work to the public via
broadcast. Tips denied Wynk’s right to invoke section 31-D and contended that
the invocation is wholly illegal and non-est.
Therefore, two suits were
instituted against Wynk:
instituted against Wynk:
(i)
Infringement of copyright
thereby disputing Wynk’s right to avail statutory license provided by section
31-D.
Infringement of copyright
thereby disputing Wynk’s right to avail statutory license provided by section
31-D.
(ii)
Permanent injunction against
Wynk restraining to communicate to public Tips songs and sound recordings and
to give tips songs on commercial rental/sale by way of providing download
services or features.
Permanent injunction against
Wynk restraining to communicate to public Tips songs and sound recordings and
to give tips songs on commercial rental/sale by way of providing download
services or features.
“Fair Dealing” under section 52(1):
Wynk argued that allowing
the user to retain an electronic copy of a sound recording copy for personal
use or enjoyment on the Wynk application constitutes “fair dealing” and does
not amount to copyright infringement of Tips under section 52 (1)(a)(i) of the
Act. However, the Court rejected Wynk’s contention that the recording of music
for a user’s personal use would constitute “fair dealing” under Section 52
(1)(a)(i) of the Act. In this regard, the Hon’ble Court observed the following,
the user to retain an electronic copy of a sound recording copy for personal
use or enjoyment on the Wynk application constitutes “fair dealing” and does
not amount to copyright infringement of Tips under section 52 (1)(a)(i) of the
Act. However, the Court rejected Wynk’s contention that the recording of music
for a user’s personal use would constitute “fair dealing” under Section 52
(1)(a)(i) of the Act. In this regard, the Hon’ble Court observed the following,
“The
defence of fair use may be available in a given case, to an individual user.
The activities of the Defendants (“Wynk”) can never be termed as ‘private’ or ‘personal use’
or ‘research’. The Defendants are clearly selling and /or commercially
renting sound recordings including, inter alia, the Plaintiff’s Repertoire for
their own commercial benefit. Thus, the Defendants use of the Plaintiff’s
Repertoire cannot be termed as fair dealing for the purpose of private personal
use or conducting research. Hence, the exception under Section
52(1)(a)(i) of the Act is not available to the Defendants.”
defence of fair use may be available in a given case, to an individual user.
The activities of the Defendants (“Wynk”) can never be termed as ‘private’ or ‘personal use’
or ‘research’. The Defendants are clearly selling and /or commercially
renting sound recordings including, inter alia, the Plaintiff’s Repertoire for
their own commercial benefit. Thus, the Defendants use of the Plaintiff’s
Repertoire cannot be termed as fair dealing for the purpose of private personal
use or conducting research. Hence, the exception under Section
52(1)(a)(i) of the Act is not available to the Defendants.”
Since the services (download/purchase feature) provided by Wynk are in the nature of
commercial rental and/or sale of sound recordings, the
defence of fair use under Section 52(1)(a)(i) of the Act is not available to Wynk
in the present case.
commercial rental and/or sale of sound recordings, the
defence of fair use under Section 52(1)(a)(i) of the Act is not available to Wynk
in the present case.
Grant of Statutory License under section
31-D:
31-D:
Now, the primary issue that
arose was whether Wynk can invoke section 31-D to exercise the statutory
license in respect of Tips songs for internet broadcasting.
arose was whether Wynk can invoke section 31-D to exercise the statutory
license in respect of Tips songs for internet broadcasting.
Section 31-D was introduced by the Copyright
(Amendment) Act, 2012. A plain reading of the section provides for a statutory licensing scheme according to which
any broadcasting organisation desirous of communicating to the public any sound
recording, may obtain a statutory license to do so, provided they pay the
royalty rates to the copyright owners, at rates fixed by the Intellectual
Property Appellate Board (“IPAB”).
(Amendment) Act, 2012. A plain reading of the section provides for a statutory licensing scheme according to which
any broadcasting organisation desirous of communicating to the public any sound
recording, may obtain a statutory license to do so, provided they pay the
royalty rates to the copyright owners, at rates fixed by the Intellectual
Property Appellate Board (“IPAB”).
Wynk offers an “on demand
streaming services” on their application where the songs are made available to
public by streaming them online which can be accessed through any device
connected to the internet. There is no doubt that the “on demand streaming
services” amounts to communication of the sound recordings to the public.
However, such communication was done by Wynk without authorization from Tips amounting
to infringement of Tips exclusive right under section 14(1)(e)(iii) of the Act.
Further, statutory license is restricted only to radio and television
broadcasting organization and “on demand streaming services” offered through
internet as an “internet broadcasting organization” does not fall within the
purview of section 31-D of the Act. This effectively means that OTT internet
service provider i.e., Wynk cannot provide copyrighted music and sound
recordings without the permission of the copyright holders.
streaming services” on their application where the songs are made available to
public by streaming them online which can be accessed through any device
connected to the internet. There is no doubt that the “on demand streaming
services” amounts to communication of the sound recordings to the public.
However, such communication was done by Wynk without authorization from Tips amounting
to infringement of Tips exclusive right under section 14(1)(e)(iii) of the Act.
Further, statutory license is restricted only to radio and television
broadcasting organization and “on demand streaming services” offered through
internet as an “internet broadcasting organization” does not fall within the
purview of section 31-D of the Act. This effectively means that OTT internet
service provider i.e., Wynk cannot provide copyrighted music and sound
recordings without the permission of the copyright holders.
Section 31-D contemplates only
two types of broadcasting, i.e., radio broadcasting and television
broadcasting. Moreover, section 31-D clause 3 provides that the rate of royalty
for radio broadcasting shall be different from the rates of television
broadcasting and both such rates shall be fixed by IPAB.
two types of broadcasting, i.e., radio broadcasting and television
broadcasting. Moreover, section 31-D clause 3 provides that the rate of royalty
for radio broadcasting shall be different from the rates of television
broadcasting and both such rates shall be fixed by IPAB.
However, no other mode
is contemplated under the said clause. The power to fix royalty rates for
internet broadcasting should have been clearly and expressly defined and in the
absence of such clarity, it should mean that the IPAB does not have the power
to fix royalty in case of internet broadcasting.
is contemplated under the said clause. The power to fix royalty rates for
internet broadcasting should have been clearly and expressly defined and in the
absence of such clarity, it should mean that the IPAB does not have the power
to fix royalty in case of internet broadcasting.
In addition to the
abovementioned contentions, the provisions of Section 31-D read with Rules 29
to 31 of the Copyright Rules, 2013 implies that Section 31-D
contemplates only television and radio broadcasting and not internet
broadcasting. Moreover, prior
determination of royalty rates is a necessary precondition for the exercise of
rights in respect of a statutory license under Section 31-D. The said rules
require furnishing of details and the manner of determining royalties with
respect to radio and/or television broadcasting only.
abovementioned contentions, the provisions of Section 31-D read with Rules 29
to 31 of the Copyright Rules, 2013 implies that Section 31-D
contemplates only television and radio broadcasting and not internet
broadcasting. Moreover, prior
determination of royalty rates is a necessary precondition for the exercise of
rights in respect of a statutory license under Section 31-D. The said rules
require furnishing of details and the manner of determining royalties with
respect to radio and/or television broadcasting only.
Conclusion
The internet broadcasting organizations cannot
enjoy the benefits of a statutory license under section 31-D. The intention of
the Legislature while enacting the Copyright (Amendment) Act, 2012, was to
restrict the grant of statutory license under section 31-D to radio and
television broadcasting organizations. Therefore, the Court considered it
necessary to grant reliefs in favour of Tips industries in terms of the
permanent injunction claimed by it.
