India's courts make opposite decisions on rights paid by broadcasters for composition and recording

 

By Emmanuel Legrand

India's courts have been sending mixed messages to lyricists, composers and music publishers about their rights to earn royalties when their music is played by the country's radio stations. 

  In December, the  Intellectual Property Appellate Board (IPAB) in New Delhi affirmed the right for the Indian Performing Rights Society Ltd (IPRS) and its members (lyricists, composers and music publishers) to claim royalties to be paid by FM radio stations in India independently from royalties paid for the use of sound recordings (Music Broadcast Limited vs Tips Industries Limited & Ors).

  However, in the IPRS vs ENIL case, a Delhi High Court ruled on January 4 that compositions should not be considered independent from the sound recordings they are attached to when broadcast by radio stations and that radio stations do not need a specific license from IPRS for the right to use compositions. The court ruled that radio stations do not need to pay royalties to lyricists, composers and publishers in addition to the fees they pay for the use of sound recordings. The case was brought by IPRS in 2006 against media group Entertainment Network India (ENIL), operator of Radio Mirchi. 

Preeminence of recordings over compositions

  India's copyright system has been for decades dominated by the notion that the producer of a film is the sole owner of the soundtrack and the rights related to the soundtrack, including the underlying composition and lyrics, usually delivered under a work-for-hire contract. Since most of the songs played on radio are extracted from soundtracks, broadcasters have used loopholes in the copyright legislation to deny royalties for compositions and lyrics. 

  Since its launch in 1969, IPRS has tried to collect performance rights in cinemas and later with broadcasters, but had to make do with the Copyright Act of 1957 which did not explicitly introduced a remuneration for the use of compositions and lyrics. 

  The 2012 amendment to the Copyright Act introduced for the first time a specific royalty for compositions. Section 31D of the amended Copyright Act of 2012 introduced a "statutory license for broadcasting of literary and musical works and sound recording."

A separate royalty rate

  It added: "Any broadcasting organisation desirous of communicating to the public by way of a broadcast or by way of performance of a literary or musical work and sound recording which has already been published may do so subject to the provisions of this section." Sound recording royalties are collected by PPL India.

  In its 234-page ruling, the IPAB noted that the amendments of 2012 "clearly mandate a separate rate of royalty to be fixed for underlying works" and that "every time a song is broadcast on a radio channel, each of the three separate works which are part of the song namely sound recording, the literary work and the musical work, is communicated to the public.

  The ruling also specifies that "fixing rates for underlying works is consistent" with provisions in the Copyright ACt. "The prevailing practice for underlying work is that the fee for the same is payable is in addition to and separate from the sound recording fee," reads the ruling, which also explains that "nothing" in the law "shall affect the rights of the authors in their underlying works," including if the work is included in a cinematograph film. In addition, the IPAB set rates specific rates applying to compositions and recordings.

A landmark decision

  Lyricist Javed Akhtar (pictured, below), Chairman of IPRS, said the IPAB's ruling was a "landmark decision" which recognised the rights of creators such as lyricists and music composers "to an equal share of royalty from the utilisation of the lyrics and music in any form."

  Based on the IPAB interpretation of the law, broadcasters would need a separate license from IPRS to cover the right to use composition and pay a specific royalty from the one paid for the recording (usually through PPL). However, broadcasters continue to "claim that the law has not changed despite the fact that the law is quite clear," Achille Forler, a Mumbai-based publisher and rights management specialist, who has been a consultant to IPRS, told Creative Industries Newsletter.

  At the last count, according to the IPAB ruling, there are currently 385 private radio stations operating in India, following the privatisation of the airwaves in 1997. The vast majority of music played by radio station comes from Bollywood movies.

Contradictory decisions

  In contrast, the Delhi High Court ruled that the claim that owners of copyright in underlying literary and musical works in sound recording are "entitled to assert their copyright even when sound recordings are communicated to the public under authorisation from owner of copyright in the sound recording" has "no merit." However, the Court ruled that if songs played in public are broadcast, broadcasters then need a license from IPRS. 

  Analysing the two rulings, IPRMentLaw's Anushree Rauta, wrote: "The most unfortunate part remains that it took over eight years for a decision to come interpreting these provisions post 2012 Copyright Amendment and the two contradictory decisions have taken us back to square one with only more ambiguities and anomalies to deal with. The Delhi High Court decision miserably fails to deal with the legislative intent behind the 2012 Amendment and go into sound reasoning behind the decision laid by it."

  One of the issues, said Forler, is that the Copyright Board decided in 2010 that broadcasters would pay a royalty fee of 2% of net advertising revenues earned by each FM radio station, pro-rated to its use of the music from the repertoire in question. This royalty has so far been captured by the producers of sound recordings, and they fear that they would have to share this royalty with lyricists, composers and publishers. "Their concern is that this 2% could be divided by two," Forler said.

More litigation ahead

  Forler said the IPAB ruling was "one of the best documents I have read in India about authors' rights." But based on the January 4 court ruling, he surmises that the case would be appealed and go up to the Supreme Court. In the meantime radio station will continue to deny IPRS the right to collect royalties.

  Atul Churamani, Managing Director of Turnkey Music & Publishing, said in a statement that the judgment by the Delhi High Court "reinforces my belief that copyright matters should be adjudicated only by a Copyright Tribunal, in our case this being the IPAB. The latter delivered an excellent judgment in the radio royalty case, recognising the rights to both the sound recording and underlying works, which was the whole point of the 2012 Amendment."

  He added that the Delhi High Court ruling causes "confusion, more litigation and prevent the music industry from unlocking its true potential." He asked for the current Copyright Act to be "rewritten completely instead of making more amendments to it, which will cause further confusion." 

Modernise copyright law

  Forler agreed that there should be a clarification of the law, and said there is currently a project by the government to introduce a one-stop-shop for licensing music works, that would deliver licenses for both the recording and the composition, and would then distribute royalties to the respective societies, similar to the system used in Brazil through ECAD.

  "Users would have one license and would pay royalties to one organisation, which in turn would pay the different rights holders," said Forler. This solution is currently being researched by the government with the support of the World Intellectual Property Organisation.

  Forler said the situation in India does not get enough attention from international publishers and rights organisations, mainly because the share of international music played by Indian radio stations is very low. "They're not really interested," he lamented, adding that it would really make a difference if IPRS could start collecting royalties from the use of music by radio stations. 

[IPRMentLaw has published an extensive analysis of the two cases, available here.]