Statutory Licensing and Internet Broadcasting: A Legal Conundrum

[Ayushi Singh and Abhishek Jamalpur are 4th year students at National University of Advanced Legal Studies, Kochi]

In May 2019 the Ministry of Commerce and Industry, in exercise of its powers conferred under section 78 of the Copyright Act, 1957, has proposed the Copyright Draft Amendment Rules, 2019 to amend some of the rules of the principal Copyright Rules, 2013. These Amendment Rules are proposed mainly to ensure smooth and efficient compliance of the Act in light of technological advancement in the digital era and to bring them at parity with other relevant legislations. These Amendment Rules are open for suggestions and comments.

Rule 29, Chapter VIII of the principal Rules, titled ‘Statutory Licence for Broadcasting of Literary and Musical Works and Sound Recordings’, which is in furtherance of section 31D of the Act, has been proposed to be amended. Rule 29 deals with notice for communication to the public of literary and musical works and sound recordings. This amendment substitutes the words “by way of radio broadcast or television broadcast”, with the words “for each mode of broadcast”. This implies that internet broadcasting would also fall under these rules.

Currently Internet Broadcasters do not fall under Section 31D of the Copyright Act, 1957

A bare reading of current section 31D of the Act suggests that any broadcasting organisation, which is desirous of communicating to the public by way of a broadcast or by way of performance or a literary or musical work and sound recording which has already been published, may do so subject to the provisions of section 31D of the Act. Section 31D, along with rules 29, 30 and 31 of the Rules, lays down the procedure for the same and states that the broadcasting organisation shall give prior notice in such manner as may be prescribed, of its intention to broadcast the work stating the duration and territorial coverage of the broadcast and shall pay to the owner of rights in each work, royalties in the manner and at the rate fixed by the Intellectual Property Appellate Board (IPAB). The section also clearly states that the rates for radio broadcasting shall be different from television broadcasting and the IPAB shall fix separate rates for radio broadcasting and television broadcasting. In simple words, the Act currently allows only radio and television broadcasters to approach the IPAB to get its approval for statutory license and excludes internet or online broadcasters.

Judicial interpretation of section 31D suggests that internet or online broadcasters are excluded from the purview of section 31D. This can be clearly seen in the cases of Tips Industries v. Wynk Music and Warner/Chappell  Music Limited v. Spotify AB where the Bombay High Court held that section 31D must be interpreted narrowly with respect to the intention gathered from the reports of the Rajya Sabha Standing Committee and the Statement of Objects and Reasons of the Copyright (Amendment) Act, 2012. Justice Kathawalla in Tips Industries stated that it was a conscious legislative decision made by the legislature to exclude internet broadcasters from the purview of section 31D.

Proposed Amendment to Rule 29 of the Copyright Rules, 2013 is Constitutionally Invalid

According to Sir John Salmond: “Subordinate legislation is that which proceeds from any authority other than the sovereign power and is, therefore, dependent for its continued existence and validity on some superior or supreme authority.” At times there have been instances where these subordinate legislation which tended to replace or modify the provisions of the parent or the basic law or attempted to lay down new law by themselves had been struck down as ultra vires.

The Supreme Court in Barium Chemicals Ltd. v. The Company Law Board, A.I.R. 1967 S.C. 295,[i] observed:

Even if it is passed in good faith and with the best of intention to further the purpose of the legislation which confers the power, since the Authority has to act in accordance with and within the limits of that legislation, its order can also be challenged if it is beyond those limits or is passed on grounds extraneous to the legislation or if there are no grounds at all for passing it or if the grounds are such that no one can reasonably arrive at the opinion or satisfaction requisite under the legislation.

In light of the Supreme Court decisions, the proposed amendment to rule 29 is constitutionally invalid as it goes against section 31D of the parent legislation. It is to be noted here that the Bombay High Court has clearly held in Tips Industries that section 31D, in accordance with its sub-section 3, is restricted only to television and radio broadcasters. It was also held that the provision, being expropriatory in nature, should be strictly interpreted. The proposed amendment to rule 29 goes against the very interpretation of section 31D given by the Bombay High Court and is thus constitutionally invalid. It is clear that the intention of the legislature now is to include internet broadcasters under section 31D of the Act, but in order to implement the proposed amendment there needs to be an amendment to the parent Act (section 31D of the Copyright Act, 1957).

Ongoing Debate on Whether Internet Broadcasters should be included under Section 31 D

The issue of including internet broadcasters within the ambit of section 31D is being extensively debated. Firstly, persons who are against bringing internet broadcasters under section 31D of the Act argue that the term “communication to the public” mentioned under that provision and defined in section 2(ff) of the Act involves the discretion of the owner to choose the time and place for such communication. However, in case of internet broadcasters, it is the consumer who chooses the time and place. For instance, the internet broadcasters merely provide a platform and it is ultimately the consumers who make a choice as to when and what to stream. Therefore, one of the arguments is that broadcasting through internet does not mean communication to public where there is user discretion. The courts of the European Union, however, have taken a broad approach towards “communication to the public” to include online portals where user discretion is exercised.  Now, it would be interesting to see the Indian courts’ take in light of section 31D which is expropriatory in nature.

Secondly, the term “any other broadcaster” is very wide and ambiguous. The legislature must define the term and lay down guidelines as to who will fall under this definition. It will also be interesting to see if the definition will include over-the-top (OTT) service providers as they are still unregulated by the Telecom Regulatory Authority of India (TRAI). The legislature or government should clarify as to who will regulate the OTT service providers before bringing in changes to the copyright law.

The justification put forward by the other side is that when both the radio and the television broadcasters are included within section 31D, not including internet broadcasters is not reasonable. The Madras High Court in South Indian Music Companies Association v. Union of India, (2016) 3 M.L.J. 647, and the Supreme Court in Entertainment Network (India) Limited v. Super Cassette Industries Limited, (2008) 13 S.C.C. 30,  held that section 31D provides for a mechanism to deal with public interest vis-a-vis private interests. The scheme of section 31D protects the private interests of the owner by recognising the efforts put in by him in the form of royalty and ensures public interest by allowing the broadcasting of such work.

Conclusion

In the opinion of the authors, the shortcomings overweigh the justifications to include internet and online broadcasters under section 31D of the Copyright Act, 1957. The legislature needs to first cure the constitutional defect by amending the Act along with the Rules. It also has the duty to define and lay down the rules governing the term “any other broadcasters.” These changes are however subject to the question whether TRAI has the power to regulate OTT service providers and to the constitutionality of section 31D of the Copyright Act, 1957 which is challenged and is pending before the Supreme Court[ii] and Calcutta High Court.[iii]

Ayushi Singh & Abhishek Jamalpur

[i] See also Rohtas Industries Ltd. v. S.D. Agarwal, [1969] 3 S.C.R.108; State of Tamil Nadu v. P. Krishnamoorthy, (2006) 4 S.C.C. 517.

[ii] Lahiri Recording Company v. Union of India, W.P.(Civil) No. 667/2018.

[iii] Eskay Video Pvt. Ltd. v. Union of India, W.P. 14979 of 2016.

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