Categories
Copyright World IP Day 2020

SMEs and IP: The Biggest Challenge For Many Small Businesses—Protecting their Intellectual Property

This year the theme for World Intellectual Property (IP)Day, April 26, is “SMEs and IP”. As the World Intellectual Property Organization (WIPO) points out, SMEs (Small and Medium Sized Enterprises) are the backbone of the economy; they constitute 90 percent of the world’s businesses and employ around 50 percent of the global workforce, generating up to 40 percent of national income in many developing economies. Many micro and small businesses depend on their creativity and innovation to establish a niche for themselves in a competitive marketplace. At the same time, they often face major challenges in protecting their unique creations because they generally lack the wherewithal—knowledge, time, money—necessary to protect their IP. This has been demonstrated time and time again and is an important factor that needs to be taken into account when discussing the importance of IP to small businesses. While many national and international IP authorities focus on the lack of capability to access and incorporate IP into product development–or to properly manage IP–as the major challenges faced by SMEs, their limited ability to protect the IP they already have is also an important issue of concern.

But first what is an SME? There are various definitions of an SME; the European Commission defines a Medium Sized Enterprise as a company having less than 250 employees and an annual turnover of 50 million Euros or less (about $60 million USD), a Small Sized Enterprise as having less than 50 employees and a turnover of less than 10 million Euros and a Micro Sized Enterprise as one having less than 10 employees and an annual revenue of less than 2 million Euros. Many of the companies in this sector are micro-enterprises with just one or two people working to generate income, and indeed, the new term of art incorporates micro enterprises into the acronym as MSMEs (Micro, Small and Medium Sized Enterprises). Many micro enterprises, estimated at about one-quarter of the total, are run by women entrepreneurs and are an important vehicle for social and economic development and greater gender equity.

A few years ago I wrote a blog posting about knitting, crocheting, publishing and copyright featuring Joanne Seiff, a Winnipeg-based author and knitwear designer who was, in effect, running her own MSME. Knitting is a hobby and an industry where most of the players are women, and it is an activity that is growing, spurred on in part by the lockdowns of COVID.  The Craft Yarn Council reports that over 50 million people in the US knit or crochet. Knitters are motivated by many things and come from all regions and all age groups. Even young children can be introduced to knitting through use of creative instructional techniques such as setting knitting rhythms to nursery rhymes. While most of the participants in knitting do it a hobby to make items for family, or to raise funds for charity or just to relax, there is a business—an IP related business— behind knitting and writing about knitting. There are some big players but many who earn revenue from knitting-related activities are micro businesses. And this is where protecting IP becomes a challenge.

Knitwear designs are creative works protected by copyright. Creating, editing, distributing and selling new designs is an essential part of the industry, just as important as selling wool, needles and the other accoutrements of the trade. Unfortunately, designs are often copied and distributed, sometimes unthinkingly, as a form of unauthorized “sharing”. When I wrote my first blog on this topic back in 2016, Joanne commented that, in her experience, copyright violation in knitting and crocheting is frequently disparaged as unimportant because it is a predominantly (but not exclusively) female industry. It is seen by some as a “cottage industry” with women earning “pin money” and therefore not taken seriously.

I recently reconnected with Joanne to see how things were going in the era of COVID. She said it is still a challenging business-albeit one that she seems to really enjoy. As with any business, there is upfront investment in the hopes of hitting the jackpot with a design that takes off. She pointed out that it is time intensive to develop and make the sample for each pattern (and have it photographed, written up, tech edited, uploaded online to various sites and then marketed), with each pattern that is downloaded yielding around $5 to $10. A pattern needs to sell a lot of copies over time to break even or make money—but if just one percent of Americans who knit bought a particular pattern once and paid $10 for it, that would amount to…..$5 million! Not too shabby.

While not every micro-business is a success, any more than every multi-national enterprise is successful, there are some encouraging examples. One of these is Kate Davies Designs, a Scottish enterprise founded by Kate Davies in 2010 that has now grown into a successful small business that was named UK Microbusiness of the Year in 2016.  KDD & Co. now encompasses many different aspects of publishing, design, and creative practice related to yarn and knitting. Another is Denise Bayron’s business, Bayron Handmade, in California. Yet another is Sarah Schira, of Imagined Landscapes, in Manitoba.

When it comes theft of IP, the problem is that the more successful a pattern, the more likely it will be infringed. In Joanne’s words, there are sites in Russia and elsewhere that steal the designer’s photos, buy or steal one pattern, perhaps translate it, and then sell it online. Then there are those such as the occasional knitter who feels that if she paid for that “cute bunny knitting pattern” once, she can make dozens of the bunnies and then sell them at craft sales.  This is not technically against the law, but it goes against the intent of the designer who sells the $5 for single use only.  Some people look at the design and reverse engineer it. Human “ingenuity” has no bounds when it comes to trying to get something for “free”.  So how can micro businesses protect the IP that is the stuff and substance of their product offering.

In Joanne’s view, there has to be sufficient capital available to invest in IP protection at the beginning of the process. Shortage of capital is a perennial problem for small businesses, who have to make difficult decisions as to where to allocate scarce funds. Product design, better distribution or legal fees to protect IP? Some small businesses have enough money upfront to protect their product (through patents, copyright, registered designs, etc) and to fund the legal support to fight the battles on the business’ behalf. But unfortunately, most knitting designers (writers, artists, etc.) are never in this category.  For many people who have a very small business, there’s not enough income up front to do anything preventative from the outset.  Further, when something goes wrong, there’s not enough money to follow up properly with legal action.

It is not just pattern designers who face this dilemma. Many writers, graphic artists and musicians, as soon as they start to enjoy some sort of success, face the same challenge of monitoring infringement, chasing it down, sending notices to online sellers and distribution platforms, (usually while trying to avoid incurring legal bills by not engaging a law firm), all while trying to continue to create and produce appealing new content. This is the curse of the small or micro business and the independent artist.

If governments want to help SMEs and empower the small business sector, they need to find ways to allow small businesses to protect their IP without breaking the bank. That is the prime motivation for the passage of the CASE Act in the US (Copyright Alternative in Small-Claims Enforcement Act of 2019), which was enacted in January of this year. Once operative, it will establish an alternate form of settling copyright infringement claims (think, “small claims court” for copyright cases) to allow rights-holders to avoid the costs of litigation in a federal court. Under the CASE Act, a Copyright Claims Board will be established within the US Copyright Office. The process is voluntary (the plaintiff must choose to use the Board and the respondent must agree), statutory damages are limited to $15,000 per work or $30,000 per case and the work in question must be registered with the Copyright Office.

The CASE Act is one example. In the UK there is the Intellectual Property Enterprise Court (IPEC) which has the capacity to perform much the same function. According to IPEC, the small claims track within the court provides “a forum with simpler procedures by which the most straightforward intellectual property claims with a low financial value can be decided:

• without the need for parties to be legally represented

• without substantial pre-hearing preparation

• without the formalities of a traditional trial and

• without the parties putting themselves at risk of anything but very limited costs.”

That is the sort of facility that small businesses need, but a streamlined legal process only works when the perpetrator (or suspected perpetrator) is known. Much infringement takes place online, where perpetrators can hide their true identity. To combat this kind of infringement, both platforms (like Amazon) and governments have a role to play. My brother, a successful indie author who has published several e-books on Kindle through Amazon, discovered that one of his more successful books was being pirated (by definition, only successful books get pirated) and listed on Goodreads (owned by Amazon).   It was also a Kindle edition, with only a slight spelling change in the title. He brought it to Amazon’s attention whose response was to suggest he contact the website (which Amazon owns) and consider applying DRM (digital rights management) to the work. DRM is one solution but is easily stripped off the work. In fact, when I searched “DRM and Kindle”, the first listing on Google was “Remove the DRM from Kindle Books”. If you do decide to list your work on Amazon, the platform has a form you can submit to report infringement. How much is done about it by Amazon is another question.

Given the prevalence of online copyright infringement, any means that helps interrupt the distribution of pirated content is helpful. In this regard, various forms of site-blocking that have been instituted in a number of countries are a useful tool. (My World IP Day blog last year focused on the need to forge a global solution to the problem of global piracy by expanding site blocking). Site blocking in some countries (UK, Australia, Canada—just one case so far) is triggered only through the courts—a process which favours complainants with the means to pursue legal action, normally large companies. However, in some other countries (Portugal, Italy, Korea, for example) there is a relatively simple administrative process in place that allows rights-holders to seek a site blocking order, making it more accessible to SMEs. Site blocking orders require ISPs to block offshore web and streaming sites that promote and distribute infringing pirated content. In Canada a number of content owners tried unsuccessfully to petition for the establishment of an administrative site blocking review entity (the Independent Piracy Review Agency) operating under the oversight of the telecommunications and broadcast regulator, the CRTC, but were unsuccessful when the CRTC determined that establishment of such an agency was beyond its mandate. The problem, however, has not gone away and is now being resolved through the courts.

To come back to SMEs—they face many challenges; underfunding, difficulties in distribution, and issues related to IP, both access to innovation and protection of IP they have developed. For small businesses that require access to patented knowledge, mechanisms and concepts such as open innovation and various technical support programs offered by national governments and WIPO can help. For copyright based small businesses, the biggest IP challenge is fighting piracy with minimal available resources. The more that governments can do to facilitate enforcement action and lighten the burden on rights-holders seeking to protect and enforce their rights, the better.

As Joanne Seiff summed it up, “yes, SMEs can definitely succeed if enabled by good IP protection”. That is a big “if” and a good reminder to all concerned as we mark World IP Day.

This article was originally published in Hugh Stephens Blog.

Categories
Blog Copyright Industry Intellectual Property Piracy

Charles Rivkin Remarks at the Federation of Indian Chambers of Commerce and Industry (FICCI) Frames

Thank you, Uday, and thank you, FICCI, for inviting me to Frames. It’s an honor to speak before such a vibrant forum about timely issues and challenges affecting our industry.

Before I go on, I want to acknowledge that we meet at a very important moment. Very important. The beginning of the Indian Premier League season. And I know there are some big questions playing on the minds of many here: Like: Can the Chennai Super Kings successfully defend their title?

Now, I grew up in the United States with baseball, where we “pitch” the ball instead of “bowling” it. Where we hit “home runs” instead of “Sixes.” And while many far smarter people have discussed the similarities and differences of these two great sports, the former diplomat in me knows better than to talk cricket with this audience.

But I will say this: the IPL is the most exciting and most-attended cricket league in the world. That’s why Star is banking on this passion and has paid substantially for the broadcasting rights for five years.

Now that’s the kind of smart media business that all of us can understand. And it’s what I have come to talk about today.

Because if there’s one thing that unites Indians as passionately, and across as many religions and socioeconomic strata as cricket, it’s movies.

Movies in all their diversity of cultures and language. The pure richness of spectacle, whether they’re on jumbo screens or pocket-sized mobiles. And in recent years, it has been so exciting to see Indian filmmakers no longer only creating stories for local audiences but sharing dramas with universal themes for global audiences, here and in markets around the world.

More and more people are learning about India primarily through its films and television.

You only need to look at the successes of Dangal and Sacred Games to see the global impact of what we do and – just as importantly – what we do together. Dangal brought UTV Motion Pictures and Walt Disney Pictures India together.  And Sacred Games, Netflix’s first Indian language movie, brought our newest member studio together with Phantom Films.

On a personal note, this is my third trip to India over the past few years. And in my previous capacity as U.S. Assistant Secretary of State for Economic and Business Affairs, I saw the country from many perspectives: from the economic to the political; and from the business to the cultural.

I also saw the vibrancy of the Indian film and television industry. The film industry, which makes between 1,500 and 2,000 films a year, contributed US$33.3 billion to the Indian economy, and supported 2.36 million jobs in 2017. India is also the largest television market in the world, with more than US$10 billion in revenue in Fiscal Year 2018.

When I visited, I knew that Bollywood was – and still remains – the world’s largest producer of films, contributing more than 40 per cent of India’s box office revenue. So I decided to see it for myself.

I visited a Bollywood film set which turned out to be one of the memorable highlights of my trip. Watching the day to day production activity was extraordinary. You couldn’t take your eyes away from the spectacle and sheer enormity of these scenes. A marvel of creativity!

So, India, I’m one of your film and TV industry’s biggest fans! And I am proud to return to this extraordinary country as Chairman and CEO of the MPAA, to represent the interest of our member studios.

They are so deeply invested in India: Disney/Fox’s Star TV India … Sony … Viacom … and Netflix, our newest member, which has emphasized its strong commitment to India.

And because of our presence, and our deep investment in India’s future, we want to be your partners in many mutually beneficial ways.

And we share a deep interest in incentivizing the Indian media and entertainment industry to grow even bigger.

As we meet, for example, Indians live in a country that is the world’s largest producer of movies with the least number of screens available to enjoy them. And a report that we are releasing with the Producers Guild of India here at Frames underscores this challenge with a telling example.

Dangal is the highest grossing film in Indian history. And as Prime Minister Modi has reported, China’s President Xi even made a point of telling him how much he enjoyed it!

India’s population is second only to that of China. Yet the movie made more at the Chinese box office than it did in its own country. As much as five times more by some estimates.

Numbers tell the story. China boasts 50,000 screens, compared to India’s total, which is approximately 9,500.

Clearly, as our report concludes, building more screens would bring much more revenue to India, and that would be a game-changer for the national box office and the entire entertainment industry.

Unfortunately, there are at least as many state laws governing the construction of new theaters as there are states. Some laws even date back to the British Empire, a time when they were imposed to restrict the gathering of large crowds.

Incentivizing our industry is so much more effective than hampering it. Which is why, we are urging the states to reduce those barriers, by shortening the time it takes to get approval and build those screens.

On the production side, we are pleased that Government is contemplating a Federal tax incentive for filming that our member studios could find attractive.

We have also urged state governments to step up their incentives not only for local films but also to encourage foreign investors. We are pleased that the Film Facilitation Office India, created in part at the industry’s urging, regularly engages with the states to open doors and create more opportunities.

We must build on – and support – Prime Minister Modi’s historic one nation, one tax idea, so that creators are not so overcome with additional local taxes that they change their minds on starting productions. We have encouraged state governments not to levy additional taxes that discourage filmmakers; and we have asked three states that have introduced Local Body entertainment taxes to roll them back.

Of course, there is so much more that we can do together – not only to protect our creativity but to actively incentivize the market and build on the kind of growth that India enjoys today in its OTT industry.

Thanks to the affordability of mobile phones in recent years, young people and old … rich and poor …. From remote villages to bustling towns … 95 per cent of this nation … are watching movies, TV shows – and of course cricket … in the palms of their hands.

Around the world, people spend an average of 6 hours 45 minutes a week on the internet.

In India, it’s 8 hours and 28 minutes.

According to a recent study by the Boston Consulting Group, the OTT market here is going to reach US$5 billion by the year 2023.

We know that, together, we can build an even bigger entertainment market … A market that can generate millions, even billions, of rupees in revenue to the Exchequer.

A market that can create jobs and opportunities across the economy.

At the producer end of the equation, filmmakers and other creators are often beset by cumbersome regulations that slow down the shooting permit process, or by state taxes that threaten to engulf their production budgets.

In our conversations with the federal and the State governments, we have advocated a simple formula: to simplify, incentivize, promote, and measure return on investments on any incentive that takes India forward.

For example, the MPA shared an Economic Contribution Report last year that underscored the importance of the movie and entertainment sector to the Indian economy. And we were pleased that the Government of India subsequently identified the Indian media and entertainment industry as one of 12 designated “Champion” sectors to help raise its export services to more than four percent of GDP by 2022.

We have seen in many other countries the positive impact of rewarding creativity, instead of harnessing it into submission. And wherever appropriate, we have tried to show the economic rewards – the return on investment – of these and similar initiatives.

On that point, creativity, I’d like to talk about piracy and copyright protection.

Creativity is the heartbeat of our industries. Piracy cuts into that vibrancy. It robs incomes from creators and craftsmen. Our creative output starts to drop off. And little by little, an entire ecosystem breaks down. Our economies lose. And a rising number of consumers – here and across the world – are deprived of great stories.

When I came here as Secretary of State John F. Kerry’s top economic and business advocate,   one of the issues before the Indian Parliament was camcorder legislation. And I was among those who strongly advocated for legislation to address in-theater camcorder piracy.

I am pleased to see that the Cinematograph Act Amendment is now inching closer to the finishing line… And not only that, it contains many of the provisions that we proposed.

This is one important step. But it’s essential to address online piracy problems in a comprehensive manner.

In Maharashtra, for example, the very heart of Bollywood, we are fighting to reduce piracy in a very direct way.

The Maharashtra Cyber Digital Crime Unit – or the MCDCU – is a great example of multiple stakeholders partnering on a successful endeavor to honor and protect the sanctity of Indian creativity.

Our studios support the MCDCU, while the Motion Picture Association has helped to coordinate their efforts with law enforcement.

It is our hope that this example can be adopted across India, and even internationally with cooperation from similar agencies.

It’s as important to protect India’s incredible creative assets as it is to introduce the incentives that will not only produce more cinema screens but build a greater infrastructure across all platforms that makes India the ever more robust media and entertainment market that we all want to see.

That is an outcome – and a future – that I anticipate with great excitement, and one that I look forward to working with you to realize in the years ahead.

The great cricket journalist Peter Roebuck once told a story that says a lot about India’s passion for cricket. But I believe there’s a message in there for all of us too.

A train that was going from Shimla to Delhi stopped at a station for a few minutes longer than usual. The reason was simple. At that moment, Sachin Tendulker was batting 98 runs. Everyone on that train and on the platform – from the passengers to the conductor – waited to watch him complete his century.

I think both our industries always feel a little like that. We are batting 98. We are powerful, strong. We’re achieving. But we are always looking to get to that century.

Like the crowd that waited so patiently and confidently for Sachin to score his ton, we know it’s going to happen.

Together, here in India, I know that we can get there.

We have the shared interests.

We have the desire.

We have the partnerships.

We have the capacity.

And we certainly have the creativity.

Thank you.

 

Categories
OTT

Regulating OTT: Between Freedom and Responsibility

The Ministry of Information and Broadcasting (MIB) along with the Ministry of Electronics and Information Technology (MEITY) issued the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 on February 25, 2021 (Rules). This intervention seemed imminent given recent events relating to electronic news media, social media as well as over-the-top streaming (OTT) platforms. This article focuses on the available opportunity for OTT rather than any fragility in the Rules or their manner of issuance. The aim is to highlight the need for filling the gap between freedom for content creation and the responsibility that may be embedded therein. The endeavor is to ensure that the growth trajectory for the world’s fastest growing OTT market is maintained and content creation continues at the same clip and in the same vein.

The Opportunity

India is the world’s fastest growing OTT (over-the-top streaming) market and is all set to emerge as the world’s sixth-largest by 2024.[1] Digital media in fact overtook print in 2020 and contributed approximately $ 3.2 billion to the overall media and entertainment market. The segment is expected to grow at a clip of 22% and contribute close to a quarter of the entire media and entertainment industry by the end of fiscal 2023[2].

This growth has no doubt been accelerated by the rollout of 4G, the relative increase in broadband penetration and the technological ease of access for OTT platforms generally. However, the primary reason for this growth remains the content that has found its voice through this medium. It is reflective of an unaddressed demand that subsists. There has been a hitherto unseen spurt in content creation across the country and anyone with bare minimal facilities stands empowered to create content and find the means to disseminate it. The rise of this industry has been an impressive story of democratization and it may not be incorrect to say that it has received less than its due in public discourse.

Characteristics

There are a few distinctive characteristics unique to OTT which ought to be borne in mind when dealing with OTT platforms. Unlike theater which is public exhibition i.e. exhibition in a public place along with other members of the public, OTT is distinctly private viewing. Further, unlike television, which is also private viewing, it may be fair to distinguish television as being passive viewing while OTT may be considered active in that sense. Simply put, there is an active informed choice made by a viewer in the context of OTT. Not to say that a television remote is not suitably empowering of informed choice as such. Much jurisprudence exists in the context of the traditional mediums, but we will not delve into those aspects in this article. Suffice to say that exhibition of content in public places and viewing in your own residence / private property is different and ought to carry a distinct legal application especially when active informed choice is involved.

Creative Ecosystem

 

Speech and expression (its creation and dissemination) are at the core of the entire creative industry including OTT and stand to benefit immensely from a light touch approach. The products and processes involving creativity need to be treated and regulated distinctly. Indian Courts have consistently preserved the preferred treatment required for the creative industry. Content by its very nature can be polarizing. To say that content must receive universal sanction would be an exercise in futility and a gross travesty on speech and expression. As has been held by the Supreme Court[3]:

The framers of our Constitution recognised the importance of safeguarding this right since the free flow of opinions and ideas is essential to sustain the collective life of the citizenry. While an informed citizenry is a pre-condition for meaningful governance in the political sense, we must also promote a culture of open dialogue when it comes to societal attitudes.

The Supreme Court has further held as recently as in 2015[4] that Indian Courts have moved towards the contemporary community standards test when dealing with subjective matters used to define “public order”, “decency” or “morality” i.e.

Thus in Directorate General of Doordarshan v. Anand Patwardhan this Court noticed the law in the United States and said that a material may be regarded as obscene if the average person applying contemporary community standards would find that the subject-matter taken as a whole appeals to the prurient interest and that taken as a whole it otherwise lacks serious literary, artistic, political, educational or scientific value.

Embedded into these observations is the tacit acknowledgement that ideas and opinions expressed through any form of creative speech must be free flowing and without hindrance save for any valid exercise under the specific limitations to Article 19(1)(A) of the Constitution. These limitations have been permitted to curtail free speech by Courts only by way of a valid law passed by parliament prescribing the least intrusive measure into the freedom.

The Rules

The Rules issued by the Central Government include the requirement to:

  • comply with the prescribed content code and content classification requirements;
  • follow a three-tiered grievance redressal for addressing complaints regarding non-compliance – tier 1 being redressal by the OTT platform itself, tier 2 being redressal at the level of self-regulation body; and tier 3 being redressal at the government level; and,
  • access controls for content classified above a particular age.

The Rules also set out a Code of Ethics which proposes certain principles on the basis of which publication of content itself must be evaluated by a publisher as well as its classification. The Rules have since been the subject matter of some preliminary judicial scrutiny but there has been nothing to dislodge their presumption of validity as on date.

Striking the Right Balance

Given the pre-eminent rights involved, it is not only important for the relevant laws to be framed in consonance with the constitutional mandate, but equally important for its application to be guided by well-established principles laid down by Indian Courts. It is the collective duty of civil society as well as the Central Government to nourish and support the constitutionally preferred right of speech and expression and find the right balance as we chart the road ahead. Towards this endeavor, the following could be some starting points:

  • Light touch implementation;
  • Industry level regulation (i.e. grievance redressal at tier 1 and tier 2) should be the norm;
  • Invocation of the more stringent provisions only in the rarest of rare cases with intelligible criteria to minimize misuse; and,
  • Contemporary community standards as the test for determining all subjective decisions relating to publication or the classification of any content.

With the right manner of implementation, the industry may be in a position to find a way to continue on its trajectory of growth and creation of world quality content while providing a mechanism to suitably deal with those exceptions which fall foul of constitutional parameters.

Disclaimer: This article contains the views of the author alone.

 [1]https://www.livemint.com/news/india/india-is-the-world-s-fastest-growing-ott-market-pwc-report-11603355739242.html

[2] “Playing by new rules” 2021 edition, FICCI – EY report on the media and entertainment sector

[3] S. Khushboo v. Kanniamal & Anr. (2010) 5 SCC 600

[4] Shreya Singhal v. Union of India (2015) 5 SCC 1

Categories
Media

Broadcast & Beyond

In a world where assumptions drive perceptions and shape opinions, Sunil Lulla is a man who presents every claim and supports it with data. A large assumption in today’s mobile-led era would be that traditional broadcast television is seeing a downturn. Sunil Lulla, the CEO of BARC India, in our conversation addresses this assumption and shows that in fact, the industry is still growing.

 

Sunil sees television to see growth over the next 10 years and is bullish on it’s role as a content medium for demographics across regions, languages and ages. The robust growth of TV has continued in the last year and advertising has also seen a growth.

 

Not to say, that the industry has no challenges and what mobiles change in the market is taking the screen from the household to the individual making it more accessible for the individual viewer.

 

With regards to neutrality, Sunil talks about BARC’s role in neutrality with regards to reporting and a level playing field with a neutral measurement platform between digital and television.

 

With regards to policy, Sunil mentions how the government creates policy keeping the consumer in mind. He also feels the broad and open policy by the government still allows for freedom of speech from a policy perspective.

 

With regards to the future for broadcasting, Mr.Lulla feels that global sports, especially the Olympics will be a huge event on a global scale which will fuel viewership this year. Globally, he feels, television and digital will see huge growth. On local shores, the low subscription rates for television make it more competitive and accessible with regards to television viewership.

 

With his unique role in BARC, Sunil has interesting insights on Indian viewership and what we watch.

 

And while a large number of new television channels are being launched, Doordarshan still saw a huge surge last year, almost 69%.

 

 

For more insights on the matter, view our video interview with Mr.Lulla.

Categories
Copyright

Towards IP Courts

Mr. G.R. Raghavender is currently serving as the Joint Secretary, Department of Justice, Ministry of Law and Justice, Government of India and has been witnessing the changing landscape of copyright law in India.

All views and opinions by Mr. G. R. Raghavender represented in this blog are personal and do not represent the Ministry of Law & Justice and Government of India.

The Government of India began the process of rationalisation of tribunals in 2015. By the Finance Act, 2017, seven tribunals were abolished or merged based on functional similarity and their total number was reduced to 19 from 26.

In an engaging chat with Mr. Ameet Datta, Partner, Saikrishna & Associates, Joint Secretary Mr. Raghavender spoke about the Tribunal Reforms (Rationalisation and Conditions of Service) Ordinance, 2021 (“Ordinance”). This was originally introduced as a Bill in Parliament on February 13, 2021, during the 2021 budget session. Since the Bill could not be passed into a law, the President of India issued it in the form of an Ordinance on April 4, 2021.

The Ordinance seeks to dissolve or transfer the functions of key appellate tribunals to either Commercial Courts or High Courts.

During the conversation, Mr. Raghavender called attention to issues that plagued the working of various tribunals which ultimately led to the abolishment of several tribunals, including the Intellectual Property Appellate Board (IPAB). According to Mr. Raghavender, a tribunal is not an ordinary court, but an adjudicating body constituted by the State and it is vested with some judicial functions. He clarified that these tribunals were not bound by procedural laws of the country; instead, they were to formulate their own procedural rules so as to speed up the process of adjudication. However, instead of doing so, the tribunals proceeded to rely on the existing procedural laws, and this increased the time of adjudication, leading to delays and pendency of matters. He also pointed out that tribunal members, though deemed experts in their field, did not possess the requisite qualifications to deal with complicated matters.

Mr. Raghavender explained that since appeals from tribunals lie directly in the Supreme Court, it deprives High Court judges from getting the necessary exposure to adjudicate nuanced issues of law. He also commented that tribunals are not as accessible as High Courts. The Ordinance solves these issues by making it possible for litigants to access twenty-five High courts as compared to, for instance, the three benches of the IPAB.

However, Mr. Raghavender expressed concerns about the impact that the transfer of IPAB’s powers to various High Courts would have, on involuntary licensing under the Copyright Act, 1957. While the IPAB was a centralised body invested with the power of granting involuntary licenses and fixing tariffs for the same, the Ordinance transfers these powers to Single Judges of the various concerned High Courts of each state. Now, it is unclear whether an involuntary licence granted/ tariffs set by a Single Judge of one High Court, for example Delhi High Court, will be applicable to other states across the country as the High courts of different states will be similarly authorized to issue involuntary licenses and fix tariffs as well.

According to him, there is a need to further amend the recently notified Copyright (Amendment) Rules 2021 in light of the Ordinance, as the Rules continue to refer to the IPAB. These amendments may clarify which court(s) can grant involuntary licenses.

Given that the Ordinance authorises transfer of matters to either a single judge of a High Courts or to a Commercial Court, Mr. Raghavender cautioned that there may be some confusion regarding which Court a matter should be transferred to. He referred to an amendment to the Commercial Courts Act, 2015 which brought down the pecuniary jurisdiction of Commercial Courts from INR 1 crore to INR 3 lakh, in light of a World Bank Ease of Business Report. Now, whether a  commercial intellectual property (IP) matter of INR 3 lakh would go to a Single Judge of a High Court or to a Commercial Court, may need to be clarified through an amendment to the Commercial Court Rules, 2018. Mr. Raghavender suggested that if it is a matter relating to compulsory license, statutory license, registration, etc., it would go to a Single Judge bench in a High Court; on the other hand, if it is a dispute matter (for example, a matter relating to patent, copyright, trademarks infringement, etc.), it would go to a Commercial Court.

He noted positive aspects of commercial courts over a tribunal such as the IPAB. As per the Commercial Courts, Act 2015, any commercial court proceeding is to be initiated only after a pre-suit mediation which attempts to aid the parties in reaching a settlement. The settlement arrived at in these proceedings has a binding authority as it is equivalent to an  Arbitration Award. There is a mandatory case management hearing wherein parties on a fixed date meet and gather requisite information such as list of witnesses, list of evidence of other parties etc. This saves time. Parties may opt for a summary trial under the Commercial Courts Act, 2015. The entire process has to be completed within the span of one year. There is also a provision which entitles the winning party to get the entire court fees from the court.

To conclude, Mr. Raghavender endorsed the view that the Ordinance is a step forward towards creating specialised IP Courts in India.

Categories
Intellectual Property

Copyright Amendment Rules, 2021

I. Introduction

On March 30th, 2021, the Central Government notified the Copyright (Amendment) Rules, 2021. A draft of these rules were released two years ago for public comments (you may read our article covering the 2019 draft here).

II. Key Changes

1. The 2021 amendment replaces ‘Copyright Board’ with ‘Appellate Board’ (reproduced hereunder). However, this seems to be in contrast to the recent plans of the government as per The Tribunals Reforms (Rationalisation and Conditions of Service) Bill, 2021 which is set to abolish the Appellate Board (along with other tribunals and authorities).

Appellate Board– The Chairman and other members of the Board shall be appointed as per the provisions of the Trade Marks Act, 1999; Provided that the Technical Member of the Board for the purposes of the Act shall have the qualifications as specified in the Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2020”. Terms and conditions of the office of the Chairman or members of the Board.— The Chairman and other members of the Board shall be appointed for such period not exceeding five years as the Central Government may in each case deems fit:.

2. The 2021 amendment modifies Rule 55 (reproduced hereunder), requiring the copyright society to create a system of payment through electronic modes through which payments are traceable.

Conditions subject to which a copyright society may issue licences, collect royalties and distribute such royalties.— (1) A copyright society may issue licences and collect royalties in accordance with Tariff Scheme in relation to the right or the set of rights in the specific categories of works for which the copyright society is registered as it has been authorised to administer in writing by the members for the period for which it has been so authorised.

(2) The royalty so collected shall be distributed in accordance with the Distribution Scheme subject to a deduction not exceeding fifteen per cent. of the annual total collection on account of administrative expenses incurred by the copyright society and a further deduction not exceeding five per cent. for the Welfare Scheme under rule 7167:

Provided that a copyright society may during the initial period of two years of its registration deduct up to twenty percent of the annual total collection on account of administrative expenses incurred by the society.

(3) The copyright society in relation to collection of royalty under sub-rule (1) and distribution of royalty under sub-rule (2) of this rule, shall create a system of payment through electronic modes and shall establish a system through which the payments so made are traceable.”

3. The 2021 amendment modifies Rule 58 (reproduced hereunder) requiring the copyright society to (i) keep separate royalties of those authors who could not be identified or located; (ii) take all necessary measures to locate the authors and owners; (iii) at the end of three years transfer undistributed royalty of such unidentified persons to the welfare fund of the copyright society.

Distribution Schemes –

(11) A copyright society must ensure that where the royalty cannot be distributed within the time specified in sub-rule (8) as the relevant author or other owner could not be identified or located; such royalties are kept separate in the accounts of the copyright society.

(12) A copyright society must take all necessary measures to identify and locate the authors and other owners and must publish on its website, at the end of every quarter, the following information:

(a) the title of the work;

(b) the name of the author and other right owners of the work, as available; and

(c) any other relevant information available which could assist in identifying the right holder.

(13) In case the royalty due to author and other owners remains undistributed at the end of the period of three years from the end of the financial year in which collection of the royalty occurred, the copyright society shall transfer such amount to the welfare fund of the copyright society.

4. Addition of Rule 65A (reproduced hereunder) which requires the copyright society to make an annual transparency report for each financial year within 6 months following the end of that financial year. Some of the information (along with other information) the report must contain are: (i) number of refusals to grant license; (ii) financial information on total royalties collected; (iii) total royalties paid to author and other owners; (iv) total royalties collected but not yet attributed to author and other owners.

65A. Annual transparency report.— (1) The copyright society must draw up and make public a special report to be referred to as the annual transparency report for each financial year within six months following the end of that financial year. The copyright society shall publish on its website the annual transparency report and ensure that the annual transparency report remains available on its website for at least three years.

(2) The annual transparency report must contain the following information, namely:— (a) report on the activities in the financial year;

(b) number of refusals to grant a licence;

(c) financial information on total royalties collected;

(d) the total royalties paid to author and other owners;

(e) the total royalties collected but not yet attributed to author and other owners;

(f) the total administrative deductions made from royalty collected;

(g) the details and use of the amounts deducted for the activities conducted under the welfare scheme as provided under rule 67; and

(h) Information on amounts received from and paid to the foreign societies or organisation”.

5. The 2021 amendment modifies Rule 70 (reproduced hereunder) requiring every application for registration of a computer programme to be accompanied with the first 10 and the last 10 pages of the source code or the entire source code (if less than 20 pages), with no blocked out or redacted portions.

(5) Every application for registration of a computer programme shall be accompanied by at least first 10 and last 10 pages of source code, or the entire source code if less than 20 pages, with no blocked out or redacted portions the source and object code.

III. What is missing from the proposed rules circulated in 2019?

The proposed rules in 2019 which had created an uproar in the industry and which seem to be missing in the notified 2021 Rules are:

1. Inclusion of ‘each mode of broadcast’ for the words ‘radio broadcast or television broadcast’ in Rule 29 to 31. Rules 29 to 31 deals with statutory licenses for broadcasting of literary and musical works and sound recordings. Readers may recollect that this proposed amendment would have extended the statutory licensing provisions to internet broadcasting in contradiction with the ruling in Tips vs Wynk judgement and beyond the scope of Section 31D i.e. the parent provision. Read about it at length in our older post here.

2. The proposed rules of 2019, provided for Explanation 3 under sub-rule 4 of Rule 68 to be omitted, however, the amendment of 2021 does not touch upon the same. Read about it at length in our older post here.

3. The proposed rules in 2019 had also attempted to add certain parameters to be considered by the copyright society while fixing the tariff scheme, which have been omitted in the 2021 Rules.

 

This article was originally published in IPRMENTLAW.

Categories
Intellectual Property

NFTs & Copyright

The English language is constantly being transformed by the addition of new words, meanings, terms and acronyms. It is hard to keep up sometimes. The latest to crowd into my consciousness is “NFT”. While the expression NFW (you can look it up and no, it doesn’t stand for Nashville Flower Week) is quite familiar to me, WTF is NFT? And does it have anything to do with copyright? Of course it does, you say, or else he wouldn’t be blogging about it.

An NFT is a “non-fungible token”, the digital phenomenon that has taken off in recent weeks as wealthy investors purchase, often at art auctions, digital representations of “something”. Rather than try to explain it, I will crib from someone who undoubtedly knows more about NFTs than I do. As explained by Luke Heemsbergen, a Ph.D candidate at Deakin University in Melbourne, in his blog “NFTs Explained: What They Are and Why They Are Selling for Millions of Dollars”;

“NFTs are digital certificates that authenticate a claim of ownership to an asset and allow it to be transferred or sold. The certificates are secured with blockchain technology similar to what underpins Bitcoin and other cryptocurrencies…  (Unlike Bitcoin) NFTs are by definition non-fungible, and thus, are deployed as individual chains of ownership to track a specific asset….   NFTs are designed to uniquely restrict and represent a unique claim on an asset. And that is precisely where things get weird: often, NFTs are used to claim “ownership” of a digital asset that is otherwise completely copiable, paste-able and shareable, such as a movie, JPEG, or other digital file”.

NFTs can be bought and sold (for a lot of money—usually cryptocurrency), as shown by the example of the token created by digital artist Beeple (Mike Winkelmann) and sold to an anonymous buyer for $69 million through auction house Christie’s in early March. They exist only digitally but unlike most digital images they cannot be duplicated as each has a unique digital signature, although a semblance of the NFT can certainly be reproduced. Basketball fans can buy unique NFTs of video game highlights of NBA games, a collectible that can be traded or sold, even though the same video clip can be viewed for free on Youtube. But the NFT owned by the fan is identified and unique. I guess it is a bit like anyone being able to see Monet’s Artist’s Garden at Giverney in an art magazine or even on the internet, but the one and only original is in the Musée d’Orsay in Paris.

An NFT can be made out of just about anything digital—images, text (Jack Dorsey’s first Tweet), videos, music, etc. and just like the famous Dutch tulip bulb is a product of scarcity. It has value because someone will pay something for it, in the expectation that in future it can be sold to someone else who will be willing to pay even more for it.

How about the role of copyright with respect to NFTs?

One thing is certain. It is the creator of the artwork or music in an NFT who owns the copyright to the underlying work, not the purchaser unless the sale includes the sale of certain rights.  In many cases, even though the buyer is the sole owner of a particular NFT, the artist who created the work to which the NFT is linked could continue to produce copies of the work. One legal blog illustrates the limits of an NFT owner’s copyright by using the following example;

“Unless the NFT owner has received explicit permission from the seller, the NFT owner does not automatically acquire the legal right to take pictures of the creative work attached to the NFT and make T-shirts or postcards for sale.”

Can the NFT itself be copyrighted? The answer is unclear but it is unlikely because the NFT itself (i.e. the certificate of ownership) is not a creative work. Some people have compared it to a deed to a house, but not the actual house. The NFT gives title to the underlying work but normally is not the work itself. (There are some exceptions when an original piece of art is uploaded directly into the blockchain but this is unusual because, as explained here, the cost of writing data into the blockchain is often prohibitive).

What about NFTs based on works created by a team, or by employees in the course of employment or by AI machines?  The answer to these questions is the same with respect to other tangible works, it depends on the circumstances, except that a machine cannot hold a copyright. There has to be a human creator behind the AI.

This raises an intriguing question with regard to the NFT created by the humanoid robot “Sophia” that was put up for sale in an online auction at the end of March. The underlying art is based on a collaboration between Sophia and Italian digital artist Andrea Boneceto, with Sophia shown manipulating Boneceto’s original creations to produce something new. The NFT of the work will not include the copyright which pershaps will belong jointly to Boneceto and David Hanson, the owner and founder of Hanson Robotics, Sophia’s creator. It will be interesting to find out.

Can the copyright of the underlying work be transferred to the owner of the NFT? That question has been pondered by legal experts; the conclusion seems to be yes, although the actual modalities of transferring a Blockchain-verified digital file written in software code might be complicated. A rights-holder might also choose to license certain, but not all, of their rights associated with an NFT. A key element in the process is ensuring the integrity of the link between the NFT and the underlying work in order to be certain that any given NFT actually represents the art on display.

NFTs offer some potentially exciting new advantages to artists in terms of copyright tracking, as well as greater returns from selling the copyright. As I wrote in a blog posting about a year ago (Blockchain and Copyright: How can this new Technology serve Creators?), blockchains can be a useful tool to enable tracking of authorship attribution, and thus attribution of royalties, as well as monitoring of use of copyrighted materials. They enable digital music distribution companies like Bluebox to flow royalties back to rights-holders more efficiently. With respect to NFTs, these are now being exchanged through the Bluebox platform. As reported by Bloomberg, one technique is to split each song into multiple NFTs, each representing a one percent split of the song’s copyright, half of which will be sold to the public. In this way, fans could purchase “bits” of recordings to help propel their favourite artists to the top of the charts, and then potentially resell their NFT for a profit.

However, it is not all smooth sailing. Artists have found their work appropriated by sellers of NFTs, without permission. It’s a bit like finding your art work adorning posters and T-shirts being sold on the internet, all without permission or licensing. NFTs have their downsides but still, they offer a new revenue-stream for some artists, as long as they can protect their copyright.

NFTs also raise ethical concerns for some artists because of the huge amounts of energy required to power blockchain transactions. Environmental responsibility is a big issue for some artists and consumers and, believe it or not, the way in which content is distributed and consumed can have a significant impact on one’s carbon footprint.

Coming back to copyright, it should be entirely possible for the laws and principles of copyright to be adaptable to works of art that have become digital tokens. However, there are still many unanswered legal questions related to NFTs, several of them involving copyright, others contractual terms. One US legal firm has outlined a number of them in the context of US law;

What rights and remedies does a creator have if their work is tokenized without their permission?
How can platforms, issuers, and IP owners enforce their rights and remedies against NFT owners in violation of license terms and contractual restrictions?
How do you clearly and conspicuously “attach” terms and conditions to an NFT and ensure that those terms follow the NFT and bind subsequent owners?
What right of publicity and SAG (Screen Actors Guild) issues are triggered by the tokenization of an asset that includes an individual’s image, likeness, voice, or performance?
How do moral rights impact NFTs in the U.S. and abroad? Does the Visual Artists Rights Act (VARA) apply, or should it? (Comment: VARA protects the moral rights of artists in the US).
What rights and remedies does an NFT owner have, and against whom, if the underlying asset disappears or changes? (Comment: This could happen if the entity hosting the NFT went out of business or dropped its internet registration).
How does the first sale doctrine (17 U.S.C. § 109) operate in the world of NFTs? (Comment: It probably doesn’t since the first sale doctrine does not apply to digital works).
How do copyright terminations work in a world of NFTs that is designed to last for eternity?
I certainly don’t know the answers to these questions and I am not sure that anyone does. However, the author of the blog that I have referenced above, Jeremy Goldman of Frankfurt, Furnit, Klein and Selz PC in New York would be more than happy to help you figure it all out. For a fee of course. There, Jeremy, some free publicity in return for providing such a thoughtful piece on the issue of NFTs and copyright. Thank you.

There are a host of challenging and as yet undefined issues when it comes to the sale and monetization of NFTs.  Will NFTs, like the Dutch tulip bulbs of the 17th century flame out, or are they here to stay as part of our digital world? Only time will tell. In the meantime, Beeple has cashed in “big-time” for his digital token “Everydays: The First 5000 Days”. Will his benefactor be so lucky in future? WTHDIK?

This article was originally published in Hugh Stephens Blog.

Categories
Copyright Industry

Dissolution of the IPAB

COPYRIGHT INDUSTRIES – CAUGHT BETWEEN A ROCK AND A HARD PLACE?

The Tribunals Reforms (Rationalisation and Conditions of Service) Bill, 2021 introduced in the Lok Sabha on February 13th, 2021 aims to dissolve 6 of 19 Tribunals constituted under different legislations including intellectual property legislation including the Copyright Act, 1957, Patents Act, 1970 and Trade Marks Act, 1999 etc., and transfer their functions to commercial courts or high courts.

 

The Bill which is likely to have a significant impact on the copyright sector, proposes to dissolve the Intellectual Property Appellate Board or “IPAB” which is tasked under the  Copyright Act, 1957 with hearing appeals from decisions of the register of copyrights as well as appeals against tariffs of registered Copyright societies and acting as a “rate court” tasked with setting statutory license or compulsory license fee rates under the various provisions of the Copyright Act, 1957.

 

To be clear, the IPAB has been plagued with inefficiency for a long period of time due to the IPAB either not having a full time Chairperson (between May 2016 and January 2018) or on other occasions technical members (between 2016 and 2020) on the patents and copyright benches. This resulted in a substantial backlog of over 2500 Patent, Copyright and Trademark Appeals and cases. The adverse impact of the hobbled IPAB was felt directly in cases where invalidity challenges had been filed against Patents and in relation to the copyright sector, due to the inability of the IPAB to conduct hearings to fix statutory licensing rates for Radio and Television under Section 31D of the Copyright Act.

 

The question is whether the transfer of the IPAB functions to the courts i.e., the commercial division courts or the high court appellate side will better serve the interests of the copyright sector?

 

At first flush, the transfer of the IPAB’s functions to commercial courts and High Courts appears to be just the medicine the doctor ordered. Judges in the Indian high courts, though generalists by background, have proved themselves adept at handling complex patent, copyright and other IP cases. Overall the commercial court system has also expedited the pace of civil litigation and, some would argue, even elevated the level of jurisprudence. This would suggest that the courts system is the perfect system to absorb the IPAB’s functions.

 

On the other hand, the High Court’s themselves have a considerable backlog of cases and most are not functioning according to their sanctioned strength- simply put we don’t have enough judges in the High Courts. News reports show that some high courts in India are functioning at less than 50% of their sanctioned strength. The Delhi High Court was functioning with a vacancy rate of 46%. On all India basis, as against a sanctioned strength of 1,079, 404 judicial posts were lying vacant across the various High Courts in India.

 

There is also the issue of exactly which commercial court in India will conduct hearings and fix the rates for Statutory Licenses for instance under Section 31D of the Copyright Act. Clause 4(e) of the New Bill which accords functions of the IPAB under Section 31D (among other provisions) simply vests this function with the “Commercial Court”. The new Bill does not provide any clarity on this aspect because it does not accord this specific responsibility with a specific court in a specific state- resulting in a very real possibility of multiple commercial courts across the country conducting Section 31D hearings and arriving at contradictory license conditions and worse, different statutory license fee rates. Imagine commercial courts situated in Delhi, Mumbai, Kolkata and Chennai or even Ranchi conducting hearings under Section 31D.

 

Thus, from one tribunal which would hear and set rates for statutory license fees, Industry would now be faced with the possibility of multiple benches all eager to hear such cases, potentially leading to disastrous consequences for both rights owners and for radio and television industry.

 

The IPAB conducted hearings under Section 31D for the Radio Broadcast sector. These full day hearings conducted across the entire month of November 2020 on a day-to-day hearing was unprecedented in number of parties, size and volume of pleadings and information filed before the IPAB. More than 50 parties took part and unlike the general adversarial proceedings before commercial courts, these hearings consists of multiple rights owners, radio stations all filing submissions / suggestions for optimal royalty rates. expert reports also accompany submissions which must be dealt with by the courts. These hearings conducted by the erstwhile Chairman of the IPAB Mr Justice Manmohan Singh (Retd.) with two technical members Mr Chockalingam and Mr Surya Senthil were marathon sessions which finally culminated in a detailed Judgement on 31st December 2020. This type of sustained hearing may not be possible before a commercial court which has its own backlog of various matters.

 

So what then is the solution? Simply transferring the IPAB’s burden to the commercial courts will not suffice because this will result in contradictory orders across India in relation to statutory licensing. A solution could be to:

  • create specialised IP benches in the High Courts invested with the responsibility of hearing cancellation/validity challenges petitions for various IP such as trademarks, patents, designs etc and also revocation (of copyright assignment) claims;
  • appeals from the various IP office actions would be heard as appeals by a single Judge of the high court as already proposed by clause 4(i) of the new Bill;
  • invest specific responsibility for cases such as statutory licensing, appeals against copyright society tariffs with one specific commercial bench in one High Court – this court would then be the ‘rate court’ and would have an opportunity to build a body of jurisprudence in IP valuation and provide a streamlined and permanent venue for such cases. This Bench shall be able to secure assistance from experts in their field. The IP Bench can form part of the normal roster of the High Court concerned and accordingly, will continue to have ‘continuity’ which the IPAB sorely lacked over the past few years.

 

The IPAB currently is functioning without a Chairperson. For years, courts in India have employed innovative jurisprudence to counter the effect of executive apathy to tribunals. The new Bill is a welcome step to radically change the system- one can hope that this opportunity is not lost because the practical consequences of the current proposal are overlooked.