Facts of the present case

The facts of the case are such that Wynk Limited (“Wynk”) had an agreement to exploit Tips Industries Limited (“Tips”) repertoire on its internet based streaming platform and when that agreement expired, there were various negotiations between Tips and Wynk. However, since no consensus was reached for the terms and conditions and fees between the two parties, vide an email dated 25th November 2017, Wynk asserted its rights as a broadcaster and invoked Section 31D of the Act for exploiting Tips repertoire. Tips contended this position through an email and in that email stated that Wynk did not have any right to invoke Section 31D for the services it provides.

Tips filed two suits for copyright infringement against Wynk since Wynk did not have any license to exploit Tips repertoire. One suit was in relation to the download facility and the other was in relation to the on-demand streaming service. In both the suits, Tips sought permanent and temporary injunction against Wynk from exploiting Tips repertoire on Wynk’s platform. Vide an order dated 23rd April 2019 (“Interim Order”), the Single Judge Bench of the Bombay High Court ruled that Wynk could not have invoked Section 31D of the Act for its internet based service.

Wynk had moved two appeals against the Interim Order passed by Justice S.J. Kathawalla which allowed the two interim applications moved by Tips. The main issue for consideration in the said appeals was whether Section 31D covers all kinds of dissemination that may be encompassed by the terms ‘broadcast’ and ‘communication to the public’ or whether Section 31D is limited and confined to the traditional radio and television broadcast.

Findings of the Division Bench

The division bench while disposing of the said two appeals held the following:

1. As stated above, the division bench has affirmed the Interim Order passed by Justice S.J. Kathawalla of the Bombay High Court which ruled that Section 31D of the Act is restricted to traditional non-internet based radio and television broadcasting and performances only and it cannot be applied to any internet based offering.
2. Until the rates are fixed by the Commercial Courts, under the third proviso to Rule 29(1), no notice under Section 31D can be served or issued.

Analysis

Section 31D of the Act is not applicable to any internet based offering:

The division bench decision as well as the Interim Order had accurately held that Section 31D cannot be made applicable to any internet based offerings/services and should be restricted to traditional radio and television broadcast. The reasoning for such an order is multi-fold. Firstly, although sub-section 1 of Section 31D states that any broadcasting organisation which is desirous of communicating to the public by way of broadcast or performance of a literary or musical work and sound recording may do so subject to the provisions of Section 31D. Interestingly, sub-sections 1 and 2 of Section 31D do not restrict itself to radio or television broadcast, however, sub-section 3 of Section 31D provides that the Commercial Court shall fix different rates for radio and television broadcasting, thus restricting itself to radio and television broadcasting.

It is pertinent to note the well-established principle of law that a section has to be interpreted by reading all of its part together, and it is not permissible, to omit any part thereof. This interpretation is based on the legal maxim “A Verbis Legis Non Est Recedendum”. Thus, while interpreting Section 31D, all parts of it have to be read together and since sub-section 3 of 31D restricts itself to radio and television broadcast, while other parts of it are ambiguous, Section 31D has to be interpreted to restrict itself to radio and television broadcast.

Secondly, Rule 29 of the Copyright Rules, 2013 (“the Rules”) which provides the manner in which an advance notice has to be provided under Section 31D(2) and which was brought into force to supplement Section 31D of the Act also restricts application itself to radio and television broadcast. Rule 29(3) of the Rules state that separate notices shall be given for radio and television broadcasts. Further, Rule 29(4)(b), (c), (g), and (h) all restrict themselves to radio and television broadcasts. Further, Rule 31 of the Rules which gives Commercial Court the power to determine the rate of royalty also restricts itself to radio and television broadcasts, especially Rule 31(5) and (6).

Thirdly, the 227th Parliamentary Report on the Copyright Amendment Bill, 2010 provides reasoning for the introduction of Section 31D of the Act. The major reason for introduction of Section 31D was to ensure that the public has access to musical works over the FM radio networks as well as the copyright owners are not subject to disadvantages. This was owing to the fact that FM radio networks were subject to voluntary license at that point of time and unreasonable terms and conditions were being set by copyright owners and societies.

Thus, the legislative intent behind introducing Section 31D also plays a major role in interpreting Section 31D and since unreasonable terms and conditions were being set up for FM radio networks, which in turn was reducing access to musical works for the users, it can be said that Section 31D was introduced for radio and television broadcasting. Moreover, at that point in time, the internet was prevailing and since the legislature did not include the same, it cannot be now said that the legislature wanted to include internet broadcasting under the ambit of Section 31D.

Section 31D cannot be invoked until rates are fixed by Commercial Court

Admittedly, Wynk sent notice under Section 31D for its internet based service when rates were not fixed by the Intellectual Property Appellate Board (now Commercial Court), as it stood at that time in relation to the same. Section 31D of the Act is of expropriatory nature and must be strictly followed. Section 31D(2) states that broadcasting organisations shall give prior notice of its intention to broadcast the work and shall pay to the owner of rights in each work royalties in the manner and at the rate fixed by the Commercial Court.

Further, third proviso of Rule 29(1) provides that any broadcasting organisation shall give a prior notice only after the royalty to be paid is determined by the Commercial Court. According to the statute no notice can be given until and unless rates have been determined by the Commercial Court, implying that Section 31D cannot be invoked unless rates have been determined by the Commercial Courts. In the present case, Wynk invoked Section 31D when rates were not even determined by the Commercial Court and in any case the rates can be determined by the Commercial Court only in relation to radio and television broadcast as contemplated under Rule 31 of the Rules. Thus, Wynk could not have invoked Section 31D.

Conclusion

It is not in dispute that internet based services for communication of works have gained traction over the years, however, looking at the scheme of the statutory license as it stands now, i.e. Section 31D of the Act and Rule 29 of the Rules, it cannot be said that Section 31D can be made applicable to internet based services and the Interim Order as well as the Division Bench of the Bombay High Court have interpreted the law accurately as it stands now. It is upto the legislature to amend the said provisions to include internet service under the ambit of Section 31D, however, it is reiterated that for now Section 31D is restricted to radio and television broadcasts.

This article was first published on IPRMENTLAW