The Bombay High Court passed a judgment in 2019 in the case of Tips Industries vs. Wynk Industries, wherein it held that statutory licensing scheme under Section 31D of the Copyright Act does not apply to internet broadcasting. The Court held that internet music streaming and digital downloads are not covered under the statutory licensing provision of the Copyright Act, 1957, which is an important decision for the entire recorded music industry in India.
The plaintiff, Tips Industries, had a licensing agreement with the respondent, Wynk Music, which expired in 2017. Following failed negotiations with respect to renewal of their license, Wynk claimed that they could avail a statutory license to broadcast sound recordings under Section31D of the Copyright Act. Tips then filed a case challenging Wynk’s claims under Section 31D and filed a suit claiming infringement of their copyrighted works under Section 14(1)e of the Copyright Act.
What is Section 31D?
Section 31D of the Copyright Act was introduced by the 2012 amendment to the legislation. The provisions states: “Any broadcasting organization 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 the section.”
Clause 2 of section 31D requires the broadcasting organization to give prior notice of its intention, duration and territorial coverage of the broadcasting and accordingly pay the royalties to the Copyright owners as fixed by the Intellectual Property Appellate Board. Clause 3 also expressly refers to the differential royalty rates for radio and television broadcasting. There is no mention of ‘internet broadcasting’ or ‘online broadcasting’ in the provision as it exists.
Section 31-D(2) imposes two conditions upon a broadcasting organization – 1) to give prior notice to the owner of the copyright and 2) to pay royalties in the manner at the rate fixed by the Appellate board. Regarding this, the Court stated that priority fixation of the rate of royalty is a necessary condition to invoking Section 31-D. It stated that Section 31D is only a departure from the old scheme of licensing to the limited extent that it does away with a hearing to the copyright owner and an inquiry for determining the necessity and/or requirement of a license and the Registrar’s act of issuing a license. However, it does not do away with a prior determination of the rates for defining the statutory license to be exercised.
Thus, while it still remains open whether the present position will be overturned by the Supreme Court on a future appeal, the current position has been clearly established by the Bombay high Court. In conclusion, Wynk Music and Spotify must have licensing agreements with the music labels who own the copyright.
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