What's New

Articles & Reviews
February 19, 2021

Article: Can Third-party Licensing Companies Grant Copyright Licences?

Hardik Choudhary

Introduction

Licensing is an essential means of monetising one’s copyright, especially in sound recordings and cinematographic films. To streamline this process, the Copyright Act, 1957 (“the Act”) provides for registered Copyright Societies to grant such licenses. In addition to such Copyright Societies, there exists un-registered third-party licensing companies who also grant such licences. This article analyses such companies’ legal ability to issue licences under the Act.

Copyright Licensing by third-party companies

At present, third-party licensing companies’ issue licenses either by (i) claiming themselves to be the owner of the copyrighted works by virtue of assignment under Section 18(2) of the Act; or (ii) claiming to be an authorised agent of the copyright owner under Section 30 of the Act, which provides that an authorised agent can grant licenses on behalf of the owner of the copyrighted work.

Section 33 (1) of the Act provides for Copyright Societies, it states that “…No person or association of persons shall…commence or, carry on the business of issuing or granting licences in respect of any work in which copyright subsists or in respect of any other rights conferred by this Act except under or in accordance with the registration granted under sub-section (3)…”. A bare reading of this provision gives the impression that only a registered Copyright Society can grant licenses. Further, the first proviso to Section 33(1) provides that in addition to the registered Copyright Societies, an owner of the copyrighted work will continue to have the right to grant licenses of its work.

The first proviso of Section 33(1) leads to the question whether third-party licensing companies can grant licenses by virtue of Section 18 and 30 read with first proviso of Section 33(1) of the Act.

Judicial Interpretation

One of the major judgements on this issue came from the High Court of Bombay in Leopold Café Stores v. Novex Communications Pvt. Ltd. [2014 (59) PTC 505 (Bom)], where the defendant claimed to grant license as an authorised agent under Section 30 of the Act. While forbidding the defendant from carrying on its business for want of proof of agency, a Single Judge Bench [G.S. Patel, J.], expressed the need to harmonise Sections 30 and 33 of the Act and held “…What Section 33 forbids is an engagement in the “business of issuing and granting” licenses in works in which copyright subsists. This cannot mean that a copyright owner cannot appoint an agent to grant any interest on behalf of the copyright owner. That is something that Section 30 in terms permits. The express permission in Section 30 cannot be occluded by an extension of the express prohibition in Section 33. All that the two sections, read together, require is that the factum of agency must be disclosed…The minute the principal is undisclosed and the license is issued and granted in the agent’s own name, the prohibition in Section 33 comes into play”. This case legitimised the business of third-party licensing companies if they issued licenses in the name of the copyright owner and not in their own name.

However, subsequently in M/S Event and Entertainment Management Association (EEMA) v. Union of India and Ors. [2017 SCC OnLine Del 12740], a Single Judge Bench [Vibhu Bakhru, J.] of the High Court of Delhi held that “…Since PPL, IPRS and Novex are not registered as copyright societies, they are by virtue of Section 33(1) of the Act – proscribed from carrying on the business of issuing or granting licences”. Therefore, this judgement prohibited third-party licensing companies from granting licenses irrespective of whether they can show assignment under Section 18 read with the first proviso to Section 33(1) of the Act.

Further, this issue came up before the High Court of Delhi in Novex Communication Pvt. Ltd. v. Lemon Tree Hotels Ltd. and Ors [2019 IIAD (Delhi) 644], wherein a Single Judge Bench [Valmiki J. Mehta, J.] held that “…it is not as if that the second Proviso to Section 33(1) says that so far as sound recording is concerned, the same cannot be licensed except by a copyright society. Obviously, if this interpretation is given, the same will nullify or render otiose the first Proviso to Section 33(1)…”. The Court explicitly stated that “…a copyright society need not legally be the only one exclusive authorised entity/person to give out licenses…”. 

Conclusion

Currently, the latest judgment on the issue allows and favours licensing by third-party companies like Novex. However, different High Courts have given different interpretations with some legitimising such companies’ business, and others forbidding it. Since all the judgements mentioned above come from coordinate benches, the question of third-party licensing remains open for consideration. Thereby, this issue should be further examined and addressed by a larger bench of the High Courts or the Supreme Court of India

References-

  1. Leopold Café Stores v. Novex Communications Pvt. Ltd., [2014 (59) PTC 505 (Bom)].
  2. M/S Event and Entertainment Management Association (EEMA) v. Union of India and Ors., [2017 SCC OnLine Del 12740].
  3. Novex Communication Pvt. Ltd. v. Lemon Tree Hotels Ltd. and Ors., [2019 IIAD (Delhi) 644].

Disclaimer: Views, opinions, interpretations are solely those of the author, not of the firm (ALG India Law Offices LLP) nor reflective thereof. Author submissions are not checked for plagiarism or any other aspect before being posted.

Copyright: ALG India Law Offices LLP

  • Non Solicitation
  • Data Privacy & Protection
  • Conflict of Interest Policy
  • Data & Document Retention Practice
  • Firm Management Policy
  • Liability
  • Disclaimer
  • Privilege
  • Copyright
  • Billing Policy
  • Pro Bono