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September 24, 2020

Can Online Streaming Platforms Avail Statutory Licenses Under Section 31D Of The Copyright Act?

Author: Pranay Bali

With significant advancements in internet connectivity services, proliferation of mobile devices and wide accessibility of online services at reasonable costs, online streaming and download services have become extremely popular. Success of such online content streaming platforms depends, in large part, on the amount of content they can offer their users. Obtaining licenses for vast repositories of content from copyright owners (majority of which are multi-billion-dollar production houses) is key for such streaming platforms, but negotiations for such licenses can often be complex and difficult.

Statutory licenses for communicating copyrighted works can be obtained under Section 31D of the Copyright Act, 1957, which provides that “Any broadcasting organisation 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 this section…”. The Section also lays down the requirements and mechanism for acquiring such a statutory license, including prior notice by the interested broadcasting organization, fixing of the rates of royalties to be paid to the copyright owners, etc.

However, while the provision expressly mentions radio and television broadcasting, it does not contain any reference to internet broadcasting/communication. Accordingly, there has been considerable debate and confusion about whether online streaming platforms are included within the ambit of Section 31D and whether they are eligible for statutory licenses under this provision.

The Ministry of Commerce and Industry, vide an Office Memorandum dated September 5, 2016 had sought to clarify the position by stating that – “…the words “any broadcasting organization desirous of communicating to the public…” may not be restrictively interpreted to be covering only radio and TV broadcasting as definition of ‘broadcast’ read with ‘communication to the public’, appears to be including all kinds of broadcast including internet broadcasting.”

Litigation over Statutory Licenses sought by Online Streaming Platforms

Presumably encouraged by the aforementioned memorandum, Spotify, the popular international music streaming platform, right before launching its services in India (on February 25, 2019), invoked the statutory licensing scheme under Section 31D by filing a notice with the Intellectual Property Appellate Board (IPAB) for broadcasting the copyright works owned by Warner Chappell Music Ltd. through its online platforms. Warner Chappell sued Spotify for copyright infringement.

In Warner/Chappell Music Ltd. v. Spotify AB [Notice of Motion (L) No. 514 of 2019 in COMIP (L) No. 256 of 2019], the Bombay High Court, vide its interim order dated February 26, 2019, directed Spotify to deposit a sum of 6.5 Crores with the High Court; maintain a complete record of the use of Warner Chappell’s musical works as well as the advertisement and subscription revenue; and not to pursue proceedings for a Statutory License before the IPAB for a period of four weeks. Gradually, Spotify and Warner Chappell negotiated a global license and the suit was accordingly disposed of.

The Bombay High Court dealt with this issue comprehensively in Tips Industries Ltd. v. Wynk Music Ltd. and Ors. [Notice of Motion (L) Nos. 197 and 198 of 2018 in Commercial Suit IP (L) Nos. 114 and 113 of 2018, respectively]. The plaintiff, Tips Industries Ltd., is the owner of copyright over a repertoire of music/sound recordings, which had been licensed to the defendants by Phonographic Performance Ltd. Upon expiry of the said license, the parties started negotiating a new license but these negotiations broke down upon Wynk’s claim that it was entitled to a statutory license under Section 31D, being a “broadcasting organization”. Tips filed the suit claiming infringement of the copyright in its sound recordings.

A key issue for determination before the Bombay High Court was whether the Defendants were entitled to invoke Section 31D to exercise a statutory license. While determining this, the Court analyzed the following aspects and provisions.

Download, Purchase and Streaming services vs. “Communicating to the public” 

An important question is whether the services offered by music apps, viz. enabling users/subscribers to download, purchase and stream music through the apps, amounts to “communicating to the public”, as provided in Section 31D. This requires an analysis of whether such services amount to “communication to the public” as defined in Section 2(ff), such as would also bring them within the ambit of “broadcast” under Section 2(dd) of the Act. In Tips Industries, the Court held that the download/purchase services (such as were offered by Wynk) amount to “commercial rental” as defined in Section 2(fa) and are accordingly not covered within the ambit of Section 31D –

“…Section 31-D contemplates communication to public by way of broadcast of sound recordings only, and not their commercial rental and/or sale…Since the services (download/purchase feature) provided by the Defendants are in the nature of commercial rental and/or sale of sound recordings, they do not fall within the purview of Section 31-D of the Act and the Defendants are prohibited from exercising a statutory license apropos thereto.

The Court held that online streaming (which is different from download/purchase services) does amount to communication to the public and broadcasting. However, whether such “internet broadcasting” is included within the purview of Section 31D was to be determined.

Interpretation of the scope of Section 31D

While interpreting Section 31D, it is essential to determine whether the meaning of the terms in the provision should be construed strictly or liberally and broadly, so as to bring within their ambit terms pertaining to the technological advancements which may be subsequent to the drafting of the statute.

In The Senior Electric Inspector and Ors v. Laxmi Narayan Chopra and Ors. [AIR 1962 SC 159], the Supreme Court had held that –

“…in a modern progressive society it would be unreasonable to confine the intention of a Legislature to the meaning attributable to the word used at the time the law was made, for a modern Legislature…must be presumed to be aware of an enlarged meaning the same concept might attract with the march of time and with the revolutionary changes brought about in…fields of human activity. Indeed, unless a contrary intention appears, an interpretation should be given to the words used to take in new facts and situations, if the words are capable of comprehending them. (emphasis supplied)

On the other hand, while dealing with interpretation of Section 31, the Supreme Court, in Super Cassettes Industries Ltd. v. Music Broadcast Pvt. Ltd. [AIR 2012 SC 2144], had exhibited caution before expanding the scope of the provision. Specifically, the Court ruled against the Appellate Board’s ability to grant a temporary compulsory license in the absence of an express statutory provision conferring such power. It was held that –

If the legislature had intended that the Copyright Board should have powers to grant mandatory injunction at the interim stage, it would have vested the Board with such authority. The submission made that there is no bar to grant such interim relief in Section 31 has to be rejected since the presence of a power cannot be inferred from the absence thereof in the Statute itself.”

In Tips Industries, the Defendants contended that Section 31D ought to be construed broadly to include within its ambit internet broadcasting. The Plaintiff contended that since Section 31D was inserted by the Copyright (Amendment) Act, which is a recent and modern enactment, the legislators were aware of internet streaming/broadcasting and deliberately chose not to include it in the Section.

The Bombay High Court agreed with the Plaintiff and adopted a strict interpretation of the provision,holding that

“from a perusal of the Statement of Objects and Reasons of the Copyright Amendment Act, 2012 it seems that the Legislature was in fact aware of and cognizant of the digital technologies and of music downloading/streaming when the bill was discussed at the Parliament.

…The absence of express words in Section 31-D providing for a Statutory License in respect of internet streaming and/or downloading, was a conscious legislative choice. In view of the above and in the absence of an express statutory provision including internet broadcasting within the purview of Section 31-D, the scope of Section 31-D cannot be expanded to include the same”

Accordingly, it was held that the internet broadcasters cannot invoke a statutory license under Section 31D of the Copyright Act. The Tips Industries judgment has clarified the position with respect to availability of statutory licenses under Section 31D to internet broadcasters.

Interestingly, in the Draft Copyright (Amendment) Rules, 2019, all references to radio and television broadcasting in Rules 29 and 31 have been proposed to be amended to “each mode of broadcast”. If enacted, this would enable statutory licensing for internet broadcasting.

CONCLUSION

While the terms “Broadcasting organization” and “communicating to the public” have a broad scope, the specific references to only radio and television broadcasting in Section 31D have been interpreted to reflect legislative intent to exclude internet broadcasting from the scope of the provision. Accordingly, as it stands, internet broadcasters are not eligible to obtain statutory licenses under Section 31D of the Copyright Act. However, if the proposed changes in the Draft Copyright (Amendment) Rules, 2019 are enacted, the position will change radically.

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.

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