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January 4, 2022

Court Case Bulletin (CCB): Only A Registered Copyright Society Can Carry Out The Business Of Granting Copyright Licenses

Author: Former Intern - Anvita G. Joshi

In the matter of M/s. Novex Communications Pvt. Ltd. v.  DXC Technology Pvt. Ltd. & Cognizant Technologies Solutions India Pvt. Ltd. [Civil Suit Nos. 407 and 413 of 2020], a Single Judge [N. Anand Venkatesh, J.] of the Madras High Court, on December 8, 2021, held that the plaintiff, not being a copyright society, was not entitled to grant copyright licences under Section 33 of the Copyright Act, 1957 (“Act”).

Section 33(1) of Act provides that – “No person or association of persons shall…commence or, carry on the business of issuing or granting licences…except under or in accordance with the registration granted under sub-section (3)”. Section 33(3) provides for the registration to persons as a Copyright Society. At the same time, proviso to Section 33(1) states that – “an owner of copyright shall, in his individual capacity, continue to have the right to grant licences in respect of his own works…”.  The above statutory anomaly raises the question that when a copyright owner assigns their copyright to a commercial entity, can such entity carry out ‘business of granting licenses’ to third-parties, without being registered as a copyright society?

In the present case, the plaintiff submitted that they are the absolute owners of the copyright in the sound recordings by virtue of the assignment agreements executed in their favour. Thus, as owners, they have an unfettered right to issue licences independently of any copyright society. On the other hand, the defendants argued that Section 33 precludes the plaintiff from issuing licences except through a copyright society. Therefore, they did not have to obtain licences from the plaintiff for the on-ground performance of such sound recordings.

The Court rejected the plaintiff’s argument and held that, “the right of an owner, in his individual capacity, to exploit a right by issuing a license remains untouched. However, when it comes to the “business” i.e., a commercial enterprise of issuing licenses, the law, as it presently stands, requires it to be routed only through a copyright society registered under Section 33(3) of the Act.” The Court observed that the plaintiff’s grant of licences had transcended into the realm of business, and hence the statutory embargo of Section 33 applied to them. Accordingly, the Court held that the defendants had not violated the rights of the plaintiff by not obtaining licenses from them for the on-ground performance of sound recordings and dismissed the plaints.

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.

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