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February 1, 2022

Court Case Bulletin (CCB): Payment Of Consideration Is Not A Pre-Requisite For An Effective Assignment In Music Industry

Author: Former Intern - Aishwarya Raj Mishra

In the matter of C. Prakash Vs. S.N. Media and Others [Commercial Application No.68 of 2021, a Division Bench [Sanjib Banerjee, CJ. And P.D.Audikesavalu, J.] of the Madras High Court, by judgment dated October 29, 2021, accepting an appeal filed by the plaintiff has effectively held that prior payment of royalty by assignee is not a condition required for effective assignment of copyright.

Section 19(3) of the Copyright Act 1957, states that The assignment of copyright in any work shall also specify the amount of royalty payable,if any, to the author or his legal heirs during the currency of the assignment and the assignment shall be subject to revision, extension or termination on terms mutually agreed upon by the parties.” The question that arises in the present case is whether ‘royalty payable’ means a mandatory prior payment of royalty for the copyright assignment to be effective or can the royalty be paid post the assignment as well?

In the present case, plaintiff was assigned the copyright in favour of two films by the defendants (2&3) via agreement dated May 29, 2020. The plaintiff asserted due payment of the royalty before the assignment which was subsequently denied by the defendants 2&3. The first defendant claims to be subsequent assignee having similar agreement with the defendants 2&3. He asserted that with no prior payment of royalty, plaintiff’s transaction cannot be considered as an effective assignment of copyright.

The Court while granting an injunction in the plaintiff’s favour held that “…Subsection (3) of Section 19 of the Act requires the assignment to specify the amount of royalty or other consideration payable. However, the provision does not mandate that the payment of consideration would be a condition precedent to the assignment taking effect. Indeed, when it comes to royalty in respect of assignment of copyright in musical work, traditionally, royalty has been paid after the music has been played notwithstanding the assignment having been made earlier. Particularly in the music industry, assignment is made and the instrument provides for the royalty payable, based upon the number or the period or other parameters that may be agreed upon between the parties. It is not required for the assignment to become effective upon due or any consideration therefor being tendered by the assignee to the assignor.

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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