Hotel chains go after Novex Communications before the Bombay High Court

0
2388

As reported by Spicy IP here, Bombay High Court has restrained Novex Communications from taking any coercive action against Gulraj Hotel and Gautam Hospitality Private Limited (combined order) which filed a groundless threats action under Section 60 of the Copyright Act after receiving a legal notice from Novex [Read order here].

The Plaintiffs have been directed to however record the entire sound recordings played during all events which takes place in their hotels and produce the same before the Court on the next date of hearing i.e. March 5, 2018.

Novex Communications is engaged in the business of giving public performance rights in sound recordings which includes public performance in hotels, restaurants, lawns, discotheque, resorts, malls and other venues for communication to the public on a commercial basis of the following music labels:

  • Zee Entertainment Enterprises Limited
  • Shemaroo Entertainment Limited
  • Eros International Media Limited
  • Yash Raj Films Private Limited

M/s. ZEE Entertainment Enterprise Limited, M/s. Shemaroo Entertainment Ltd. & M/s. Eros International Media Ltd. have assigned the public performance rights’ in the “sound recordings” of the songs contained in the Films which are part of their repertoire in favour of Novex as its “Assignee” in accordance with Section 18 of the Copyright Act, 1957. Whereas, M/s. Yash Raj Films Private Limited (“YRF”) has authorized Novex as its authorized agent to exploit public performance rights’ in the “sound recordings” of the songs contained in the Films which are part of the repertoire of YRF in accordance with Section 30 of the Act. The copies of all such agreements are available on the website of Novex here.

In 2014, Leopold Cafe, one of the most popular restaurants in Mumbai, obtained an interim order against Novex Communications in a groundless threat suit [Read order here].  The issue before the Bombay High Court pertained to whether companies such as Novex could perform the function of collecting societies in light of the new proviso to Section 33 of the Copyright Act which requires that the business of issuing or granting license in respect of literary, dramatic, musical and artistic works. Novex had argued that it could license music as an agent of music labels, since Section 30 of the Copyright Act allows the copyright owner or its agent to grant an interest in any work by way of a licence. Justice G S Patel clarified that Copyright Owners would be allowed to license their works themselves or through their authorized agents under Section 30 of the Copyright Act. The Court held that Novex was not allowed to be in the business of issuing or granting licenses as per Section 33 of the Copyright Act. However, they could continue issuing licenses as an authorized agent of Copyright Owners under Section 30 of said Act provided that it could only collect copyright royalties in the name of its principal and not in its own name. While reasoning out on the co-existence of Section 30 and Section 33 of the Copyright Act, Justice Patel held:

“There is also the seemingly nice distinction between “issuing” and “granting” a license. Both words must be read together with their conjunctive. “Issuing” speaks possibly to the physical act of generating a license. “Granting” is the legal effect of that issuance. 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 so that the licensee knows that it has a valid license from the copyright owner; i.e., that it is made known by the agent that it is acting on behalf of the holder of copyright in the works in question, even though the licensee may throughout deal only with the agent and never directly with its principal. 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.”

Thereafter, in 2016 M/s Event and Entertainment Management Association (EEMA) filed a writ petition before the Delhi High Court for issue of a writ of mandamus, directing the Union of India to hold an enquiry against other Respondents, namely, Indian Performing Rights Society/ IPRS, Phonographic Performance Ltd./ PPL and Novex Communications for the alleged violation of Section 33 of the Copyright Act. Hon’ble Mr. Justice Sanjeev Sachdeva, vide his interim order dated December 23, 2016, restrained IPRS, PPL and Novex from acting in contravention of Section 33 of the Copyright Act, i.e. from issuing or granting licenses in breach of Sec 33 of Act, till the next date of hearing [ Read order here] .

The injunction order dated December 23, 2016 passed by Justice Sanjeev Sachdeva was challenged by IPRS, PPL and Novex, who sought for the said order to be vacated. The matter was heard by Hon’ble Mr. Justice Najmi Waziri of the vacation bench of the Delhi High Court. Vide its interim order dated December 29, 2016 [Read order here],   the vacation bench of the Delhi High Court did not vacate the earlier order dated December 23, 2016 passed by Justice Sachdeva. However, the  bench, relied on the decision in Leopold Café & Stores v. Novex Communications Pvt. Ltd. of the Bombay High Court to observe that the right under Section 30 is not obliterated by the prohibition in Section 33 and both must exist harmoniously. As an interim compensatory arrangement, Justice Waziri directed EEMA to pay copyright fees/ royalties to IPRS, PPL and Novex under Section 30 of the Copyright, which is reserved for owners of copyrights, with the express rider directing IPRS, PPL and Novex to prove their ownership over the copyrights when called upon to do so, and also providing a process for issuing licences and obtaining royalties in the immediate interim period. PPL/IPRS/Novex were directed to put up a detailed list on their website listing all songs they own including the names of the authors/producers they have acquired them from, along with the dates of validity of the contract until December 31, 2016. In addition to this, the licensing companies were asked to upload the valid legal agreements by which they claimed ownership of these tracks. The petition was eventually disposed of by the Delhi High Court vide order dated October 12, 2017 [Read order here].   With respect to EEMA’s submission that an enquiry be conducted under Section 33(4) of the Copyright Act against PPL, IPRS and Novex, the Delhi High Court observed that since neither of these three entities are registered as a copyright society, no direction is required to be given to the Central Government to carry out an enquiry or conduct any proceedings against them under Section 33 of the Act. The Court disposed of the proceedings keeping it open for EEMA to resist any proceedings or action initiated by PPL, IPRS or Novex against them to enforce any right as well as to file Section 60 (groundless threat) proceedings.

There also seems to be another writ petition filed by Hotel and Restaurant Association (Western India) and Anr. against Novex Communications Pvt. Ltd) [WPL/3113/2017] which is pending before the Bombay High Court. Notice has been issued in the matter. Read order here.

Over the last few years, Novex Communications has been supremely active in filing copyright infringement suits against several hotel chains and others.

An illustrative list of such actions before the Bombay and Delhi High Courts along with their orders is provided below:

DELHI HIGH COURT
Novex Communication Pvt. Ltd vs Le Meridien New Delhi Order dated January 19, 2018- Defendant agreed not to exploit the sound recordings of the Plaintiff
Novex Communication Pvt. Ltd vs Golden Roots Entertainment Pvt. Ltd Order dated December 21, 2017– Defendants ensured that they would not play the music without permission of the plaintiff. Suit withdrawn.
Novex Communication Pvt. Ltd vs Great Indian Nautanki Company Pvt. Ltd & Anr Order dated May 15, 2017– suit disposed as  matter settled between the parties
Novex Communication Pvt. Ltd vs Odisha Television Limited Order dated May 3, 2017– interim injunction granted in favour of Novex

Order dated November 17, 2017- Suit disposed as matter settled between the parties.

Novex Communication Pvt. Vs M/s Piccadily Hotel Order dated December 23, 2016– Interim injunction granted

 

Novex Communication Pvt. Ltd vs M/s Grand Hotel & Anr Order dated October 26, 2016– Defendants ensured that they would not play the music without permission of the plaintiff.
Novex Communication Pvt. Ltd vs Hotel Crowne Plaza Order dated September 16, 2016– out of court settlement
Novex Communication Pvt. Vs M/s 3 Pegs Down & ORs Order dated August 24, 2016 interim injunction granted
Novex Communication Pvt. Ltd vs Sky Lounge Bar Order dated August 12, 2016 Interim injunction against defendants.

Order dated February 1, 2017– Suit dismissed as matter settled between the parties

Novex Communication Pvt. Ltd vs The Royal Plaza Order dated April 22, 2016– ex-parte ad interim injunction granted.
Novex Communication Pvt. Ltd vs The Park Hotel Order dated April 22, 2016– Suit disposed as matter settled between the parties
Novex Communication Pvt. Ltd vs Amit Jain & Ors Order dated Feb 8, 2017 Contempt petition filed by Novex claiming violation of the order of the court dated December 23, 2016. The Court held that petitioner has an alternative remedy by way of proceedings under Order 39 Rule 2A CPC and accordingly disposed of the contempt petition.
BOMBAY HIGH COURT
Novex Communication Pvt. Ltd vs Chinagate Restaurants Pvt. Ltd & Ors Order dated December 29, 2017- injunction granted

Order dated Feb 7, 2018– Court ordered Commissioner of Taking Accounts and Assistant Registrar (IT) to go through CCTV footage available with the defendants at the restaurant and submit report to the court confirming that there is no audio available along with CCTV forage and whether playlist in which the Plaintiff has copyright of sound recording for on ground public performance is played and/ or available on laptops of the defendants.

Novex Communication Pvt. Ltd vs Percept Live Private Limited Order dated February 5, 2018– Temporary injunction granted
Novex Communication Pvt. Ltd vs Cricket Club of India Order dated December 22, 2017- Defendant agreed not to use the sound recording of the Plaintiff.
Novex Communication Pvt. Ltd vs Kamath Hotels India Ltd Order dated December 21, 2017 injunction granted
Novex Communication Pvt. Ltd vs Hitech Events Pvt Ltd Order dated September 28, 2017- Interim injunction granted
Novex Communication Pvt. Ltd vs M/s Ashok Hotel Order dated December 23, 2016– interim injunction granted

Order dated January 3, 2017– Disposal

 

Novex Communication Pvt. Ltd vs Andheri Recreational Club Order dated December 22, 2017–  Defendants made a statement that they are not conducting any event. Hence notice of motion disposed of.

 

Hotel establishments are required to obtain dual licenses from both sound recording owners and underlying rights owners for public performance rights.

The tariff scheme of IPRS (which is now a registered copyright society) provides the following with respect to hotels, guest houses, etc.

 

Scope of Tariff This Tariff Applies to the Public Performance of Music in the Premises either for the Staff Members or for the General Public by way of Radio and/or Tape and/or any other Audio Medium and/or Television and/or Video and/or any other Video Medium.
General Conditions This Tariff is subject to the Society’s General Conditions Applicable to Tariffs and Licenses.
Royalty Rates The following Royalty Rates shall apply:

1. For Public Performance of Music in Restaurants, Rooms, Lobby, Foyers, Lifts,  Shopping   Arcade   only in   the   Lobby, Disco, Saloons, Beauty Parlors, Sauna Baths,    Health Centre Kiosk Stalls, Music on Hold the Royalty Rate shall be calculated as per the following:-

Rate calculated on the Room Rent                 Occupancy              Occupancy

(On Rack Rate)                                (Hotels doing Business     (Hotels doing Business

Less than 50% Occupancy) More than 50% Occupancy)

Up to Rs.3000/-per day per room                    Rs.2.00                       Rs.2.25

3001 to 5000/-per day per room                       Rs.2.25                       Rs.2.50

5001 to 8000/-per day per room                       Rs.2.50                       Rs.2.75

8001 and above per day per room                   Rs.2.75                      Rs.3.25

 

The number of days shall be 365 days and the Licence fees calculated on the basis of actual number of rooms in a hotel.

a) For DJ/Recorded music/ Live Performance / Events /Performance by third parties / Outside Organizers within the Premises, Relevant Tariff LP/DJ shall apply.

2.  Hotels less than 100 Rooms, should take a Separate licence for Disco as per Tariff DISCO.

a) For DJ/Recorded music/ Live Performance / Events /Performance by third parties / Outside Organizers within the Premises, Relevant Tariff LP/DJ shall apply.

 

3. Less than 30 Rooms, a minimum Royalty under this tariff shall be Rs.5000/- per annum.

a) For Public Performance of Music in Restaurants within the premises, Tariff RB shall apply.

b) For Public Performance of Live/DJ Music in Banquet or other areas within premises, Tariff LP/DJ shall apply.

Applicability of Tariff This Tariff comes into force from 1st’Jan, 2015 and applies to all Royalties falling due on or after that date.

Non-Compliant licenses who seek to regularize past infringements / violations / breach of Society’s rights and licenses (including non-compliance with agreements, usage without license, vexatious litigation, etc), a penalty of 30% over the existing tariff shall be applied at the discretion of Society, whereas compliant licenses will be charged licenses fees at a rate discounted at 5% at the discretion of the Society

On each anniversary of this Tariff there will be an upward revision by 10%

All Royalties are exclusive of all applicable GST/levies and are charged  in advance for a  period of  twelve  months  and  are  to be  paid  at the beginning of the year.

 

By virtue of the royalty provisions granted to authors of literary and musical works under Section 18 of the Copyright Act, 1957, if a sound recording is played by any hotel then royalties would be payable to the authors and owners for such utilization of their works.

As mentioned in my post here, the Copyright Amendment Act, 2012 is a deeply flawed amendment and has failed to take into account the practical difficulties which would arise due to the scope of varied interpretations resulting from ambiguous provisions.

There is an urgent need for a sustainable model for the music industry to work efficiently and to save India from being a global embarrassment with regards to its copyright laws.

Image source: here