GUEST POST: ANKIT RELAN- MUSIC SUB-PUBLISHING IN INDIA AND HOW LEGAL IS IT, REALLY?

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I am pleased to bring to you our next guest post by Ankit Relan, Partner- Mason & Associates that explains the position of law in India surrounding sub-publishing of music. Ankit is a practicing attorney based out of Delhi and represents some of the biggest names in the film and music industry in India. He handles the copyright and technology law practice at Mason & Associates, a top tier law firm that regularly advises the top companies in the film and music industry, media & technology sector, internet service providers, book publishing companies, pharmaceutical companies in India on a variety of issues. Ankit had earlier done a guest interview for us where he had dealt with the issue of performers’ rights in India, which can be viewed here. He had also written a guest post for us on Mashups, Remixes and Cover Versions which can be viewed here.

MUSIC SUB-PUBLISHING IN INDIA AND HOW LEGAL IS IT, REALLY?

~ Ankit Relan

There are several bodies floating around the music industry in India today which offer to do sub-publishing of rights for music owners in India. These bodies include private companies, aspiring copyright societies, even individuals who license music on behalf of several small music labels in India, in return for some commission out of their royalties. And then there is always the IPRS, the only one registered amongst the lot! These bodies grant licenses, collect royalties, send threatening notices to defaulters, institute legal proceedings all over the country – virtually behaving like the owners, yet not owning any rights.

Are they even legal? Does the Copyright Act, 1957 permit “non-owners” to license copyright in India? Don’t they have to be registered as a copyright society to sub-publish rights? But Novex is already doing all this, aren’t they? And what happens to IPRS if anybody can just sub-publish the rights for the mere asking?

In this article (blog or whatever you want to call it) I will try to address some of these questions that a lot of people in the industry have been asking about, but haven’t yet got a clean answer on.

What does sub-publishing mean?

Let’s first understand what the term “sub-publishing” even means. It comes from the word “publishing” which as per most dictionaries means – to generally make a work available to the public. A ‘work’ here could mean ‘any’ kind of work – whether a book, a script, a painting, a song etc.

The Copyright Act, 1957 does not define or so much as mention the word “sub-publishing” anywhere. In fact, it does not even specifically define the term “publishing” anywhere. What it does provide is a general definition of the term “publication” under Section 3, which reads as follows –

3. Meaning of publication. For the purposes of this Act, “publication” means making a work available to the public by issue of copies or by communicating the work to the public.”

Clearly, it refers to the act of “making a work available” by either issuing copies or by communicating the work to public. The expression “communicating to public” itself is so wide in its ambit that it covers virtually any and all forms of dissemination of works. Therefore, to publish is to basically communicate your work to public by any means possible. Section 3, however, is of a general import and applies to all kinds of copyrighted works – songs included.

The Copyright Act then comes close to describing the publishing business under the second proviso to Section 33(1) as –

“…business of issuing or granting licenses in respect of literary, dramatic, musical and artistic works incorporated in a cinematograph films or sound recordings…”

 This provision is at a slight variance with how the film and music industry in India understands it to mean. The music industry in India understands “publishing” to mean the act of licensing of rights in the lyrics and musical compositions embodied in songs (or what are also commonly called the “underlying works”) by its owner. It is a term specific to only these 2 classes of works – lyrics and musical compositions that are embodied within the sound recording of any song. The song may be a film song or a non-film song, that’s immaterial. The owner of these underlying works is known as the “publisher” and this direct licensing by him is known as “publishing”. But when the owner gets someone else to run his musical errands, and engages an agent or a licensing representative to issue these licenses on his behalf, he indulges in “sub-publishing” and the errand boy agent who licenses on his behalf is known as the “sub-publisher”.

Who can be a sub-publisher?

Anyone can be a sub-publisher as long as you have these 2 traits –

Firstly, you must be a “legal person” or a “juristic entity” recognized by law. In lawyerspeak, this means that you must be a person that law recognizes as someone capable of having rights and liabilities. In humanspeak, what that means is that you can either be an individual, a sole proprietorship, a partnership, an LLP, a Company, a Trust or a Society; and

Secondly, you must be capable of entering into agreements and should not be suffering from any restriction, whether legally or contractually, from carrying on business in India. So minors, lunatics, lawyers etc. cannot indulge in the business of sub-publishing, theoretically speaking, because they are not allowed by law to do so.

But these are the bare minimum requirements. A true blue sub-publisher also needs to have the domain expertise of the sub-publishing business, have necessary contacts in various territories to help enforce the publisher’s rights, possess a good understanding of the copyright law or at least have a decent lawyer to help do the paper work.

What exactly do these sub-publishers do?

Sub-publishers have to basically “administer” rights on behalf of the owners of copyright. Anything that an owner can do, but is too damn lazy to do by himself or for which he lacks the resources or the necessary time, can be done by these sub-publishers on the owner’s behalf.

What rights a sub-publisher can administer on behalf of the owner depends upon the rights that the owner has specifically granted to the sub-publisher (this is called the sub-publisher’s authorization or his mandate). The Indian Copyright Act allows every owner/publisher to choose what rights to give to his sub-publisher while retaining the others. For Example, an owner can say, I will do all my public performance, radio and television related licensing through a sub-publisher like IPRS, while all other licensing of my rights over the internet, mobile, OTT platforms etc. will be done directly by me. Section 34 permits this!

How do they do it?

To administer these rights, a sub-publisher needs the owner’s permission in some form. He can either enter into an assignment agreement with the owner, in which case, he will step into the shoes of the owner himself (Short Note: Section 18(2) says the “assignee” of copyright has the rights of an “owner” under law) or he can simply enter into an “agency” agreement, also called an “authorization” agreement and act on behalf of the owner (Short Note: Section 30 permits the owner to license his rights either directly or through an “agent” duly authorized by him).

After taking the necessary authorizations from the owner, the sub-publisher has to then look for prospective licensees who are playing or want to play the songs belonging to the owner/publisher, then negotiate and grant licenses to these license seekers at a price that is either fixed in consultation with the owner or in keeping with the market trends, then collect the license fees, deduct some commission out of the transaction (usually upto 15%) and pretend to pay the entire remaining amounts back to the owner.

Is that how IPRS also does it?

 Well, I am no expert on IPRS (or the Indian Performing Rights Society) but from the agreements entered into by them and made publicly available, it seems that they too have been taking “assignments” from their members and thereby stepping into the shoes of the “owners” of underlying works, which is a perfectly legitimate way of doing it.

Though, in case of IPRS, they don’t need to take any assignments from their members as they are now registered as a copyright society in India and can legitimately sub-publish rights on behalf of its members in terms of Section 33(1) and the second proviso of Section 33(1), which is explained in greater detail below. These provisions confer a special status upon IPRS and allow IPRS to sub-publish the rights of its members under any form of authorization ie. agency, assignment, licensing etc.

What does the Indian law say about music publishing?

 Section 33(1) of the Indian Copyright Act, 1957 is the most relevant to our discussion here and both, defines and delineates the limits of sub-publishing business in India. Let’s look at what it says, before I comment on what it possibly means –

“33. Registration of Copyright Society– (1) No person or association of persons shall, after coming into force of the Copyright (Amendment) Act, 1994 commence or, carry on the business of issuing or granting licenses in respect of any work in which copyright subsists on respect or in respect of any other rights conferred by this Act except under or in accordance with the registration granted under sub-section (3):

Provided that owner of copyright shall, in his individual capacity, continue to have the right to grant licenses in respect of his own works consistent with his obligations as a member of the registered copyright society

Provided further that the business of issuing or granting license in respect of literary, dramatic, musical and artistic works incorporated in a cinematograph films or sound recordings shall be carried out only through a copyright society duly registered under this Act…”

Yes, it actually says –

“…in a cinematograph films or sound recordings…”

#hailthygrammar #myeyesarebleeding

On a simple reading, these provisions offer an interesting triangle of self-contradictions and leave a lot of room for speculation and ambiguity as to their true import. Let’s try to understand what they mean –

Section 33(1) provides the basic policy of the law and states that no person or association of persons can carry on the “business of issuing or granting licenses in a copyrighted work” unless it is registered as a copyright society under Section 33(3). The idea was to streamline and regulate the licensing business in India by only allowing registered copyright societies to do it, as a single licensing window.

The First Proviso to Section 33(1) however carves out an exception to this basic policy and permits the “owner” to issue licenses for his works by himself even if there is already a registered society in India licensing rights in that category of works and even if he is already a member of that society.

The Second Proviso to Section 33(1) then spells out that the “business of issuing or granting licenses in respect of literary, dramatic, musical and artistic works incorporated in a cinematograph film or sound recording” shall only be done through a registered copyright society, which in India, is the IPRS. This business of issuing or granting of licenses in underlying works is what sub-publishing is.

So, if you read these provisions together – first they provide that all types of commercial licensing of copyright must be done through a registered society. Then they say, it’s not mandatory, the owner can continue doing his individual licensing, if he wants. Then they say, no, the music sub-publishing business can only be done through a registered copyright society (viz. IPRS).

What does this First Proviso imply, can the owners continue to license or not?

On first blush, the first proviso sort-of defeats the purpose of having a registered licensing window, doesn’t it? If you can license your rights independently despite there being a registered society for it, then why have a society at all?

Legally speaking, this first proviso is an exception to the basic norm and as between Section 33(1) and this proviso, the proviso prevails! That’s what the cannons of legal interpretation say.

The owner has a statutory right to grant a license in respect of his copyrighted works. This right comes from Section 30, the relevant extract of which is reproduced below –

30. Licenses by owners of copyright— The owner of the copyright in any existing work or the prospective owner of the copyright in any future work may grant any interest in the right by license in writing by him or by his duly authorized agent…

The first proviso effectively safeguards what Section 30 already provides. As a result, the owner’s right to issue licenses for his own works remains unaffected, regardless of whether there is a registered copyright society in place in India or not.

The rationale behind this, in my opinion is, that the legislature wanted the ultimate control over the copyrighted works to remain with its owner. He is the one who has created the work and has invested in it and therefore he alone should have the final say in who to license his works to, at what terms, for what territory or whether to license them at all. Though desirable, the model of single window licensing may not work for all and sundry and the first proviso is a legislative recognition of the same. A society is required by law to issue blanket licenses with fixed tariffs and distribute the money under pre-approved distribution schemes. It cannot treat the content of any one particular owner more or less favorably than the others. Therefore, an owner may feel that his creation or his portfolio might not yield an effective return under a blanket license and he is better off licensing directly. The first proviso is therefore intended to be a limited carve out to allow for such possibilities and not monopolize the licensing process.

What about the second proviso, does that mean only IPRS can sub-publish music rights now?

I don’t think so!

This Second Proviso, it must be noted, is a relatively recent addition and was introduced by way of the 2012 amendments to the Copyright Act, 1957. Though I agree that this proviso, at least on the face of it, implies that the business of music sub-publishing in India is to be done only through a registered copyright society, however, if you read this proviso along with the other provisions of this Act, you will find that this proviso is not absolute in nature and does not take away the right of the owner of underlying works to license his rights independently. I say this because despite introducing the second proviso, the first proviso of Section 33(1) which preserved the right of the owner to do his licensing himself has remained intact and unaltered; then, Section 30 which provides that the “owner” of copyright in any work can grant licenses in his work either by himself or by a “duly authorized agent” acting on this behalf, has also remained unaffected; Moreover, by interpreting the second proviso to mean that sub-publishing can only be done through IPRS and not otherwise, an unreasonable and almost unconstitutional restriction gets imposed on the rights of owners of lyrics and musical compositions to mandatorily join a body, even if they don’t want to, and only license their rights at the blanket terms fixed by such a body, on a take-it-or-leave it basis.

In my view, to harmonize these provisions, the trick lies in the interpretation of the expression “business of issuing or granting licenses”. These provisions suggest to me that the prohibition only applies when someone who does not own the copyright makes a “business” out of licensing the copyright in his own name but not otherwise. The owner is still exempt from this prohibition and the licenses he grants for his own works, are not considered a business activity under Section 33. As a natural sequitur to this, and to give Section 30 the respect it deserves, if the owner can still publish his music rights in his own name, he can very well engage a “duly authorized agent” to do so on his behalf, under Section 30.

Has any court had a chance to look at this?

Yes!

None other than the much revered Justice Gautam Patel has.

In Leopold Café & Stores vs Novex Communications Pvt. Ltd. [2014 SCC OnLine Bom 4801], speaking for the Bombay High Court, Justice Patel interpreted Section 30 and 33(1) to hold that it is legally permissible for companies like Novex to issue licenses and carry on the business of granting licenses on behalf of copyright owners but it must not do so “in its own name” and must clearly represent to the licensees that it is acting “as an agent” on behalf of the owner. Alternatively, it can always act as the “assignee” of the works. If the sub-publisher acts as the assignee, there is no difficulty whatsoever and the first proviso to section 33(1) read with 30 directly permits this, however, when the sub-publisher acts as an agent, he must only act “as an agent”.

The relevant extracts are reproduced below –

“13. It is not, I believe, the mere “carrying on of business” that is interdicted by Section 33. It is the carrying on of the business of issuing or granting licenses in “its own name”, but in which others hold copyright. Every agent also “carries on business”, but that is the business of agency, with the agent functioning as such, i.e., clearly indicating that it is acting on behalf of another, one who holds the copyright. This is the only manner in which both Section 33 and Section 30 can be harmonized. An absolute bar even on an agency, invoking Section 33, would undoubtedly run afoul of the plain language of Section 30 and render the words “or by his duly authorised agent” entirely otiose. I very much doubt it could have been the legislative intent of Section 33 to compel every copyright owner to set up a separate division to monitor the use of its works.

Entities like YRF and Shemaroo typically hold copyright in a very large number of works. It is perhaps more efficient for them to appoint an agency to ensure that those who use their works have valid licenses and have paid the license fees. These licenses are, however, to be issued in the name of the copyright owner and license fees to be collected for and on behalf of the copyright owner. A society like PPL, on the other hand, can issue license fees in its own name. It need not disclose the names of the original holders of the copyright. The distinction Mr. Bhatt draws is, I think, material one without which Sections 33 and 30 cannot both co-exist.

14.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.

15.In this matter, Novex seems not to have clearly disclosed its agency if indeed there is one. We have no evidence of the terms of that agency. What, instead, is apparent is that Novex has consistently been demanding that persons obtain licenses from Novex itself. It has invoiced parties in its own name. Licenses are issued in its own name. The mere mention of the license being of the works of others does not sufficiently indicate any agency to take Novex out of the mischief forbidden by Section 33 and into the permissive regime of Section 30…”

The Delhi High Court also had the occasion to deal with a similar issue, in a 2016 writ petition filed by Event and Entertainment Management Association (EEMA) vs Union of India & Ors. [2017 SCC Online Del 12740]. In this petition, EEMA, an association of event management companies, sought a direction, amongst many other directions, against IPRS & PPL & Novex stating that they were carrying on the “business of issuing and granting licenses” in copyrighted works without being registered copyright societies in India and that this was specifically proscribed under Section 33(1).

Notably, neither IPRS, nor PPL or Novex were claiming to be registered copyright societies back then and they had themselves stated so before the court. The Delhi High Court initially passed an ex-parte order on 23.12.2016 directing each of these entities to not act in contravention of Section 33(1) and issue licenses without being registered, however, subsequently, on 28.12.2016 and 29.12.2016, after considering the rationale of the decision of Leopold Café case (as above), accepted that Section 30 and 33 have to be read together and harmonized the way done by the Bombay High Court.

Subsequently, on 12.10.2017, the Delhi High Court disposed of the writ petition without making any substantive comment or observation on the interplay of these provisions and left it open for EEMA to raise its contentions in any appropriate suit proceedings against these entities, if it wanted to.

Conclusion

Therefore, the answer to the questions raised at the beginning of this article are as follows –

  • Does the Copyright Act, 1957 permit “non-owners” to license copyright in India?

In letter yes, in spirit may be not!

  • Don’t they have to be registered as a copyright society to sub-publish rights?

No, they can sub-publish rights either as an agent or as an assignee of the owner.

  • But Novex is already doing all this, aren’t they?

Novex licenses sound recordings, not underlying works. But yes the answer remains the same. Novex takes assignments from some of their members and agency from others. Therefore, they do it under the mandate of Section 30 and not under Section 33.

  • What happens to IPRS if anybody can just sub-publish the rights for the mere asking?

Well, IPRS can continue to issue licenses for its members but cannot oppose the issuance of licenses by non-members, in terms of Section 30.

Thank you for taking time out to read this long post. I hope it made some sense and brought clarity on some of these complex issues. In case you have any queries or want to share any feedback, criticism or comments about this article, please feel free to write to me at ankit.relan@mason.co.in or relan.ankit@gmail.com.

Disclaimer: The contents of this article are purely for academic purposes and do not constitute any binding legal advice, opinion or commercial suggestion by and between the parties, being you, the reader and me, the author of this article. While all reasonable efforts were made to ensure the accuracy and completeness of the contents of this article, certain errors or omissions may have inadvertently crept in. The author disclaims any and all liability in relation to or arising out of any such errors or omissions.