Guest Post: Mr. Jagdish Sagar-Copyright Amendment Act, 2012- prospective or retroactive application?

I am pleased to bring to you our next guest post by Mr. Jagdish Sagar.

Mr. Jagdish Sagar is a practicing IPR attorney in the Delhi High Court since 2006; initially in Anand and Anand, first as Consultant, then as Partner. Since December 2011, Mr. Sagar has been practicing independently in intellectual property, writ jurisdiction, appellate criminal matters and general legal practice. Mr. Sagar was originally a senior civil servant (member of the Indian Administrative Service) from July 1966 to February 2004, acquiring varied legal and managerial experience including criminal and writ litigation, and extensive exposure to copyright law as Joint Secretary in the Government of India in the late 1980’s and early 1990’s. He was the sole copyright law representative from India at the TRIPS negotiations and was closely involved in the amendments that became the Copyright (Amendment) Act 1994. Mr. Sagar had earlier done a guest interview for us which can be viewed here.

One of the most widely debated topics on the Copyright Amendment Act, 2012 has been with respect to its application i.e. whether the Amendment applies prospectively only with respect to the works assigned post the Amendment Act coming into effect (such as works of films like Padmaavat, Bajrangi Bhaijaan, etc) or retroactively i.e. with respect to works assigned even prior to the Amendment but utilized post Amendment (such as works of films like Zanjeer, Sholay, Zindagi Na Milegi Dobara, etc). While the popular theory is that the Amendment has retroactive application owing to the legislative intent[1] behind bringing the Amendment, Mr. Sagar argues that the Amendment is strictly prospective, and no other interpretation is possible. In this post Mr. Sagar has objectively analysed the key legal provisions while deriving on the conclusion that the Amendment has prospective application i.e. it applies to works assigned only post June 21, 2012.

Copyright Amendment Act, 2012- prospective or retroactive application?

-Jagdish Sagar

A question that must have been put to every copyright lawyer at one time and another is whether the 2012 amendments to the Copyright Act apply prospectively, retroactively or retrospectively. The question is raised most often in connection with the royalty right created by insertion of the third and fourth provisos to section 18(1) of the Act, together sections 19(9) and 19(10), which is what I shall discuss.  (I have also heard the question raised in connection with Section 52, but we shall leave that for another time.)

The relevant provisions of sections 18 and 19 are extracted below:

Before we go further, we need to consider how the above provisions of sections 18 and 19 work together; we are bound to reconcile them if at all possible. Except in regard to the quantification of royalty (“share on equal basis” and “equal share”) the provisions, though not well-drafted, can be reconciled. Section 18 governs “assignment of copyright” and section 19 governs the “mode of assignment”.  The principal provision of section 18(1) confers on a copyright owner the right to assign copyright in whole or in part. The third and fourth provisos have to be read as creating (obliquely, by necessary implication) a personal right to royalty de hors copyright which comes into existence after copyright in the work has been assigned; then, having created this right, these provisions put a fetter on the author’s right to assign it. (I shall say more on the relationship between copyright and this personal royalty right later.)

Section 19 is not concerned with the right to assign, which section 18 deals with, but with the methodology and scope, or sometimes the default scope, of an assignment—that is clear from the earlier sub-sections.  Hence sub-sections (9) and (10) are concerned with the scope of an assignment of copyright: they lay down that even a complete assignment of copyright does not affect the author’s personal royalty right created under the third and fourth provisos to section 18(1).  Sub-sections (9) and (10) of section 19 are, as it were, the flipside of the third and fourth provisos to section 18(1).  The former seem to have been inserted out of a misguided intention to make section 19 look more complete, balanced against the third and fourth provisos to section 18(1); but unlike the earlier sub-sections of section 19 they really add nothing to section 18 for our present purpose and may be ignored.  Henceforth, for convenience we shall refer only to section 18.

Now, returning to the question of prospective/retrospective/retroactive, we need first to get section 79 of the Act out of the way, since I have heard it cited too often in this debate.  This section, which has never been amended since 1957, provided for the consequences of repeal of the 1914 Act and enactment of the 1957 Act. It has nothing to do with later amendments which neither refer to it nor amend it. It is well settled that the legislature cannot bind itself and its successors: in 1957 the legislature could not have provided for the survival or extinction of rights that might possibly be created in future and/or be affected by unforeseeable future legislation.  After each amending Act, the amended principal Act must contain its own provisions on repeal and saving (by insertion of a new provision or by amendment of an earlier repeal and savings provision, as in the case of section 36A) failing which section 6 of the General Clauses Act applies.

Anyway, it would make no sense to try to apply the substantive provisions of section 79 to the 1983, 1984, 1992, 1994, 1999 and 2012 amendments; the repeal and savings enacted in 1957 were too obviously situation-specific.  Sub-section (1) repeals only the copyright legislation earlier in force (before the original 1957 Act) and the rest of section 79 deals with the consequences thereof retrospectively, i.e. it makes special provision for the legal consequences of past events but operates prospectively.  Since the 1957 Act extended copyright to certain acts in which copyright did not subsist under the repealed 1914 Act, sub-section (2) created, in effect, a compulsory licence to partly save the interests of persons who had incurred expenditure or liabilities on subject-matter in which copyright had not subsisted earlier. Sub-section (3) prevented new rights from being exercised in pre-existing works; sub-section (4) extended existing ownership of copyright in a work to the new rights; sub-section (5) protected the term of copyright in pre-existing works.  (Incidentally there is a background to sub-section (5): the Copyright Bill, 1956 had sought to reduce the term of copyright from 50 to 25 years. Better sense prevailed by the time the legislation was enacted, but this sub-section stayed as proposed in the Bill.)  Sub-sections (6) and (7) are actually redundant, merely applying the general law as laid down in section 6 of the General Clauses Act.

It is trite that an amendment is prospective unless, either in terms or by necessary implication, the amending legislation makes it retroactive or retrospective; or unless the amendment is clarificatory.  I have never heard it argued that the third and fourth provisos to section 18(1) are clarificatory. Again, it is hard to see how they could be retrospective. What is argued by some is that they are retroactive, i.e. that assignments of copyright for literary or musical works included in sound recordings or films made before 21.12.2012 are to be treated as if the new royalty rights applied to them.

It looks very obvious to me that this new right to royalty, which is not in derogation of the exclusive rights of the copyright owner under section 14, is strictly prospective and no other interpretation is possible.  Arguments to the contrary, so far as I have heard them, are based either on legislative intent or section 79.  I have dealt with the latter; so far as legislative intent is concerned, we have only the word of a few proponents of this view. If the meaning of a section is uncertain (though it isn’t in this case) we must first look for assistance by interpreting the statute as a whole. We may also if necessary go to the Statement of Objects and Reasons and Notes on Clauses, which are part of the Bill.   Debates in the legislature may be referred to as a last resort; but it is dicey to try to infer the intention of Parliament from one or more speeches of individual MPs, including the Minister. All this is trite, and anyway none of these external aids to interpretation is necessary in the present case; there is no occasion to go beyond the words of the statute.

Repeal and amendments affecting existing vested rights stand on the same footing. The general rule on the consequences of repeal is laid down in section 6 of the General Clauses Act.  Section 6(c) and (e) save vested rights:

“6.       Effect of repeal. – Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not–

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(c) Affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or

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(e) Affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid;”

There is a catena of Supreme Court decisions underlining the continuity of vested rights absent any provision to the contrary in the repealing/amending legislation.

• “… The line of enquiry would be, not whether the new Act expressly keeps alive old rights and liabilities but whether it manifests an intention to destroy them … “State of Punjab v Mohar Singh [1955]1 SCR 893.
• “’…vested right” is a right independent of any contingency. Such a right can arise from a contract, statute or by operation of law. A vested right can be taken away only if the law specifically or by necessary implication provides … “S. Yadav v State of U.P. and Anr (2011) 6 SCC 570
• “Learned counsel has argued that … the amending Act being a beneficial legislation, retrospectivity is implied in it … but there is no such rule of construction that a beneficial legislation is always retrospective in operation…” Shyam Sunder & Anr. v Ram Kumar and Anr AIR 2001 SC2 472.
• Other decisions which could be cited include L. Srinivasa Jute Twine Mills P. Ltd v Union of India (UOI) and Anr. (2006) 2 SCC; Bansidhar and Ors. v State of Rajasthan and Ors. AIR 1989 SC 1614; and several more.

(Here, since I have heard it mentioned, I shall parenthetically refer to section 36A as amended in 2012.) This special provision, which earlier applied to the 1994 amendments, has been made with reference to Chapter VII, which relates not to the subsistence of rights in works, but to the management of copyright societies.  The provision takes as a given that rights in back repertoire are unchanged and it merely clarifies the consequences for the administration of copyright societies.

Now what do the third and fourth provisos to section 18(1) do?  They do not affect or derogate from copyright as defined in section 14; in fact, they come into play only after the author has assigned such copyright. The assignee enjoys the exclusive rights enumerated in section 14 by virtue of the assignment; none of these rights is tied to any specified royalty or particular form of compensation. What these new provisos confer on the author is an additional, personal and virtually inalienable royalty right limited to certain forms of exploitation (i.e. exploitation of a musical or literary work included in a film or sound recording, only if copyright in the work has been assigned; and this special additional royalty excludes theatrical exhibition.)

It is pertinent to note that the author’s exercise of this new personal royalty right has necessarily to be tagged to a particular assignment: it cannot be enjoyed de hors the particular assignment of a particular work. Clearly, absent provision to the contrary, this completely new right granted by the statute in regard to assignments, cannot qualify the vested rights of assignees obtained by earlier assignment agreements.  It actually baffles me how anyone could say that it did.

In sum, then, it seems very clear to me that neither the third or fourth provisos to section 18 nor sub-sections (9) and (10) of section 19 of the Copyright Act can be applied retroactively. Assignments made before 21.12.2012 when the last amending Act came into force are unaffected.  In fact, I would go further: assignments of future works that were executed before 21.12.2012 gave the assignee a vested right in the copyright of the work whenever the work came into existence.  The right created by the assignment of rights in a future work, under section 18(1) read with the first proviso thereto is no less an enforceable and vested right than the right created by the assignment of an existed work.   All this is just as well, if we consider the horrifying, unmanageable consequences of giving all author/assignors who have been conferred with the new personal royalty rights a right to claim vaguely defined royalties going backwards in time: who would benefit in the end but lawyers?

[Disclaimer: The views contained in this post are solely the views of the author and do not necessarily reflect the views of this platform.]

[1] Reference may be made to the Parliamentary debates where Mr. Javed Akhtar has advocated retroactive application of the 2012 Amendment.