The Ministry of Commerce and Industry (Department for Promotion of Industry and Internal Trade) has notified on May 30, 2019 the proposed amendments to the Copyright Rules, 2013 (“Proposed Rules”) in exercise of its powers conferred under Section 78 of the Copyright Act, 1957. The Ministry has sought objections or suggestions from all persons likely to be affected thereby within a period of thirty days [ READ DRAFT RULES HERE]

The major highlight of the Proposed Rules is the amendment to Rules 29 to 31 to include “each mode of broadcast” for the words “radio broadcast or television broadcast”. Rules 29 to 31 deals with Statutory license for broadcasting of literary and musical works and sound recordings.

The proposed amendment seems to be in contradiction of the recent decision of the Bombay High Court in the matter of Tips vs Wynk where Justice Kathawala had held that the provisions of Section 31-D of the Act read with Rules 29 to 31 coupled with the legislative history preceding the passage of Copyright Amendment Act, 2012 clearly support that Section 31-D contemplates only television and radio broadcasting and not internet broadcasting. The Bombay High Court had also ruled that the DIPP Office Memorandum of 2016 which clarified that internet broadcasting was included within the scope of Section 31D lacked ‘statutory flavour’ and could not prevail over interpretation which is drawn under the Act and the Rules.

The statutory licensing provisions have been a bone of contention between the broadcasters and the music labels. The challenge to Section 31D by SIMCA had failed before the Madras High Court in 2016 and the petition filed by Lahari Music before the Supreme Court is still pending (read details here). The provision has also been challenged by Eskay Videos before the Calcutta High Court and is also the subject matter of dispute in the Warner vs Spotify matter before the Bombay High Court.

The Proposed Rules if passed are likely to be challenged by the music labels as being ultra vires to the Copyright Act, 1957.

It is troubling to see the Government make efforts to add clarifications via amendment to the Rules/  in the form of office memorandum rather than amending the provisions of the Copyright Act itself. A subordinate legislation cannot be in derogation of the principal legislation.

Some of the other highlights of the Proposed Rules are as under:

1. Tariff Scheme: In Rule 56 (4) which provides that “While fixing the tariff the copyright society shall follow the guidelines issued by any court or the Board, if any, may consult the user groups.

The following has been added:

“and may also consider: (a) cross-sectional tariff comparisons; (b) economic research; (c) the nature and scope of the use of the work; (d) the commercial value of the rights in use; (e) the benefits to licensees;”

2. Interim Tariff in Appeal to the Board on Tariff Scheme : Deletion of Rule 57 (3) and  (4)  which dealt with interim tariff fixed by the Board being paid by a person appealing against the tariff scheme of a society that has fallen due before filing of the appeal.

3.  Rule 57(5) which provides that the Board shall determine the  Tariff Scheme of the copyright society under Section 33A, after taking into consideration:

“(a) the prevailing standards of royalties in regard to such commercial exploitation of works; and (b) such other matters as may be considered relevant by the Board.”

The following clauses shall be substituted, namely:

“(a) class of works; (b) nature of use of work; (c) modes of communication to public. (d) prevailing standards of royalties with regard to such works; (f) commercial value of the rights in use; (g)benefits to licensees; (h) such other matters as may be considered relevant by the Board.”

The Proposed Rules include some other clarifications and rectifications of some errors in the Copyright Rules, 2013. It would have to be seen to what extent are these proposed amendments going to be included and passed by the Ministry.

4. Royalties of authors / owners who cannot be identified to be kept for three years: In Rule 58 which deals with the Distribution Scheme the Proposed Rules provide that if author or other owner cannot be identified then their royalties should be kept separate in the accounts of the copyright society for a maximum of three years. The copyright society should take all measures to identify and locate the authors and other owners and must publish on its website, at the end of every quarter, the following information:(a) the title of the work; (b) the name of the author and other right owners of the work, as available; and (c) any other relevant information available which could assist in identifying the right holder. In case the royalty due to author and other owners remains undistributed at the end of the period of three years from the end of the financial year in which collection of the royalty occurred, the copyright society shall refund such amount to the licensee within a period of three months from the end of such financial year;

It further provides that nothing in this sub-rule shall prejudice the right of an author and other owner to claim such amounts from the copyright society or the licensee, as the case may be, in accordance with the limitation period applicable to such civil proceedings

5.  Annual Transparency Report: One of the positive proposed amendments to the Proposed Rules includes the requirement of having an Annual Transparency report which the copyright society must draw up.

Rule 65A. Annual transparency report —(1) The copyright society must draw up and make public a special report to be referred to as the annual transparency report for each financial year within six months following the end of that financial year. The copyright society shall publish on its website the annual transparency report and ensure that the annual transparency report remains available on its website for at least three years. The annual transparency report must contain report on activities of financial year,  information on refusals to grant a licence; a description of the legal and governance structure of the copyright society; the details and use of the amounts deducted for the activities conducted under the Welfare Scheme as provided under Rule 67; financial information on rights revenue for each category of rights administered and for each type of use (for example broadcast, public performance, etc.) including several other details.

6. In Rule 66 which deals with the Code of Conduct for copyright societies and the list of items every society needs to make available on its website, the following items have been added:

“(m) the facility to search from the database of works forming part of the repertoire of the copyright society, (n) the annual transparency report as approved by the General Body, (o) the details of the undistributed royalties”

7. Performers Rights: In Rule 68 which deals with registration and management of performers society, the Proposed Rules provides that Explanation 3 under sub-rule 4 has been omitted.

Explanation 3 of Rule 68(4) provides that “performance includes recording of visual or acoustic presentation of a performer in the sound and visual records in the studio or otherwise.”. This provision has been a bone of contention between music labels and ISRA as it goes beyond the definition of ‘performance’ under Section 2(q) of the Act which defines “performance” to mean any visual or acoustic presentation made live by one or more performers. The proposed amendment may impact the ongoing litigation of ISRA where labels are arguing that royalties to performers is limited to “live” performance and not recorded performance.

The Proposed Rules include some other clarifications and rectifications of some errors in the Copyright Rules, 2013. It would have to be seen to what extent are these proposed amendments going to be included and passed by the Ministry.

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