An Overview of Statutory Licensing with respect to Online Streaming Services

Rashi Dalmia



Introduction - Statutory Background


The mode of utilising media by people has been varying expeditiously over the last few decades. There has been a sharp increase in the number of people who are utilising smartphones and other gadgets to access forms of media, such as listen to music, watch movies, etc. Streaming in the 21st century has progressed into internet streaming with the introduction of companies such as Netflix, YouTube, Spotify, Hotstar and Amazon Prime in the last 1990s and early 2000s. India has seen increasing growth in the usage of these online streaming websites, with the growth of better internet connectivity in the remotest parts of the country. These online services allow consumers numerous options and choices of what content they would like to consume. In an attempt to bring the internet broadcasting and streaming services under the purview of the Copyright Act, 1957 (“Copyright Act/Act”), Section 31D was introduced in 2012.


Statutory licensing is provided under Section 31D under Chapter VI of the Copyright Act. The Section deals with statutory licensing for broadcasting of literary and musical works and sound recordings. The said Section has been reproduced below for ease of reference,


“Section 31D - Statutory licence for broadcasting of literary and musical works and sound recording


  1. Any broadcasting organisation desirous of communicating to the public by way of a broadcast or by way of performance of a literary or musical work and sound recording which has already been published may do so subject to the provisions of this section.

  2. The broadcasting organisation shall give prior notice, in such manner as may be prescribed, of its intention to broadcast the work stating the duration and territorial coverage of the broadcast, and shall pay to the owner of rights in each work royalties in the manner and at the rate fixed by the 1 [Appellate Board].

  3. The rates of royalties for radio broadcasting shall be different from television broadcasting and the 1 [Appellate Board] shall fix separate rates for radio broadcasting and television broadcasting.

  4. In fixing the manner and the rate of royalty under sub-section (2), the 1 [Appellate Board] may require the broadcasting organisation to pay an advance to the owners of rights.

  5. The names of the authors and the principal performers of the work shall, except in case of the broadcasting organisation communicating such work by way of performance, be announced with the broadcast.

  6. No fresh alteration to any literary or musical work, which is not technically necessary for the purpose of broadcasting, other than shortening the work for convenience of broadcast, shall be made without the consent of the owners of rights.

  7. The broadcasting organisation shall— (a) maintain such records and books of account, and render to the owners of rights such reports and accounts; and (b) allow the owner of rights or his duly authorised agent or representative to inspect all records and books of account relating to such broadcast, in such manner as may be prescribed.

  8. Nothing in this section shall affect the operation of any licence issued or any agreement entered into before the commencement of the Copyright (Amendment) Act, 2012.”


Section 31D of the Copyright Act along with Rules 29 and 30 of the Copyright Rules 2013 (“Copyright Rules/Rules”) allows organisations to broadcast any literary or musical works and sound recordings by furnishing a notice to the rights holder informing of their intention to broadcast the said work and paying the appropriate royalty, as fixed by the Intellectual Property Appellate Board (“IPAB”). The manner of determine the royalties to be paid under Section 31D is highlighted under Rule 31 of the Copyright Rules. As per this rule, the IPAB is to determine the royalties payable to the owner of the copyright under Section 31D by taking into account factors such as the time slot in which the broadcast takes place and different rates for different time slot including repeat broadcast, different rates for different class of works, different rates for different nature of use of work, the prevailing standards of royalties with regard to such works, etc..There have however been differing views with respect to statutory licensing of online streaming services mainly due to the fact that the Copyright Rules 2013 do not explicitly contain the words internet streaming and/or broadcasting. In this regard, the Department of Industrial Policy and Promotion (“DIPP") clarified the scope of internet streaming vide its office memorandum dated September 5, 2016, by stating that “Section 31D which talks of ‘any broadcasting organisation desirous of communicating to the public…may not be restrictively interpreted to be covering radio and TV broadcasting” and appears to include internet broadcasting as well.


Myspace Inc. v. Super Cassettes Industries Ltd. [236 (2017) DLT 478]

The 2016 order of Justice Ravindra Bhat and Justice Deepa Sharma of the Delhi High Court in the matter of Super Cassettes v. MySpace is a landmark judgment in this subject matter.


The brief facts leading up to the judgment are that in 2007, Super Cassettes Industries Limited (“SCIL”), in the business of music distribution and film producing, filed a suit before the Delhi High Court against MySpace, a social networking platform based in the USA, and the owner of MySpace. SCIL alleged the MySpace had infringed their copyright by displaying their copyrighted material on their website without prior approval, under Section 51(a)(i) and (ii) of the Copyright Act. The Court in an order dated July 29, 2011 held MySpace liable for copyright infringement despite MySpace exhibiting that it could not and did not have knowledge about specific instances of infringement and that each and every complaint of infringement was dealt with by removing the infringing content from the website. Further, the Court also held that it was MySpace’s duty to screen the content before making it available on their website instead of relying on post-infringement measures to remove infringing content, and stated that “there is no reason to axiomatically make each and every work available to the public solely because user has supplied them unless the defendants are so sure that it is not infringement.”


In response thereto, MySpace filed an appeal before the Division Bench of the Delhi High Court and on December 23, 2016, the Division Bench of the Delhi High Court, passed its final order in the instant matter. The Court finally held that MySpace and other intermediaries cannot be held liable for copyright infringement unless the plaintiff can prove actual knowledge on part of intermediaries to attract offence and prove mens rea. Moreover, the Court held that if an intermediary follows certain minimum standards and has post-infringement safety measures, the intermediary would be given protection under Section 79 of the IT Act, 2000. Thus, an intermediary would be liable for infringement if there is actual knowledge of such infringing content and they fail to remove the same.


This judgment is landmark and very progressive as it reinforces the protection given to intermediaries online in India. The judgment attempts to harmonise the Copyright Act with the IT Act, 2000 in case of copyright issues and holds that intermediaries need not pre-screen their content before uploading.


Tips Industries Ltd. v. Wynk Music Ltd. & Others

A recent Bombay High Court judgment in the matter of Tips Industries Ltd. v. Wynk Music Ltd. decided on April 23, 2019 has resulted in discussions regarding statutory licensing of online streaming services under Section 31D of the Copyright Act.


Tips Industries Ltd. (“Tips”) is the owner of a music label in India which controls the copyright over 25,000 sound recordings. Wynk Music Ltd. (“Wynk”) is an online service through which customers can pay a subscription fee and access numerous sound and audio-visual recordings including, inter alia, the Tips’ repertoire of songs. In 2014, Tips had licensed their music repository to Wynk, however, in 2016 there was a dispute between the parties with respect to the license fees and the license was terminated and Tips requested Wynk to remove their repertoire from Wynk’s online platform. n the WYNK platform. In this regard, Wynk invoked the protection granted by Section 31D of the Copyright Act claiming that they were a broadcasting organization and were entitled to a statutory license under Section 31-D to communicate the work to the public. Thus, Tips filed a copyright infringement suit before the Bombay High Court.


The Court decided several issues in this matter, the most important and relevant one being whether the defendants can invoke Section 31D of the Act to exercise a statutory license in respect of the plaintiff’s repertoire for internet broadcasting. The Court found Wynk liable for copyright infringement as their customers can store physical files/electronic copies of the Plaintiff's Repertoire on their devices in violation of the exclusive rights granted to Tips under Section 14(1)(e) of the Act. Furthermore, with respect to online streaming, the Court held that firstly, statutory licensing under Section 31-D is not available to internet broadcasters as the absence of express words in Section 31-D providing for a Statutory License in respect of internet streaming and/or downloading, was a conscious legislative choice. It was the view of the Court that the object of Section 31-D was to ensure that the public had access to FM radio networks and that the Legislature did not intend to include internet broadcasting within the ambit of Section 31-D but solely to restrict the same to radio and television broadcasting.


Conclusion

Although, the growth of the internet has impacted the world and society including the music industry, and the powers of internet broadcasters were protected to an extent by the Delhi High Court in the Super CassetttesCassettes judgment, the Bombay High Court in the Tips judgment has presented aggressive challenges to the world of online streaming. Mindful of the shift towards online streaming, the amendment to the Copyright Act was brought about to introduce Section 31D however more clarifications are required with respect to online streaming and internet broadcasters to finally bring out an end to this long drawn debate of whether internet broadcasters are protected under Section 31D of the Copyright Act, especially since there are no specific guidelines to regulate the manner in which licences are to be obtained by online streaming services.


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