Novex Communications v. DXC Technologies & Anr.
Decided by: Madras High Court
Decided on: 08.12.2021
Facts of the Case
The Plaintiff was involved in a business of protecting the copyright for sound recordings – in the capacity of an assignee, or an agent of the copyright holders. In order to do so, the Plaintiff had entered into various agreements with the holders of the copyrights, and had obtained several rights related to the sound recordings – in particular, the rights for the on-ground performances of the concerned sound recordings. On the basis of these agreements, the Plaintiff claimed having been assigned the right for the issuance of licenses in respect of on-ground performance of the concerned sound recordings.
The Plaintiff alleged that the concerned Defendants had not sought the requisite licenses from the Plaintiff before playing the concerned sound recordings in the events conducted by the Defendants. The Defendants contested the allegations of the Plaintiff, arguing that the Plaintiff was ineligible to issue licenses on behalf of the copyright holders, the Plaintiff not being a copyright society itself nor a member of one, for the purpose of S.33 of the Copyright Act, 1957.
Issues in the Case
Whether the Plaintiff in the case was entitled to grant or issue a license, under the Copyright Act, without being a Copyright Society, as u/S.33 of the Copyright Act?
The Court referred to S.2(d) for the definition of an author, to S.18 for deciding what amounts to assignment of a copyright, S.19 for the mode of assignment of such copyright, S.30 for the licensing of such copyrights by their owners, and to S.33 for the registration of Copyright Societies.
The Plaintiff contended that by virtue of the assignment agreements executed in its favour by the owners of copyright, it had become the absolute owner of the copyright under Section 18(2) of the Act and had the right to issue licenses to any person under Section 30 of the Act. The Plaintiff further contended that there was a distinction between the owner of a sound recording and the original content creators who are the authors of the underlying literary, musical or artistic work, and it is the latter category of persons whose right is recognised under Section 33 of the Act, wherein, the role of the copyright society comes into play, but there is no necessity for the owner of the copyright to be registered under Section 33(3) of the Act since the right of the owner is specifically recognised under Section 30 of the Act. That apart, a reading of Section 34 shows that joining a copyright society is entirely a voluntary act that is left to the decision of the copyright owner. It was further mentioned that a combined reading of Sections 18, 30 & 33 of the Act makes it clear that the owner of the copyright is entitled to independently issue licenses and collect royalties.
The Defendants contested the allegations of the Plaintiff by bringing to light the fact that, as admitted by the Plaintiff, it was not a copyright society, and yet was involved in a business of licensing of copyrights in sound recording – which is specifically restricted under the second proviso to S.33, unless the involved party is a copyright society. The Plaintiff asserted that S.30 of the Act allowed the owner of a copyright to grant licenses unrestricted, and that by way of S.18(2), the same right was also available to the assignee of a copyright.
The Court assessed the developmental history of the provisos to S.33 and disagreed with the contention of the Plaintiff. While S.18(2) did not differ between persons or companies in regards to grant of licenses – however, the second proviso to S.33 specifically restricts such persons when the concerned act is a business related to issue or grant of licenses. Quoting Taylor v. Taylor, the court opined that the language of the second proviso restricted the permission of carrying out business of issuing grant or licenses of copyrights to copyright societies alone, and to no other entities. The Court also established that the restriction under the second proviso to S.33 did not interfere with the right of the owner of the copyright, be it under S.18 or S.30.
The Court also took note of the judgement delivered in Leopold Café & Stores &Anr v. Novex Communications Pvt. Ltd, reported in 2014 SCC Online Bom 1324, and agreed with the opinion, that Novex was indeed carrying out the business of issuing or granting license in respect of works for which there exists a copyright, and that Novex was doing so in contravention of the restriction under S.33.
The Court also took note of the opinion of the judgement delivered by Delhi High Court in Novex Communications Private Limited v. Lemon Tree Hotels Limited, wherein the Court emphasized the restriction being only for the musical work in a sound recording, and not the sound recording itself. However, the Court did not agree with this opinion, reasoning that it did not factor in the distinction between a license being issued in an individual capacity of an owner, or as a business for the same.
The Court was of the opinion that, if the business of grant or issuance of licenses was allowed by other persons in addition to copyright societies, it would render the inclusion of the word ‘only’ by the legislature, into the language of the proviso to be considered redundant. Quoting Sankar Ram & Co. v. Kasi Naicker ((2003) 11 SCC 699), the Court reiterated that it should proceed with the assumption that every word in a legislation was put there with a purpose, and that it is the legislative intent for every word there to have effect.
In the opinion of the Court, the reason behind the introduction of the second proviso by the 2012 Amendment to the Copyright Act, 1957 – was the fact that the copyright societies were being taken over the by owners of the copyrights, while the authors were being pushed to the back. S.17 and 18 left the authors and composers with almost no share of royalties. The amendments to S.33 were made so that the business of issuance of licenses for copyrights can be routed only through the copyright societies, thus allowing for the benefits to be equally shared between the owners, as well as authors and composers of the copyright, on both ends. While the court did agree that joining a copyright society as an owner is optional, by virtue of S.34 of the Act, it did state that the right to issue licenses as an owner remains unimpacted only till the point it is in individual capacity – it does not remain uninfluenced once it enters the dimension of being for the purpose of a business in that nature.
The Court held that the basis of the suit instituted by the Plaintiff was a misconception on its part that its right was infringed by the Defendants, as by virtue of the restrictions in the second proviso to S.33, the Plaintiff was barred from issuing licenses as a business in the first place.
Citation: M/S.Novex Communications. vs Dxc Technology Pvt. Ltd, decided by Madras high Court on 8th of December, 2021, available at https://indiankanoon.org/doc/97106760/, accessed on 18.01.2021.
About the Author
Authored by Tanmaya Purohit (Intern, BananaIP Counsels)
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