As we had blogged earlier, the
constitutionality of several provisions of the Copyright (Amendment) Act, 2012 is
being challenged by music labels and film producers. We earlier had a guest
post by Chaitanya, who explained in detail the petitions filed by T-Series
before the Delhi High Court challenging the constitutionality of the statutory
and compulsory licensing scheme of the copyrights in the music owned by music
labels.
In this post, I will (very) briefly explain the
constitutional challenges mounted by film producers against the amendments to
Section 17, 18, 19 & 33 of the Copyright Act. I’ve already dealt with the
petitions challenges to the Copyright Board over here.
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| Image from here. |
(i) The
second proviso to Section 17: The amendments to the second proviso of
Section 17 were aimed at over-ruling the Supreme Court’s judgment in the 1977
IPRS case where it was held that the producer of a cinematograph film would be
the first owner of the music and lyrics that were commissioned for
incorporation in the soundtrack of a movie.
Section 17 in general, deals with the concept
of first ownership and identifies a number of situations where the person who
commissions a work owns a copyright in the work. The purpose of such a
provision is to make business simpler and reduce the transaction costs for
several scenarios. As detailed in Bharat Anand’s petition, the production of a
cinematograph film is complicated business with thousands of people involved
and a provision like Section 17 makes it easier for the producer to claim a
copyright in the movie to the exclusion of everybody else.
The amendments however, waive the principles
of first ownership enshrined in Section 17, for all original literary,
dramatic, musical and artistic works. Prior to this amendment, an author of the
works mentioned above could claim ownership of the copyright in the case of a
commissioned work only in a case where he had entered into a contract expressly
stating the same. However the amendment, exempts the above mentioned works,
from the principles of first ownership laid down in Section 17. In my
understanding (and I’m not sure whether the Bharat Anand petition says the same
thing) this means that now onwards in order to claim first ownership of a
contract, the producer of a film will expressly have to enter into a contract
with the authors of the original literary, dramatic, musical and artistic
works.
There has been some talk, by people in the
industry, including in Bharat Anand’s petition that Section 17 prohibits the
producer from first ownership of a copyright in entirety. I don’t think such an
interpretation of the law is correct. Section 17 does not expressly prohibit or
void such contracts which would mean that producers can enter into contracts of
employment with the staff on their rolls expressly claiming copyright in all
works created by the staff. Of course this involves transactions costs of negotiating
with employees.
The Bharat Anand petition challenges the
constitutionality of this provision alleging that the amendments violate their
right to equal protection under Article 14, since they discriminate unfairly
against only the producers of cinematograph films, while maintaining the status
quo for other copyright owners.
This is a weak argument since Article 14 does
allow Parliament to create special classes or categories which can be treated
separately from others, provided that such classification has a rational nexus
to the overall objectives of the legislation. In the present case, Section 17
already creates special classes and provides them with special treatment and
Parliament has complete liberty to amend this classification further to provide
for a more level playing field between producers and authors of certain works.
The petition also mentions Article 21 (Right
to Life and Liberty) as a ground of challenge but I think it was more of a
formality than a focussed challenge.
(ii) The
provisos to Section 18 & 19: These provisions basically create a right
which allows lyricists and composers to receive equal share of all royalties
earned by the producer through the exploitation of their works. This amendment
was the most contentious point of debate since it changed the practice wherein
the composer or lyricists would assign away their copyrights for a one-time
lump-sum payment. I have to agree with the producers, that these particular
amendments are delightfully vague and are likely to lead to a lot of
litigation.
The core constitutional challenge against
this provision, by the film producers, is that such provisions create special
rights for only lyricists and composers and unreasonably discriminates against
other classes of authors.
Once again this is a weak ground for
challenging the amendments, since the classification of lyricists and composers
of works incorporated in cinematograph films, is based on intelligible criteria
and more importantly, such a classification bears nexus to the final aims of
the amendments, which is to protect the interests of composers and lyricists
who were being exploited by producers. Moreover, the entire idea of copyright
is a creation of Parliament and Parliament has a considerable leeway in
deciding how to structure these rights. If Parliament wants, it can even do
away with copyright law completely. Unlike the U.S., there is no provision in
the Constitution requiring Parliament to protect the copyrights of authors.
The petition also complains that these
amendments place all composers and lyricists on an equal footing regardless of
their track record or status in the industry instead of allowing the
petitioners to exercise their fundamental rights in Article 19(1)(g) to conduct
their business. However all fundamental rights are subject to reasonable
restrictions and in the circumstances, these amendments would be considered as
reasonable restrictions.
(iii) Section 33: The amendments
to the proviso of Section 33(1) required that the entire business of issuing
copyright licences for soundtracks incorporated in cinematograph works, be
administered only through a copyright society. The aim of this amendment was to
force all music labels into copyright societies to ensure that they could be
regulated under a stricter regime of transparency.
The film producers argue that such a
provision violates their fundamental right under Article 19(1)(c) to form
associations and unions since the Supreme Court has held that the right to form
association, includes the right to not join an association.
I think that this is a strong argument, since
it makes intuitive sense, to forbid the state from forcing a company into
business with a bunch of other companies with which it may not want to conduct
business. In the context of copyright societies, royalty distribution can be an
exceptionally tricky business, especially with unlogged royalties where the formula
for distribution depends on a vote of the majority. In the circumstances it is
simply unfair to force a company into copyright society where it does not trust
the majority of members.
This argument presupposes that the Registrar
of Copyrights allows the creation of only one copyright society. If this is the
case, the High Court is almost certain to strike down the amendment as
unconstitutional but it is also possible that the High Court may just interpret
the provision to conclude that the Registrar will have to register multiple
copyright societies. Of course, having multiple copyright societies can destroy
the very purpose of creating copyright societies, which is to create a one stop
shop for all licensing. The advantage however is that we have more transparency
and more competition between the different copyright societies.
I disagree on the views posted on section 33. The basic intention of the amendments were to grant rights and protect the economic interests of the authors. That is why the amendments to section 33 only say licensing of musical & literary works incorporated in its cinematograph film and or Sound recording will be licensed thru a copyright society, for the other rights viz. sound recording, cinematograph film the owner has the liberty to license himself or thru the society. If the owners of the musical & literary works are allowed to do licensing on their own, then authors right to royalty will be a challenge as the author will have to chase numerous owners to get royalty and the purpose of the amendments by parliament will be defeated. Also in case authors are owners and not members of a society licensing will be a nightmare separate license from lyric writer, music composer or the legal heirs and in case more than one composer (duos or trios) and what if each wants a different royalty rate / structure. Then you will again complain that licensing has become difficult. Probably that is why for authors rights i.e. lyrics and compositions it is best governed thru a copyright society and the owner will be entitled to his share of royalty.
ReplyDeletePrashant has succinctly covered the critical challenges. There are varied interpretations floating in the market with respect to these amendments. The IPRS judgment extended the scope of Section 17 (b) to include underlying works incorporated in cinematograph films within “work for hire”/ “commissioned work” concept. The idea was that the producer of a film who bears the entire financial brunt of the film and has to alone bear the losses should have the right to deal with his film as his property (unless otherwise agreed). If the intention of the Parliament was to take away this right from the producer then the amendment should have been to Section 17 (b) and (c). Wrt to S.17 proviso Mr. Kapil Sibal had mentioned in his speech “In the past what has happened is that those who have money power have sought the assignments of their intellectual property unconditionally to themselves and, then, use that assignment for the purposes of exploiting that work, not just in cinema, but through other mediums, the result of which has been that the artist who is the creator of intellectual property gets no share of the profits. That has been the legacy of this industry in the past. We want to correct that thing. We want to ensure that the author, the music composer and the artist have equal share in the profits that the Assignee makes through other mediums, and it is in that context that we have amended Section 17 of the Act.” Therefore a logical interpretation of S.17 proviso would be that “the right of author” referred therein should be understood as “right to receive royalty” and not the copyright of the authors in their respective underlying work.
ReplyDeleteIn this regard it may also be relevant to consider S. 21 of the Copyright Act, which provides for a right to relinquish any right in the copyright, vis a vis the amendments to Section 18, which prohibit an author from waiving his right to receive royalty. If the right to receive royalty is treated as a copyright or part of the copyright, then there could possibly be a conflict between the S. 18 amendment and S.21. However, if the right to receive or claim royalty available under the amended S. 18 and 19 of the Act is treated as a right separate and independent of copyright, then there may not be any conflict between the aforesaid provisions, since S. 21 only provides for relinquishment of right comprised in a copyright in a work.
The Amendment will however lead to a situation where the producer by virtue of being the assignee of copyright will be required to be a member of several societies which are formed by script writers, screenplay writers, dialogue writers, music composers, lyricists, sound designers, background sound designers, choreographers, set designers, singers, actors and the list goes on. It would be interesting to see the Parliament achieve its objective in practicality.