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CASE ANALYSIS OF M/S. NOVEX COMMUNICATIONS PVT. LTD. V. DXC TECHNOLOGY PVT. LTD., C.S. NO. 407 & 413 OF 2020 (MAD HC) BY – MEHER & DR. KAJORI BHATNAGAR
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CASE ANALYSIS OF M/S. NOVEX
COMMUNICATIONS PVT. LTD. V. DXC TECHNOLOGY PVT. LTD., C.S. NO. 407 &
413 OF 2020 (MAD HC)
AUTHORED BY – MEHER & DR. KAJORI BHATNAGAR
INTRODUCTION:
Intellectual property has become one
of the most sought after properties in the era of data and information. There
are business models which solely run on intellectual property. The
intangibility of the property makes it easier for exploitation along with giving
huge returns to its owner. This very nature of intellectual property compels
the creators and the government to create a fool proof mechanism which balances
the returns and prevents exploitation. Even in the most infallible laws there
are loopholes which powerful organizations and companies deem it worth to
exploit. These violations call for societies which plan to protect the
interests of the owners of intellectual property in good faith. Then there are
the societies which plan to further monopolise. Every time the society and the
market tends to take piecemeal measures to build up a perfect competitions
market with a proper transparent economy there are the counter forces acting up
to monopolise the resources. This is an recurrent loop which is inevitable to
have the intellectual property ecosystem running. To soften the blow to the
economy the laws brought in licensing. Copyright licensing is one of the most
famous among intellectual property licensing because of the array of subject
matters it covers. The licensing of anything ranging from music to machines and
software made licensing process a national income. Essential licensing should
include meeting of minds like any other contract. It is also pegged to be the
most rewarding aspects of intellectual property.[1]
This case analyses the issuing of licenses and how authors can be manipulated
by monopolizing the issue of licenses.
FACTS:
The plaintiff filed the case against
the two defendants for infringement of copyright of sound recordings. The plaintiff
was assigned the copyright to certain sound recordings by their owners
eventually making the plaintiff the owner of such sound recordings. The
plaintiff claims that the performance rights are also included in the
assignment agreement and the defendants have infringed the right by playing the
songs in different functions without proper licensing. The defendants claim
that the plaintiff has no authority to grant licensing, and is charging
exorbitant fee without being registered as a copyright society as under section
33(1) of the 1957 act.
ISSUES:
Whether unregistered third parties
can license music and other copyrighted works?
Whether only copyright societies can grant licenses?
LAWS:
COPYRIGHT ACT, 1957
SECTION 2(d) defines author with respect to
different copyrightable works.
SECTION 2(ffd) defines “copyright society”-- means
a society registered under sub-section (3) of section 33.”
Section 18 talks about the assignment of
copyright, who is entitled to the royalties and further rights if any. The
royalties cannot be waived off, it also talks about the assignee becoming the
authorizing agent despite the author being original owner of the copyright.
Section 19 talks about the mode of the
assignment and the period of assignment if nothing is mentione dit would be 5
years from the date of assignment.
Section 30: it talks about licensing by the
owners of the copyright- The owner of the copyright in any existing work or the
prospective owner of the copyright in any future work may grant any interest in
the right by licence in writing by him or by his duly authorised agent:
Provided that in the case of a licence relating to copyright in any future
work, the licence shall take effect only when the work comes into existence.
Section 33: Registration of Copyright
Societies- (1) No person or association
of persons shall, after coming into force of the Copyright
(Amendment) Act, 1994 (38 of 1994) commence or, carry on the business of
issuing or granting licences in respect of any work in which copyright subsists
or in respect of any other rights conferred by this Act except under or in
accordance with the registration granted under sub-section (3):
Provided that an owner of copyright
shall, in his individual capacity, continue to have the right to grant licences
in respect of his own works consistent with his obligations as a member of the registered copyright society:
Provided further that the business of issuing or granting licence in respect of
literary, dramatic, musical and artistic works incorporated in a cinematograph films or sound
recordings shall be carried out only through a copyright society duly
registered under this Act
JUDGEMENT:
The Madras High court disagreed with
the previous High court judgements of that of Delhi High court and Bombay high
court. The reasoning given by these two courts have different value to the
issue at hand, nevertheless are very much relevant to signify the intent of the
statute. The interpretation taken by the Madras high Court is completely in
dissent with the previous two decisions by other high courts. The Madras High
Court signifies the use of the word “only” and emphasizes on the fact that the
copyright societies alone are the authorities who can get into the business of
granting licenses. The provisos of section 33 are rather complementing each
other than making it mutually exclusive. The court lays importance on the fact
that the first proviso clearly talks about the authors and license grantors in
individual capacities whereas the second proviso talks about organizations like
that of Novex communications. Since Novex Communications is an entity which is
involved in a business of owning copyrightable material like sound recording it
is a prerogative to be registered as a copyright society without which there is
no authority to give licenses. The registration and granting of licenses are
not contingent to each other but are a mandate established by the statute.
Since there is a bar on the organization the fictitious rights violated do not
exist. Therefore the court held that there is no liability on part of the
defendants, as there is an embargo. The court held that the whole cause of
action is misconceived and there is no cause of action. The plaintiff was
directed to pay Rs. 1,00,000 to each of the defendants.
ANALYSIS:
The contentions of the parties throw
a significant light on how to view the conflicting interests the different
sections of the copyright act protects. The contentions of the plaintiff go as
follows:
The plaintiff is the rightful owner
of the sound recordings as there is an assignment agreement under section 18(2)
and according to section 30 the rightful owner can grant licenses. The
plaintiff being the owner is exempted from the joining of a copyright society
as under section 33 as he has the authority under section 30. The plaintiff
also takes the protection of section 34 of the act which talks about the fact
that the joining of copyright society is a voluntary act and nothing can act as
an embargo on the organization which is an owner of copyrightable works to
grant licenses.
The contentions of the defendant go as
follows:
The defendants claim that the section
33 does not give the exception to the owners who are organizations. They also
claim that the work so protected by novex communications does not include
performance rights, they just own the sound recordings. The defendants also
highlight the 2012 Amendment which was brought in to restrict the exorbitant
amount of royalties organizations like novex collected. The purpose of section
33 would be nullified if Novex communications was allowed to grant licenses.
From the arguments we can analyse the
effect of this case on the copyright law in the following manner:
Compulsion to be a member of a
Copyright Society:
Copyright societies have already sabotaged the purpose of copyrights. With the
increasing amounts of royalties they are charging they are manipulating
competition in the copyright market. The unfair trade practices and the
predatory pricing has become a common scenario for copyright societies. While
the 2012 amendment to section 33 was brought about to prevent this effect where
unscrupulous activities were carried on by the big organizations by snatching
the rights form the original copyright owners and licensing them at incessantly
higher price, even going to the extent of charging per minute. The copyright
act sought to curb this practice by bringing in copyright societies but they
follow the same track and now it is in the governments’ hands to regulate the
competition. Seeking to monopolise creations is one of the after effects of
copyrights statutes but monopolizing to the extent of even the author not
enjoying the benefits is atrocious and against copyrights in their true sense.
The mandate of the act to be registered in copyright society is violating the
act in various ways but the courts seem to ignore the greater picture. The
courts so far have decided on the very myopic issue of interpreting only
and the difference between individual and organizational rights when it comes
to licensing. The greater picture here is the loss to individual rights and
boosting the copyright societies. With this judgement although the courts
clarified the legislative intent of the word shall and only in the section 33 they
have ignored their duty to the stakeholders involved.
Source of Power: source of power to grant license is
obtained from the statute in the case of copyright societies, whereas in the
case of unregistered third parties it is the contract of agency. In the present
case there is contract of agency unlike the previous case of M/sLeopold Café
Stores v Novex Communication[2].
The Bombay High Court in the above stated case nullified the power to grant
license on the basis of lack of assignment agreement as that is the contract
which gives the ultimate power to grant licensing making the corporations the
owners of copyright. Factum of agency is duly established in this case
therefore it cannot be a contention for restricting the power. There need to be
a harmonious construction to reconcile both conflicting interest of section 33
and section 30. Although they are complementing interests the interpretation
should be in way to supplement each other fulfilling the final objective of the
act on whole. The same reasoning of source of power goes when there is a
question of second proviso being an exception to the first proviso. The present
court substantiated with the differentiation between individual capacity and
business. When someone is involved in a business they should be registered in a
copyright society but an individual is free to grant license even if not
registered.
Interpretation of the word ‘Business’: the court was mainly focused on
this word after giving ample importance to the word ‘only’. The word of business
has been interpreted stating that the same has not been used in section 30
whereas it appears in section 33. This court focused more on section 33 as
opposed to the harmonious interpretation given by Bombay High Court. The
interpretation can be seen in the paras 27- 30 of the judgement. The court took
a two-fold rationale by interpreting business and only. The court further
emphasizes on the meaning of business[3] by
using certain judgements.
Precedents: this is not the first time the court
is faced with the issue of section 30 v. section 33. In the case of Event and
Entertainment Management Association (EEMA) v. Union of India[4]
the court held that not beign registered under copyright societies proscribes the
organization form granting licenses but the court did not substantiate much on
the topic. Whereas in the case of Novex Communications Private Limited v. Lemon
Tree Hotels Limited[5] the
court held the opposite and did not differentiate between the business and
individual capacities. The court differentiated between the sound recording and
the musical rights in the sound recordings. This case differentiated between
the different kinds of copyrightable works and noted that it is hard to decide
whether a particular is a business entity, which will nullify the provisos if
the licensing authority is granted on that basis.
CONCLUSION:
As of now a Supreme Court Judgment or
an amendment will only clarify the stance on this section. The courts have done
their course of action which resulted only in the piecemeal bearings on the
stakeholders. The courts have tried to clear the ambiguities as always and made
it more complex. The courts have to look at the bigger picture rather than
sticking to the tradition role of interpretation. The present case is an
example as to how detrimental the interpretational duties of courts can prove
to be to the ecosystems and markets at large. The harmonious balance in all the
interests is hard to obtain but the least the courts can do is to clarify the
position without complicating the meaning of the amendments. Another noteworthy
part of this judgment is the use of a law commission report to substantiate the
claims, and how authoritative it can be when it is the question of interpretational
issue. On the whole the case is an addition to the huge literature there is on
section 33 and section 30. It being digressing judgement from its predecessors
makes it a unique one.
Article Information
CASE ANALYSIS OF M/S. NOVEX COMMUNICATIONS PVT. LTD. V. DXC TECHNOLOGY PVT. LTD., C.S. NO. 407 & 413 OF 2020 (MAD HC) BY – MEHER & DR. KAJORI BHATNAGAR
Authors: MEHER, DR. KAJORI BHATNAGAR
- Journal IJLRA
- ISSN 2582-6433
- Published 2023/09/06
- Issue 7
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International Journal for Legal Research and Analysis
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