May 09, 2014

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Is The Creative Community Satisified With The Copyright Act 2012?

- Rahul Ajatshatru, Managing Associate [ Anand and Anand ]

Rahul Ajatshatru

The judgement of the Supreme Court of India in the case of Indian Performing Right Society v. Eastern Motion Pictures Association, AIR 1977 SC 1443 is the most controversial judgement that has aggrieved the creative community at large. One of the most significant purpose of the 2012 Amendments to the Copyright Act, 1957 was to undo the far reaching consequences of the SC ruling. This article examines the efficacy of Copyright (Amendment) Act, 2012 to that limited extent.

A. Background

Indian film industry has emerged as the largest in the world. Over the years it has employed and established various creative artists who have composed poetry/lyrics, musical compositions, stories and scripts and so and so forth that has become a part of the contemporary Indian culture. These (copyright) works that are presumably created by their own creativity, intellect and talent, more frequently the inspiration or at least the requirement for such creative works originates at the instance of a film producer who engages/employs such talent. IPRS, the copyright society constituted under the Copyright Act, 1957 represents the authors and composers of literary and musical works and collects performance royalty on their behalf.

B. The Ruling Of The Supreme Court

Many years ago, IPRS on behalf of its members wanted to collect performance royalty for literary and musical works that were incorporated in a cinematograph film from the box office proceeds that were collected from the exhibition of films in cinema hall/theatres. The case went all the way upto the apex court and the moot question before the Supreme Court was: When an author/composer has created a literary/musical work at the instance of the producer and accordingly the said work is incorporated in a cinematograph film then can the creative artists claim royalties from the box office collection from exhibition of the film to public in the cinema halls as their works are performed in public along with the film during such exhibitions/screening of the film. The general law on ownership of copyright as contained in section 17 of the Act states that the 'author' of a work shall be the first owner of copyright. Interpreting section 17(b) of the Act which reads,

"subject to the provisions of clause (a), in the case of a photograph taken, or a painting or portrait drawn, or an engraving or a cinematograph film made, for valuable consideration at the instance of any person, such person shall, in the absen ce of any agreement to the contrary, be the first owner of the copyright therein",

the Supreme Court in the 1977 IPRS Case held that when a 'work' is created at the instance of a producer to be incorporated in a cinematograph film being produced by him then in the absence of a contract to the contrary the producer becomes the first owner of copyright in such 'work'. The Supreme Court thereafter dismissed the petition holding that the authors and composers by effect of section 17(b) never became the owners of copyright in their work in the first place and accordingly they could not claim royalty from exhibition of film incorporating their work.

C. Consequences Of The Ruling

The Copyright Act provides the widest protection to the individual authors (natural persons) and empowers them with a spectrum of rights to enable them to derive economic benefits and livelihood from the works of their creation. While making a film is only one of the several rights recognised by the Act, the Supreme Court in the IPRS Case did not clarify the extent to which these rights got vested in the producer, ab initio. Other rights that were outside the cinematograph film and probably to the least interest of a producer also got taken away because of the limited scope of the dispute before the Supreme Court and its wide and far reaching ruling. The baby was thrown away with the bathwater.

D. 2012 Amendments

The Copyright (Amendment) Act, 2012 came to the rescue of the creative community by inserting certain 'negatively' worded provisions. Firstly, a provision is inserted in section 17 to negate the effects of 17 (b) and 17(c) on the ownership of copyright and securing the same in the author. It reads:

"Provided that in case of any work incorporated in a cinematograph work, nothing contained in clauses (b) and (c) shall affect the right of the author in the work referred to in clause (a) of sub-section (1) of section 13."

This insertion was obviously made with a specific intention to negate the 1977 Supreme Court ruling. As a consequence, no matter how the authors and composers are engaged by a production house/producer, they shall always be the first owner of copyright in the works created by them. Thus, it now becomes necessary for every producer to take written assignments/license of rights from all authors/composers engaged by him in course of production of a cinematograph film. This gives the authors and composers opportunity to negotiate their contracts and receive income/royalties accordingly.

Another important amendment to secure income to the authors and composers is made to section 18 where a proviso is inserted to ensure that they are not tricked into assigning their economic rights under unfair contracts and income is guaranteed to them. The proviso reads as:

"...Provided also that the author of the literary or musical work included in a cinematograph film shall not assign or waive the right to receive royalties to be shared on an equal basis with the assignee of copyright for the utilisation of such work in any form other than for the communication to the public of the work along with the cinematograph film in a cinema hall, except to the legal heirs of the authors or to a copyright society for collection and distribution and any agreement to contrary shall be void."

Similar protection is given to the authors and composers of works that are used in the sound recording which includes a music album. Though this insertion puts a negative restriction on the rights of authors and composers the object is to protect them and to ensure that they get their share of the royalty pie.

Further, section 19(9) of the Act, reads: "(9) No assignment of copyright in any work to make a cinematograph film shall affect the right of the author of the work to claim an equal share of royalties and consideration payable in case of utilisation of the work in any form other than for the communication to the public of the work, along with the cinematograph film in a cinema hall."

Thus, by such amendments the authors and composers are ensured royalties from the income of a film in which their works are incorporated except for the theatrical exhibition/ exhibition in a cinema hall.

E. The Consequences And Conclusion

These amendments do not necessarily fill all the gaps and further create certain unintended situations. For instance, the Supreme Court ruling still is binding so far as the question of ownership of copyright is concerned for works that are created prior to the notification of present amendments. This leaves a large constellation of works and a large numbers of authors and composers who will not benefit from these amendments. Their work will still be governed by the position of law prior to the amendment and no benefits may accrue from the amendments in their favour.

The 2012 Amendments while uses the expression 'royalty', it does not define it. Royalty is a commercial consideration for grant of copyright license/assignment. The present amendment to copyright law makes royalty to be payable to the person (author) even when he has assigned all his rights (and is no longer the owner of the copyright). This means that even if the ownership of copyright in a work (literary and musical) has changed hands from authors to producers to broadcasters/third parties, the liability to pay royalty to the author shall survive which does leave some fallacy and unknowns gaps in valuation and commercial viability of transaction.

These statutory restrictions and conditions has a direct bearing on the manner in which the business is currently conducted in the entertainment industry so far as the income and revenue share agreements are concerned. Making films have become expensive and music rights of films have never been more expensive. Music industry is bleeding and many labels are slowly shutting shops because of reduced scale of business. In the current economy and especially the business practices employed, Indian film and music industry survival has become difficult. Music companies/record labels/distribution platforms are trying hard to keep up but the present amendments have made their survival even more difficult. As a result of which completely onesided contracts have started surfacing at every kind of distribution platform/ music label. Withholding release, rejecting products, replacing artistes and their works from music albums are some of immediate reactions of the music labels/distribution platforms that are being witnessed lately.

The Parliament clearly intended to empower the authors and composers and to give them protection against exploitation and to ensure remuneration and royalties to them for the copyright works created by them. However, the present amendment has created more hostility and friction between the business and creative sides resulting into an oscillating cobweb. These amendments may not be the final destination but a first step towards correcting / rationalising the industry practices and standards.

Rahul Ajatshatru, Advocate, graduated from the University of Delhi with degrees in Economics and Law. He was called to the bar at Delhi in 2004. He has practiced Media & Entertainment Laws for over seven years now and after advising India's leading entertainment company he heads Anand And Anand's practice in Mumbai with a keen interest and focus on media & entertainment laws.

Disclaimer - The views taken in this article are personal views of the author and not of his firm or his clients.

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