Copyright Assignees Like PPL & Novex Are 'Owners', Can Issue Music License Without Being Registered Copyright Societies U/S 33(1) Of Copyright Act: Bombay HC

In a significant order, the Bombay High Court has held that music rights holders like Phonographic Performance Ltd and Novex are copyright owners and can issue music licenses even if they are not registered as copyright societies under Section 33(1) of the Copyrights Act.

PPL and Novex are two companies that have acquired music assignments from producers like Tips, T-Series, Eros etc and are the exclusive licensees of these titles for the purpose of on-ground performance rights. 

Justice R.I. Chagla ruled that "Section 33(1) of the Act cannot curtail the power of the owner to grant any interest in the copyright by license under Section 30 of the Act."

The concept of copyright society under Section 33(1) was introduced by an amendment in 1994 to enable collective administration of copyright licencing/music licencing as assigning rights individually is cumbersome. However, a registered copyright society is also regulated under the Act and has greater obligations than a copyright owner.

The court's decision grants greater flexibility to the companies and upholds the primacy of Section 30 which empowers copyright owners to grant licenses for their works.

The bench decided this preliminary issue in PPL and Novex's pleas against a host of restaurants, hotels and malls alleging copyright infringement for using sound recordings without a licence.

It rejected the defendant's arguments that section 33(1) prohibits any person, including a copyright owner, from carrying on the business of issuing licenses without registering as a copyright society.

“If such interpretation is accepted, Section 33(1) of the Act would take way the power of owner and /or the right of the owner to grant any interest in the copyright by license. This would emasculate right of the owner under Section 30,” the court observed.

The court referred to section 30 of the Copyright Act which gives a copyright owner the power to grant any interest in the copyright by license. "Thus, it follows that PPL and Novex as owners/assignees have the power to grant any interest in the copyright by license which would include the interest of communicating the sound recordings to the public," Justice Chagla observed.

The court also relied on the Supreme Court's decision in Entertainment Network India Ltd. v. Super Cassette Industries Ltd. (2005), which held that Chapter VII of the Copyright Act was incorporated to enable authors to commercially exploit intellectual property through copyright societies and does not take away the rights of authors/owners.

Quoting from the Supreme Court judgment, Justice Chagla said, "The idea of a Copyright Society is to assist the owner and not take away rights from an owner."

The court dismissed the contention of the defendants that the word 'business' in Section 33(1) should be interpreted broadly to include the licensing activities of a copyright owner.

"If the interpretation of the Defendants on business is to be accepted then in that case 99% of the ownership rights would be taken away and the only right left with the owners would be to license its rights for philanthropy. Thus, this interpretation of the Defendant cannot be accepted," the Judge added.

The court also held that section 33(1) operates in a different field than section 30 and there is no conflict between the two provisions.

It said that the prohibition as contemplated under Section 33(1) is on carrying on the business of licensing by a person or association of persons in its own name for works in which 'others' hold copyright.

In conclusion, the Bombay High Court held that it was not necessary for PPL and Novex as owners/assignees of copyright to be registered as copyright societies for carrying on the business of granting licenses of their works.

The court rejected the argument that the non-registration of PPL and Novex as copyright societies makes their assignment agreements illegal and their cause of action invalid.

“Thus, in my view a partial assignment created as in the present case in favour of PPL and Novex i.e. to communicate sound recording to the public, to the extent of the right so created, the assignee is an 'owner' of the copyright in the work,” the court ruled.

The court disagreed with the Madras HC's view in Novex Communications Vs. DXC Technology Pvt. Ltd. which distinguished between granting licenses in an individual capacity and carrying on the business of licensing. 

The court held that the Madras HC had overlooked the primacy of Section 30 giving the owner the right to grant interest in the copyright by way of license.

Accordingly, the court held that for a limited purpose, assignees such as Novex and PPL become owners of the copyright under Sections 18 and 30 of the Copyright Act.

Case Title - Novex Communications Pvt Ltd. Vs Trade Wings Hotesl Limited

Case Number - COMMERCIAL IP SUIT NO. 264 OF 2022

Appearances – Sr Adv Darius Khambata a/w Adv Rashmin Khandekar for Novex, Sr Adv Ravi Kadam, Adv Amogh Singh and DP Singh for PPL (kindly refer to judgement copy for complete list of appearances)