Legitimacy of IPRS and PPL

26th August, 2017 - 7:38 am Categories: Copyright India Intellectual Property 24 Comments

What is a Copyright Society?

The collective administration of copyright by a society is a concept where management and protection of copyright in several works are undertaken by the said society of authors and other owners of such works.

In India, a copyright society is registered under Section 33 of the Copyright Act, 1957. Such a society is formed by authors and other copyright owners which may include licensing entities by virtue of assignment from the original author. The business of issuing or granting license in respect of literary, dramatic, musical and artistic works incorporated in cinematograph films or sound recordings shall be carried out only through a copyright society duly registered under this Act. Ordinarily, only one society is registered to do business in respect of the same class of work.

The minimum membership required for the registration of a copyright society is seven. On registration, a copyright society stays in existence for 5 years[i], after which it must apply for renewal. The functions of a copyright society include prescribing a license fee in accordance to its “Scheme of Tariffs” as decided by the members of the society. Under the Copyright Rules, 2013, every society must publish its tariff scheme on a regular basis. The society also decides how the collected fees shall be distributed among the members of the society.

What are IPRS and PPL?

The Indian Performing Right Society (IPRS) and Phonographic Performance Limited (PPL) were Copyright societies registered under Section 33 of the Copyright Act, 1957.

IPRS came into existence on 23^rd August, 1969 to administer and issue license for usage of all performing rights associated with composition and lyrics and got registered as a copyright society in 1996.

The Indian Phonographic Industry (IPI), the association of phonogram producers was established in 1936. Subsequently, it decided to form a specialised body to administer the public performance and broadcasting rights, and so Phonographic Performance Limited (PPL) came into being in 1941 and just like IPRS, it also got registered itself as a copyright society under the Copyright Act, 1957.

Controversy involving the legitimacy of IPRS and PPL

In 2012, the Copyright Act was amended and a series of changes were incorporated. Following the amendment, string of litigation, unfolding of facts and judgements came to the notice.

The said amendment was made in Section 33 of the Act wherein subsection 3A was inserted, the proviso to which stated “every copyright society already registered before the coming into force of the copyright (amendment) Act, 2012 shall get itself registered under this chapter within a period of one year from the date of commencement of the Copyright (Amendment) Act, 2012”, and came into force on the 21^st of June, 2012.

Both IPRS and PPL applied for re-registration on 8^th May, 2013 and 10^th May, 2013 respectively which was only a month prior to the expiration of the granted period for re-registration. However, IPRS in a letter dated 2^nd June, 2014 and PPL in a letter dated 20^th May, 2014 expressed their intent to withdraw their application for re-registration. Thus, due to failure to re-register IPRS and PPL, the earlier copyright societies were automatically disqualified to operate as Copyright societies under Section 33 of the Indian Copyright Act.

Now, both the entities operate as Private Limited Companies, registered under the Companies Act.

Such aforesaid actions by IPRS and PPL could have ensued due to the amendments brought about in 2012. It may be pertinent to note that authors of copyrighted works usually assign their rights in favour of IPRS or PPL for the licensing of said rights. The amendment in 2012 resulted in the change whereby “owners of the right” in Section 33 was substituted by “authors and other owners of right”. Therefore, as per Sections 33(4) and 33(5), the Central Government by virtue of the amendment could intervene in the administration of the said copyright society if the affairs of such society were being conducted contrary to the interests of the authors of the copyrighted works.

Moreover, by virtue of the amendment, an author of a copyrighted work shall have the right to withdraw the exclusive authorisation given to the copyright society to administer any right in a work without prejudice to the rights of the said society under any contract. Further, Section 35 has been amended to provide that every copyright society shall have a governing body with such number of persons elected from among the members of the society consisting of equal number of authors and owners of work for the purpose of the administration of the society. Section 35(4) provides that all members of a copyright society shall enjoy equal membership rights and there shall be no discrimination between authors and owners of rights in the distribution of royalties.

IPRS v. Union of India and Ors. & Hasan Kamal v. Union of India

(Writ Petition no. 2384/2014 with 2236/2014)

There were several complaints keeping IPRS in limelight for irregularities which  ranged from non-distribution of royalties, illegal sub-licensing of royalties, illegal transfer of mechanical rights and ring-tones royalties to another copyright society- PPL and lastly, forging signatures and misrepresentation to the Ministry of HRD. All these acts were violative of Sections 33-35 of the Copyright Act, 1957. Taking cognizance of such complaints, the government proceeded to pass an order to appoint an Enquiry Officer to make necessary enquiries into alleged complaints and to give suggestions to improve the administration of IPRS, thereby Justice Shri Mukul Mudgal was appointed. Post that, IPRS moved the High Court of Bombay and argued that  Rule 50 of Copyright Rules, 2013 provides for the appointment of an office above the rank of Deputy Secretary to the Government of India for the purposes of this enquiry and contended that the appointment of a former Chief Justice of the Punjab and Haryana High Court was not in compliance with the provisions of the Act. However, later in September 2014, the Justice resigned from the post of Enquiry officer as he did not want his qualifications to be a subject matter of litigation.

It further contended that since it failed to re-register itself as a copyright society as per the amendment, the order was inapplicable since it was made on the assumption that IPRS was still functioning as a ‘copyright society’. The High Court dismissed IPRS’s contention and said that if such contentions were to be accepted, “it would be adding premium to dishonesty” since it was a registered society from 1996 to 2013. In this regard, the Court stated;

“We do not think that the Legislature intended such an absurd result. We are, therefore, clearly of the view that the Central Government had jurisdiction to form a prima facie opinion that an enquiry is required to be conducted into the affairs of the petitioner society in respect of the alleged violations of the Act and the Rules”

IPRS moved the Supreme Court of India by a Special Leave Petition which was dismissed.

Whether IPRS and PPL can be construed as Copyright Societies or not?

The question as to whether IPRS and PPL are to operate as copyright societies is important as Section 33 of Copyright Act permits only a registered copyright society or an authorised agent to carry out the business of issuing and granting licenses. Both IPRS and PPL have publicly stated that they are not registered copyright societies and even the Ludhiana High Court ruled that IPRS was not a registered society in 2013.

Interplay between Section 30 and Section 33

Section 30 of the Act provides that “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 signed by him or by his duly authorised agent”

Thus, Section 30 provides for granting the license by agents on behalf of the owner. In the current scenario, the two entities, IPRS and PPL, claim to function as agents of their members and thus grant license in the name of the agent.

Section 33 of the Act provides “No person or association of persons shall 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)”

IPRS’ and PPL’s claim of functioning under Section 30 is overlapped by Section 33.  It needs to be reiterated that for the purpose of issuing or granting license, the entity needs to be a copyright society registered  under the Indian Copyright Act but IPRS and PPL maintain that they are not copyright societies and hence don’t come under the ambit of Copyright Act. Despite this, IPRS and PPL have repeatedly acted otherwise. In 2014, the IPRS filed a suit at the Delhi High Court where it verified that it was a copyright society, completely contradicting itself. In the same year, in other two cases — namely, IPRS v. Goodwin Jewellers and ors. – CS(OS)871/2014, and IPRS v. Black and White Media India and ors. – CS(OS)1274/2014, it approached the Delhi High Court as a copyright society, successfully managing to get the court to rule in its favour thereby digging its own grave.

Leopold Café Stores v. Novex Communications Pvt. Ltd.

Citation – Order in Notice Motion No. 1451 of 2014 in Suit (L) NO. 603 OF 2014

In this case Hon’ble Bombay HC observed that “every agent also ‘carries on business’, but that is the business of agency, with the agent functioning as such, i.e., clearly indicating that it is acting on behalf of another, one who holds the copyright. This is the only manner in which both Section 33 and Section 30 can be harmonized. An absolute bar even on an agency, invoking Section 33, would undoubtedly run afoul of the plain language of Section 30 and render the words “or by his duly authorised agent” entirely otiose.”

“In order to qualify an agent, it is necessary for the agent to disclose that it is acting for and on behalf of the copyright owner in all the relevant documents.” Thus, license granted by IPRS and PPL can be only in the name of copyright holder and not itself.

On 14^th August 2015, the Central Government announced the appointment of Y.P.C. Dangey, retired joint secretary and legal adviser of the Department of Legal Affairs in the Ministry of Law and Justice as Inquiry Officer to look into the inconsistencies and irregularities by IPRS and PPL all throughout its existence and submit a report. Further, IPRS was unsuccessfull in moving a writ petition regarding Dangey’s appointment against Union of India.

Chitra Jagjit Singh vs. The Indian Performing Rights Society 

Citation – MANU/DE/0917/2016)

In 2016, Delhi High Court restrained IPRS from granting any license in respect of the works of Jagjit Singh and also from recovering license fee from any third party in respect of the works, though it continued to collect license fee irrespective of the order. This case is landmark in the sense that for the first time court considered that IPRS is not competent in issuing license and collecting license fee, in furtherance of the decision of the court in the case of Novex Communications which was unclear on the standing of unregistered societies. The Hon’ble Court held that IPRS cannot claim to function as a company when it is issuing licenses in the capacity of a copyright society and hence, cannot issue licenses without being registered as such under the Copyright Act.

Recent Development

While Enquiry Commission’s report is still awaited, there has been a positive development as IPRS appointed Javed Akhtar – a noted poet, lyricist, scriptwriter as their chairman and Achille Foler – copyright administrator as a permanent advisor of the board.

Javed Akhtar on his appointment stated that it’s a “new chapter” and “writers, composers and publishers have risen above the past conflicts and have a taken a pledge to work together for the enhancement of Indian Music Industry’s reach and prosperity.”

Another positive step was taken by IPRS as it held the Extraordinary General Meeting on the 9^th February 2017 which aimed to replace the Articles of Association. Moreover it was reported that the revamped IPRS has adopted a new working constitution which is fully in sync with the amended Copyright Act. The primary objective being, rightful royalty flow to the right’s owners, while simplifying the license procedure for the end users.

Authors- Himani Kohli and Pratik Das, Legal Intern at Khurana & Khurana, Advocates and IP Attorneys and can be reached at info@khuranaandkhurana.com

[i] Section 33 (3A) of the Copyright Act, 1957, inserted by Copyright (Amendment) Act, 2012