Unravelling the Web: Challenges and Competition in India’s Copyright Society Landscape

11th May, 2024 - 11:30 am Categories: Competition Law Copyright 0 Comments

Introduction

Section 33 of the Patents Act plays a crucial role in delineating the scope and limitations of patent rights. This pivotal section addresses various aspects, including the rights conferred by a patent[1], the exclusive nature of those rights, and the circumstances under which third parties may be exempted from infringement. Copyright societies, also known as collective management organizations (CMOs), serve as linchpins in the intricate world of intellectual property. [2]These entities play a pivotal role in safeguarding the rights of creators by managing and licensing their works collectively. As intermediaries between creators and users, copyright societies contribute to the equitable distribution of royalties and facilitate the lawful use of copyrighted content. This exploration into the functions and significance of copyright societies unveils the mechanisms that uphold the delicate balance between artistic expression and intellectual property rights.[3]

Legal Aspects of Copyright Societies in India

In addition to serving the interests of authors for whom it would be impractical or unprofitable to license the use of their work individually to each user or to collect the license fee from them, Chapter VII of the Copyright Act, 1957 and Chapter XI of the Copyright Rules, 2013 outline provisions for the registration and management of Copyright Societies. These provisions are also intended to serve the interests of the general public, particularly those users of the right who might find it inconvenient to obtain licenses from individual authors or copyright owners.[4]

As a result, the copyright organizations assist in upholding copyright, which benefits the two groups stated above. Additionally, it benefits the public by giving them a convenient location to get licenses from multiple right holders, as well as copyright owners by increasing their profits.[5]

The society registered under Section 33(3) is referred to as the “Copyright Society” by Section 2(ffd) of the Copyright Act, 1957.

2012 Amendment: The Change

A new sub-section 3A was added to Section 33 by the 2012 modification, stating that the registration given to the copyright society must be kept current for five years. Periodically, the registration may be renewed.  After reviewing the Copyright Registrar’s report on the operation of the Copyright Society in accordance with Section 36, the Union Government may decide to renew the registration.[6] Furthermore, the 2012 amendment added Section 33A, which required copyright societies to publicize their price system in the approved way. If the society violates any of the provisions outlined in Section 33A of the Act, the registration may be cancelled.[7]

[Image Sources: Shutterstock]

The Condone of Competition act

1)High rate of fees

Due to their dominant positions licensing certain types of work, IPRS, PPL, and ISRA may levy exorbitant royalties. They could take advantage of their status by overcharging for their services. These businesses are accused of charging extremely expensive and irrational royalties.[8] They charge a fee that is not set and fluctuates depending on the terms of the agreements reached between the users of their repertoire and the employees of IPRS, PPL, and ISRA. According to the Telangana Chamber of Event Industry in Hyderabad, the cost of a PPL license for a year in the United Kingdom is only INR 16112/-, but in India, the same permit might cost up to INR 1 lakh for each event. [9]“As a common user, one might not be able to know the correct tariff, and one does not have any option except to pay these societies the amount they ask for.?” PPI has not posted their tariff rate on its website, even after it became necessary for them to do so.” According to section 4(2)(a)(I) of the Competition Act, 2002, the practice of charging exorbitant license fees may be considered an abuse of dominant position. * In the case of HT Media Ltd. v. Super Cassettes Industries Ltd.” HT Media Ltd.[10]

information against super cassette industries claiming the violation of SectionS 3 and 4 of the Competition Act.

Behaviour as cartel

India’s copyright societies might be seen as acting in many ways like a cartel. Section 3(3) of the Competition Act prohibits cartels. For instance, IPRS was formerly made up of publishers, composers, and writers, but as time passes, it is evolving into a society of record labels. Similarly, PPL collects sound recording royalties and has more than 200 members who collectively offer their works through PPL’s window. The way copyright societies operate in India is similar to a cartel that prevents rivalry amongst market participants.[11]

Unreasonable conditions on licenses

“IPRS and PPL are claiming a flat fee for the full year for their blanket license without considering the level of business.” This is because they impose unjustifiable conditions on the users while granting them licenses to use the work, which could result in an offence of abuse of dominant position.[12] Users can only obtain blanket licenses from either society. Regardless of the users’ needs, users who get a license from these societies must pay a yearly fee to use of the whole repertory that the societies offer. These two societies routinely assert their right to royalties on a six-month or annual basis.[13]

Abuse Of Dominant Position Toward Copyright Holders

1. Refusal to Grant Membership to Small Music Labels

Due to the low level of popularity of their music, IPRS and PPI keep small or regional music labels from becoming members. For instance, the PPI refused to grant the South India Music Association (SIMCA) membership, citing practical concerns. “One of the grounds for refusal stated by PPL was its eligibility criteria, which provides that for becoming an associate member, there must be at least 50 music albums and cover versions excluding classical and devotional albums!” This indicates that PPL does not accept religious music within its requirements for eligibility. But its Memorandum of Association (MOA) makes no mention of such a need.[14]

Furthermore, PPL’s registration certificate states that, “music for films and non-films is the same.” It could be equivalent to refusal to deal under section 3(4)(d) of competition act,2002.[15]

1. Unreasonable Conditions While Granting Membership

Copyright societies have the potential to misuse their position of power by placing unjustifiable requirements on members who possess copyrights. For instance, they coerce the owner of the copyright to assign it exclusively to the benefit of society, and then they assert that they are the rightful owners of the copyright. “Copyright holders want to retain some of their rights as rights for individual administration, but they are not allowed to do so if they want to have the membership of the copyright society.”[16]

Competition Law and New Emerging Copyright Societies

Competition law governs the operations of copyright societies, considering them as enterprises and subjecting them to the regulations outlined in the Competition Act of 2002. Section 3 of the Act explicitly prohibits agreements that hinder competition, encompassing both horizontal and vertical agreements.[17]

Horizontal agreements, which involve collaborations or agreements between copyright societies, undergo scrutiny. These agreements are assumed to be anti-competitive and void if they impede competition. Examples of such agreements include those that fix prices, allocate markets, or restrict sources of production.[18] The parties involved bear the responsibility of proving that these agreements comply with competition law.[19]

Comparably, competition law examines vertical agreements—like licensing agreements—between copyright societies and other organizations. These agreements could be seen as anti-competitive even though they aren’t always void if they harm competition. To maintain a fair and competitive market, factors like exclusive distribution agreements, tie-in contracts, and refusals to deal are assessed.[20]

Conclusion

The existence of several societies makes competition and licensing processes more difficult. Copyright implementation can be improved implementing reforms, such as increasing awareness, guaranteeing economic diversity, and streamlining licensing.[21] Upholding competition legislation is essential to preserving equity. These initiatives will uphold rights, fortify the copyright system, and foster the expansion of India’s creative sector.[22]

Author: Muskan, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.

[1] Hiremath, C. (2023, August 17). COPYRIGHT SOCIETIES Section 33, Registration mandatory ? https://www.linkedin.com/pulse/copyright-societies-section-33-registration-mandatory-chetan-hiremath

[2] Bose, A. (2021, July 31). All you need to know about copyright societies – iPleaders. iPleaders. https://blog.ipleaders.in/need-know-copyright-societies/

[3] Saba. (2021, April 7). A critique of the provisions on Copyright Societies under the Copyright Act, 1957 | SCC Blog. SCC Blog. https://www.scconline.com/blog/post/2018/03/14/a-critique-of-the-provisions-on-copyright-societies-under-the-copyright-act-1957/amp/

[4] Legal, P. (2022, March 10). Section 33(3) of the Copyright Act says only one copyright society would be registered for administering the rights relating to same class of work i.e. sound recording: High Court Of Delhi – Prime Legal. Prime Legal. https://primelegal.in/2022/03/10/section-333-of-the-copyright-act-says-only-one-copyright-society-would-be-registered-for-administering-the-rights-relating-to-same-class-of-work-i-e-sound-recording-high-court-of-delhi/

[5] The Madras High Court deliberates on the Rights of a Copyright Society. (2021, December 17). Lexology. https://www.lexology.com/library/detail.aspx?g=211c72d0-8cad-45f6-bdae-4de5a02240df

[6] Chakraborty, S. (2022, March 31). The tussle between copyright societies and judiciary. IP Bulletin. https://ipbulletin.in/copyright-societies-and-judiciary/

[7] Admin. (2022, April 12). India: Copyright societies & their roles. EXCELON IP – Patent | Trademark | Copyright | IP Services. https://excelonip.com/india-copyright-societies-their-roles-2/

[8] Shairwal, S., & Priyadarshi, P. (2022, June 20). Can issuing/granting of music licenses be done by private companies? Lexology. https://www.lexology.com/library/detail.aspx?g=d04efcb9-8581-4dff-b4e1-e66abf48a6b6

[9] Jain, M., & Jain, M. (2023, March 6). Copyright Societies – sec (33-36) of the Copyright Act, 1957 › The Legal Lock. The Legal Lock › MAKING LAW SIMPLE! https://thelegallock.com/copyright-societies-sec-33-36-of-the-copyright-act-1957/

[10] copyright+section+33 | Indian Case Law | Law. (n.d.). https://www.casemine.com. https://www.casemine.com/search/in/copyright%2Bsection%2B33

[11] Llp, A. I. L. O. (2022, January 4). Court Case Bulletin (CCB): Only a registered copyright society can carry out the business of granting copyright licenses – ALG India Law Offices LLP. ALG India Law Offices LLP. https://www.algindia.com/court-case-bulletin-ccb-only-a-registered-copyright-society-can-carry-out-the-business-of-granting-copyright-licenses/

[12] Dhwaj, G. (2016, February 3). Copyright Society under the Copyright Act, 1957. Copyright – India. https://www.mondaq.com/india/copyright/463106/copyright-society-under-the-copyright-act-1957

[13] Nexgeno. (2021, December 14). Ahlawat & Associates. https://www.ahlawatassociates.com. https://www.ahlawatassociates.com/news/madras-high-court-sheds-clarity-on-section-33-of-the-copyright-act-1957/

[14] Copyrights – Assignee to copyright cannot grant license without being a copyright society. (n.d.). Lakshmikumaran & Sridharan Attorneys. https://lakshmisri.com/newsroom/news-briefings/copyrights-assignee-to-copyright-cannot-grant-license-without-being-a-copyright-society/

[15] Company360.In, & Company360.In. (2023, February 24). Enforcement of Copyright Laws through Copyright Societies – company360.in. company360.in – Just another WordPress site. https://company360.in/blog/enforcement-of-copyright-laws-through-copyright-societies/

[16] Firm, J. L. (2023, May 24). Emerging Challenges & Reforms in Copyright Societies for Cinematographic Films: A Comprehensive Analysis. JusIP Law Firm. https://www.jusip.in/emerging-challenges-reforms-copyright-societies-cinematographic-films-analysis/

[17] Firm, J. L. (2023b, May 24). Emerging Challenges & Reforms in Copyright Societies for Cinematographic Films: A Comprehensive Analysis. JusIP Law Firm. https://www.jusip.in/emerging-challenges-reforms-copyright-societies-cinematographic-films-analysis/

[18] Dhwaj, G. (2016b, February 3). Copyright Society under the Copyright Act, 1957. Copyright – India. https://www.mondaq.com/india/copyright/463106/copyright-society-under-the-copyright-act-1957

[19] Joshi, D. (2022, March 27). Delhi High Court revives PPL’s Copyright Society registration Application, Sets aside registration of RMPL. Spicyip. https://spicyip.com/2022/03/delhi-high-court-revives-ppls-copyright-society-registration-application-sets-aside-registration-of-rmpl.html

[20] Team, M. (2022, February 23). [Legal Article] Copyright Societies in India and the controversies surrounding them | IPR by Mahima Jain. C. https://www.mylawman.co.in/2021/05/legal-article-copyright-societies-in.html

[21] https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/gnlur6§ion=10. (n.d.). C.

[22] Bose, S. (2020, June 7). Competition Law versus Patent Law – The Monsanto Conundrum. The IP Press. https://www.theippress.com/2020/06/08/competition-law-versus-patent-law-the-monsanto-conundrum/