Theme:
ACCESS TO PROTECTED WORKS: LIMITS OF
COMPULSORY LICENSING AND PARALLEL IMPORT
COMPULSORY LICENSING:
IN THE BROADCASTING
INDUSTRY
What is a Compulsory License?
• The government, rather than the copyright owner, grants a company a nonexclusive license to make, use or sell the copyrighted work.
• The government, not the copyright owner, sets the terms of the license,
including the royalty.
Why They Exist
– To correct imbalances in market forces
– Protect those who wish to use a work for educational or non-commercial
purposes
– Useful when it is too burdensome to locate the author
– Generally considered good for society
Tempers the exercise of market power
Discourages abuse of a patent
How They Are Obtained
– Private party files an application to the government
– Government reviews the application, and if appropriate, grants the license
Provisions in the Indian
Copyright Act
Copyright in India is governed by the Copyright Act,
1957, which provides that Copyright in the property
subsists in
– (a) original literary, dramatic, musical and artistic works;
– (b) cinematograph films; and
– (c) sound recordings (Section 13).
The purpose of the Copyright Act is to grant a statutory right and
protection to the author / owner of the work in which copyright
subsists
Owner of the Copyright work has been empowered to grant license
to various persons for use of its work. ( Section 30 )
In the interest of the General Public the copyright
board has been empowered to grant compulsory
license
 where the copyright work is withheld form the public
(Section 31)
 in case of unpublished Indian work (Section 31A)
 Produce and Publish Translation (Section 32)
 reproduce and publish work for certain specified
purposes (Section 32A).
Grant of Compulsory License
Under section 31 of the Act the Copyright Board can grant a
Compulsory License on the satisfaction of the following conditions :– (1) The work in respect of which the compulsory license is sought is
withheld from the Public.
– (2) Owner has refused to make the work available to the Public.
– (3) The ground(s) for refusal by the owner are not reasonable.
– (4) Owner is being afforded an opportunity of being heard.
– (5) The license in granted subject to the payment of royalty fixed by the
Copyright board.
Copyright licences may be either voluntarily entered into by the copyright
owner or be imposed on him.
If the licence is not voluntarily entered into by the copyright owner, it is
referred to as a non-voluntary licence, and it may assume the form of either
a compulsory licence or a statutory licence.
The Incentive Argument and
Compulsory Licensing
The incentive argument in Compulsory Licensing focuses on
incentive/access imbalances in copyright: the under-protection of
works in new technological environments lacking copyright
protection and the under-utilization resulting from copyright
protection in the presence of market power.
Compulsory Licensing- justifies higher levels of production or
utilization- rewards related to the value of work.
Compulsory licensing- method of providing the correct access/
incentive balance- corrects imbalances introduced into the law by
the expansion of the copyright’s breadth and duration.
Justification of compulsory licensing- Middle line between
Monopolies argument and Cost benefit analysis.
In this context, one should note that Art 31(k) of the TRIPS
Agreement which requires such consideration on the basis of
“individual merits”.
Present Position
The Hon’ble Supreme Court in its Landmark Judgment of “M/s
Entertainment Network (India) Ltd. Versus M/s Super Cassette
Industries Ltd” delivered on 16th May 2008 is :Sound Recording stands on the different footing than that of other literary,
dramatic or musical work and there is no statutory requirement that a compulsory
license can be granted only once the work is withhold from the public.
Compulsory License can be granted even the work in not withheld form the
public but on owner’s refusal to permit a broadcaster to broadcast the work.
Refusal also means demanding of the royalty which is high or imposing
unreasonable restrictions therein.
The burning question in today’s business scenario is whether
the owner(s) of copyright has ceased to be the owner and
has lost all his rights to decide and determine as to whom
he ought to permit broadcasting of this recordings?
The right to property has been deleted form the constitution as a
“Fundamental Right”, but still the contractual rights of the persons and
freedom to enter into a contract find itself in the statute book.
Are we in the transition phase and the concept of monopoly powers will be
carried forward to curtail the contractual rights of all the copyrights owner, in
times to come? Unfortunately, only time has the answer.
Is it the international conventions, to which India is a signatory, which has
tilted the mind of the Hon’ble Supreme Court.
The government of India has been in the process of privatising the
broadcasting sector and has recently issued 37 licenses to private players
to run radio channels in different parts of the country covering about 19
cities.
Majority of these private radio channels play Hindi film songs, FOR which
they should obtain a license from a copyright society to play the film songs
by paying a certain amount as royalty. The royalty received by such
copyright society is shared with the original owners of the copyright.
Citing this decision, an appellate division of the Delhi High Court in the Hotel
Regency case (Phonographic Performance Ltd. Vs. Hotel Gold Regency
& Ors.; 2008(37)PTC 587(Del)) rejected the contention that a copyright
society’s role is limited to licensing and confirmed the society’s right and duty
to enforce the rights it administers.
In Music Broadcast Pvt. Ltd vs. Phonographic Performance Ltd.,
the Board held in favour of granting compulsory licences under
Section 31 (1) (b) of the Copyright Act, 1957 to complainants FM
radio providers against music providers such as Phonographic
Performance Limited (PPL). In this case, the issue in question was
that whether the FM radio industry could claim compulsory licensing
on music owned by music providers such as PPL.
 This was based on the argument that the latter were being unreasonable in
charging exorbitant royalties of FM radio channel providers for music owned by the
latter which in turn was affecting public interest at large.
 Interestingly, the Board concluded that FM radio broadcasters, though organized
as business enterprises, thus now owe a social obligation towards nation building,
thus serving public interest.
The Board held that the fact the radio service providers, though
private commercial ventures, worked within the social development
plan of the government, the only reasonable license fee model was
wherein the music providers charge a fixed percentage of the net
advertisement revenue.
This would generate far more income for music providers as more
broadcasters would be willing to come into the foray throughout the
country.
Though the judgment is a definite positive for the FM radio
industry, there still remains the question of whether it will help serve
the very purpose on which the judgment hinged – that of public
interest. Sure the average city dweller will be able to get his regular
dose of ‘top ten 90s singles’ on his way to work, but it remains to
be seen as to whether it would really help incentivise greater
expansion of the private radio industry in tribal or remote areas
wherein the revenue earned is likely to be less.
International Copyrights Regime and
Compulsory Licensing System
Article 9(2), Berne Convention – Convention’s exclusive basis for equitable
remuneration and provides for the conditions which should be met before a member
country can entirely excuse a use which includes the equitable remuneration and
not prejudicing the reasonable interests of the author.
Article 11bis (2), Berne Convention- Discretion to the countries to prescribe
conditions under which broadcasting rights to be exercised- Can be exercised only
in the country prescribing them
Article 13, Berne Convention- Discretion to the countries to prescribe conditions
under which sound recording rights to be exercised- Can be exercised only in the
country prescribing them
Article 13 of the TRIPS Agreement- Reiteration of Article 9(2)
As can be seen these provisions make the licenses territorial as they are
specific to the country prescribing the conditions!!
Article II and III of the Appendix to the Berne Convention allow compulsory
licenses in certain cases, for translation and reproduction of the work. This
is an enabling provision for the developing countries.
India has ratified the Berne Appendix and follows it in dealing
with compulsory licensing.
International Scenario:
Under Section 109 of the Australian Copyright Act, a free to air broadcaster
of a sound recording requires a license and all is to be done is to give an
undertaking to pay a royalty for broadcasting of published sound recording.
China follow the Berne Convention for International recordings. Domestic
recordings can be broadcasted on the radio or television without any license
or payment. However commercial broadcast requires a license and all is to
be done is to give an undertaking to pay a reasonable sum which in the
event of dispute will be decided by a competent tribunal.
In Japan Director General of the Cultural Affairs Agency will determine the
compensation required to be paid by a Broadcaster. Non-profit transmission
of works already made public is exempted from paying any royalty.
In U.K. statutory licensing and compulsory licensing exists.
Issues with the Indian
Compulsory Licensing Regime
A compulsory license is granted only to
the complainant, while other broadcasters
continue to face problems.
Compulsory licenses are granted only for
Indian works in the present regime.
Competition & Compulsory License
Courts have granted compulsory licenses in the name of fostering
competition.
– while granting compulsory licenses the Courts must keep in mind the huge
research and development costs that have been incurred by the right-holders.
– By granting compulsory licenses the right-holder is forced to give up his
exclusive rights and is disallowed from recouping his cost of production.
Competition for the market should be promoted, and for the same
compulsory licensing should follow some concrete rules and
should not be granted liberally.
In the field of broadcast reproduction rights, however there is a requirement
for antitrust authorities to be more vigilant.
Broadcasting organisation tend to assimilate market strength at a very fast
pace and the tendency to abuse it is also very high.
They may undertake a variety of activities that may foreclose competition
and create barriers to entry, all in the name of reproduction rights.
Thus, the CCI need to keep such organisations and their conduct under
close scrutiny to maintain free markets.
Amendment Bill, 2010
The amendment bill is a welcome move in many aspects as it seeks to
promote greater access to knowledge and information to the
physically challenged and have been able to address the concerns of
the music and film industry.
To tackle with the problem of misuse of copyrighted works, the amendment
act seeks to introduce the measure of compulsory licensing to ensure that
the authors are duly recognized and their royalties are paid in advance.
It has been proposed to amend Section 31 of the Copyright Act so that a
compulsory license may be granted in respect of not merely an Indian work
but in respect of any work.
– The background to the amendment seems to be an order of the Copyright Board
in Music Broadcast Private Limited (MBPL) vs. Phonographic Performance
Limited . This would benefit all broadcasters who operate their broadcasting
stations within the same territories.
– The amendment of Section 31 seeks to provide statutory licensing which would
particularly benefit all broadcasters who operate broadcasting stations.
It has been proposed to introduce into the Copyright Act, Section
31D that deals with statutory licensing of the broadcast of literary
works, musical works and sound recordings.
A broadcasting organization which desires to communicate to the public
a published literary work, musical work or sound recording may do so if
the communication is by way of broadcast or by way of performance.
prior notice to the copyright owner-the duration and territorial extent of
the broadcast. The names of the authors and principal performers of the
work must be announced with the broadcast.
The broadcasting organization is proscribed from making any fresh
alteration of any work unless that alteration is (i) technically necessary
for the purpose of broadcasting, or (ii) comprises only a shortening of
the work for the convenience of the broadcast, or (iii) has been made
with the consent of the copyright owner(s).
The broadcasting organization must pay royalties to the copyright owner
in each work at the rate fixed by the Copyright Board, and the Copyright
Board may require that these royalties be paid in advance.
Further, it has been proposed to allow for the grant of a compulsory license
under this Section not specifically to the complainant but to any person(s)
who, in the opinion of the Copyright Board, is or are qualified to publish the
concerned work.
There is an inherent dichotomy in that stance as this would mean that
the licenses would continue to be territorial while the Bill states that
compulsory licenses will be granted to works other than Indian ones!
The Parliamentary Standing Committee has expressed an apprehension on
expanding the scope of compulsory licences and has asked for the
Government to ensure that the same did not conflict with the Berne
Convention. (Section 31A)
The Committee finds that the introduction of system of statutory licensing
has been proposed so as to ensure that public has access to musical works
over the FM radio networks and at the same time, the owner of copyright
works is also not subject to any disadvantages.
a broadcasting organization would have far greater certainty in terms of its
operation cost and the number of disputes arising due to arbitrary and
unreasonable demands of copyright owners would likely to be quite low
However, the following grounds should be considered
before passing this provision :
 the new regime of 'statutory licensing' of music to broadcasters appears
to be discriminating as the copyright owner/author has been denied any
say in the fixing of royalty.
 like music industry, the broadcasting (except AIR) industry is in the
private sector.
 radio industry is risk-free and solely profit-oriented and already offered
concessions by the Government. Reasons for music industry which
takes risks in bringing out music being singled out are not known.
 television industry is a long established industry, not needing any
support. However, with such a provision for broadcasting industry,
Television industry may also seek concessional licensing for their
programmes as well.
 it will drastically reduce the number of works, societies can administer
by excluding all those works where the author has already assigned his
rights
“That he, the Inventor, ought to be both compensated
and rewarded… will not be denied… it would be a
gross immorality of the law to set everybody free to
see (or use) a person’s work without his consent, and
without giving him an equivalent.”
- John Stuart Mill
Grant of Compulsory Licenses is the art of delicately
balancing the interests of the author and that of the public.
India has tried to treat the middle path with the Copyright
(Amendment) Bill, 2010 and this is considered to be an
accomplishment given the current economic situations.
But it has Miles to go, before it sleeps..
THANK YOU!!!
PRESENTED BY:
Aayushi Agarwal
Trisha Mitra
SYMBIOSIS LAW SCHOOL
PUNE