Journal of Intellectual Property Rights

Vol 18, May 2013, pp 201-211

Entertainment Network v Super Cassette Industries: Compulsory Licensing

Compulsory licences are exceptions to the exclusive rights of the copyright holders. If monopolistic conduct or
exclusionary conduct of the licensor is observed, then it will create anti-competition in the market and kill potential. If these
copyright holders by the exercise of their right refuse to communicate or withhold their work from public then it will affect
public interest. India is a developing country, her economic, social and educational developments have to be accelerated and
not retarded. Public interest cannot be put on stake just for the profit of one person. The Supreme Court’s decision in
Entertainment Network (India) Ltd v Super Cassette Industries Ltd1 can be rendered as an epoch-making case in the field of
intellectual property. The case became all the more important as it involved wide ranging issues like interpretation of
Section 31 of the Copyright Act and the purposive interpretation placed on it treading on a thin line balancing the public
interest with commercial interest. The radio industry in India is one of the booming sectors. Out of 139 music companies
around 69 are private radio stations.2 This paper reviews and critiques the decision in the case alongwith the law prevailing
in other countries. This paper makes two important contributions bringing aspect of compulsory licences to the fore and
providing step by step discussion on the above judgment. The paper also highlights anxiety of the industry and further
suggests the way out of this.

Keywords: Copyright, compulsory licensing, licensing, review

‘Intellectual Property has the shelf life of a banana.’3 licence’, thereby rectifying market failure. This
This quote aptly sets the background for controversies concept of compulsory licensing in copyright is
surrounding IPRs. Initially there was no protection for derived from patent law, where the owner is forced to
the intellectual property rights (IPR). Later owners’ face the competition in market, similarly in copyright
right over the creations were accepted and they were law; the copyright holder is subjected to equitable
granted certain rights. These laws provided a remuneration.5 There are two main reasons for
protection to the owners under different categories introducing non-voluntary licences: (i) where the
and names like patents, industrial designs, copyrights, users of certain works have access to these works on
trademarks etc.4 However, occasionally the IPR terms which are known in advance and it is not
owners used to engage in ‘exclusionary conduct’ practicable for them to locate right owner each time
towards innovators and potential competitors on and obtain an individual licence from him;
markets which are secondary to and dependant upon (ii) to avoid creation of monopoly for user of certain
an IPR protected industrial standard or de facto copyrights at the expense of all other users. However
monopoly. This anti-competitive conduct could criticism can be attributed to the moral rights of the
manifest itself in the form of ‘refusal to deal’ or author and his economic rights.
‘refusal to licence’. To counter this behaviour many The application of the compulsory licensing
measures have developed over time and one of such provisions in the copyright has been a bone of
measures is ‘compulsory licensing’ which can be seen contention and various courts have kept on passing
as a potent tool for mitigating the rigours of ‘abuse of contradictory judgments. This lacuna came to be finally
dominant position by arbitrary refusal to deal or settled in Entertainment Network (India) Ltd v Super
_______ Cassettes Industries.1 This comment analyses dicta in
† Corresponding author: Email: himanshuraman@[Link] the case in the light of its effect on the music companies
202 J INTELLEC PROP RIGHTS, MAY 2013

and powers of the Copyright Board. The comment licence to the Copyright Board under
would also draw a comparison with the law prevailing in Section 31 (1)(b)9 of the Act. The Board allowed the
the United States and the European Union. same and fixed the royalties to be paid. Appeals were
filed against this order of the Board to the Bombay
Circumstances Leading to the Present Case: High Court, which remitted the matter back to the
A Background Study Copyright Board for reconsideration.
Although much water has flown after this case, this The appellant filed an application before the
case still holds a dominant position and the law laid Copyright Board at Delhi for the grant of compulsory
down still holds good especially the principles laid licence under Section 31(1)(b) of the Act. The
down therein. Grant of copyright in India is governed respondent contended in Bombay High Court that
by the Copyright Act 1957. Being governed by they were not given suitable opportunity for the
statutory law no copyright can exist in any work presentation of the evidence. This was tagged along
except as provided in the Section 16 of the Copyright with the various other appeals in the same court. The
Act. This makes it clear that under the present law, respondent filed appeals in the Delhi High Court as
copyright is a creation of the statute and there is no well which referred the matter back to the Copyright
such thing recognized as a common law copyright. Board after taking an undertaking from the appellant
This being stated, the authors analysed the events that that the songs would not be broadcast. The decision of
led to the present case being filed. the Bombay High Court6 opined that in terms of
Super Cassettes Industry Limited (SCIL) is one of Section 31 of the Act, grant of compulsory licence on
the leading music companies engaged in the recording reasonable remuneration is permissible; the Delhi
of songs and acquiring of rights in the songs created High Court6 held otherwise.
by others. Entertainment Network Industry Limited An appeal was preferred against the decision of
(ENIL) is a FM radio broadcaster which broadcasts the Delhi High Court in the Supreme Court. The
under the name ‘Radio Mirchi’. Bennett Coleman & bench comprising of S B Sinha and Lokeshwar Singh
Co Ltd is the holding company of Super Cassettes. Panta, J J formulated the following issues in the case:
The appellant, ENIL is running radio stations in
12 cities and is a member of the copyright society, • Whether the Copyright Board has jurisdiction
Phonographic Performance Ltd (PPL). under Section 31(1)(b) of the Copyright Act,
In this case two petitions came to be clubbed.6 1957 to direct the owner of a copyright in any
ENIL being one of the appellants was denied licence Indian work or a registered copyright society to
to broadcast musical works of owners of copyright issue compulsory licences to broadcast such
that resulted in the issue of compulsory licensing.7 works, where such work is available to the
The case involved an in-depth analysis of Section 31 public through radio broadcast?
of the Indian Copyright Act, 1957 which enumerates • Whether in any event such a compulsory licence
the procedure for the issuance of a ‘compulsory can be issued to more than one complainant in
licence’ to republish copyrighted works, which are the light of Section 31(2)10?
withheld from the public.8 • What would be the relevant considerations
The second appellant, PPL, an association of which the Copyright Board must keep in view
phonogram producers registered with the Government while deciding on;
of India as a Copyright Society in 1996 is engaged in (a) Whether to issue a compulsory licence to a
administering the broadcasting/telecasting along with particular person; and
public performance rights on behalf of ‘all members’ (b) What are the terms on which the compulsory
of the music companies. licence may be issued, including the compensation?
The issue arose when the appellant (ENIL) was The appellants argued that the word ‘or’ used
playing the songs in which the respondent (SCIL) had between clauses (a) and (b) of sub section (1) of
copyright under the mistaken impression that Section 31 should be read disjunctively. It was argued
respondent was a member of PPL. A suit was filed in that the term ‘such work’ occurring in the clauses
the Delhi High Court restraining the appellant from (a) and (b) operate in different fields and as such song
playing the songs belonging to the respondent. broadcasting cannot be compared with publication in
Consequent to this several broadcasters including the print media. The sub section (2) should be confined to
appellant filed petition for grant of compulsory clause (a) alone otherwise it would lead to anomaly.
 SINGH & SINGH: COMPULSORY LICENSING IN THE COPYRIGHT DEMYSTIFIED 203

The respondents argued that importance should be provides for the constitution of the Copyright Board
given to the copyright protection. The rights should be as well as defines its functions. In this case the
dealt within the four corners of the statute. It was Supreme Court has expanded its power and added
argued that Section 31 must be given literal meaning. another function; that is, to determine the amount of
The literal interpretation would mean that the Board royalty to be paid to a party who wants to obtain the
can exercise its power provided there is a refusal for copyrighted work. Therefore, the amount of royalty
publication or the work has been withheld from the which each broadcaster is entitled to pay is to be
public. Both the interests need to be considered, that is determined by the Board.
(i) the interest of the copyright owners and The court concluded that compulsory licensing
(ii) the interest of the general public. It was argued does exist in Australia, China, Japan and UK. A
that the narrow commercial interests of the balance has to be struck between the rights of the
broadcasters should not be given preference under owner and the right of the public to access the
Section 31 of the Act. work. As regards the powers of the Copyright
The arguments advanced in this paper have been Board, following observation of the court is
segmented into two parts; firstly, that the Court has noteworthy:
incorrectly applied the concept of public interest; ‘…the provisions relating to grant of licence
secondly, there has been wrongful purposive by owners of copyright and compulsory
interpretation of Article 31(2). licences operate in different fields.’1
Section 31 uses the words ‘or’ between the clauses.
The Public Interest Angle
The meaning of public interest has been scrutinized Then question was whether it was supposed to be read
greatly by Indian Courts.11 Though there is no concrete disjunctively or conjunctively. The court concluded
definition of the term ‘public interest’12; therefore, that it has to be read disjunctively. The court sought to
reliance has been placed on the definitions provided for interpret the meaning of the word refusal used in
by Black’s Law Dictionary as ‘Something in which the Section 31 of the Act. The court attributed meaning of
public, the community at large, has some pecuniary the word to the context in which it is used. It came to
interest or some interest by which their legal rights or determine what exactly is meant by the
liabilities are affected……’13 communication to the public. The court gives a very
Prior to examining the ruling in Entertainment wide meaning to the same. The court notes:
Networks, one may consider the findings of the ‘The very fact that refusal to allow
Bombay High Court in Phonographic Performance communication on terms which the complainant
Ltd v Music Broadcast (P) Ltd6, which rightly considers reasonable have been used by the
concluded that: Parliament indicate that unreasonable terms
(a) Under Section 31(1)(b) grounds to seek would amount to refusal.’1
compulsory licence should fall outside the The court refuting the arguments noted that ‘The
ambit of Section 31(2) of the Act. The relief Board acting as a statutory authority can exercise its
stipulated under Section 31(2) should only power from time to time. It is therefore not correct to
be restricted to Section 31(1)(a); and, contend that having regard to the provisions of sub-
(b) Section 31(1)(b) of the Act includes section (2) of Section 31, compulsory licence can be
broadcasting of sound records which are granted only to one and not to more than one
already available to the public. Therefore, broadcaster.’
since the general public is not deprived of their Section 31(1)(b) in fact does not create an
right to enjoyment, the issue of grant of entitlement in favour of an individual broadcaster. The
compulsory licence in relation to Section 31(2) right is to approach the Board when it considers that
does not arise. the terms of offer for grant of licence are unreasonable.
However, whilst entertaining the complaints of The court further noted that principles of natural justice
those who wish to ‘communicate to the public’14 have to be complied with. The court finally agreed with
copyrighted works; the right of the copyright holders the decision of the Bombay High Court and criticized
should not be disregarded. In the present case, ENIL the Board for not giving opportunity to produce
broadcasted copyrighted work owned by SCIL witnesses by one of the parties. The court also remitted
without paying any royalty. Section 11 of the Act the matter again to the Board.
204 J INTELLEC PROP RIGHTS, MAY 2013

The Purposive Interpretation made is not Justified If the grant of more than one licence satisfies the
The Supreme Court has applied purposive public interest test within the realm of Section 31(2) then
interpretation to Section 31 of the Act rather than a granting multiple licences can be justified. However, for
literal one. The principle is that the concept of purely commercial and economical benefit , a licence
purposive interpretation15 is applied only when a cannot be obtained under Section 31(2).
literal interpretation would result in an anomaly or Moreover, Sinha J should have deliberated that if a
absurdity.16 literal interpretation of Section 31 was made, the
The court deliberated on the question that if the right broadcasters would have no remedy under copyright
of an author/society is so pervasive, is it necessary to law if the owners denied a licence to them. It is this
construe the provisions under Section 31 of the Act factor that forced the Delhi High Court to interpret the
having regard to the International Covenants and the word ‘may’ in Section 31 and the Bombay High Court6
laws operating in other countries? The court answered to adopt an interpretation separating the Act of the
the same in affirmative. It was observed that broadcast as different from that of other
interpretation of a statute cannot remain static. The ‘communication to the public’. Therefore, instead of
court noted as follows: making arbitrary claims about purposive interpretation,
‘Different canons and principles are to be the Supreme Court should have advised for an
applied having regard to the purport and object amendment for tackling such issues; thereby
of the 1952 Act. What is essential therefore is to straightening the law. The interpretation made places a
see that the expanding area in which the compulsion on the copyright owners to share their
copyright will have a role to play is covered. work which goes against the very nature of a copyright.
While India is a signatory to the International
Comparative Analysis: An International Perspective
Covenants, the law should have been amended
Evolution of compulsory licensing can be traced
in terms thereof. Only because laws have not
back to Berne Convention in which a three-step test
been amended, the same would not by itself
for the determination of compulsory licensing was
mean that the purport and object of the Act
introduced in Article 9(2) of the Convention.18
would be allowed to be defeated. If the ground
Subsequently this Convention led to Stockholm
realities changed, the interpretation should also
Conference and Paris Act. After decolonisation
change. Ground realities would not only depend
developing countries including India demanded
upon the new situations and changes in the
compulsory licensing so that bulk knowledge and
societal conditions vis-a-vis the use of sound
research can be made easily accessible for the
recording extensively by a large public, but also
development of the country.19 These demands were
keeping in view of the fact that the Government
rejected; however India in her domestic legislation
with its eyes wide open have become a signatory
introduced another provision of remuneration in
to International Conventions.’
addition to three-step test. In India, if the refusal of
A general rule of interpretation is that a statute work is unreasonable and suitable remuneration has
should always be read as a whole.17 On a literal been given then compulsory licence can be granted
reading of the Section 31(1)(a) of the Act, a but this only satisfies the third test of the Berne
compulsory licence can be issued when the ‘work’ is Convention.20 Thus provisions of Berne Convention
withheld from the public or when there is an are quite restrictive in approach.
unreasonable restriction on the right of the Demands of India did not go in vain and an
broadcasters on account of communication to the appendix was added to Berne Convention by the Paris
public as per Section 31(1)(b) of the Act. Act, 1971 which was the result of Stockholm revision,
Whilst applying the ‘purposive’ approach, the it was meant for special treatment to developing
court completely ignored the standpoint taken. In countries so that they can introduce compulsory licence
Phonographic Performance Ltd v Music Broadcast provisions in the law for foreign works.21 Similarly,
(P) Ltd6 ; Deshmukh J opined that operation of Article 13 of the TRIPS Agreement reiterates the
Section 31(2) should be restricted to Section provisions of Article 9(2) of the Berne Convention.
31(1)(a). Sinha J in the present case has partly come Specifically Article 11 bis (2) of the Berne Convention
to a similar deduction but even then has read Section generally permits national legislation to determine the
31(1) and Section 31(2) bereft of each other. conditions under which the broadcasting and related
 SINGH & SINGH: COMPULSORY LICENSING IN THE COPYRIGHT DEMYSTIFIED 205

rights granted by Article 11bis (1) may be exercised. reasserted that the three cumulative criteria must be
Section 31(1)(b) of Indian Copyright Act is in met for a refusal to be regarded as abusive:
consonance with Article 11 bis (2) of the Berne • The undertaking which requested the licence
Convention and deals with the grant of compulsory must intend to offer new products or services not
copyright when the work is refused to be offered by the owner of copyright and for which
communicated to public by broadcasting unreasonably. there is a potential consumer demand.
• The refusal cannot be objectively justified.
The American Approach
• The refusal must be such as to exclude
In Hartford-Empire Co v United States22, the court
competition on a secondary market.
clearly articulated that the owner of the copyright is
not in a position of a quasi trustee for the public. He Curtailment of the Owner’s Power of Copyright
has no obligation to use it or either grant it for use. The court has referred to the word publication but
However, certain exceptions have been recognized on has failed to specify whether it has the same meaning
the same. The essential facility doctrine imposes as the publication of a print material has. It is
liability when one firm, which controls an essential submitted that it should be specified whether there is a
facility, denies a second firm reasonable access to a separate standard for the broadcast of songs.28
product or service that the second firm must obtain in One of the views that have been put forth is that the
order to compete with the first.23 decision has given more teeth to the Copyright Board
In Lorain Journal Co v United States24, the for deciding royalty rates.29 It is argued that if rates
Supreme Court observed that where facilities cannot are to be decided by the Copyright Board, then there
practicably be duplicated by would-be competitors, is no need for the music industry to enter into
those in possession of them must allow them to be negotiations for the fixation of rates. This would
shared on fair terms. It is illegal restraint of trade to definitely lead to intense lobbying by the music
foreclose the scarce facility. The federal circuit in companies in the Copyright Board. In the same vein,
Intergraph Corp v Intel Corp25 trimmed the ambit of the Supreme Court has left the fixation of ‘appropriate
‘essential facilities’ doctrine by holding that only royalty rates’1 to the Board. This is problematic
when the facility owner and the user compete in a because once the Board comes to a decision; the
downstream market that requires access to the facility, scope to negotiate commercial terms amongst the
will the doctrine apply. stakeholders becomes limited. One cannot dispute the
A perusal of the above decisions makes it amply fact that the Board being a statutory authority is
clear that in US, apart from mere ‘ownership’ of an subject to judicial review but one can state that
IPR, some additional exclusionary conduct is essential excessive power has been given to the Board; thus,
for the grant of compulsory and involuntary licence. increasing the possibility of pecuniary or personal
bias. Moreover, the judgment itself was making space
The European Union Approach for lobbying thereby mutilating the general interest of
The relevant provision is Article 82 of the EC the public. An important point to be noted is that the
competitive law which regulates undertakings which issue of compelling public interest which does not
have been found to occupy positions of dominant apply when the basic issue is more inclined towards
market power. It has been interpreted to prohibit the commercial interest of parties.30
anti-competitive or ‘exclusionary’ abuses such as The only place where the issue of public interest
refusal to supply without justification. In AB Volvo v prima facie comes in is when there is a threat of
Erik Veng (UK) Ltd26, the ECJ noted that no obligation creation of monopoly.1 It is a norm that public interest
is imposed upon the proprietor of protected design to is subject to the facts and circumstances of each case;
grant to third parties, even in return for a reasonable however, over here the applicability of the principle is
royalty, a licence for the supply of products highly inaccurate and against the freedom to enter
incorporating the design would lead to the proprietor into agreements.
thereof being deprived of the substance of his exclusive The question that arises is whether the ownership is
right, and that a refusal to grant such a licence cannot illusionary. Are we reverting to the price and supply
itself constitute an abuse of a dominant position. control regime qua the sound recording rights where
In a more recent case of IMS Health GmbH & Co the owner loses his rights to choose the buyer and the
OHG v NDC Health GmbH & Co KG 27, the court price he wants to charge? We are moving towards the
206 J INTELLEC PROP RIGHTS, MAY 2013

market driven economy in which market forces are favoured treatment; i.e., it should be taken into
permitted to play their role for the determination of consideration that there intent is not solely
demand and supply? In such a situation the landmark commercial in nature. An evident problem which can
judgment appears to be acting contrary to the policy be attributed to multiple licences by applying the above
that has been adopted. The judgments have definitely case is to gauge whether granting more than one
equated music rights to other goods available in the licence is in general interest of the public33 and not
market which is per se wrong. merely in furtherance of the commercial interests of the
The judgment has been wrongly inspired by the broadcaster. Therefore, it is imperative that Section
concept of monopoly. Even if assuming for a moment 31(2) and Section 31(1) are read together. While
that it is a monopoly, it is worth mentioning that the subjecting Section 31(2) to Section 31(1) , it is
contractual powers of even the monopolistic necessary that the grant of multiple licences satisfies
establishment in respect of its dealing with the the grounds of reasonableness which have not been
customers/buyers/purchasers were not taken away under defined by the Court in this case. For instance, to give a
the MRTP Act. If the legislature in its wisdom decided concrete definition to the ‘valid grounds’ the case of
not to place such restrictions even on monopolistic IMS Health v NDC Health34 could have been put to
organizations what propelled the court to place the same use. In this case, ECJ laid down ‘exceptional
on music companies is a matter for deliberation. circumstances’35 where there could be a refusal to grant
If the court has been influenced by various a compulsory licence. Though this was a negative test;
international conventions that India has signed31, does a positive test could have been laid down by the Indian
that mean the object of the Act itself would be courts. This could have been done by listing the
allowed to be defeated. However, the court should reasonable grounds where the grant of licence would
have realized that interpretation of the domestic law be construed in public interest and more than one
by use of international convention so as to make them licence can be granted. The IMS Health case gave the
more meaningful and incorporating the terms of owner of an intellectual property the status of a
domestic law stands on two different footings. dominant undertaking36 and stated that on refusal by
the owner, the question of issuing a compulsory licence
Curtailment of Owner’s Power does not arise. However, in the Entertainment
Moreover, the ruling of the Supreme Court seems to Networks case, the Supreme Court has excessively
give exclusive power to the Board under the guise of curtailed the power of the copyright owner as the
public interest if the parties cannot come to an Board has the discretionary power to issue licences to
agreement regarding the amount. Section 31(1)(b) uses as many broadcasters it deems to be in public interest.
the word ‘may’ by virtue of which the Delhi High
Court6 gave the Board undue power to grant licences to Decision of the Copyright Board
whomever it may deem fit. The issue of granting the As the Hon’ble Supreme Court remitted the matter
Board exclusive jurisdiction to grant licences is to the Board, the Copyright Board has settled this
problematic even though the High Court did state the dilemma in Music Broadcast Pvt Ltd v Phonographic
need to prove the ‘valid grounds’ for granting the same. Performance Ltd.37 On 25th August 2010, the
A major glitch pertaining to this is granting licences to Copyright Board put an end to the nine-year saga of
more than one broadcaster. In this light, two major compulsory licensing dispute between the radio
issues have been left unaddressed by the Court. Firstly, stations and collecting society, in the matter of Music
the valid grounds’ for ascertaining whether the party Broadcast Private Ltd (MBPL) v Phonographic
seeking the licence is doing so in public interest or not Performance Limited (PPL) and other connected
under Section 31(2) of the Act have not been defined applications [Case Nos 1, 2 and 6 of 2002 along with
and secondly; the means of ascertaining the other cases. A number of witnesses along with expert
‘appropriate royalty’ have not been laid down. witnesses were examined by the Board giving the trial
To emphasize on this issue, the Supreme Court a flavour of court room trial. The Board arrived at the
should have illustriously used foreign judgments. For magical figure of 2% of net advertising revenue as the
instance, the case of Associated Music v Debs compulsory licensing rate.
Memorial Radio Fund32 states that while providing The Board was quite liberal in approach and upheld
copyright owners with a licence to broadcast their in favour of granting compulsory licences under
copyrighted work, public broadcasters should not get section 31 (1)(b). The Board opined that if the
 SINGH & SINGH: COMPULSORY LICENSING IN THE COPYRIGHT DEMYSTIFIED 207

communication of the work to the public has been private radio industry in tribal or remote areas wherein
refused and such refusal is unreasonable, then in such the revenue earned is likely to be less.
cases compulsory licences can be granted. Ruling of
the Board put more emphasis on ‘public interest’ as Litigation on the Order of the Copyright Board
the same can be found in various Indian laws, Super Cassettes preferred a Writ Petition No.6255
specifically Constitution of India which says that of 2010(ref.38), questioning the order passed by the
India is a social welfare state and the interest of public Copyright Board dated 25 August 2010. On
is supreme. Government of India itself through its 15 September 2010, the Delhi High Court passed an
policy wanted to develop FM radio for the purpose of interim order to the effect that the order dated
social development by which information, education, 25 August 2010, passed by the Board would not be
entertainment etc. could be transmitted to far off relied upon by any of the Respondents or any other party
places. Now it is an established fact that FM radio for a compulsory licence against Super Cassettes.
owes a duty towards nation building and hence Despite the aforesaid order of the Delhi High Court
compulsory licence cannot be denied to it with less dated 15 September 2010, MBPL filed an application
amount of royalty. Music industry argued that such for compulsory licence under Section 31(1) (b) of the
broadcasting hampers their sale of music CDs, Copyright Act, relying solely on the rates fixed by the
I-PODS etc. but the Board said instead of harming Copyright Board for PPL by its order dated
FM radio is trying to popularize music and eventually 25 August 2010. Other eight broadcasters also filed
it will boost the sales of music industry. applications for compulsory licence against Super
By interpreting Section 31(1)(b) , the Board also Cassettes, relying solely on the order of the Copyright
tried to distinguish broadcasting through radio and TV Board dated 25 August 2010. Super Cassettes
channels. Radio is ‘free on air’ and does not charge responded to the said offer made by MBPL on the
anything from its subscribers but on the other hand TV same terms as were prevalent under the expired
channel charge exorbitant amount from its viewers. voluntary licence agreement.
Thus for such pro bono initiatives radio should be The said proposal made by Super Cassettes was
exempted from high royalties. The Board held that rejected by MBPL, while other broadcasters
keeping in mind the fact the radio service providers, continued to broadcast the work of Super Cassettes on
though private commercial ventures, worked within the existing mutually agreed terms which were different
social development plan of the government, the only from the terms set out in the order of the Copyright
reasonable licence fee model was wherein the music Board dated 25 August 2010. By its order dated
providers charge a fixed percentage of the net 28 March 2011, the Copyright Board dismissed the
advertisement revenue. In fact the Board reasoned that application for interim relief filed by MBPL holding
this would generate far more income for music that it did not have the power to grant any interim
providers as more broadcasters would be willing to compulsory licence.
come into the foray throughout the country which MBPL thereafter preferred an appeal against the order
would generate further income. Based on the reasoning dated 28 March 2011, before the Delhi High Court and
provided above, the Board developed a set of terms and by its judgment and order dated 1 September 2011 in
conditions under which it directed the Registrar of [Link].250 of 2011 and [Link].8977 of 2011,
Copyrights to grant licences to the complainants based the High Court reversed the finding of the Copyright
on a revenue sharing model wherein 2% of the net Board upon holding that even while the grant of
advertisement earnings of each FM radio station would compulsory licence under Section 31 of the Copyright
be set apart to pay the music providers. Act was under consideration, an interim compulsory
Although the judgment is definitely a positive licence could be granted.
development for the FM radio industry, there still It was further held by the High Court that where the
remains the question of whether it will help serve the controversy concerns only the quantum of licence fee,
very purpose on which the judgment hinged – that of an interim protection should be granted and even though
public interest. The average city dweller will definitely Super Cassettes was not a party to the order of the
be able to get his regular dose of ‘top music’ on his Copyright Board dated 25 August 2010, it is similarly
way to work, but it remains to be seen as to whether it placed as PPL, which was bound by the order passed by
would really help incentivise greater expansion of the the Board on 25 August 2010. Accordingly, it was
208 J INTELLEC PROP RIGHTS, MAY 2013

appropriate that Super Cassettes should also receive 2% Section 31C of the amended Act deals with
of the net advertisement revenue as licence fee in the statutory licence for cover versions. In the unamended
interim period for broadcasting of its sound recordings. Act, Section 52 (1) (j) provided an exception from
Against this order of the High Court Super infringement, in relation to the cover version, if the
Cassettes filed an appeal in the Hon’ble Supreme cover versions were made in accordance with the
Court.39 The sole question for consideration before the conditions specified in the said Section. The 2012
Hon’ble Supreme Court was whether on a complaint Amendment has deleted the said Section and added a
made to the Copyright Board under Section 31 of the new Section 31C, which provide for granting a
Copyright Act, 1957; the said Board under Clause statutory licence to make cover versions. Clause (4)
(b) of Sub-Section (1) can pass an interim order in the is worth noting which provides that one royalty in
pending complaint. respect of cover version shall be paid for a minimum
It was submitted in the Court that being a creature of fifty thousand copies of each work during each
of statute, the Copyright Board could only exercise calendar year in which copies of it are made.
such powers as were expressly vested in it by the However, the Copyright Board may, by general
statute and that the power to grant an interim order, fix a lower minimum in respect of works in a
compulsory licence not having been vested with the particular language o dialect having regard to the
Board, it could not exercise such substantive power, potential circulation of such works. This is important
which it did not possess. It was further submitted that as the Copyright Board has been given power to fix
by making an interim arrangement and granting an the royalty rates. Further proviso to Clause (5)
interim compulsory licence to the respondent, the further strengthens the power of the Copyright Board
High Court had conferred upon itself a jurisdiction stating that the owner of the copyright may file a
which the Copyright Board and, consequently, the complaint before the Copyright Board if the owner
High Court did not possess under Section 31 of the has not been paid in full for any cover version
Copyright Act. purporting to be made in pursuance of this section.
The Hon’ble Court noted in Para 39 that a Tribunal The proviso further provides that if the Copyright
is a creature of Statute and can exercise only such Board is, prima facie, satisfied that the complaint is
powers as are vested in it by the Statute. Before genuine, it may pass an order ex parte directing the
allowing the appeal the Court noted that such person making the cover version to cease from
incidental powers could at best be said to exist in making further copies and, after holding such inquiry
order to preserve the status-quo, but not to alter the as it considers necessary, make such further order as
same, as will no doubt happen, if an interim it may deem fit, including an order for payment of
compulsory licence is granted. If the legislature had royalty. Thus it is amply clear that the power to issue
intended that the Copyright Board should have ex parte orders have been expressly conferred on the
powers to grant mandatory injunction at the interim Copyright Board.
stage, it would have vested the Board with such Section 31 D of the amended Act provides for
authority. The submission made that there is no bar to statutory licence for broadcasting of literary and
grant such interim relief in Section 31 has to be musical works and sound recording. The Amendment
rejected since the presence of a power cannot be has introduced the concept of ‘statutory licence’ in
inferred from the absence thereof in the Statute itself. relation to published works. The amendment states
that any broadcasting organization, that proposes to
Copyright Amendment Act, 2012: A Failed Attempt communicate a published work to the public by way
After a long wait and a lot of controversy the of broadcast (including television and radio) or a
Copyright Amendment Act, 2012 has been enacted. performance of any published musical/lyrical work
Two specific Sections viz. 31 C and 31 D have been and sound recording, may do so by giving prior notice
added to the Copyright Act that specifically addresses of its intention to the owners of the rights. Such prior
the issues of licensing. Numerous changes have been notice has to state the duration and territorial coverage
made to the provisions dealing with compulsory of the broadcast and pay royalties for each work at the
licensing and new provisions have been added with rate and the manner fixed by Copyright Board. The
respect to statutory licensing .The salient points of rates fixed for television broadcasting should be
these provisions have been discussed hereinafter. different from that fixed for radio broadcasting. In
 SINGH & SINGH: COMPULSORY LICENSING IN THE COPYRIGHT DEMYSTIFIED 209

fixing the manner and the rate of royalty, the that would play role in that. The amendment Act fails
Copyright Board may require broadcasting miserably to pin point the conditions under which
organization to pay an advance to the owners of compulsory licensing can be done.
rights. No fresh alteration to any literary or musical
work, which is not technically necessary for the Conclusion
purpose of broadcasting, other than shortening the The jurisprudence in the EU and US both suggest
work for convenience of broadcast, shall be made that under exceedingly limited circumstances,
without the consent of the owners of rights. The compulsory licensing can be an appropriate remedy in
names of the author and the principal performer will antitrust cases. It is abundantly clear that such
have to be announced with the broadcast (unless licences are not to be issued routinely and should be
communicated by way of the performance itself). applied cautiously and within a limited ambit.
Records and books of accounts will have to be Compulsory licensing has served the purpose
maintained by the broadcasting organizations and rectifying the market failure, which is the
reports will be required to be given to the owners of quintessence of competition policy. The narrow and
the rights. The owners are also granted audit rights well defined application has at the same time ensured
against the broadcasting organizations. that an efficacious and delicate balance is maintained
The Copyright Board has been given the power to between innovation and competition. Judgments in
decide royalty rates. However it is not clear on what these jurisdictions laid down that at any cost
principles the Copyright Board may fix royalties for competition in the market should not be eliminated
statutory licence; whether the Board will invite and the refusal should not be unjustified. If these
suggestions from stakeholders or separate rates will be conditions are not fulfilled then the Board will award
fixed for different territorial areas or whether royalty compulsory licence. However the same has not been
rates will vary depending upon the nature of the work. replicated in India, as it appears from the case at hand
Further there is no express mechanism provided to decided by the Supreme Court of India. Court
challenge the rates fixed by the Board for statutory explicitly decided that Copyright Board has suitable
licences. It seems probable that if the royalties fixed by jurisdiction to hear such matter.
the Copyright Board, are more favourable than the As a general rule, the licences are granted under
Tariff Scheme issued by the Copyright Societies very narrow circumstances and timely restrictions.40
(given more powers under the amended Act), the The Act provides for granting a compulsory licence to
broadcasters may opt for the same. This is likely to a complainant who benefits the public at large to its
reduce lengthy negotiations and/or litigation with the maximum. The discretion granted to the Board in
right holders/copyright societies. Under Section 31, the determining the grant of licence to appropriate
Copyright Board while considering the application for candidates without any explicit definition of valid
compulsory licensing is required to form an opinion grounds is illogical. If the Board is given the power to
whether the applicant for compulsory licensing is choose the number of complainants satisfying the
qualified to do so. It has not been clarified as to what is relevant consideration test and then grant licences,
meant by ‘qualified to do so’. such discretion would be unfettered in nature.
Further in Section 31 under the amended Act for Thus, it can be concluded that the Supreme Court
the words ‘licence to the complainant’ the words has failed to do justice to compulsory licensing and
‘licence to such person or persons who, in the opinion has belittled the whole issue rather than coming up
of the Copyright Board, is or are qualified to do so’ with a significant analysis and interpretation. Sinha J
shall be substituted. The criteria have not been laid has provided tangential reasoning for most of the
down. It seems that instead of clearing the clouds, the judgment. However, this case shall definitely go down
amendments have opened Pandora’s Box as this as one of the most debated cases in the field of
would lead to further litigation. copyright.
Thus it remains that the amendments have remained The law of the land is to be respected. But the
rather ambiguous and have failed to clear the mist question remains whether the Hon’ble Court was
surrounding the aspects of compulsory licensing. It competent enough to legislate on the same. That still
also remains to be seen how the Copyright Board remains a debatable issue. Naturally the question
would decide the royalty rates and what are the factors arises whether the proposition laid down in case of
210 J INTELLEC PROP RIGHTS, MAY 2013

broadcasting of sound recordings will also hold good 9 Section 31 of the Act before 2012 amendment: Compulsory
for broadcasting of the programmes by television licence in works with held from public - (1) If at any time
during the term of copyright in any Indian work which has
channels. This judgment opens a watch gate for been published or performed in public, a complaint is made to
similar industries which might have to bear the brunt the Copyright Board that the owner of copyright in the work—
at a later stage. Fortunately, the anxiety of the has refused to re-publish or allow the re-publication of the
industry has somewhat reduced when the judgment of work or has refused to allow the performance in public of the
the Board came, which clearly distinguished between work, and by reason of such refusal the work is withheld
from the public; or
broadcastings through television channels and radio. has refused to allow communication to the public by
The Board laid down that if the requisites of Section broadcast, of such work or in the case of a sound recording
31 (1)(b) are fulfilled, there is no problem in granting the work recorded in such sound recording, on terms which
compulsory licence. the complainant considers reasonable,
However one important thing to be noted is that the the Copyright Board, after giving to the owner of the copyright
in the work a reasonable opportunity of being heard and after
Copyright Board and thereafter the Hon’ble Supreme holding such inquiry as it may deem necessary, may, if it is
Court (May 2012)(ref.39) held that interim satisfied that the grounds for such refusal are not reasonable,
compulsory licence cannot be granted. This shows a direct the Registrar of Copyrights to grant licence to the
marked shift in the attitude of the judiciary. As can be complainant to re-publish the work, perform the work in public
or communicate the work to the public by broadcast, as the
seen from the decision in the 2008 case, the apex
case may be, subject to payment to the owner of the copyright
court was inclined to grant compulsory licence and of such compensation and subject to such other terms and
minimum conditions were to be imposed in granting conditions as the Copyright Board may determine; and
of the same. However, the same Court in 2012 thereupon the Registrar of Copyrights shall grant the licence to
construed the provisions of the Copyright Act strictly the complainant in accordance with the directions of Copyright
Board, on payment of such fee as may be prescribed.
to hold that no interim compulsory licences can be Explanation.- In this sub- section, the expression’ Indian work
granted by the Copyright Board. This step is an action includes-(i)an artistic work, the author of which is a citizen of
in the right direction and would assure the Music India; and (ii)a cinematograph film or a record made or
Companies that compulsory licensing provisions manufactured in India.
would not be allowed to be misused giving them some (2) Where two or more persons have made a complaint under
sub-section (1), the licence shall be granted to the
peace of mind. Strict interpretation of the provisions complainant who in the opinion of the Copyright Board
would serve the public interest by promoting the would best serve the interests of the general public.
growth of music companies and thus encouraging 10 Subsection (2) has been now omitted by the Copyright
innovations and investment in this filed. It could only Amendment Act, 2012.
be speculated that in further rounds of litigation, the 11 Jain D C, The Phantom of Public Interest, Supreme Court
Cases (Journal Section), 3 (1986) 30.
court strengthens its footing as taken in the 2012
12 Janata Dal v H S Chowdhary and Ors. AIR 1993 SC 892,
decision and do justice to the Copyright Act paras 11, 12 and Holicow Pictures Pvt Ltd v Prem Chandra
provisions. It also remains to be seen as to what Mishra and Ors. AIR 2008 SC 913, paras 51,52.
would be the impact of the Copyright (Amendment) 13 Garner Bryan A, Black’s Law Dictionary, (West Publishing,
Act, 2012 on the decision of the Court. Delhi), 1990, p. 1266.
14 Section 31(1)(b) of the Copyright Act, 1957.
References 15 Barak Aharon, Purposive Intepretation In Law (Universal
1 Entertainment Network v Super Cassettes Industries, Law Publishing Co Pvt Ltd, Delhi), 2007, p. 88.
2008(37) PTC 353 (SC), Para 71, 78,84,89-91. 16 New India Assurance v Nusli Wadia (2008) 3 SCC 279;
2 [Link]/[Link] (16 October 2012). paras 51- 54.
3 Bill Gates quotes(American Entrepreneur and Founder of 17 Pentiah v Veeramallappa, AIR 1961 SC 1105; paras 8-10.
Microsoft Co, b.1955), [Link] 18 The Berlin Act 1908 introduced for the first time, the
keyword/intellectual_property/ (25 September 2012). possibility of member countries to apply a compulsory
4 [Link]/articles/[Link] (25 March 2012). license (Article 13/2); Stewart & Sandison, International
5 Stewart & Sandison, International Copyright and Copyright and Neighbouring Rights (Butterworths, Delhi),
Neighbouring Rights (Butterworths, New Delhi), 1989, p. 83. 1989, pp. 105, 106. Paragraph 2 of Article 13 of the Berlin
6 Super Cassettes Industries Ltd v Entertainment Network (India) Act (1908) of the Berne Convention reads: Reservations and
Ltd. (2004) 29 PTC 8 (Del) and Phonographic Performance conditions relating to the application of this article may be
Ltd v Music Broadcast (P) Ltd, (2004) 29 PTC 282 (Bom) determined by the domestic legislation of each country in so
7 Article 11bis of the Berne Convention. far as it is concerned; but the effect of any such reservations
8 Das J K, Intellectual Property Rights (Kamal Law House, and conditions will be strictly limited to the country which
Delhi), 2008, p. 187. has put them in force.
 SINGH & SINGH: COMPULSORY LICENSING IN THE COPYRIGHT DEMYSTIFIED 211

Anyhow, it is the Brussels Act, 1948 that provided for by the Central Government. The International Conventions
equitable remuneration to be fixed by competent authority in provide for compulsory license. Whereas U.K., Australia,
the absence of mutually agreed terms. See article 13 (2) of Singapore, U.S.A. have framed laws for grant of compulsory
the Brussels Act 1948. license and also constituted Tribunals for the purpose of
19 Records of the Intellectual Property Conference of overseeing the tariff for licensing, stricto sensu the Indian
Stockholm (1967). Act does not say so.
20 Paragraphs 71 and 80 of the Records of the Intellectual 32 Associated Music v Debs Memorial Radio Fund, 141 F. 2d
Property Conference of Stockholm (1967). 852 [1994]
21 The House Report on the Berne Convention Implementation 33 Section 31(2) of the Indian Copyright Act, 1957.
Act of 1988 (1988).
34 IMS Health v NDC Health [2002] 5 C.M.L.R. 1 (ECJ)
22 Hartford-Empire Co v United States , 323 US 386 (1945).
23 First articulated in United States v Terminal Railroad Ass’n, 35 Radio Telefis Eireann (RTE) & Independent Television
224 U.S. 383 (1912). Publications Ltd (ITP) v Commission of the European
24 Lorain Journal Co v United States, 342 US 143, 146-49 (1951). Communities (Magill Case) [1995] All E.R. (EC) 416 (ECJ),
25 Intergraph Corp v Intel Corp, 195 F.3d 1346 (Fed. Cir. 1999). para 6.
26 AB Volvo v Erik Veng (UK) Ltd [1988] EUECJ C-238/87. 36 Carew and Company Ltd v Union of India (1975) 2 SCC
27 IMS Health GmbH & Co OHG v NDC Health GmbH & Co 791, Para 5.
KG (C418/01) [2004] E.C.R. I-5039 (ECJ (5th Chamber)). 37 Decision came on 25th August, 2010.
28 Narayanan P S, Intellectual Property Law (Gogia Law 38 The case is still pending in the High Court.
Agency, Hyderabad), 2005, p.310.
39 Super Cassettes Industries Ltd v Music Broadcast Pvt Ltd
29 Goorha Pallavi , SC ruling gives more teeth to Copyright
[Civil Appeal Nos.4196-4197 of 2012 arising out of SLP(C)
Board for deciding on royalty rates,
Nos.26581- 26582 of 2011]. The judgment came on
<[Link]
4th May 2012.
ection_id=7&news_id=31072&tag=25980>, (26 March 2012).
30 Eastern Book Company v D B Modak (2008) 1 SCC 1, para 15 40 Timm Neu, Bollywood is Coming!: Copyright and film
31 India is a signatory to various International conventions, such industry issues regarding, international film co-productions
as, Berne Convention, Rome Convention, etc. as would involving India, San Diego International Law Review,
appear from the International Copyright Order, 1999 issued 8(1)(2006) 123.