2008 (5) TMI 671 - SC - Indian Laws

Interpretation of statute - Section 31 of the Copyright Act, 1957 - Grant of compulsory licence - broadcast of the songs in respect whereof the first respondent holds a copyright as owner thereof or by reason of purchase of the copyright belonging to others - Principles of Valuation - royalty and compensation - 'work' defined in Section 2(y). Whether the Copyright Board has jurisdiction u/s 31 (1)(b) of the Copyright Act, 1957 to direct the owner of a copyright in any Indian work or a registered copyright society to issue compulsory licences to broadcast such as works, where such work is available to the public through radio broadcast? - Whether in any event such a compulsory license can be issued to more than one complainant in the light of Section 31(2)? - relevant considerations which the Copyright Board must keep in view while deciding on issuance of compulsory license to a particular person and terms on which the compulsory license may be issued, including the compensation. If the right of an author/society is so pervasive, is it necessary to construe the provisions under Section 31 of the Act having regard to the International Covenants and the laws operating in the other countries? - HELD THAT - The answer to the said question must be rendered in affirmative. Interpretation of a statute cannot remain static. Different canons and principles are to be applied having regard to the purport and object of the Act. What is essential therefor is to see that the expanding area in which the copyright will have a role to play is covered. While India is a signatory to the International Covenants, the law should have been amended in terms thereof. Only because laws have not been amended, the same would not by itself mean that the purport and object of the Act would be allowed to be defeated. If the ground realities changed, the interpretation should also change. Ground realities would not only depend upon the new situations and changes in the societal conditions vis-'-vis the use of sound recording extensively by a large public, but also keeping in view of the fact that the Government with its eyes wide open have become a signatory to International Conventions. Application of International Conventions in India - HELD THAT - Applicability of the International Conventions and Covenants, as also the resolutions, etc. for the purpose of interpreting domestic statute will depend upon the acceptability of the Conventions in question. If the country is a signatory thereto subject of course to the provisions of the domestic law, the International Covenants can be utilized. Where International Conventions are framed upon undertaking a great deal of exercise upon giving an opportunity of hearing to both the parties and filtered at several levels as also upon taking into consideration the different societal conditions in different countries by laying down the minimum norm, as for example, the ILO Conventions, the court would freely avail the benefits thereof - Those Conventions to which India may not be a signatory but have been followed by way of enactment of new Parliamentary statute or amendment to the existing enactment, recourse to International Convention is permissible. Essential Features of the Copyright Act - HELD THAT - The underlying philosophy of the Copyright Act is that the owner of the copyright is free to enter into voluntary agreement or licenses on terms mutually acceptable to him and the licensee. The Act confers on the copyright owner the exclusive right to do the various acts enumerated in Section 14. An infringement of copyright occurs if one of those acts is done without the owner's license. A license passes no interest, but merely makes lawful that which would otherwise be unlawful. The Act also expressly recognizes the notion of an exclusive license which is defined in Section 2(j). But, that does not mean, as would be noticed from the discussions made hereinafter, that it would apply in all situations irrespective of the nature of right as also the rights of others - This Scheme shows that a copyright owner has complete freedom to enjoy the fruits of his labour by earning an agreed fee or royalty through the issuance of licenses. Hence, the owner of a copyright has full freedom to enjoy the fruits of his work by earning an agreed fee or royalty through the issue of licenses. But, this right, to repeat, is not absolute. It is subject to right of others to obtain compulsory licence as also the terms on which such licence can be granted. Copyright Society - HELD THAT - The Copyright Society is required to frame a scheme to determine the quantum of remuneration payable to individual copyright owners having regard to the number of copies of the work in circulation - Rule 14J requires that a Copyright Society shall frame a scheme of tariff to be called a Tariff Scheme setting out the nature and quantum of fees or royalties which it proposes to collect in respect of such copyright or other rights administered by it. Rule 14K requires a Copyright Society to frame a Distribution Scheme setting out the procedure for collection and distribution of royalty specified in the Tariff Scheme among the owners of copyright. Any distribution under the Distribution Scheme is required to be in the proportion to the income of the Copyright Society from actual use of the work or works of each owner of rights. Compulsory Licence - HELD THAT - Chapter VI relate to grant of licence, which can be divided into two parts; licences by owners of copyright and compulsory licenses. Compulsory licences can be granted by the Copyright Board subject to the limitations contained therein. It cannot be said to be an exception to the general rule in the strict sense of the term as the provisions relating to grant of license by owners of Copyright and compulsory licenses operate in different fields. It may be true that while passing an order for grant of compulsory licenses, the relevant factors as laid down therein must be kept in mind which would include the right of the owner of the copyright as a part of the right of property, but where a statute is to be construed as a balancing statute, the situation may be different. Construction of Section 31 of the Act - HELD THAT - Admittedly in terms therof the principles of natural justice are required to be complied with and an enquiry has to be held. The extent of such enquiry will depend upon the facts and circumstances of the case. A finding has to be arrived at that the grounds of refusal by an owner of a copyright holder is not reasonable. Only upon arriving at the said finding, the Registrar of copyright would be directed to grant a license for the said purpose. The amount of compensation payable to the owner of the copyright must also be determined. The Board would also be entitled to determine such other terms and conditions as the Board may think fit and proper. Registration is granted only on payment of such fees and subject to compliance of the other directions. Right to Property - Is the Concept Applicable - HELD THAT - The right of property is no longer a fundamental right. It will be subject to reasonable restrictions. In terms of Article 300A of the Constitution, it may be subject to the conditions laid down therein, namely, it may be wholly or in part acquired in public interest and on payment of reasonable compensation. Public Interest - Public Policy - HELD THAT - The right to property, therefore, is not dealt with its subject to restrict when a right to property creates a monopoly to which public must have access. withholding the same from public may amount to unfair trade practice. In our constitutional Scheme of statute monopoly is not encouraged. Knowledge must be allowed to be disseminated. An artistic work if made public should be made available subject of course to reasonable terms and grant of reasonable compensation to the public at large. Royalty and Compensation - HELD THAT - The legislature for all intent and purport equates 'compensation' with 'royalty'. In the context of the Act, royalty is a genus and compensation is a species. Where a licence has to be granted, it has to be for a period. A 'compensation' may be paid by way of annuity. A 'compensation' may be held to be payable on a periodical basis, as apart from the compensation, other terms and conditions can also be imposed. The compensation must be directed to be paid with certain other terms and conditions which may be imposed. Parliamentary Intent - HELD THAT - The intention of the Parliament, it is trite, must be ascertained from the plain reading of the Section. The intention is to treat works, which have been withheld from the public differently from the right to broadcast . The right to broadcast is a ephemeral right. It requires special treatment as it confers upon every person, who wishes to broadcast a work or the work recorded in a sound recording, the right to do so is either by entering into a voluntary agreement to obtain a licence on such terms which appear to be reasonable to him or when the term appears to be unreasonable to approach the Board - When such a complaint is made, it confers the jurisdiction upon the Board. It may ultimately allow or reject the complaint but it cannot be said that the complaint itself is not maintainable. Interpretation of Section 31(2) - HELD THAT - The meaning of the Statute is neither clear nor sensible. It is a statute where a purposive construction is warranted. It is a case where sub-Section (2) should be kept confined to clause (a) for that purpose. The statute has to be read down. It is not a case of improper interpolation so as to take away a primary purpose of the legislative intent. It is expedient to give effect to the intent of the statute. This itself says that creases can be ironed out. While undertaking the said exercise, the court's endeavour would be to give a meaning to the provisions and not render it otiose - Section 31(2) refers to case falling under clause (a) of Sub-section (1) of Section 31 and not clause (b) thereof. Principles of Valuation - HELD THAT - The Tribunal exercises a limited jurisdiction in India. Different cases are required to be considered on its own merits. What would be reasonable for one may not be held to be reasonable for the other. The principles can be determined in a given situation. The Bombay High Court has remitted the matter back to the Board for the said purpose. We endorse the views of the Bombay High Court. Discretionary Jurisdiction - whether the discretionary jurisdiction should have been exercised in favour of the appellant? - HELD THAT - Reliance has been on Phonographic Performance Ltd. vs. Maitra. The general principle of grant of injunction came up for consideration before the Court of Appeal. Therein, it was held that an owner may exercise and exploit his proprietary right by licensing some and not others. He may charge whatever he wishes. Such is not the position in India. Therein, the defendant did not take part in the proceedings. It was, inter alia, from that angle, held that the court could still exercise discretion. Conclusion As it was a case of abuse, the Board had the jurisdiction to entertain any application for grant of compulsory licence. How far and to what extent appellant has infringed the right of the respondent is a matter which may be taken into consideration by the Board. A suit was filed and injunction was granted. Apart from the fact that the appellant offered to take a license held negotiations with the respondents in the suit as soon as it came to know that Super Cassettes is not a member of PPL, it gave an undertaking. Each case must be considered on its own facts - However, we do not approve the manner in which the Board has dealt with the matter. It has refused to examine the witnesses. It took up the matter on a day for hearing which was fixed for production of witnesses. We, therefore, are of the opinion that the order of the Board should be set aside and the matter be remitted to the Board again for the consideration of the matter afresh on merit. Appeal allowed.

Summary

Issues Involved:
1. Interpretation of Section 31 of the Copyright Act, 1957.
2. Jurisdiction of the Copyright Board under Section 31(1)(b) of the Copyright Act, 1957.
3. Grant of compulsory licenses to more than one complainant.
4. Relevant considerations for issuing compulsory licenses and determining compensation.

Issue-Wise Detailed Analysis:

1. Interpretation of Section 31 of the Copyright Act, 1957:
The case revolves around the interpretation of Section 31 of the Copyright Act, 1957, particularly focusing on the conditions under which the Copyright Board can grant compulsory licenses. The section aims to balance the monopoly of copyright owners and public interest by allowing the Board to grant licenses if the copyright owner refuses to republish or allow the performance of the work, or refuses to allow communication by broadcast on reasonable terms.

2. Jurisdiction of the Copyright Board under Section 31(1)(b) of the Copyright Act, 1957:
The court examined whether the Copyright Board has the jurisdiction to direct the owner of a copyright or a registered copyright society to issue compulsory licenses for broadcasting works already available to the public through other radio broadcasts. The court concluded that the Copyright Board does have jurisdiction to grant compulsory licenses if the terms offered by the copyright owner are unreasonable, which amounts to a refusal. The Board's jurisdiction is triggered when the complainant considers the terms unreasonable, and the Board must determine if the refusal is reasonable.

3. Grant of compulsory licenses to more than one complainant:
The court addressed whether compulsory licenses can be issued to more than one complainant under Section 31(2). It was held that the provision should be read down to apply only to clause (a) of Section 31(1) and not clause (b). This interpretation avoids the absurdity of allowing only one broadcaster to receive a license, ensuring that multiple broadcasters can apply for compulsory licenses if the terms are unreasonable.

4. Relevant considerations for issuing compulsory licenses and determining compensation:
The court emphasized that the Copyright Board must consider the reasonableness of the refusal by the copyright owner and the public interest. The terms "royalty" and "compensation" were discussed, with the court noting that they are often used interchangeably in the context of statutory licenses. The Board must determine compensation and other terms and conditions for the license, ensuring that the interests of both the copyright owner and the public are balanced.

Conclusion:
The court allowed the appeals, setting aside the order of the Copyright Board and remitting the matter back to the Board for fresh consideration on merit. The Board must comply with the principles of natural justice, allowing parties to present evidence and determining the reasonableness of the refusal by the copyright owner. The court also highlighted the need for a purposive construction of Section 31 to avoid absurdities and ensure that the statutory provisions fulfill their intended purpose.