2013 (4) TMI 651 - HC - Companies Law

Infringement of copyright - Persistent breach and default of the terms of the licence - Held that - The judgement of a Division Bench of this Court in Music Choice India Private Limited v. Phonographic Performance Limited () similarly emphasises that exclusive jurisdiction to grant a licence is vested with the Copyright Board - Defendant has prima facie been guilty of a persistent breach of its obligation - The Plaintiff has made out a strong prima facie case - The balance of convenience must necessarily weigh in favour of the Plaintiff since, to allow the Defendant to broadcast songs on the basis of the terms of the compulsory licence which has been validly terminated would amount to an infringement of the copyright of the Plaintiff - Moreover, admittedly the Plaintiff does not command a monopoly in respect of the entire market - The grant of an injunction may at worst be a matter of inconvenience but would not result in the closing down of the business of the Defendant. Learned Single Judge was in error in allowing the Defendant the continued use of the repertoire of the songs of the Plaintiff - We set aside the operative direction contained in paragraphs 9 and 10 of the impugned order of the learned Single Judge allowing the Defendant to broadcast sound recordings from the repertoire of the Plaintiff subject to the deposit of an amount of Rs.11.50 lakhs - For the reasons indicated earlier, we grant an ad-interim order in terms of prayer clause (a) of the Notice of Motion - We also clarify by way of abundant caution that this order shall not come in the way of the final disposal of the Notice of Motion on merits. The appeal filed by the Defendant stand dismissed - Cross-Objection of the Plaintiff is allowed.

Issues Involved:
1. Validity of the termination of the compulsory licence.
2. Defendant's compliance with the terms of the compulsory licence.
3. Plaintiff's entitlement to an injunction against the Defendant.
4. Jurisdiction of the Copyright Board in granting interim compulsory licences.
5. Applicability of Section 31D of the Copyright Act, 1957.

Issue-wise Detailed Analysis:

1. Validity of the Termination of the Compulsory Licence:
The Plaintiff terminated the compulsory licence granted to the Defendant for breach of the obligation to submit a revised Bank guarantee. The Court noted that under the terms of the licence, the Plaintiff had the right to terminate the licence without notice if the Defendant failed to revise the Bank guarantee. The Defendant did not submit a revised Bank guarantee for the period from October to December 2010 and for five consecutive quarters thereafter. Consequently, the Plaintiff's termination of the licence was deemed prima facie valid.

2. Defendant's Compliance with the Terms of the Compulsory Licence:
The Defendant was required to submit a revised Bank guarantee within two weeks from the end of each quarter and to make monthly payments by the 7th day of the following month. The Defendant failed to comply with these obligations, as no revised Bank guarantee was furnished, and no payments were made between 2009 and 2012. The Defendant's claim of an understanding for adjustments based on excess royalty payments was unsupported by any formal documentation. The Court found that the Defendant had persistently breached the terms of the compulsory licence.

3. Plaintiff's Entitlement to an Injunction Against the Defendant:
The Plaintiff sought a permanent injunction against the Defendant for unauthorized broadcasting of its sound recordings after the termination of the licence. The Court held that the Plaintiff had made a strong prima facie case for an injunction, as the Defendant's continued broadcasting would constitute an infringement of the Plaintiff's copyright. The balance of convenience favored the Plaintiff, as allowing the Defendant to broadcast the songs would infringe the Plaintiff's rights.

4. Jurisdiction of the Copyright Board in Granting Interim Compulsory Licences:
The Court referenced the Supreme Court's judgment in Super Cassettes Industries Ltd. v. Music Broadcast Pvt. Ltd., which held that the Copyright Board does not have the power to grant an interim compulsory licence under Section 31(1)(b) of the Copyright Act. The Court also cited a Division Bench judgment in Music Choice India Private Limited v. Phonographic Performance Limited, which emphasized that the exclusive jurisdiction to grant a licence under Section 31(1)(b) lies with the Copyright Board. The learned Single Judge's order allowing the Defendant to continue broadcasting subject to a deposit was effectively granting a compulsory licence, which was beyond the Court's jurisdiction.

5. Applicability of Section 31D of the Copyright Act, 1957:
Section 31D, introduced by the Copyright (Amendment) Act, 2012, allows broadcasting organizations to communicate literary and musical works and sound recordings to the public, subject to payment of royalties fixed by the Copyright Board. The Court clarified that the grant of an ad-interim injunction would not preclude the Defendant from seeking remedies under Section 31D. However, the Court did not express any opinion on the applicability of Section 31D to the present case.

Conclusion:
The Court affirmed the finding that the Defendant breached the terms of the compulsory licence and that the licence was validly terminated. The learned Single Judge's direction allowing the Defendant to broadcast songs subject to a deposit was set aside. An ad-interim injunction was granted in favor of the Plaintiff, preventing the Defendant from broadcasting the Plaintiff's sound recordings. The Defendant's appeal was dismissed, and the Plaintiff's cross-objections were allowed. The Court refused to stay the operation of its order, as it would constitute an infringement of the Plaintiff's copyright.

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