Commercial use of music generally involves more than one layer of copyright. For instance, a song may exist as a sound recording but may also include underlying musical and literary works, such as the composition and lyrics. This difference becomes important when a business obtains a licence from the owner of a sound recording and then uses the song commercially through digital or telecom services. The issue that arises here is whether such licence is sufficient or a separate royalty claim may still exist in favour of the authors or the copyright society representing the underlying works.
The Calcutta High Court dealt with this issue in Vodafone Idea Limited vs The Indian Performing Right Society Limited and the connected appeal involving Saregama India Limited [A.O. (COM) No. 17 of 2024 and APOT No. 300 of 2024]. The appeals arose from a judgment and order dated May 17, 2024, of a single judge that recognised the independent rights of the Indian Performing Right Society Limited (IPRS) and issued directions to protect those rights.
Legal Background
The central issue before the Division Bench was whether the amendments introduced by the Copyright (Amendment) Act, 2012, allow IPRS to claim royalties for underlying musical and literary works contained in sound recordings when such sound recordings are commercially used.
The Copyright Act, 1957 recognises separate categories of works in which copyright may subsist. Literary works, musical works, cinematograph films and sound recordings are treated as distinct works under the Act. This distinction is significant because the copyright in a sound recording does not extinguish the separate copyright that may exist in the underlying lyrics or musical composition.
Section 13 of the Act recognises the independent character of original literary and musical works as well as sound recordings. Section 13(4) further provides that copyright in a cinematograph film or sound recording does not affect the separate copyright in any work in respect of which the film or sound recording is made.
The issue of authors’ rights in underlying works has a long legislative history, including the Supreme Court’s judgment in Indian Performing Right Society vs Eastern India Motion Pictures Association, which dealt with the position of authors whose works were commissioned for cinematograph films. However, the Copyright (Amendment) Act, 2012, introduced important changes to protect authors’ rights to receive royalties, especially where their literary and musical works are used beyond exhibition of a cinematograph film in a cinema hall.
The 2012 amendments inserted important provisions under Section 18 that restrict the ability of an author to waive or assign their right to receive royalties in certain cases. Under the provisions, contrary assignments are also considered void. Broadly, the amendments seek to ensure that authors of literary and musical works continue to receive royalties when their works are commercially used in different ways.
Background of the Dispute
Vodafone, a telecommunications service provider, offered value-added services (VAS) to its customers, including caller tunes and ringtones, using film and non-film songs. The appellant had entered into arrangements with Saregama, which is engaged in manufacturing, selling and publishing sound recordings, including digital downloads of film and non-film songs.
Vodafone argued that Saregama held the copyright in the sound recordings and that it was not required to pay any separate royalty to IPRS under the arrangements with Saregama. According to Vodafone, any claim between Saregama and IPRS had to be resolved between those parties, and the appellant could not be made liable for a separate royalty claim.
However, IPRS contended that the core issue was whether Vodafone had a licence to commercially exploit the underlying musical and literary works incorporated in the sound recordings. According to IPRS, a licence from Saregama in respect of sound recordings did not amount to a licence for the underlying musical and literary works. IPRS also contended that Saregama did not have the legal authority to grant such licence to Vodafone in respect of those underlying works.
Saregama submitted that its claims against Vodafone had been settled, maintaining that it was not liable to pay any amount to IPRS. The dispute required the Court to ascertain the competing rights of Vodafone, Saregama and IPRS under the Copyright Act.
The present matter involved 3 suits: Vodafone had filed an interpleader suit involving Saregama and IPRS. Saregama had filed a suit seeking an injunction against Vodafone from exploiting copyright in sound recordings or related works in relation to VAS. IPRS had also filed a suit seeking an injunction against Vodafone from authorising the public performance or communication to the public of IPRS’s repertoire of musical and literary works without payment of royalty. The appeals before the Division Bench arose from interim orders and directions passed in these proceedings.
Issues Before the Court
The Division Bench framed 3 principal issues for consideration:
- Whether the amendments introduced by the Copyright (Amendment) Act, 2012 allow IPRS to claim royalties for the underlying musical/literary works in a sound recording when such sound recording is commercially exploited.
- Whether any music company, including Saregama, has legal authority or competence to grant a licence in respect of the underlying musical and literary works in sound recordings to Vodafone for commercial exploitation.
- Whether Vodafone had a licence to commercially exploit the underlying musical and literary works incorporated in the sound recordings.
Separate Copyright in Sound Recordings and Underlying Works
The Court examined the structure of the Copyright Act, noting that the Act recognises different classes of works, including literary works, musical works and sound recordings. Copyright in original literary and musical works is recognised separately from copyright in sound recordings. The Court relied on Section 13(4) to hold that copyright in a sound recording does not affect the separate copyright in the underlying works from which the sound recording is made. Therefore, the Court treated the copyright in the sound recording and the copyright in the underlying musical and literary works as separate rights recognised under the Act. The Court did not accept that a licence for sound recordings automatically defeated the rights attached to the underlying musical and literary works, especially in light of the 2012 amendments.
Effect of the 2012 Copyright Amendments
The Court treated the Copyright (Amendment) Act, 2012, as central to the dispute, opining that the 2012 amendment specifically addresses literary and musical works included in cinematograph films and sound recordings. The amendment protects the right of authors of literary and musical works included in a cinematograph film to receive royalties on an equal basis, except for the communication of the work to the public along with the cinematograph film in a cinema hall. Any assignment contrary to this is held to be void.
The amendment also addresses literary and musical works included in sound recordings that are not part of cinematograph films. It prevents the author from assigning or waiving the right to receive royalties, except in favour of legal heirs or a collecting society for collection and distribution. Any assignment contrary to this is considered to be void.
The Court also considered Section 19(10), which provides that no assignment of copyright in any work to make a sound recording that does not form part of a cinematograph film would affect the right of the author to claim an equal share of royalties and consideration payable for utilisation of such work in any form.
Reading these provisions together, the Court held that the 2012 amendments recognised the continuing right of authors of literary and musical works to collect royalties when such works are commercially exploited through sound recordings. The Court described the amendments as bringing about a substantial change in the rights of owners of literary and musical works.
Commercial Exploitation and Royalty Rights
The Court held that authors of underlying literary and musical works in sound recordings are entitled to royalties when such sound recordings are commercially exploited. The only exception recognised by the Court relates to the exhibition of a cinematograph film in a cinema hall, where the sound recording forms part of the cinematograph film.
In other words, when a sound recording is used commercially in a manner outside that limited statutory exception, the underlying authors’ royalty rights may be triggered. The Court applied this reasoning to Vodafone’s VAS, which involved commercial use of songs as caller tunes and ringtones. Even if a sound recording owner grants certain rights, such arrangement cannot override statutory royalty rights protected under Sections 18 and 19 of the Act.
Whether the Music Company Could Grant Licence for Underlying Works
The second issue concerned the authority of Saregama to license underlying musical and literary works to Vodafone. Vodafone argued that its arrangement with Saregama was sufficient and that no separate licence from IPRS was required. The Court rejected this argument, holding that Saregama did not have legal authority or competence to grant licence in respect of the underlying musical and literary works added in the sound recordings to Vodafone for commercial exploitation. Such agreements do not negate the rights of IPRS if those rights otherwise existed under the Copyright Act.
The Court also found that the agreements relied upon by Vodafone did not provide for payment of royalties to which IPRS was entitled. Some of the agreements, in fact, acknowledged that IPRS may be entitled to royalties when Vodafone commercially exploits sound recordings. Therefore, Vodafone could not rely on its private arrangements with Saregama to defeat IPRS’s statutory rights.
Whether Vodafone Had Licence to Exploit the Underlying Works
On the third issue, the Court held that Vodafone did not have a licence to commercially exploit the underlying musical and literary works added in the sound recordings without permission from IPRS. The Court examined the agreements and found that they did not establish a valid licence in favour of Vodafone for the underlying works. Even if Vodafone had obtained rights in respect of sound recordings from Saregama, that did not amount to authorisation to use the underlying musical and literary works where such separate authorisation was required under the Act.
Rights of IPRS as a Copyright Society
The judgment also confirmed the role of IPRS as a copyright society in protecting and administering rights in underlying musical and literary works. The Court observed that the Copyright Act, through its amendments, permits copyright societies to claim royalties in respect of musical and literary works in sound recordings when such sound recordings are commercially exploited.
The Court also clarified that an individual author may exit such a society if the author chooses to do so. However, where rights vest in or are administered through a copyright society, commercial users must address the society’s royalty claims in accordance with the law.
Final Directions
The Division Bench found no ground to interfere with the judgment and order of the learned Single Judge. It held that the amendments introduced by the Copyright (Amendment) Act, 2012 allow IPRS to claim royalties in respect of musical and literary works in sound recordings when such sound recordings are commercially exploited.
The Court directed that all money lying in deposit with the Joint Special Officers and with the Registrar, Original Side, be made over to IPRS, subject to the society submitting a written undertaking in the pending suits that it would refund such amount to the rightful owner if IPRS does not ultimately succeed in the suit.
Conclusion
The Calcutta High Court’s ruling clarifies that the ownership or licensing of a sound recording does not automatically extinguish or absorb the royalty rights attached to the underlying lyrics and musical compositions. It also confirms that a music company could not grant Vodafone a licence in respect of underlying musical and literary works where it lacked legal authority to do so, and that Vodafone could not commercially exploit those works without permission from IPRS. In conclusion, the decision establishes that users of sound recordings must carefully assess not only sound recording licences, but also the rights and royalty obligations attached to the underlying musical and literary works.
Authors: Manisha Singh and Shivi Gupta