Recently, the Calcutta High Court passed a landmark judgment reinforcing the rights of authors of music and literary works used in sound recordings. In a significant decision aimed at safeguarding copyrights, the Court directed Vodafone to pay royalties to the Indian Performing Right Society (IPRS) for using musical works protected under copyrights in its Caller Ring Back Tone (CRBT) service.
This ruling is a major victory for authors whose rights, despite being enshrined in the Copyright Act through the 2012 amendment, have often been overlooked. The judgment acknowledges the necessity of honouring the rights of creators in the digital age.
The dispute originated when Vodafone introduced a value-added service (VAS) allowing customers to set Caller Ring Back Tones for personal use. This service featured music recordings owned by Saregama and other works protected by IPRS, which represents authors, publishers, and musicians. IPRS argued that Vodafone needed a separate license and had to pay royalties for using these works. Vodafone, however, contended that it only needed permission from Saregama, the owner of the recordings.
This disagreement led to a series of lawsuits. IPRS sought royalties from Vodafone, while Saregama aimed to prevent Vodafone from using recordings protected under copyrights without proper authorization. Vodafone responded by requesting to implead other music companies like Sony, Tips as well as other music labels, for effective adjudication of disputes, contending that they did not need a license from IPRS.
The primary issue of consideration for the Court was, whether Vodafone was liable to pay royalties and obtain a separate license from IPRS to commercially exploit the underlying musical and literary works of authors who are members of IPRS.
The Court found that IPRS’ claim was a mixed question of fact and law. On the factual side, Vodafone failed to produce any agreement with IPRS that allowed commercial exploitation of the literary and musical works. The Court scrutinized the agreements between Vodafone and Saregama, concluding that Saregama did not grant a license to play the sound recordings nor did it have the authority to grant rights concerning the underlying musical or literary works incorporated in the recordings.
Vodafone contended the following:
- Saregamabeing the first owner of the literary and musical works in the sound recordings, thus no IPRS license was required.
- Under Section 17(c) of the Copyright Act, 1957, in a contract of service, authors surrender their rights to the employer for valuable consideration, including the right to collect royalties.
- The 2012 Amendment does not alter the law regarding independent copyright in sound recordings.
However, the Court clarified Section 18 of the Copyright Act, stating that the author cannot relinquish their right to receive royalties. It acknowledged Saregama as the first owner of the copyright in sound recordings but emphasized that the rights of authors of literary and musical works have an overriding effect post the 2012 amendment. Thus, authors’ rights to royalties cannot be circumvented or bypassed.
The Court dismissed Vodafone’s reliance on the precedent set in IPRS v. Aditya Pandey (2011), where the Delhi High Court ruled that the right to royalties would only accrue when the works were used independently of the sound recordings. Instead, the Calcutta High Court held that authors are entitled to claim royalties even when their underlying works are used in sound recordings.
Hence, considering all the contentions and submissions made, the Court directed Vodafone to:
– Cease the unauthorized use of works protected under copyrights without obtaining an IPRS license and making royalty payments.
– Pay the amounts previously deposited in the Court of Rs.3.5 crores along with interest to IPRS.
– Expedite the resolution of the dispute with IPRS.
– Disclosure of data and logs of actual use made by the Vodafone’s subscribers and the works utilized as part of their Value Added Services
Lessons learnt:
This judgment underscores the importance of recognizing and compensating the creative efforts of authors, treating copyright not merely as an economic right but as an extension of the author’s personality and legacy. The ruling also highlights the impact of the 2012 amendment to the Copyright Act, which strengthened the position of authors regarding their entitlement to royalties. This case emphasizes that legislative changes must be respected and enforced, ensuring authors benefit from their creations. For companies utilizing works protected by copyrights for services such as Caller Ring Back Tones (CRBT) must obtain separate licenses from relevant copyright societies, like IPRS to ensure that all parties involved in the creation of an artistic work are fairly compensated.
The interpretation of Section 18 of the Copyright Act in the present matter demonstrates that even when a sound recording is owned by a music company like Saregama, the underlying rights of authors to receive royalties remain intact and delineate the boundaries between ownership of copyright and the rights of authorswhich cannot be waived.
Media companies must ensure that their agreements with copyright owners explicitly cover all aspects of rights and royalties, highlighting the necessity of thorough and compliant contracts.This case sets a precedent on the responsibility of MNC’s to respect intellectual property rights, the need for due diligence and adherence to the requisite laws when developing and offering new services that involve Intellectual Property.