Spotify beware – Indian broadcasting licensing scheme may not cover streaming

May 2020

COPYRIGHT: A recent ruling against and Indian streaming service could have important implications for Spotify in its battle with Warners in the country and it’s plans to launch in the Indian market.

The Bombay High Court (Justice S.J. Kathawalla) has now made its decision Tips Industries Limited vs Wynk Music Ltd with (judgement dated April 23, 2019) and and has found for Indian record label Tips against a local streaming service based, Wynk. The dispute began in 2017 when Tips and Wynk failed to agree new licensing terms. Tips then told Wynk to remove its catalogue from the service, but Wynk responded by saying it didn’t have to because it was covered by a compulsory licence under Indian law that was traditionally intended for broadcasters. Tips then brought a legal action for copyright infringement. 

Justice SJ Kathawalla has now ruled in favour of the label, saying that Wynk was “knowingly infringing upon the plaintiff’s copyrights”. He also dismissed claims by Wynk that the label was simply trying to force its hand in licensing negotiations. The judge noted the increase in digital music companies claiming protection under Section 31-D of India’s Copyright Act but ruled that  this “amounts to usurpation of the exclusive rights of the owners to commercially rent, sell or communicate to the public their sound recordings” and that these claims of legal protection do “not meet the legislative purpose” of the Act. The court held that Section 31D of the Copyright Act 1957 covers only radio and TV broadcasting and not internet broadcasting.

Spotify are likewise relying on Section 31D of the Act in their battle with Warners: The section was introduced in the Act by an 2012 amendment to provide for a statutory licensing scheme for any broadcasting organisation desirous of communicating to the public

any sound recording, may obtain a statutory license to do so, provided they pay the royalty rates to the copyright owners, at rates fixed by the Intellectual Property Law Board. Here The Court held that Section 31D does not cover internet broadcasting. It noted that Section 31-D acted as a statutory exception to the rule that a copyrighted work is the exclusive property of its owner, and should be therefore construed narrowly in “conformity with the specific intention for which it was enacted” and that the Section was intended only to address radio and TV broadcasting:  “The absence of express words in Section 31-D providing for a Statutory License in respect of internet streaming and / or downloading, was a conscious legislative choice. In view of the above and in the absence of an express statutory provision including internet broadcasting within the purview of Section 31-D, the scope of Section 31-D cannot be expanded to include the same”.

Further, a bare perusal of the Rules 29 and 31 of the Rules also supported the view that Section 31-D is a statutory licensing regime meant only for ‘radio’ and ‘television’ broadcasting and not internet broadcasting. In conclusion, the Court said unequivocally : “The internet broadcasting organizations cannot enjoy the benefits of a Statutory License under Section 31-D. The intention of the Legislature while enacting the amending legislation viz. the Copyright (Amendment) Act, 2012, was to restrict the grant of Statutory License under Section 31-D to radio and television broadcasting organisations”.

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