by Harshit Bhoi
In this post, Harshit Bhoi, a fourth year student at National Law University, Odisha discusses the recent Madras High Court judgement Novex Communications Pvt. Ltd. v DXC Technology Pvt. Ltd. & Anr. to analyse whether businesses can grant copyright licenses without registering themselves as a copyright society. For this, he relies on several provisions of the Copyright Act, 1957 and attempts to reconcile them with Delhi High Court’s contradictory decision in Novex Communication Pvt. Ltd. v Lemon Tree Hotels Ltd.
Recently, the Madras High Court in the case of Novex Communications Pvt. Ltd. v DXC Technology Pvt. Ltd. & Anr. made it clear that Novex Communications Pvt. Ltd. (“Novex”) cannot be in the business of granting copyright licenses without being registered as a copyright society under Section 33(3) of the Copyright Act, 1957 (“the Act”). This stance has also been previously adopted by the Bombay High Court in the case of Leopold Café & Stores & anr. v Novex Communications Pvt. Ltd. and by the Delhi High Court in the case of M/s. Event and Entertainment Management Association (EEMA) v Union of India and Ors.. However, the legality of the business of granting copyright licenses by Novex has been rendered complex owing to a 2019 decision of the Delhi High Court in the case of Novex Communication Pvt. Ltd. v Lemon Tree Hotels Ltd.. Through the said judgement, the Court gave a green light to Novex to carry on the business of granting copyright licenses without being registered as a copyright society. Owing to the different interpretations of the court, it is imperative to understand the correct position of law in regard to the issue at hand.
The Provisions Involved
In deciding whether Novex can carry on the business of granting copyright licenses without being registered as a copyright society, three sections play a pivotal role. These are sections 18, 30 and 33 of the Act.
Section 18 talks about the Assignment of Copyright. It provides that when the assignee of a copyright by virtue of the assignment becomes entitled to any right/rights comprised in the copyright, as far as those rights are concerned, the said assignee shall be deemed to the owner of the copyright for the purposes of the Act.
Section 30 talks about licenses by owners of copyright. The relevant portion of section 30 is as reproduced below:
“The owner of the copyright in any existing work…. may grant any interest in the right by licence in writing by him or by his duly authorised agent.”
Section 33 talks about the Registration of a Copyright Society. Subsection (1) provides that no person or association of persons shall carry on the business of issuing or granting licenses without being registered as a Copyright Society in accordance with subsection (3). However, the first proviso to subsection (1) specifically provides that the owner of a copyright shall continue to have the right to grant licenses in his/her individual capacity in so far as such grant of licenses is consistent with his obligations as a member of the registered copyright society.
The Modus Operandi
It is undisputed that owing to Section 18(2) of the Act, the assignee steps into the shoes of the owner and acquires all the rights that the owner of a copyright otherwise has according to the Act. Further, Section 30 of the Act authorizes the owner of a copyright to grant any interest in the right through a license. A look at the authorization letters signed by Tips Industries, Think Music and Red Ribbon Entertainment in favour of Novex prove that the aforementioned provisions have been used to full effect by Novex for the purpose of acquiring the right to grant copyright licenses.
Does the owner have an unfettered right to grant a license?
Despite the existence of a modus operandi which bases itself on the application of Section 18(2) and Section 30, the provisions of Section 33 are bound to play a spoilsport in this regard. Section 33(1) prohibits the business of issuing or granting licenses without being registered as a copyright society under Section 33(3). The first proviso to Section 33(1) safeguards the right of an owner to grant a license in respect of his work in an individual capacity. To summarise the provisionary standpoint, Section 30 and the first proviso to Section 33(1) uphold the right of a copyright owner to grant a license in respect of his work, whereas, Section 33(1) prohibits the business of granting licenses without being registered as a copyright society. The Rate Card issued by Novex and the list of clients that it engages with make it evident beyond doubt that it is involved in the “business” of granting copyright licenses.
At this juncture, it is imperative to understand the legality of the business of granting copyright licenses by the owner of a copyright without being registered as a copyright society.
It is essential to understand that although Section 30 of the Act upholds the right of an owner to grant a copyright license, it does not make a distinction between granting licenses in an individual capacity and doing the business of granting licenses. This distinction, however, forms the basis of Section 33 of the Act which prohibits the business of granting copyright licenses while safeguarding the right of an owner to grant licenses in his individual capacity. Hence, the right of a copyright owner to grant a license is whittled down when he engages in the business of granting licenses in respect of his work. This ratio was also adopted by the Madras High Court in the recent case of Novex Communications Pvt. Ltd. v DXC Technology Pvt. Ltd. & Anr.,
Lacuna in the 2019 judgement
Although the Delhi High Court in the case of Novex Communication Pvt. Ltd. v Lemon Tree Hotels Ltd. legitimized the business of granting copyright licenses by Novex without being registered as a copyright society, the ratio that it adopted in arriving at the said decision was devoid of a distinction between granting licenses in an individual capacity and doing the business of granting licenses. Instead, it based its decision on the rationale that it cannot be the case that copyright licenses cannot be granted by anyone except a copyright society. This rationale applied by the court, as has been discussed in this paper, is true, however, incomplete. It is not the case that copyright licenses cannot be granted by anyone except a copyright society. However, when it comes to the business of granting copyright licenses, it has to be routed only through a copyright society registered under Section 33(3) of the Act.
Conclusion
In the introductory part of this paper, it had been mentioned that in deciding whether Novex can carry on the business of granting copyright licenses without being registered as a copyright society, three sections play a pivotal role. These were sections 18, 30 and 33 of the Act. The prior mentioned authorization letters signed by Tips Industries, Think Music and Red Ribbon Entertainment in favour of Novex demonstrate Novex’s compliance with Section 18 and 30. However, the Rate Card issued by Novex and the list of clients that it engages with undoubtedly reveal its involvement in the “business” of granting copyright licenses without being registered as a copyright society. This, by virtue of Section 33(1), is legally prohibited. Hence, it is evident that Novex cannot, legally, be in the business of issuing copyright licenses without being registered as a copyright society.
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