The Delhi High Court on March 3 granted an interim injunction to PPL against Azure, restraining the latter from playing PPL’s sound recordings in their restaurants. Highlighting Azure’s argument that PPL is not a copyright society and thus, cannot license out these recordings, SpicyIP intern Anushka Dhankar argues that the judgement fails to substantively engage with previous interpretations of different courts on this issue and thus leaves the controversy still unaddressed. Anushka is a third-year student at the National Law School of India University. She is interested in the AI/copyright interface and hopes to pursue a career in IP litigation, with a dash of AI policy on the side.
Lawful Owners or Private Licensing Cartels? The Latest Development in the S.33 v. S.30 Saga
By Anushka Dhankar
The recent order of a Single Judge bench of the Delhi High Court in Phonographic Performance Ltd. v. Azure Hospitality Pvt. Ltd. has further muddied already murky waters concerning the interplay between Sections 30 (issuing of licenses) and Section 33 (registration of a copyright society) of the Copyright Act. The order granted an interim injunction in favour of the plaintiff, Phonographic Performance Ltd. (“PPL”), against the alleged continuing copyright infringement of its work by the defendant, Azure Hospitality Pvt. Ltd. (“Azure”). In this post, I argue that the judgement fails to substantively engage with previous interpretations of whether organizations like PPL can issue licenses despite not being a copyright society, leaving the core of the issue unresolved.
In the present case, PPL argued that it owned copyrights in certain sound recordings by means of assignment deeds executed in its favour. PPL claimed that in 2022, their representative visited one of the restaurants operated by Azure and discovered that it was playing PPL’s sound recordings without having obtained the necessary license. This practice allegedly continued despite PPL sending a cease-and-desist notice to Azure, which went unanswered. Thus, PPL filed the present suit for copyright infringement and interim reliefs with respect to the same.
In reply, Azure challenged the maintainability of PPL’s suit in two ways.
Firstly, they argued that the suit was hit by the bar in Order XXIII Rule (1)(4)(b) of the CPC. Rule (1)(3)(b) of the Order states that when a plaintiff wishes to withdraw a suit, but also wants to file a fresh suit on the same subject-matter, permission for the same must be sought from the Court before withdrawal. Rule (1)(4)(b) says that if such a liberty is not sought, the plaintiff cannot file a fresh suit on the same subject-matter.
Now, PPL had previously filed a quia timet action (i.e., an application for an anticipatory injunction – to know more about this type of injunction see this post) before the Bombay High Court, (“the Bombay Suit”) where they sought injunctive relief against Azure and 900 other defendants against the anticipation of their sound recordings being played on specific festive occasions. They later withdrew this suit without seeking liberty to file a fresh suit. Azure alleged that since the sound recordings in respect of the Bombay Suit and this suit were the same, the present suit was barred. PPL, meanwhile, countered that the two suits arose from separate causes of action. The Court rightly held that the causes of action were different despite involving the same sound recordings, considering that the Bombay Suit involved an impending potential infringement, while the present suit involved allegations of continuing infringement since 2022.
Azure’s second argument against maintainability warrants closer scrutiny. They argued that, while PPL had ceased to be a copyright society since 2012, it was still functioning as one, i.e. it was carrying on the business of issuing licenses without obtaining the requisite registration for the same under the Copyright Act. They argued that this was illegal, considering the interpretation of S.33 given in Novex Communications v. DXC Technologies, (previously summarised here, and analysed here and here), where the Madras High Court held that, while owners in their individual capacity undoubtedly held a right to license, S.33 barred any entity other than a registered copyright society from engaging in the business of licensing. Accordingly, Azure submitted that PPL had no locus to file the present suit, effectively treating it as an unregistered copyright society.
The S.33 v. S.30 Controversy – A Closer Look
To appreciate the Single Judge’s order on the issue, it is necessary to understand the interpretive tussle between S.30 and S.33 of the Copyright Act.
S.30 provides that owners (which include owners who were assignees, like PPL) and their duly authorised agents can issue licenses with respect to any right in the copyright. According to S.18(2), even assignees of a specific right (such as public performance rights) who do not own the larger copyright, would be considered “owners” with regard to the copyright so assigned.
Meanwhile, S. 33(1) provides that no person except for a registered copyright society can carry out the business of issuing licenses. The first proviso to this section clarifies that owners can still issue licenses in their individual capacity, but only in a manner consistent with their membership in the copyright society.
On a bare reading of S.33(1) and the first proviso, the Madras High Court’s view seems correct – the section does differentiate between the licenses granted by owners in an individual capacity, versus the business of licensing. The judgement further defines “business” as the commercial enterprise of issuing licenses for profit. However, the second proviso to the section complicates matters – it states that in case of works embedded in a sound recording/cinematograph film, the business of licensing shall be carried out only by copyright societies. This creates ambiguity with respect to the mandatory status of copyright societies, and the legality of private entities such as PPL essentially perform the same function as copyright societies, but do it by signing assignment deeds en masse, and then claiming rights as owners, and not copyright societies.
The contravening view, championed by the Delhi and Bombay High Courts, is that such private entities can issue licenses. In Novex Communications v. Lemon Tree Hotels, the Delhi High Court observed that interpreting copyright societies as mandatory for issuing licenses would have two unintended consequences – firstly, if there exists no copyright society in respect of a work, infringers would enjoy impunity and owners would struggle to enforce their rights. Secondly, S.34 of the Act indicates that issuing licenses through societies is a choice – owners can give copyright societies partial or exclusive authority to license, or can opt out of membership altogether. Holding that licenses must be issued through copyright societies would thus undermine this choice. This view was followed in PPL v. Canvas Communications, and in PPL v. Esteem Services.
Moreover, the Bombay High Court expanded upon and reinforced this view in Novex Communications v. Trade Wings. The defendants advocated for a broad reading of S.33(1). They submitted that “business” of issuing licenses includes transactions entered into by owners as well. S.30 and the first proviso to S.33(1) protected the owner’s general right to license, and once individual transactions acquired the status of the business, they would have to be done via the copyright society route. The Court however, was unimpressed with this argument, and held that copyright societies could not trump the paramountcy of owners’ rights under S.30. It rejected the defendants’ interpretation of “business” as overbroad, but offered only confusing observations as response. On one hand, it observed that “business” would include grant of licenses by owners – an argument led by the defendants. On the other hand, it seems to tacitly support plaintiffs’ argument that “business” is to be read contextually, meaning that its presence in S.33 is only meant to indicate that the section states the way in which copyright societies are to function.
Order in PPL v. Azure
The Single Judge bench in PPL v. Azure considers all the aforementioned precedents, and proceeds to side with the Bombay and Delhi High Courts. Although the order purports to provide reasoning for this choice, it contains very little by way of concrete reasons, and the bench instead expands upon the interpretation of S.30 and S.33 without substantively engaging with the precedents at hand. The phrasing leaves the impression that the choice is a foregone conclusion, given the bench’s reading of the statute.
The order upholds a narrow reading of S.33(1), holding that it only comes into operation when a copyright owner becomes a member of a copyright society — effectively meaning that the section would not apply to owners like PPL. The order is heavily influenced by the rejection of the Madras High Court’s judgement in Novex v. Trade Wings; however, it does not expand upon or engage with the question anew.
This is a regrettable missed opportunity for two reasons – firstly, the Bombay High Court is (in my view) incorrect in interpreting Novex v. DXC. It observes that the Madras High Court wrongly applies the second proviso to S.33(1), to sound recordings (and not the embedded works within them). I believe this is incorrect – the Madras High Court constructs an argument based on statutory and purposive reading of S.33, which is why a differentiation between licensing in individual capacity versus in a business capacity is central to its holding. I could not locate this erroneous application of the second proviso.
| Section 30 | Section 33 (1) |
| The owner of the copyright in any existing work or the prospective owner of the copyright in any future work may grant any interest in the right by licence in [writing by him] or by his duly authorised agent: | (1) No person or association of persons shall, after coming into force of the Copyright (Amendment) Act, 1994 (38 of 1994) commence or, carry on the business of issuing or granting licences in respect of any work in which copyright subsists or in respect of any other rights conferred by this Act except under or in accordance with the registration granted under sub-section (3):
Provided that an owner of copyright shall, in his individual capacity, continue to have the right to grant licences in respect of his own works consistent with his obligations as a [Provided further that the business of issuing or granting licence in respect of literary, dramatic, musical and artistic works incorporated in a cinematograph films or sound recordings shall be carried out only through a copyright society duly registered under this Act: |
Secondly, I pointed out earlier that the Bombay High Court does not provide a clear definition of what “business” means, which leaves the position uncertain. In this light, the order in PPL v. Azure is another missed opportunity to engage with the heart of the dispute. In my view, the arguments in the aforementioned precedents have created a false dilemma with respect to the interpretation of “business” in S.33(1) – it is either to be read so broadly as to encompass (and trump) individual owners’ rights to license, or so narrowly as to include only pre-existing copyright societies. The first view inspires vociferous opposition, as seen in the abovementioned cases. However, the second view comes with the danger of defeating the purpose of introducing copyright societies – which is balancing the rights of authors, other owners, and the general public with respect to copyrighted works. If “business” is read so narrowly, it enables copyright arbitrage – entities like PPL can function exactly like copyright societies, but without statutory oversight.
Admittedly, Novex v. DXC contains a broad definition of “business” which can be stretched to trample on owners’ rights as well. But an imperfect definition does not warrant complete sidelining of the purpose behind the creation of copyright societies, and the differentiation between individuals and large-scale businesses. All in all, the order in PPL v. Azure leaves many unanswered questions when it comes to the S.33 versus S.30 saga.