Vodafone Case; An Analysis Of Calcutta High Court's Landmark Judgement On Copyright Royalties

Earlier last week on May 17, 2024, the Calcutta High Court delivered a landmark judgement reinforcing the copyright royalties due to authors of music and literary works used in sound recordings. This decision marks a significant step in recognizing and upholding the rights of authors, a long-overlooked aspect despite the 2012 amendment to the Copyright Act. The judgement asserts that authors are entitled to royalties for commercial use of their works, except when used in cinema halls and hence is celebrated by all artists, writers, labels, royalty collecting societies and other such stakeholders in the Indian music industry.

Case Background

The dispute began when Vodafone introduced a value-added service (VAS) allowing customers to use Caller Ring Back Tones (CRBT) for personal listening or caller tunes. The judgement consolidated three suits:

i. The Indian Performing Rights Society Limited (IPRS) vs. Vodafone Idea Limited (Vodafone): IPRS claimed Vodafone should pay royalties to authors of literary and musical works used in sound recordings.

ii. Vodafone vs. IPRS: Vodafone sought a declaration that it was not liable for such payments.

iii. Saregama India Limited (Saregama) vs. Vodafone: Saregama sought to prevent Vodafone from exploiting copyrights in sound recordings via VAS without appropriate licenses.
The court focused on whether Vodafone needed to pay royalties and obtain a separate license from IPRS to commercially exploit the underlying musical and literary works of authors, who are IPRS members. Upholding the authors' rights, the court restrained Vodafone from using IPRS's repertoire and ordered them to disclose the use of sound recordings under VAS, paying all outstanding royalties to IPRS.
Background on Authors' Rights

Historically, authors' rights in India have been rather contentious. The Supreme Court's 1977 judgement in IPRS v. Eastern Indian Motion Pictures ruled that once an original work is part of a cinematograph film, the authors' rights cease to exist. Despite its eloquent delivery, the judgement was criticized for its flawed interpretation. Justice Krishna Iyer's footnote emphasized the need for legislative intervention to protect musicians' rights, advocating that "twin lights can co-exist," recognizing the composer's inherent copyright.
Decades later, the 2012 amendment to the Copyright Act recognized authors' rights in derivative works. However, judicial interpretations often ignored this amendment until the Bombay High Court's landmark decision in IPRS v. Rajasthan Patrika in the year 2022, which acknowledged authors' rights to royalties when their work is publicly communicated, including radio broadcasts.

Vodafone-Saregama-IPRS Arrangement

The court's analysed all past agreements between Vodafone and IPRS and concluded that none of them permitted the commercial exploitation of authors' works. The court was also of the view that the agreements between Vodafone and Saregama did not authorize Vodafone to play sound recordings or grant rights to the underlying works. The court cited several sections of the Copyright Act, emphasizing that:

– No license can be granted contravening rights granted to copyright societies like IPRS.

– Authors cannot waive their right to royalties.

– IPRS is authorized to collect royalties on behalf of its members.

Therefore, any agreement between Vodafone and Saregama bypassing IPRS was invalid, making Vodafone liable to pay royalties to authors through IPRS.
Ownership and Rights to Royalties

Vodafone argued that Saregama, as the first owner of the works incorporated in sound recordings, negated the need for an IPRS license. They also contended that under Section 17(c) of the Copyright Act, authors surrender their rights to the employer in a service contract, and the 2012 amendment did not alter independent copyrights in sound recordings.

However, the court ruled that post-2012 amendment, authors' rights to royalties override Saregama's claims. Thus, even though Saregama holds the first ownership of sound recordings, authors retain the right to royalties, which cannot be circumvented.

The court further referenced Prashant Reddy's paper titled "The Globalization of Copyright- A Paper For The Conference of The Australian Copyright Society, November 2005 – Robin Jacob and The Background Score To The Copyright (Amendment) Act, 2012", suggesting that copyright extends beyond economic utility, embodying the author's personality.

Future Implications

The judgement ends the historical neglect of authors' contributions, mandating royalties for their works' commercial use. This will encourage more creativity and ensure fair compensation for authors. The decisions from both the Bombay and Calcutta High Courts may influence ongoing copyright disputes. The Calcutta High Court's ruling could serve as a reference in these cases, highlighting the precedence of authors' rights over contractual agreements that attempt to negate them.

In conclusion, the Calcutta High Court's decision marks a significant advancement in protecting author's rights in India. By affirming their entitlement to royalties, the court not only honours the legislative intent of the 2012 amendment but also paves the way for a more equitable treatment of creators in the digital age.

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