Music to the ears of FM stations

The point of law is by no means settled, and an appeal from a recent judgment is imminent. A Bombay High Court decision in late July this year has nevertheless given a glimmer of hope to the owners of radio stations who have for years battled the imposition of a double royalty for the broadcast of music.

This was a judgment in the Radio City case, where the court said that there was no requirement for a licence from the Indian Performing Right Society (IPRS) for the radio broadcast of sound recordings.

Historically, radio stations in India have been required to obtain a licence from not only the copyright owner of sound recordings, but also from owners of underlying works, such as lyricists and musical composers. The basis for this view is that the underlying works are incorporated into a sound recording and form its basis. Licences for use of underlying works are obtained from the IPRS, the statutory copyright society that collects royalties on behalf of lyricists and musical composers.

About five years ago, while the FM radio industry in India was taking root, various factors led to disputes between the IPRS and several radio stations. Stations such as Radio Mirchi (owned by the Times Group) and Radio City (owned by Music Broadcast) maintained that a licence from IPRS was not required to broadcast music.

Given that the radio broadcast is a sound recording (a separate work under the statute), a valid broadcasting licence from Phonographic Performance Limited, the statutory copyright society, whose members are the sound recording companies, should be sufficient. The Radio Mirchi matter was referred to arbitration by the Bombay High Court and the proceedings are pending.

The Radio City case explicitly recognises that while sound recordings incorporate literary and musical works, they are nevertheless separate works and are subject to copyright. The owner of the copyright in this separate work is conferred exclusive rights by the Copyright Act, 1957.

These include the exclusive right to communicate the sound recording to the public, including by a radio broadcast. The exercise of this right by the sound recording owner or its licensee should be without any interference from owners of the underlying literary or musical works. A radio broadcaster should therefore only require a licence from the owner of the sound recording and not from the owner of the underlying work.

The July decision follows the 1977 Supreme Court landmark decision in the Eastern Indian case, which has come to be a highly controversial precedent. This matter concerned films but the rationale is applicable to sound recordings. The heart of the decision was the finding that copyright in a film vests in its entirety in the film producer as an integral unit, including the musical work incorporated in the soundtrack and the right to perform the work in public.

Composers of musical works or lyricists do not therefore possess rights in the underlying works once those rights are assigned in favour of the producer of a film. This rationale can be extended to the radio broadcasting cases.

Music composers and lyricists hold no separate rights in sound recordings for which they can claim a royalty once their underlying works are incorporated, even though sound recordings are derived from musical and literary works. This is because no priority exists between the different types of works. Each work is separately recognised by statute and exclusive rights for each are stipulated.

Understandably, this decision has annoyed individual artists and much has been said about their exploitation and inequalities in bargaining power. It is imperative to recognise the rights of creative talent. This, however, cannot be done by misreading applicable law and arbitrarily imposing a licence fee.

Recognising the rights of artists, the court in the Radio City case observed that while sound recordings incorporate underlying works giving rise to a wholly separate work recognised under the statute, lyricists and music composers as owners of the individual underlying works in such a sound recording continue to retain copyright in underlying works apart from the use in that sound recording.

The owners of underlying works therefore have a right, subject to a contract to the contrary, to make another sound recording of their underlying works if they wish.

An analysis of the copyright statute demonstrates the sound basis of the decision. The owner of a sound recording is conferred an exclusive right under Section 14(1)(e)(iii) of the Copyright Act to communicate it to the public. This must include communication by radio broadcast since the very meaning of ‘communication to the public’ under the statute specifies “making any work available…by any means of display or diffusion other than by issuing copies of such work...”.

In exercising the exclusive right to communicate the sound recording, the owner of the recording cannot be said to infringe any underlying work in the recording. It must logically follow that owners of underlying works can claim a licence fee only in respect of a public performance of these works, when they are not communicated as part of a sound recording.

Once a broadcast licence is obtained from the sound recording owner, a right to radio broadcast does not require additional licences from owners of each individual element of the sound recording, since a legitimate sound recording could only result from validly obtained transfers for making it.

Purnima Singh is a senior associate at Mulla & Mulla & Craigie Blunt & Caroe. She can be contacted at: purnima.singh@mullaandmulla.com