This article is in continuation of Musical work MW Series and the intriguing question cropped up in connection to musical work was on the appointment of authorised Agents by the owners.
Can an “Agent” issue or grant business license in respect to any work in which the Copyright subsists or in respect of any other rights conferred by the Copyright and collect the license fees thereof authorised by the said owner pursuant to section 30 of the Copyright 1957?
This aspect has a straight bearing on Principle of Principal and Agent Doctrine. Not going into the details of Principal – agent relationship for this article because here the focus is on the Copyright subject question.
However, it’s well settled law that an agent cannot do an act which the principal himself doesn’t have the authority but to answer the above question, keeping the fundamental principle of Copyright in mind , knowing what an owner can do under the Copyright from first ownership onwards and what are the restrictions placed on owner & agent under the Copyright statute, becomes relevant.
No : 1 Keeping in mind the Fundamental principle of Copyright
Primarily the underline philosophy of the Copyright legislation is that , Copyright is a Government granted monopoly for a limited period of time in which authors and owners are given “exclusive rights” (not absolute rights) with restrictions / fair use exemptions / compulsory and statutory licensing and this principle is followed globally. In India too , on same analogy Copyright statute read with Copyright Rules have been promulgated with restrictions, exemptions, compulsory / statutory licensing in Section(s) 31, 31A to 31D , 32, 32A , 33 , 52 etc.
No.2. First Owner of Copyright under section 17 of Copyright Act 1957.
First and foremost is to understand the “First ownership” definition pursuant to Section 17 of the Copyright Act 1957 because this section itself have restrictive provisos. Under this provision Producer is the first owner unless there is any agreement to the contrary. But the catch is that producer can claim the first ownership provided he has entered the agreement with the music director for the musical work under “contract OF service” (under employment contract) .
Which means if the executed agreement on commissioned project for musical work is under “Contract FOR Service” then the Music director is the First owner and not the producer. For examination purpose, students are advised to read and revise the Articles 1 to 5 again with Law of Contract chapters / case laws. Therefore any issue comes on ownership on Copyright , first is to address Section 17 provisions given under Copyright Act and that’s the starting point.
Theoretically on legal stand point, the music composer can appoint the authorised agent in contract FOR service but in practical all rights are assigned by the music composer to the producer who becomes the “other owner” and in subsequent transactions further other owner(s) will emerge. For instance in typical “contract FOR service” in India for commissioned projects , the music composer assigns all rights to Producer and in turn the Producer further assigns all musical work rights to Music companies.Then as the case may be, the producer or other owner(s)appoints the authorised agent pursuant to Section 30 of the Copyright Act . Importantly, please note , the agent is not given the permission to issue license or collect license fee on his own ( neither before the Copyright Amendment nor after the Copyright Amendment of 2012) , instead the said agent has to submit the authorisation letter to the registered copyright society which the society “may” accept. Explained diagrammatically in this article.
However, post Copyright amendment 2012 even though all rights would have been assigned by the music composer to the producer under contact for service but for any utilisation of such work in any form , right to receive Royalty cannot be waived and royalty received to be shared on equal basis among authors , producers and other owners as the case may be. Therefore, post 2012 amendment , if these statutory provisions are missing in any “contract FOR service” between the producer and the music composer, then the whole contract will become void.
First ownership topics have been comprehensively covered in Article MW 1.01 & 1.02.
No: 3 Restrictions in Licensing under Copyright Act 1957
Keeping the fundamental principle of Copyright in mind , legislation in 1994 amended Chapter VII of Copyright Act 1957 under the head “Copyright Societies ” that NO PERSON OR ASSOCIATION OF PERSON shall carry on “business of issuing or granting licenses” in respect of ANY WORK in which Copyright subsists except through a registered Copyright Societies granted by the Central Government.
Further in Copyright amendment 2012 an unqualified and independent stringent proviso got introduced that business of issuing or granting licenses of literary, dramatic , musical and Artistic work incorporated in cinematographic films or sound recording can be carried out only through a registered copyright society but ironically despite of this strict restrictive statutory provisions , owners and agents are issuing licenses on their own whimsical license fee ignoring the legislative provisions of Tariff Scheme as provided under Section 33A of Copyright Act 1957.
Legislatures had complete knowledge that’s why the law was made but why this monetisation by the owners and agents have been taking place incessantly across the country all these years from 1994 onwards, is the matter of serious investigation and judicial probe.
Nevertheless , Indian Copyright law has never adopted an integrated version on licensing and royalty payments but post 2102 Copyright Amendment, some case laws have come very close to achieving the result in protecting these aspects particularly with the support of Central Government. As per research , in general the defense mechanism is taken on two counts to remain outside the Collective Administrative provisions by owners & agents and it’s being addressed herein below.
A. Owner of Copyright taking advantage of “individual capacity” proviso given in Section 33 of the Copyright Act 1957. Under this proviso the essential requirement is that, first the owner has to be a member of Copyright society and his work should be consistent with his obligations as a member of the said registered Copyright society. For more details please read Article MW 1.04 ! Point 4. http://www.medialexiconedu.org/2017/01/09/copyright-made-easy-cme-student-series-mw-1-04-commercial-utilisation-or-exploitation-of-musical-work/
B. Despite of statutory restrictions given under Section 33 of the Copyright Act 1957 on issuing and granting business license , the escape route is by invoking Section 30 of the Copyright Act 1957 to grant / issue license by owners and agents as standalone provision of licensing despite of statutory restrictions. This has been elaborately covered in Article http://www.medialexiconedu.org/2017/01/12/copyright-made-easy-cme-student-series-mw-1-05-licensing-us-30-by-copyright-owners/
Final answer to the above question on license issuance and collection thereof by Agents ?
- When owner cannot issue the license directly question does not arise an agent can issue license or collect fees for any work. Purely, principal and agent principle.
- By allowing agents and unregistered copyright societies to collect directly from users, that will certainly jeopardise the equal sharing statutory provisions and authors are left to collect their legitimate royalties from said entities and definitely that’s not the intention of the law.
- Biggest advantage by CAS mechanism is to indirect Tax Departments , particularly to Service Tax authorities. This subject will be touched upon in subsequent articles elaborately at appropriate time vis-a-vis royalties payments on different “Works” as defined under the Copyright Act 1957.
- To substantiate further that an agent cannot issue license or collect fees directly because Rule 54 of the Copyright Rules 2013 comes to play. Owners can appoint the authorised agent but the agent has to submit the authorisation letter to the respective Copyright society and the Copyright society “may” accept , accordingly which the contract will be executed. This Rule existed in Rule 14G in Copyright Rules 1958 prior to Copyright Amendment 2012.
- Explained diagrammatically :
Though the series is of Musical work but the answer is applicable to ANY work as defined under the Copyright Act 1957. Please note this requirement of LICENSING through registered Copyright society is from 1994 Amendment.
Hence, neither owners nor the authorised agents can issue business licenses directly to the users and essentially the issuance or granting of business license for any work can be only through a registered Copyright Society duly approved by the Central Government.