Traditionally, the consumption of media content was primarily carried out through television and radio. This has changed with the internet. In today’s day and age, internet content streaming services have taken over the market and changed the way in which content is consumed by the public.
While the developments in technology have made life more convenient for the consumers, the laws governing such content are not clear with respect to the use of such content. This can be seen in the conflict that arose between Spotify and Warner Chapple Music Ltd. (WMC).
Spotify is a company that provides an audio streaming services around the globe. While Warner Chapple Music Ltd. is a Music record label that produces and licenses out music.
As Spotify provides an audio streaming service, it licenses music and other sound recordings from the owners of the copyright. In this case the record labels or the production houses. Once they have licensed out their Musical works, Spotify can upload the works on their application for its users.
Spotify wished to enter the Indian market and thus wished to acquire the licenses form record labels and production houses, in order to stream their music on its app. While doing so, they had a conflict with the WMC and thus a license agreement could not be reached upon.
Though Spotify did not have an agreement with WMC, they launched their application in India and provided their users access to the songs by WMC. WMC had issued an objection against the same, still Spotify went ahead made WMC’s music available to its users. Though not all WMC’s songs were being streamed many of them were available to the users1.
The conflict had grown when Spotify made its intentions clear to invoke the Statutory licensing provision given in the Copyrights Act under section 31D. On the 25th of February 2019, Spotify issued a notice to the Intellectual Property Appellate Board (IPAB) stating that it was invoking the statutory
licensing provisions given under section 31D of the Act as it is an internet broadcaster and intended to broadcast the same. Spotify supported its claim of being a broadcaster through an Office Memorandum issued by the Department of Industrial Policy and Promotion (DIPP).
Spotify launched their service and enforced the statutory license on the 26th of February 2019. However, there was an issue in the enforced statutory agreement i.e. the IPAB had not fixed any royalty rates for the statutory license to be enforced2.
Section 31D allows broadcasters to communicate to the public any ‘previously published’ musical work or sound recording. They can do so by invoking compulsory licensing through a unilateral notice i.e. the party intending to use the work shall inform the owner of the copyright that they intend to broadcast their work. The provision also directs the parties that the license would be enforceable after the IPAB fixes the royalty rates3.
However, as the royalty rates have not been fixed by the IPAB for either radio, television or even internet broadcasters with respect to statutory licenses, there is no clarity that the move by Spotify to not wait for the IPAB to fix the rates and launch their services with the musical works of WMC was authorised.
WMC responded to the notice for statutory licensing and anticipated infringement of their copyrights by suing Spotify and applied for a petition seeking injunction against their music being streamed on the app.
The Bombay High Court issued an order where, Spotify was asked deposit a sum rupees six crores fifty lakhs with the high court, they were directed to do so without any justification. The court also directed them to not enforce the statutory license till the time the IPAB fixed the royalty
rates. But did not prohibit Spotify, from using WCM’s catalogue of musical works, subject to the remuneration being offset upon the final disposition of the suit.
On one hand, if the legislative intent of section 31D of the Copyrights act were to be understood, it was put in place with the view of television and radio broadcasting4. However, the Office Memorandum issued by the DIPP brought internet streaming services under the purview of being broadcasters5.
As both the companies wish to continue their business relations this matter would be in most likelihood be resolved by negotiations. However, it would be interesting to know what could happen if the courts were to give a judgement on the issue6.
If the court went in favour of Spotify, all internet audio streaming services would be become as broadcasters and could therefore apply for statutory licenses. At the same time, it would mean that the DIPP has substantial powers with regards to the interpretation of copyright laws. As well as, WMC would have to allow Spotify to use their musical works on their application.
If the courts were to go in favour of WMC, internet streaming services would not come under the purview of being a broadcaster and the Office Memorandum issued by the DIPP would become invalid. Spotify would have to remove the music catalogue belonging to WMC and proceed to negotiate a voluntary licensing agreement in order to stream WMC’s music.
A judgement to this case would have a long-lasting effect on the copyright laws in India. It would answer the questions whether a streaming service is a broadcaster. It would ascertain the power of DIPP. Most importantly, it would give a clear picture as to how a statutory license is to be enforced in an authorised manner.―Mondaq