Underlying Works in Sound Recordings: The Underlying Complexities

I. Introduction

Under the Indian Copyright Law, a sound recording is deemed to be a derivative work emanating from certain underlying works.² A copyright owner in a literary, dramatic or musical work has the exclusive right to make or authorize the making of a sound recording deriving out of the copyrighted work.³ However, once the sound recording comes into existence, it takes on a life of its own⁴ and generates along with it another form of copyright called the sound recording copyright.⁵

Subsequently the question that echoes is whether the exploitation of the sound recording clashes with the copyright of the underlying work in any way. The answer to this is not very straightforward and has been the source of a perpetual debate over the years. Recently, contrary interpretations in this regard by the IPAB⁶ and the Delhi High Court⁷ have reignited this debate.

The magnitude of this issue is amplified by the fact that the majority of the revenue in the Indian music industry is generated through Bollywood film soundtracks⁸ wherein most of the times the copyright in the sound recording and in the underlying works is held by different persons.

A major chunk of the ill repute that copyright has garnered over the years can be attributed to the apparent transference of copyright from being a personal right to becoming a tool of the impersonal corporations or that of the wealthy investors.⁹ Preventing the copyright holders of the underlying works from staking a claim in the sound recordings derived out of their work has the potential to further fuel this perception. This is owing to the fact that a curtailment of this kind would devoid them of any share in the royalties accrued through the exploitation of such sound recordings which go on to accumulate the “lion’s share” of the profit through broadcasting along with physical sale.¹⁰

Although a sound recording can be derived from a class of work other than a musical or literary work¹¹, for the purpose of this paper the author shall focus on sound recordings derived from musical or literary works. Nevertheless, the legal position as enumerated in this paper would be applicable regardless of any such divergent scenario.

Additionally, although according to the Copyright Act of 1957, generally the author of a work is deemed to be the first owner of the copyright in such work, the very same act provides for certain exceptions in this regard.¹² These exceptions shall be dealt with in the later part of the paper. However, owing to the academic parlance in this regard, during the course of this paper the words “author” and “copyright owner/holder” shall be used interchangeably.

II. Is the copyright in sound recordings inferior to that of underlying works?

In spite of the fact that a sound recording is derived from an existing work¹³, upon a bare perusal of the rights given to the owners of the copyright in the underlying works¹⁴ and in the sound recordings¹⁵ respectively, it is evident that the Copyright Act does not hold any class of work to be subservient to that of the other.

The term of protection given to a published musical or literary work is for a period of sixty years following the year of the death of the author¹⁶ whereas in the case of a sound recording the same is given for a period of 60 years following the year in which it was first published¹⁷. However, this difference in the term of protection of copyright cannot in any case be construed to infer that the rights of the copyright holder of a sound recording are subjacent to that of a copyright holder of a musical or literary work.¹⁸ The same stance had been adopted by the Delhi High Court in the case of Super Cassettes Industries Ltd. v. Chintamani Rao & Ors.¹⁹ wherein the court additionally accepted the submission that the making of a sound recording encompasses investments and financial risks on a considerably large scale and that it requires “independent skill and expertise”.

The scope of copyright protection in any class of work has to be interpreted within the scope of the Copyright Act.²⁰ It would thus be a grave error to construe the protection given to the owner of a copyright in a sound recording in a narrow form according to a layman’s interpretation of the rights supposed to be provided to the author of a derivative work.²¹ Even if it is assumed that one class of work is more valuable than the other, it would be irrelevant in this regard.²²

III. Sound recordings as distinguishable from the medium used in recording

In the process of determining the rights given to the owner of a copyright in a sound recording, it is pertinent to establish a demarcation between the medium on which the recording of the sound is carried out and the underlying musical or literary work.²³ This has been substantiated in Section 2(xx) of the Copyright Act wherein the medium on which a sound recording is made or the method through which the sounds are produced has been rendered irrelevant.

In the case of Music Broadcast Pvt. Ltd. v. Indian Performing Right Society Ltd,²⁴ the defendants contended that a sound recording comprises solely of the hardware and the technical process used in recording the sounds and that it does not incorporate the underlying sounds whatsoever. The Bombay High court explicitly refuted this claim by observing that had this been the intention of the legislature the wordings of Section 2(xx) would have been different in an antipodal manner. The court further went on to interpret the right to communicate the sound recording provided to the copyright holder of the sound recording²⁵ and remarked that if the defendant’s contention was to be applied in this scenario it would mean that the right to communicate the sound recording would equate to the right to communicate the hardware or the technical process used in making the sound recording . This legal position in itself clearly appears to be absurd. As the case was regarding broadcasting of sound recordings on an FM station, the court indicated that it was evident that when a sound recording is broadcasted on an FM station, the viewers do not see or hear the process or hardware used in making the sound recording.

The court also paid attention to P.Narayanan’s Law of Copyright and Industrial Designs²⁶ and interpreted that the author intends to mean that the copyright protection granted to a sound recording in the Copyright Act²⁷ should be effectively read as the copyright protection granted to the “sound recording embodying the music”. This, the court commentated to mean that the copyright subsists not in the material in which the music is encapsulated nor in the technological process used in such an encapsulation.

Therefore, it is conclusive that a sound recording refers to the aural form of the underlying literary or musical works as fixed on the technological medium regardless of the type of medium or the process used in fixing such underlying works on the medium.²⁸

IV. Does the exploitation of a sound recording escape the bounds of section 13(4)?

The Copyright Act clearly mandates that upon the creation of a sound recording in respect of an underlying work, the copyright in the sound recording shall not in any way affect the separate copyright in the underlying work.²⁹ It is of utmost importance to elucidate this provision. The term “separate copyright” used in this provision undeniably refers to the copyright in the underlying works other than as a part of the sound recording.³⁰ Once the underlying musical and literary works are incorporated in a sound recording, as far as the sound recording is concerned, they do not have a separate copyright in it.³¹ This outcome is not detrimental to the rights of the authors of the underlying works in any way owing to the fact that when a copyright holder of an underlying work authorizes someone else to make a sound recording in respect of his work, he gives away a part of his copyright provided in Section 14 (a)(iv) of the Act. Construing this provision otherwise would effectively render the rights provided to the owner of the copyright in the sound recording³² redundant.³³

At this stage, it is important to take note of the acts through which the “separate copyright” as provided in Section 13(4) is deemed to be infringed. The Supreme Court in the case of Indian Performing Right Society Ltd. v. Eastern Indian Motion Pictures Association³⁴ had touched upon this issue. Although the said case was regarding the incorporation of underlying musical or literary works in a cinematographic film, the observations of the court regarding Section 13(4) would be applicable in the present scenario nonetheless. The court explicitly remarked that to determine whether any act amounts to a violation of Section 13(4), it is imperative to know whether the copyright owner of the derivative work exploited the said work outside the scope of the exclusive rights entitled to him under the Act. As aforementioned, the case was regarding incorporation of underlying works in a cinematographic film and hence the court put forward certain scenarios in this regard. For instance, the court mentioned that the screening of the complete cinematographic film in a cinema hall would not in any case amount to infringement of the underlying works but picking out pieces of music from the film and exhibiting it would definitely be considered as infringing work. The court further stated that acts such as playing just the piece of music on an aeroplane or a radio station or a restaurant without the consent of the copyright holder of the underlying work would infringe the “separate copyright” as enumerated in Section 13(4).

The aforementioned enumeration by the apex court apart from laying down the scenario in case of underlying works incorporated in cinematographic films also presents a fair idea of what would amount to a violation of Section 13(4) in a situation where underlying works are incorporated in sound recordings not forming a part of any cinematographic film. Additionally, it has been held by the Bombay High Court in the Music Broadcast case³⁵ that the observation of the Supreme Court in regard to section 13(4) in the said IPRS case³⁶ was equally applicable in the case of standalone sound recordings.

In the case of Indian Performing Right Society Ltd. v. Aditya Pandey³⁷, the Delhi High Court further provided an example of the harmonization of Section 13(4) with the exclusive rights of the copyright holders and mentioned that although the copyright holder of the underlying works has the right to communicate his works to the public by way of live performance, the copyright holder of the sound recording does not have a similar power to communicate his sound recordings to the public by way of live performance. The same stance was iterated by the court in the case of Indian Performing Right Society Ltd. v. Ad Venture Communication Pvt. Ltd.³⁸ wherein the defendant was held to infringe the “separate copyright” by way of live performances.

V. Different sound recordings incorporating the same underlying work

Apart from the aforementioned issues, another matter which invites immediate consideration is the right of the copyright owner in a musical or literary work to make or authorize the making of another sound recording in respect of his work if he has already made or authorized the making of a sound recording in respect of such work previously.

The owner of a copyright in a musical or literary work has the exclusive power to make “any” sound recording in respect of his work.³⁹ Furthermore, it has been clearly established that when a sound recording is made in respect of any underlying musical or literary work, the copyright in the said work remains unaffected⁴⁰ unless the copyright owners in the underlying works have explicitly transferred the copyright in the name of the copyright owner of the sound recording through a contract.⁴¹

The Delhi High Court in the case of Gramophone Company of India Ltd. v. Super Cassette Industries Ltd⁴². also undertook a similar approach in this regard and held that the rights conferred by the Copyright Act on the copyright owners of the underlying works and the sound recordings harmonize with each other. The Court stated that the rights provided to the authors of underlying works are not taken away upon the making of a sound recording in respect of such work. The exact meaning of an “infringing copy” as provided in the act⁴³ was looked upon by the court after which it remarked that it was clear that the making of a new sound recording from an underlying work would not be considered as “infringing” in any way even if there already exists a sound recording derived from the same underlying work.

VI. Do underlying works incur royalty on exploitation of the derivative works?

At this stage, when the legal position regarding various aspects of sound recordings and underlying works has been discussed, it is apposite to understand whether the underlying works subsumed in sound recordings incur royalty when the sound recording is exploited.

Judicial precedents in this regard weigh fairly against the rights of the copyright holders of the underlying works. However, the amendment of the Copyright Act in the year 2012⁴⁴ has introduced a number of provisions intended to provide relief to the copyright owners of underlying works in this regard. This intention of the legislature is clearly evident from the Parliamentary Standing Committee Report on the Copyright (Amendment) Bill of 2010.⁴⁵ Section 1.3 of the report enumerates the statements of objects and reasons appended to the said bill. Clause (vi) of the said section clearly mentions that the proposed amendments seek to “ensure that the authors of the works, in particular, author of songs included in the cinematographic films or sound recordings, receive royalty for the commercial exploitation of such works”.

To have a comprehensive understanding of the matter in hand, it is appropriate to revisit some of the landmark judgements dealing with this matter along with the provisions of the Act relied upon by the honourable courts while delievering the said judgements.

However, before delving into the judicial precedents, it would be apposite to keep in mind that the Copyright Act provides for the registration of Copyright Societies⁴⁶ for the purpose of managing and protecting the interests of the owners of copyright in any class of work.⁴⁷ The primary copyright societies in India can be traced down to the Indian Performing Right Society (IPRS) and the Phonographic Performance Limited (PPL). The IPRS has historically dealt with rights in literary and musical works whereas the PPL has dealt with rights in sound recordings.⁴⁸ However, in the recent case of Indian Performing Right Society Ltd. v Entertainment Network (India) Ltd.⁴⁹, the IPRS contended that along with dealing with rights in musical and literary works, it had also started managing the rights of the copyright holders in sound recordings recently. Delving into this contention, however, is beyond the scope of this paper.

The Supreme Court in the prior mentioned case of Indian Performing Right Society Ltd. v. Eastern Indian Motion Pictures Association⁵⁰ dealt with the matter of first ownership of copyright in underlying works and dismissed the appeal of the plaintiff to collect royalty on behalf of the copyright holders of the underlying works when a cinematographic film containing such work is exhibited. The court held that when an underlying musical or literary work is made by a composer or a lyricist for a valuable consideration for the purpose of incorporation in a cinematographic film, the producer of the cinematographic film becomes the first owner of the copyright in the underlying works. The evident outcome is that the composer or the lyricist do not own any copyright in the underlying works unless there exists a contract to the contrary between the composer or the lyricist as the case may be and the producer of the cinematographic film.

In the introductory part of the paper, it had been laid down that according to the Copyright Act, although the author of a work is generally deemed to be the first owner of the copyright in his work, certain exceptions are also provided in this regard by the very same act. Section 17 of the Act deals with the aforesaid intricacies. The said section provides that the author of a work shall be deemed to be the first owner of the copyright therein and then goes on to present certain exceptions in this regard in the form of provisos.

The apex court while delivering this judgement relied on provisos (b) and (c) to Section 17 of the Copyright Act⁵¹ which the honourable court interpreted to provide for the producer of a cinematographic film to be the first owner of the copyright in the underlying works which he commissions to be made for the first time for valuable consideration solely for the purpose of incorporation in the said cinematographic film.

As mentioned before, the Bombay High Court while delivering the judgement in the Music Broadcast case⁵² in 2011 clearly established that although this case deals with the incorporation of underlying works in a cinematographic film, there was no reason to believe that the law laid down herein would not be applicable in the case of incorporation of underlying works in sound recordings.

However, it is of utmost importance to take note of the fact that the amendments to the Copyright Act brought into force in 2012 introduced an additional proviso to Section 17. The said proviso effectively nullified the privilege enjoyed by the producer of a cinematographic film to be the first owner of the copyright in an underlying musical, literary or dramatic work which he commissions to be made for a valuable consideration to be incorporated in his cinematographic film. This is obviously in lines with the statement of objects and reasons appended to the Copyright (Amendment) Bill. This is evident from clause (iv) of Section 1.3 of the earlier mentioned Parliamentary Report⁵³ which remarks that one of the aims of introducing the amendments was to “give independent rights to authors of literary and musical works in cinematographic films”.

In the case of Radio Today Broadcasting Ltd. v. Indian Performing Rights Society⁵⁴, issue before the honourable Calcutta High Court was that whether the appellant whose objective was to start a radio station in various parts of the country required a license from the copyright owners of the underlying works in order to broadcast the sound recordings incorporating them. It is hereby important to note that the appellant had no contention against paying the requisite license fees to the owners of the copyright in the sound recordings. Its contention was merely limited to the fact that it did not require to pay any additional license fees to the copyright owners of the underlying works.

The court while relying on the prior mentioned IPRS case of 1977⁵⁵ ruled against the appellant and held that unless the copyright society representing the copyright owners of the underlying works (i.e. the IPRS) explicitly assigned the rights of its members in favour of the members of the copyright society representing the copyright owners of the sound recordings (i.e. the PPL), royalty was liable to be paid to the copyright owners of the underlying works when the sound recordings incorporating them are broadcasted through radio.

However, in doing so, the court relied on the clarificatory part of the IPRS judgement⁵⁶ which discussed about the assignment⁵⁷ and mode of assignment⁵⁸ of copyright of underlying works in accordance with the provisions of the Copyright Act. The said provisions herein mentioned are Section 18 and Section 19 of the Copyright Act respectively.

At this stage it is pertinent to pay attention to the fact that the Amendment of 2012 significantly changed the structure of Section 18 and 19. These changes shall be discussed in detail in the later part of the paper.

The Bombay High Court in the case of Music Broadcast Pvt. Ltd. v. Indian Performing Right Society Ltd⁵⁹ was presented with a similar issue wherein it had to decide whether royalty would be payable by the appellant radio broadcasting company to the copyright owners of the underlying works through IPRS when it broadcasted the sound recordings incorporating such underlying works on its radio stations. Similar to the aforementioned Radio Today case⁶⁰, the appellant did not contest against paying royalty to PPL which was liable to be passed on to the copyright holders of the sound recordings which it broadcasted on its stations.

However, the court in this case took a completely different approach than the Radio Today case⁶¹ and held that royalty was not liable to be paid to IPRS on such a broadcast. The single judge bench relied on the concepts of equivalence of copyrights in the underlying works and the sound recordings, distinguishability of sound recordings from the medium or method used in recording and non-infringement of the “separate copyright” provided for in Section 13(4), all of which have been discussed in the prior sections of this paper.

On comparing the reasoning of the courts in the Music Broadcast case⁶² and the Radio Today case⁶³, it seems that the honourable Calcutta High Court in the latter failed to recognize the existence of a separate copyright in the underlying work and in the sound recording incorporating such underlying work. When a sound recording containing a musical and/or a lyrical work is produced, a number of copyrights come into existence. The musical work, the literary work and the sound recording itself each carry a distinct and separate copyright. The merging of the different works does not cause the copyright in those works to be merged.⁶⁴ For instance, the composer of the musical work remains to be the copyright holder of the musical work and the producer of the sound recording owns the copyright in the sound recording.⁶⁵ In a scenario wherein both the composition of the musical work and the production of the sound recording is done by the same person, two different copyrights would be owned by the said person.

Thus, the honourable Court seems to have erred in interpreting the correct law in regard to the issue at hand by taking no notice of the existence of separate copyrights in the underlying works and in the sound recordings and proceeding directly to the provision of assignment and mode of assignment of copyright in Sections 18 and 19 respectively.

In the case of Indian Performing Right Society Ltd. v. Aditya Pandey & Ors.⁶⁶, the Delhi High Court had to decide whether on communication of a sound recording to the public a separate license was required to be procured from the copyright holders of the underlying works. The court ruled against the appellant IPRS and held that a separate license is not required to be procured since there is no “separate communication of the underlying literary and musical works” on the communication of a sound recording to the public⁶⁷, thus denying the copyright holders of the underlying works the right to receive royalty on the exploitation of the sound recording incorporating such works.

The aforesaid decision of the Delhi High Court was affirmed by the Supreme Court in the case of International Confederation of Societies of Authors and Composers (ICSAC) v. Aditya Pandey ⁶⁸. However, the apex court additionally specified that post the introduction of the 2012 Amendments, the legal position in this regard has changed. The court explicitly emphasized on the effect of the newly introduced Section 19(10) and held that copyright holders of underlying works in sound recordings not forming a part of any cinematographic film shall have the right to receive an equal share of royalties on the exploitation of such sound recordings.

Recently , the Intellectual Property Appellate Board passed a statutory license order deriving its power from Section 31D of the Copyright Act.⁶⁹ In the said order, IPAB along with providing new rates for the radio royalty system, completely overhauled the existing structure of royalty acquisition and set royalty rates for underlying works in the sound recordings when the sound recordings are broadcasted through radio.⁷⁰

Subsequently, a single judge bench of the Delhi High Court in the case of Indian Performing Right Society Ltd. v Entertainment Network (India) Ltd.⁷¹ passed a verdict which denied royalty to the authors of underlying works on the exploitation of the sound recordings incorporating them. Though the infringement suits in this case were filed prior to the 2012 Amendment, the court held that even if the amendments were to be made applicable in deciding the present case, it would not have any effect on the legal position at all.⁷² However, subsequently this judgement has been stayed by a division bench of the Delhi High Court and has been directed not to be relied upon or used as a precedent in any further proceedings.⁷³

Having discussed a number of judicial precedents in this regard, it would be appropriate at this stage to conclusively interpret the correct position of the law in this regard as it stands today, i.e. post the introduction of the 2012 Amendment.

(a) What exactly did the amendments of 2012 change in this regard?

As mentioned before, the 2012 Amendment significantly changed the structure of Section 18 and 19. Provisos 3 and 4 to Section 18(1) in the amended act talk about the illegality of the assignment of the right to receive royalties in cases of underlying works incorporated in cinematographic films and in sound recordings not forming part of cinematographic films respectively. The 4^th proviso specifies that when the author of a literary or musical work assigns his copyright for the purpose of incorporation of the literary or musical work in a sound recording not forming part of any cinematographic film, he cannot in any case assign or waive the “right to receive royalties to be shared on an equal basis with the assignee of copyright” for any exploitation of such literary or musical work. This proviso makes the accruement of royalty in underlying works in sound recordings not forming part of any cinematographic film evident.

Further, the substitution of the term “royalty payable, if any” with “royalty and other consideration payable” in the newly amended Section 19(3) additionally cements the right of the copyright holders of the underlying works to receive royalties on exploitation of the sound recordings incorporating them and not being a part of any cinematographic film.

The final nail in the coffin is hit by the introduction of sub-section 9 and 10 of Section 19. To clearly understand the implications of these sub-sections, it would be necessary to reproduce the contents of the said provisions in this paper.

Section 19(9) states that “No assignment of copyright in any work to make a cinematographic film shall affect the right of the author of the work to claim an equal share of royalties and consideration payable in case of utilization of the work in any form other than for the communication to the public of the work, along with the cinematographic film in a cinema hall.”

Whereas, the wordings of Section 19(10) are: “No assignment of the copyright in any work to make a sound recording which does not form part of any cinematographic film shall affect the right of the author of the work to claim an equal share of royalties and consideration payable for any utilization of such work in any form.”

The single-judge bench of the Delhi Court while delivering the judgement in the prior mentioned recent case of Indian Performing Right Society Ltd. v Entertainment Network (India) Ltd.⁷⁴ interpreted the term “utilization of such work in any form” in the aforementioned Section 19(10) to mean “utilization of such work in any form other than its utilization through sound recordings”.

On comparing the wordings of Section 19(9) and Section 19(10), it becomes evident that the honourable single-judge bench erred in arriving to such a conclusion.

On a bare perusal of Section 19(9), it is evident that the said provision provides that royalty shall be accruable on the utilization of the underlying work in any form, and then specifically goes on to exclude the communication of the underlying work to the public “along with the cinematographic film in a cinema hall”. Section 19(10) on the other hand explicitly mentions that royalty shall be accruable on the utilization of the underlying work in any form.

Had the intention of the legislature been to exclude “utilization through sound recordings” in regard to Section 19(10), it would have clearly provided so. Or else, there does not seem to be any rationale in providing for an exception in Section 19(9) and excluding it in Section 19(10).

Thus, a reasonable interpretation of Section 19(10) along with the 4^th proviso to Section 18(1) and Section 19(3) leads us to the inference that the underlying works subsumed in sound recordings not forming part of any cinematographic film indeed incur royalty when such sound recording is exploited.

VII. Conclusion

It is evident that the making of a sound recording in respect of an underlying work does not in any way render the copyright in the sound recording to be inferior to the copyright in the underlying work. Nor does its exploitation infringe the “separate copyright” of the underlying work as provided for in Section 13(4). Additionally, a sound recording cannot be interpreted to mean that it comprises solely of the hardware and the technical process used in recording the sounds. Conferring the aforesaid meaning to a sound recording would mean that whenever a sound recording incorporating any underlying work is communicated to the public it would infringe the copyright of the said underlying work. It has been clearly established in Music Broadcast⁷⁵ that this is not the case.

Despite all the aforementioned inferences, when a sound recording incorporating any underlying work and not forming a part of any cinematographic film is exploited, the said underlying work definitely incurs royalty. The Amendment Act of 2012 leaves no room for doubt in arriving to this conclusion. However, the right of the copyright holders of the underlying works to demand royalty extends only to the copyright holders of the sound recording incorporating them. What this means is that the authors of underlying works cannot demand royalty directly from any third party exploiting the sound recordings incorporating their work.⁷⁶

Nevertheless, the right of the copyright owners of underlying works to demand royalty on exploitation of any sound recording incorporating their works and not being a part of any cinematographic film has been firmly established by the Copyright (Amendment) Act of 2012.

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