Determination of Royalties for Statutory License of Radio Broadcasting under Section 31D of Indian Copyright Act – Eshwars
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Determination of Royalties for Statutory License of Radio Broadcasting under Section 31D of Indian Copyright Act

Authored by Ammu Brigit

Introduction:

Section 31D, which was introduced into the Indian Copyright Act, 1957 (the Act) in the year 2012, deals with statutory licensing for broadcasting of literary and musical works and sound recordings. Section 31D has recently been in news in the context of broadcasting of sound recordings and musical works over the internet, when Spotify made an application to Intellectual Property Appellate Board(IPAB) for seeking a statutory license on musical works and sound recordings from Warner Chappell Music Limited in relation to its operation of internet music streaming broadcast services in India. Our article analysing the scope and applicability of statutory licensing under Section 31D of the  Act in relation to broadcasting of sound recordings and musical works in the internet in the context of the Spotify-Warner Chappell dispute can be read at https://www.lexology.com/library/detail.aspx?g=cd73f9de-0681-4d55-8b3c-9b7d42b0340f.

In yet another very recent development relating to statutory licensing under the provisions of Section 31D, in the context of radio broadcasting, a public notice, which can be accessed at https://www.ipab.gov.in/public_notice/PUBLIC-NOTICE-on-18-09-2020.pdf was issued by IPAB for fixing the royalties for radio broadcasting of sound recordings and musical works, based on the applications filed by a few radio broadcasting organisations before IPAB.  In this article, we will look into the statutory provisions under the Act and Copyright Rules 2013(“Rules”) and also the recent Interim Order passed by IPAB in relation to the applications filed by the radio broadcasting organisations.

Statutory Provisions

Section 31D of the Act read with Rules 29, 30 & 31 of the Rules enable broadcasting organisations to broadcast or perform any literary or musical works and sound recordings by issuing a prior notice of such intention to broadcast the said works and by paying royalty to the rights holder, as fixed by the Intellectual Property Appellate Board (IPAB). According to Rule 31 of the Copyright Rules, IPAB has to publish in the Official Gazette and re-publish in two daily newspaper as well as in the website of IPAB and Copyright Office,  a public notice after the receipt of the application under Section 31D, inviting suggestions from the public for fixing the royalties for broadcasting of literary or  musical work or sound recordings. Upon the publication of such public notice, any interested person including copyright owners, broadcasting organisations may give suggestions for the fixing of royalties within thirty-days and IPAB within two months from the last day of receipt of the suggestions shall fix the royalty rates to be paid to the copyright owners for television or radio broadcasting.

Recent Public Notice & Interim Order by IPAB

On 22nd September 2020, IPAB published a public notice on its website wherein it informed all stakeholders its intention to fix the royalties for broadcasting of the sound recordings through radio. This public notice was released consequent to an interim order of IPAB dated 18.09.2020 (“Interim Order”) in the applications filed by Music Broadcast Ltd, Entertainment Network India Pvt Ltd, DB Corp Ltd, Next Radio Ltd, Digital Radio(Mumbai) Broadcasting Ltd, South Asia FM Ltd, Reliance Broadcast Network Ltd (“Applicants”) under Section 31 D of the Act  read along with Rule 31 of  Rules. In this context, it is pertinent to note that the erstwhile Copyright Board vide an order 25th August 2010 (“CB Order”) had fixed the royalty for radio broadcasting to be 2% of the net advertisement earning of each FM radio station accruing from the radio business from that radio station to be distributed to the content owners on a pro rata basis and this CB Order is due to expire on 30th September 2020. Hence, in the wake of ensuing expiry of the CB Order, the  radio broadcasting organisations had filed applications before IPAB seeking an extension of the CB Order contemplated hereinabove and for the various copyright holders such as Tips, Eros, Saregama, etc., to maintain the status quo of the CB Order until the fixation of royalty and the final disposal of the applications

Interim Order by IPAB

IPAB, in the Interim Order states that the hearing of the seven applications shall be held once the procedure under Rule 31 for determining royalties is complied with. As an interim relief, after hearing the contentions of both sides, IPAB ordered the maintenance of status quo of the CB Order even after its expiry on 30th September 2020, till IPAB determines an equitable royalty rate based on the submissions and hearing as well as after completion of statutory provisions under section 31D of the Act. This Interim Order was passed by IPAB taking into consideration the proposals from the music label to radio broadcaster of the new royalty rates through voluntary license agreements, suit filed by music labels for copyright infringement even when the compulsory license is valid till 30th September 2020. The Interim Order further clarifies that status quo order shall be applicable to all parties who are covered in the CB Order including the parties who were members of the respondent Phonographic Performance Limited(PPL), the copyright society for composers, lyricists and publishers of music, but left the membership of PPL after the CB Order date i.e.25.09.2010.

The Interim Order for the maintenance of status quo of the CB Order was granted by IPAB to prevent the stoppage of the broadcasting of musical works and sound recordings by established radio broadcasting organisations immediately. It is to be noted that the IPAB will fix a royalty rate, either higher or lower to the rate fixed by the CB Order after the detailed submissions by the parties and hearing the rival contentions. The Interim Order also clarified that the rate fixed by the IPAB shall be retrospectively effective from 1st October 2020. It will be interesting to see how the IPAB determines the royalty rate taking into account the business interests of all stakeholders concerned in this regard.

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