Guest Post: Will the amendments to the Copyright Act serve their purpose?

Arun Mohan, a practising IP lawyer before the Madras High Court sent us this interesting piece exploring the possible complexities in enforcing the recent amendments to Indian copyright law and also the larger question of whether the amendments will serve their purpose? 

Guest post: Will the amendments to the Copyright Act serve their purpose?

by,

Arun Mohan

Many an IP lawyer representing the entertainment industry would have spent several hours grappling with the new Copyright Act, and its consequences. In working with the same especially on assignments and agreements, many issues seem to arise for which solutions don’t seem to appear in the statute itself. My focus on this blog would be on musical works in movies, which have in any event garnered the lion’s share of the amendments (atleast in the media). 

I have had the experience of representing both sides of the table, the composers and the record labels/producers, and hope to get inputs on the various queries I have raised in this blog. 

The provisos to secs 18 and 19 are the most relevant, which in substance state that an author (in this case the composer and lyricist) cannot give up his rights to demand equal royalties on his works for any purpose apart from a theatrical screening of the film in which the musical works form a part. To ensure the same, the proviso goes on to say that any agreement to the contrary would be void (note not voidable but void). The language of the provisos is far-reaching, to include “utilization..in any form”. Further, the agreements cannot run contra to the rules of any copyright society of which the author forms part of. Does this include only the Indian copyright society or even the international ones, like Performing Rights Society, UK? The Act does not elaborate on that front. 

In the light of the above provisions, which have bloated the size of many an agreement, the non-problematic areas are: 

1. Radio broadcasts 

2. Internet broadcasts 

3. TV broadcasts of the songs only 

4. Endorsements (which use the musical work) 

I call these non-problematic because the revenue that is accruing from the songs per se are calculable. With IPRS being in hyper-drive, collection of revenues has become rather efficient. However, it has to be pointed out that the Act does not provide the manner in which the royalties are to be collected and by whom. Composers are tending towards putting the responsibility on the producers and also inserting an indemnity clause in the case the producers are unable to recover the royalties due. The downside to this being that the composers do continue to remain at the mercy of the producers albeit to a much lesser degree. There are also clauses stating that copyright reverts to the composer upon non-payment of any royalty to stabilize the financial claim of composers. 

The tricky part comes in the provision which enables the author of a musical work to claim royalty on any utilization of the work, which is a non-theatrical screening. This would include: 

1. Satellite broadcast of the movie 

2. DVD sales of the movie 

3. Pay per view such as in Tata Sky 

In such circumstances, the Act does not prescribe the royalty that would accrue to the author of the musical works which would be broadcast with the movie. How does one calculate it? Based upon the length possibly i.e. the length of songs vis-a-vis the length of the movie? Given the several crores the movies are sold for, even a 8-10% claim on the basis of length could potentially be rather substantial, depending on the scale of the movie in question. To put it in perspective, Salman Khan has sold the satellite right of Dabaang 2 for a whistle-inducing/cringe-inducing (depending on if you love or hate Sallu bhai) 45-50 crores. Given the numerous songs which one would presume to be found in such a commercial movie, the music director may well be set to claim the highest remuneration for a musical director in India on the basis of such satellite rights alone. 

The Act becomes even trickier on a bit more probing. The record labels sell the CDs of the songs and the songs are offered on iTunes/FlipKart etc for digital downloads. Can the music composer and lyricist claim royalty on the same? Assuming they have assigned the copyright to the producer, who in turn has sold the same for a healthy amount to the record company, what are the rights which accrue to the composer and lyricist? Can royalties be claimed on the same as the Act states that “utilization..in any form” apart from theatrical screening of the songs as a part of the film? 

The challenge now is working out an appropriate revenue model to pay music directors. The earlier model of a single payment has become antiquated in this law. The up-front payments given to composers are dramatically being reduced to allow for such royalties. This in turn increases the pressure on composers to give out songs which would have a huge commercial following, as their earnings are now heavily dependent on royalties. While this may be good for established commercial composers and lyricists, what about the newer ones? Debutants are already paid a pittance, and this pittance is further reduced on the basis of a royalty which may or may not accrue. I also believe this law would tend to influence (some naysayers say even corrupt *gasp*) artists to produce music that is exclusively mainstream as this may be their only source of income, as they do not receive a decent sum upfront, as was the case till date. If the album becomes a success, everyone is happy but if the album does not succeed, the composer would have ended up working almost for free. Does this not seem to be in the favour of record companies and producers, who needn’t pay upfront and can hedge their payments upon success of the album. Such contingency seems to have the potential to backfire. Even artists who would want a single-shot payment are not given this option by record companies, as the companies would throw up their hands and say such payment would be illegal under the amendment. Is this possibly why the record labels and producers are not making as big a noise as expected? 

This brings me to my primary question, does this amendment support all artists? Or is it for the benefit of the bollywood club seeking a larger share of the mythical 100 crore box-office pie?