(This is a guest post by Shuchita Goel.)
The statutory licensing scheme provided under Section 31D of the Copyright Act, 1957 (“the Act”) has recently faced a constitutional challenge in the Supreme Court in M/s Lahari Recording Company v Union of India (W.P. (C) 667/2018), as well as the Calcutta High Court in Eskay Video Pvt. Ltd. v Union of India (W.P. 14979 (W)/2016). A similar challenge was previously rejected by the Madras High Court in South Indian Music Companies v Union of India, on certain limited grounds.
Section 31D was introduced into the Act through Section 18 of the Copyright (Amendment) Act, 2012, that came into force on 21 June 2012. It is supplemented by Rules 29 – 31 of the Copyright Rules, 1958 (“the Rules”). The Scheme essentially grants broadcasting organisations the right to communicate to the public, by way of broadcast or performance, a previously published literary or musical work and sound recording, after giving notice of its intent to do so, and upon payment of royalties, to the owner. This notice is given after the process of determining the rate of royalty is completed by the Intellectual Property Appellate Board (“Appellate Board”):
Section 31D: Statutory licence for broadcasting of literary and musical works and sound recording
(1) Any broadcasting organisation desirous of communicating to the public by way of a broadcast or by way of performance of a literary or musical work and sound recording which has already been published may do so subject to the provisions of this section.
(2) The broadcasting organisation shall give prior notice, in such manner as may be prescribed, of its intention to broadcast the work stating the duration and territorial coverage of the broadcast, and shall pay to the owner of rights in each work royalties in the manner and at the rate fixed by the Appellate Board.
(3) The rates of royalty for radio broadcasting shall be different from television broadcasting and the Appellate Board shall fix separate rates for radio broadcasting and television broadcasting.
The Section has been challenged for being ultra vires Articles 14, 19(1)(g), 21, and 300A on the ground that it does not allow for a reciprocal understanding between copyright owners and their licensees. Rather, it allows any broadcasting organisation to unilaterally publish copyright owners’ works without allowing them any say in the matter, thus taking away their incentive to create original works and bear the fruit of their intellect by collecting their ‘IP reward’.
What the challenges seem to have neglected, however, is an associated issue of the constitutionality of an Office Memorandum (“Memorandum”) issued under Section 31D by the Department of Industrial Policy and Promotion (“DIPP”). In this piece, I will be arguing that this Memorandum is issued outside the competence of the DIPP and violates Articles 14 and 19(1)(g) of the Constitution.
The scope of Section 31D seemed to be limited to two modes of broadcasting i.e. radio and television, as they are the only modes of communication mentioned in both the Act and the Rules. However, the DIPP’s Memorandum issued on 5 September 2016 clarifies that “internet broadcasting” and “internet broadcasters” fall within the ambit of Section 31D, as it does not contain a prohibition on either the modes of broadcasting, or classes of broadcasters.
Arrogation of Legislative and Judicial Powers
The constitutional competence of the DIPP in issuing such a memorandum is questionable. While there is no strict separation of powers doctrine followed in India, it has been held previously to be part of the basic structure of the Constitution in Kesavananda Bharati v State of Kerala. Under Articles 73 and 162 of the Constitution, the Union and state executive authorities, too, may exercise limited functions of legislative interpretation or clarification if the statute enacted by the legislature permits them to make such determinations. Shamnad Basheer has discussed the argument of how an executive agency can give limited statutory interpretations which are necessary for rendering its own functions, and only as provided by the statute. However, the DIPP has neither been granted such authority, nor is such an interpretation necessary to its functioning. The issuance of the Memorandum is quite clearly an act of arrogation of unauthorised legislative power by the DIPP.
It is also an accepted tenet of our constitutional scheme that the power of interpreting statutory instruments lies solely with judicial or quasi-judicial authorities. The power to interpret the provisions of the Copyright Act, 1957 had been given to the Copyright Board, which was held to be a judicial body exercising predominantly judicial functions by the Madras High Court in Shamnad Basheer v. Union of India. It was later merged with the Appellate Board, which has also been held to be a judicial body exercising judicial functions in the same case. Interpreting the Act is therefore, a function of the Appellate Board as a quasi-judicial entity, and any act of interpretation made by the DIPP that extends, not clarifies, the scope of Section 31D is impermissible for want of Constitutional authority.
Arbitrary Executive Action
The arbitrariness doctrine is a well-accepted tenet of determining the scope of Article 14, where it provides a guarantee against arbitrary State action, whether exercised under authority of law or in exercise of executive power without making of law. The Supreme Court, in Om Kumar and Ors. v Union of India, has laid down the grounds to be followed to challenge an administrative action as arbitrary, where the order of the administrator needs to be examined to see if it is ‘rational’ or ‘reasonable’. The basis of inquiry is “whether the administrator has done well in his primary role, whether he has acted illegally or has omitted relevant factors from consideration or has taken irrelevant factors into consideration or whether his view is one which no reasonable person could have taken.”
Section 31D opens with the words “any broadcasting organisation desirous of communicating to the public…” The Memorandum reads “internet broadcasting” into Section 31D by virtue of the definition of “communication to the public” in Section 2(ff) of the Act. Section 2ff includes within its ambit any work or performance being made available to the public by any means of “display or diffusion”, and even goes onto clarify that communication through satellite or cable or other means of simultaneous communication to more than one household or place of residence is included within such definition. The DIPP has taken this language to mean that such communication ought to not be restricted to only television or radio broadcasting, and also includes internet broadcasting.
The opening words of the Section reflect the breadth of view taken by the legislature when it comes to the classes of broadcasters and does not refer to any class in particular. The DIPP, however, stands on shaky ground when it assumes that Section 31D allows for including different modes of broadcasting, and not only the different classes of broadcasters.
The legislature has specifically restricted the scope of Section 31D to radio and television broadcasting given the specific text of the provisions in Section 31D(3), and Rules 29(3), 29(4)(b), 29(4)(g), 29(4)(h) 30, 31(1), 31(5), and 31(6) of the Copyright Rules, 1957 where “radio” and “television” broadcasting are the only modes mentioned specifically with no indications that the language may be broadened to include “internet broadcasting” as well.
Further, if we look at Rules 29(4)(j) and 31(7)(a), the scheme seems to have been made applicable only to programmes that are scheduled to appear “on air” with pre-specified time slots. It is a fact that radio and television broadcasting are media where the time at which particular programs occur depict their relative importance to the channel, and the viewership it brings in. Internet broadcasting does not have the same drawbacks that require viewers to adhere to schedule because they may choose to consume any content at any point of time as per their wishes.
From this, it is apparent that the legislature seems to only have envisaged radio and television broadcasting as the modes of broadcasting that were to qualify for statutory licensing in India. The effect of the Memorandum is to extend the scope of Section 31D to a mode of broadcasting over the internet, when the same is neither reflected expressly in the text of Section 31D, nor supported by any judicial decisions favouring such an interpretation.
The DIPP is also mistaken when it assumes that the modes of broadcasting all have the same rules applicable to them. The Act and the Rules create a clear distinction between different modes of broadcasting (and not classes of broadcasters), reflected in their insistence on delivery of separate notices, fixation of separate royalty rates, and maintenance of separate records and books of accounts for television and radio broadcasting. The arguments of the DIPP assume that all internet broadcasters are bound by a single royalty rate, irrespective of whether they choose to broadcast over the internet, or television, or radio. This would defeat the purpose of the law because a single organisation may be both, for example, a television and an internet broadcaster. It would then be able to follow a lower rate by election, regardless of which mode it broadcasts content over. Considering all this, it is evident that the Memorandum violates Article 14 because it is arbitrary, and does not confine itself to the purview of the law laid down by the legislature.
An Unreasonable Restriction on Article 19(1)(g)
Finally, we come to the issue of the rights of content owners under Article 19(1)(g) which includes the right to contract freely while carrying out that business or trade. However, this right may be curtailed under Article 19(6) by reasonable restrictions in public interest. The reasonableness standard has come to be equated with a proportionality analysis by the Supreme Court in Modern Dental College and Research Centre and Ors. v State of Madhya Pradesh, affirmed in Binoy Viswam v. Union of India (popularly referred to as the AADHAR/PAN judgement). The test itself consists of a conjunctive four-part analysis which begins with an enquiry into whether the purpose of imposing that limitation is legitimate. Secondly, it must be established that the measures are rationally connected to fulfilling that purpose. Thirdly, no alternative measures must be available that fulfil the same purpose with a lesser degree of limitation, and finally, the relative importance of achieving the end sought to be fulfilled by the measure ought to be adjudged vis-à-vis the social importance of preventing limitations on Article 19(1)(g).
The Memorandum, being clarificatory of an existing legal position, merely reads the language of 31D in a broad sense, without placing the inclusion of internet broadcasting within the larger objective of the Section itself. To determine if the Memorandum serves a proper purpose, we need to examine the purpose with which Section 31D was enacted as well. The Madras High Court in South Indian Music Companies (supra) discusses this, and justifies it as a limitation on Article 19(1)(g) on the following reasoning:
[Section 31D] provides for a mechanism to deal with the public interest vis-a-vis the private interest. It has been introduced by way of a public policy… It was meant to support the development and growth of private radio broadcasting. The object is also to strike at the monopoly to the detriment of the general public. [Emphasis supplied]
The Court thus states that Section 31D was enacted in public interest, with the intent of supporting the growth of private radio and television broadcasting. Radio broadcasting was slowly dying, where copyright owners had no incentive to license their content at low rates, and radio companies did not have the listenership that brought in high advertising revenues to pay adequate royalties to copyright owners. Thus, it was intended to allow radio broadcasters access to a mechanism where they would pay royalty at fair rates set by the IPAB (and not copyright owners) for use of their content.
The logic for television broadcasting is similar. It is pertinent to notice at this point that Section 31D does not include all forms of television broadcasting. It is very limited in scope, permitting only literary, musical and sound recording works to be broadcasted over television. This necessarily excludes visual and cinematic content. The idea was to protect a form of television broadcasting that was dying as well – synchronisation works, where music is played behind a static visual background unrelated to the music itself, and not all forms of television broadcasting. Finally, if we look at the drafting history of Section 31D as well, it was initially introduced in Parliament in 2010 with the intent of protecting only radio broadcasting. However, the final version of the amendment had included limited forms of television broadcasting as well in support of this idea.
Coming back to the Memorandum – is internet broadcasting a medium that requires protection in the public interest such that its inclusion in Section 31D acquires a legitimate purpose? Internet broadcasting is an industry on the ascendant. Out of 1.32 billion people in India, the internet has reached over 500 million in such a short period of time. Internet users are now switching from television to digital streaming services due to ease of access and diversity content they can access on demand at any time they wish. All of this means that copyright owners will retain the incentive to license their work at fairer (or even lower) royalty rates to be put up on internet broadcasting platforms because a wider audience will not only bring in increased royalties, but also wider recognition of their work, something that radio and limited television broadcasting simply cannot achieve. The argument used by the Madras High Court of striking at the copyright monopoly for radio and television broadcasting will not stand when it comes to internet broadcasting.
There, then, seems to be no prima facie public interest involved in protecting internet broadcasting as an industry which is a mode of broadcasting that is both currently flourishing, and is likely to continue doing so, keeping in mind its inherent advantages of ease and convenience of access, lower cost, and choice-based viewership capabilities. The Memorandum ought to fail the first test of proportionality and is an unreasonable restriction on the rights granted in Article 19(1)(g).
It is clear, therefore, that while arguments of the competence of the DIPP in issuing this Memorandum exist, there also exist potential arguments challenging its content as well. The broader effect of this Memorandum until now has been to create massive confusion and multiple challenges to licenses granted for internet broadcasting as no royalty rates have, as yet, been set by the IPAB. While the constitutionality of this Memorandum specifically is not currently under challenge yet, it would be interesting to see it taken up were the Supreme Court to hold Section 31D itself as not being ultra vires the Constitution.