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Written by Nasreen Serji, a student at Government Law College, Thrissur.   

AL HAMD TRADENATION V. PHONOGRAPHIC PERFORMANCE LIMITED, C.O.(COMM.IPD-CR) 8/2024 

The present case addresses the issue of allegedly arbitrary and excessive tariffs imposed by Phonographic Performance Limited (PPL), a collective rights organization (CRO) representing music record labels in India. The judgment is delivered against the backdrop of a pending appeal regarding whether PPL can legally issue licenses without being registered as a copyright society. This case is significant as it scrutinizes PPL’s licensing fee structure and its broader implications for public access to sound recordings.

FACTS: 

The petitioner, Al Hamd Tradenation, was organizing a corporate event for 50 attendees and required a license from the respondent, Phonographic Performance Limited, to play music. The respondent’s license fee for gatherings of 1 to 100 persons was Rs. 49,500. The petitioner informed the respondent that they were willing to pay one-third of the fee, citing the smaller audience size. However, the respondent refused to grant the license at the proposed rate, prompting the petitioner to file this petition.

CONTENTIONS: 

The petitioner filed the petition under Section 31 of the Copyright Act, arguing that owning the copyright in sound recordings does not entitle the respondent to impose arbitrary or excessive fees. Such fees, they claimed, effectively deny public access to the recordings, amounting to a refusal to republish or allow public performance of the work.

The respondent contended that, as the owner of the copyright, they are entitled to grant licenses for communication to the public at rates determined by them. They submitted that they had not withheld any license from the public and were willing to grant licenses upon payment of the prescribed fees. It was further argued that the petition filed under Section 31 of the Copyright Act pertains to works that are withheld from the public, which, according to them, was not the case here, as licenses had already been issued to over 9,100 entities. The respondent also claimed that the license sought by the petitioner was for ‘performance of the work in public,’ which, they asserted, does not extend to sound recordings. 

FINDINGS: 

A plain reading of Section 31 of the Copyright Act, 1957, shows that if a copyright owner unreasonably refuses to allow republication or public performance of their work, the Court is empowered to grant a compulsory license, following an inquiry and hearing. Such a license is issued on the condition that fair compensation is paid, in accordance with Rules 6 to 8 of the Copyright Rules, 2013. The concept of compulsory licensing aims to balance the rights of copyright owners with the public’s interest in accessing creative works, provided that fair payment is ensured.

Drawing from the Supreme Court’s judgment in Entertainment Network (India) Ltd. v. Super Cassette Industries Ltd., (2008) 13 SCC 30, the following principles were reaffirmed:

(i) The Act balances author rights with public access;

(ii) Public interest is central to copyright regulation;

(iii) Compulsory licenses are exceptions to exclusive rights;

(iv) Limited access does not prevent others from seeking such licenses; and

(v) Copyright is a property right, not a fundamental right, and is subject to reasonable restrictions.

In this case, the Court found the respondent’s fee structure arbitrary and excessive, especially when compared to Recorded Music Performance Limited (RMPL)—the only statutorily recognized copyright society for sound recordings in India—which charges significantly lower tariffs for similar events. The petitioner, as an event organizer, would face a disproportionate financial burden if required to comply with the respondent’s rates, which would also negatively affect the general public. 

The Court rejected the respondent’s argument that there was no refusal under Section 31(a) simply because licenses were technically available on its website. It held that the respondent’s monopoly over a large repertoire entails an obligation to offer fair and reasonable licensing terms, and that imposing unreasonable tariffs effectively constitutes a constructive refusal to license, justifying the invocation of the compulsory license provision.

The Court ruled that the respondent cannot demand arbitrary or unreasonable fees and must be held accountable to ensure that charges for its repertoire are fair and reasonable. To prevent monopoly abuse, the Court has the authority to grant compulsory licenses when necessary. It further observed that the public has a right to access, republish, and perform published works on equitable terms, and that a dominant market position cannot be misused to impose an unfair licensing regime. Additionally, Rule 8 of the Copyright Rules, 2013, outlines the method for determining royalties or compensation in compulsory license cases, requiring that prevailing industry standards be considered when setting the amount.

CONCLUSION 

The Court emphasized that making copyrighted works available to the public on reasonable terms, with fair compensation to the copyright owner, is central to the purpose of the Copyright Act and its Rules. A combined reading of the relevant provisions confirms that the term “work” includes sound recordings, and that “publication” includes communication to the public, which encompasses public performance.

Therefore, when the public performance of a sound recording is denied through unreasonable or arbitrary licensing terms or tariffs, it falls squarely within the scope of Section 31(A) of the Act. The respondent’s claim that the right to “perform the work in public” applies only to literary, dramatic, and musical works was rejected.
Based on the detailed legal analysis and findings, the Court held that the petitioner’s request for a compulsory license at a fair and reasonable tariff was well-founded and justified.