WYNK v. TIPS Copyright Battle | “Statutory licenses under Section 31D restricted to traditional non-internet-based radio and television broadcasting and performances”; Bombay High Court affirms Single Judge order

bombay high court

Bombay High Court: In twin appeals challenging the decision in Tips Industries Ltd. v. Wynk Music Ltd., 2019 SCC OnLine Bom 13087, restraining Wynk from exploiting Tips’s copyright in audio files through their streaming service, the Division Bench of G.S. Patel* and Gauri Godse, JJ. observed that Wynk was not a charitable organization and not a service available to the public but specific subscribers, hence, claim under Section 31-D of Copyright Act, 1957 could not be allowed.

The Bench highlighted that the impugned judgment in Tips Industries (supra) was an order made at the interlocutory stage but viewed that did not strictly speak an interim or interlocutory order in the sense and to the extent that it temporarily put parties in a certain position and was an authoritative pronouncement on a question of law and of interpretation of certain provisions of Copyright Act, 1957. The Bench acknowledged that so far it was the only judicial decision on the said branch of law and settled an interpretation of some portions of the statute.

The Bench explained that in Tips Industries (supra), the Court granted an injunction restraining Wynk from exploiting Tips’s copyright in audio files through their streaming service. Introducing the parties, the Bench identified Tips as copyright holder of in a very large repertoire of sound recordings, and Wynk as the owner and operator of an internet-based service — a ‘music streaming service’ and music downloading OTT facility.

Background on Tips Industries v. Wynk Music case

Tips and Wynk agreed on a license by Tips until October 2016 and in the absence of a written agreement later, Tips insisted Wynk to discontinue using Tips’s repertoire for any purposes by 7-11-2016 and pay for usage during extension period. After prolonged negotiations, the parties agreed on a minimum guaranteed amount of Rs 4.5 Crores for Tips’s repertoire for 2-year term, with Rs 2.5 crores for the second year, but only the execution of a formal document remained.

Wynk seriously disputed the same stating that no such figure was ever agreed to. Tips demanded Wynk to cease and desist exploiting its repertoire from 10-05-2017, but Wynk did not comply. On 17-11-2017, Tips demanded royalty of Rs 2.83 crores against the exploitation of copyright, directed Wynk to deactivate the entire Tips repertoire from the Wynk platform and demanded a report on the content consumed during the unlicensed period.

Wynk invoked Section 31D of Copyright Act to assert its rights as a ‘broadcaster’. Since then existing Copyright Board/Intellectual Property Appellate Board was yet to fix the rates, Wynk agreed to pay Rs 10 lakhs as first tranche of royalty, deciding royalty payable at 10 paise per stream, calculating an aggregate of Rs 1.41 Crores for September 2016 to November 2017. Tips rejected all and specifically disputed that Wynk had no right to invoke Section 31D of its services. Thereafter, Tips sued Wynk for its downloading facility and on-demand streaming and sought injunctions, perpetual and temporary, against Wynk from communicating the Tips repertoire to the public, from giving Tips repertoire songs for download, rent or on commercial rentals.

Court’s Analysis of Section 31D of Copyright Act

The Court started with drawing the line between traditional FM broadcast where the user has no control to skip an advertisement or otherwise, but has to listen to whatever plays, and online services like Wynk, Gaana, Spotify, etc. Providing much wider choice for the users to select kind of music and even individual tracks, make a playlist and sometimes also includes audio books, podcasts and other audio material. In the words of Bench, “The distinguishing factor however between online radio-type services and online services such as Wynk is not whether they are ‘streaming’ or not. Technically, both might well be called streaming services. That expression only means that packets of data are being transmitted digitally over the internet and being reassembled at the destination for audio reproduction. The expression ‘streaming’ is not a point of distinction. The real distinction is whether a service does or does not give users a choice of what is being played and what is being heard. Internet FM radio is also streaming, but without the user-control of services such as Wynk, Spotify, etc.”

Getting into depth of how Wynk and similar platforms function, the Bench traced back Wynk’s claim that Section 31D covers all kinds of dissemination that may be encompassed by the phrase “broadcast” or “communicating to the public”, but does not expressly say anything about the internet, does not prohibit or forbid internet-based services, radio-like or not. On the other hand, Tips claimed that Section 31D was confined to traditional radio and television only.

The Bench swapped through provisions of Copyright Act on what meant by copyright, assignment, licenses, compulsory license — Section 31A, 31D, copyright infringement — Sections 51 and 52. The Bench stated that Section 31D has to be read with relevant Rules under Chapter VIII of Copyright Rules 2013.

The Bench highlighted Rule 29(4) to indicate that every technical aspect was directed to radio and television, then the Rule 31 regarding bifurcation of royalties between radio and television. The Bench believed the argument that the time of the amendment introducing Section 31D, the internet and its facilities, features as also the services offered on it were very much in existence, which the legislature might have in mind while formulating the said amendment. It added that “If despite this, Section 31D does not include the word internet but expressly limits itself to the word radio and television then, it is clear that was the statutory intent.”

On the aspect of download, the Bench went on to discuss in detail what constituted commercial rental, excluding the rental, lease or lending of a lawfully acquired copy of a computer programme, sound recording, visual recording or cinematograph film for non-profit purposes by a non-profit library or a non-profit educational institution. The Bench stated that “Wynk is no non-profit; far from it. It is allowing its users access to copyright-protected material inter alia via caching. This is ‘lending’; it cannot be anything else. If it is not exempted as being not-for-profit, then it is a commercial rental.”

It further affirmed the finding of the Single Judge that statutory licenses under Section 31D are restricted to traditional non-internet-based radio and television broadcasting and performances alone. Section 31D lacks application to any internet-based offering. In addition, it was found impermissible to give notice until rates were fixed, a duty cast on Commercial Court, and that unless those rates were fixed under Rule 29(1) proviso 3, no notice as contemplated by Section 31(D)(2) could be served or issued. The Court upheld the impugned judgment and order passed by the Single Judge.

The Bench justified its stance by saying that “Wynk is no charitable organization. It has an avowed commercial profit motive. It simply does not want to pay the license fees that Tips demands. It wants to be able to determine what fees Tips should receive, and it seeks to do so unilaterally on some basis that it has conjured up for itself. It does so only to further its own business. There is no point in repeating that this is meant for the public. Wynk is not a service that is available to the public. It is available to those who sign up for Wynk: many are ‘members of the public’ but are not Wynk subscribers, paid or free. There is simply no public interest dimension to Wynk’s private profit goals. Wynk has paid subscribers. It receives money from them (apart from other sources of funding). There is, therefore, no question of Wynk attempting to obtain a statutory licence for its private profit motives in this fashion. That is a perversion of the statutory intent. It was not what Section 31D was intended to achieve at all.”

[WYNK Ltd. V. TIPS Industries Ltd., Commercial Appeal No. 424 of 2019, decided on 20]

Advocates who appeared in this case :

For Appellants: Senior Advocate Dr Birendra Saraf, Advocate Ankita Singhania, Advocate Vanditta Malhotra Hegde, Advocate Rishi Mody, Advocate Sandeep Rebari, Advocate Sanjana K; Singh & Singh, Malhotra & Hegde

For Respondent: Senior Advocate Ravi Kadam, Advocate Rohan Kadam, Advocate Chadha

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