Introduction

Copyright​‍​‌‍​‍‌​‍​‌‍​‍‌ law has undergone massive changes with the rise of digital technologies, which in turn has created more pressure on the copyright system to choose between exclusivity and access. A mechanical license in India, which is officially laid down in Section 31C of the Copyright Act, 1957, is essentially a way for the government to try and balance this conflict in the music industry.^[1] When the law allows a cover version to be made if certain statutory criteria are met, the intention is that the cover versions would have lower transaction costs and also be a source of creative reuse. But although Section 31C is very ambitious in its intentions, the law itself is ambiguous and it is not implemented effectively. In this paper, the author demonstrates that mechanical licensing in India is not something that gives licensees the statutory means to carry out a desired action, but rather it is a legally imposed regime that is highly restrictive and uncertain, so that its promise remains largely theoretical in practice in the main.

Legislative Design and Normative Justification

The purpose of Section 31C was to introduce a new statutory licensing regime to replace the fair dealing exception under Section 52(1)(j) which was more permissive and less tightly controlled.^[2] Under the revised statutory framework, once a sound recording has been made public, anybody is allowed to make a cover version, given that they notify the copyright holder in advance and pay royalties. This is a clear example of a change in policy direction looking at the broad picture, where rather than granting free access, the availability of material is made subject to certain specified conditions.

Conceptually, the copyright practice of allowing cover versions without the consent of the original creator aligns with a utilitarian perspective of copyright and the economic analysis of copyright law put forward by authors such as William Landes and Richard Posner, that is efficiency and transaction cost saving.^[3] These views have been debated in the Indian context too with Indian intellectual property commentators like Shamnad Basheer arguing that compulsory licensing can mitigate the monopolistic effects of copyright.^[4] But, as a matter of fact, the above cited arguments are based on the assumption that implementation of the license is straightforward which is not the case with Section 31C which continues to create practical difficulties.

Judicial Interpretation: Between Compulsion and Control

The judiciary in India has significantly influenced mechanical licensing both positively and negatively. The Delhi High Court, for example, in Gramophone Company of India Ltd v Super Cassette Industries Ltd, held that statutory licensing allows making of cover recordings without the need for the copyright owner’s permission, if the requirements of the statute are met.^[5] The court thereby confirmed the obligatory character of Section 31C.

Conversely, later courts showed a more limiting stance. Saregama India Ltd took the position before the Calcutta High Court that since no prior notice was given (which is a prerequisite for statutory licensing), statutory license could not be availed. This goes to show that strict adherence to procedural requirements may render the statutory licence practically inaccessible.

Moreover, it was held by the Supreme Court in Indian Performing Right Society Ltd v Eastern Indian Motion Pictures Association that the rights of composers, authors and producers cannot be at the same level, given the special characteristics of the creative process they represent.^[6] Ultimately, the existence of more than one person with rights in a work means that licensing will be complicated from a practical point of view.

In IPRS v Harsh Vardhan Samor, the Bombay High Court stressed that copyright societies play a key role in licensing and right administration.^[7] Collective right management is a move towards making the licensing system more manageable but at the same time it means a further step away from the individual liberty originally promised by statutory ​‍​‌‍​‍‌​‍​‌‍​‍‌licensing.

Doctrinal​‍​‌‍​‍‌​‍​‌‍​‍‌ Ambiguities and Structural Inefficiencies

A key point of confusion around Section 31C is that it is not clear whether it really gets rid of the consent requirement altogether. The statutory wording hints at coercion; however, in practice, the compulsory interaction with copyright societies often leads to the reopening of negotiation-type hurdles.

Also, the procedural conditions especially giving the prior notice and making the royalty payment come first are very important. The Saregama case illustrates that non-compliance in the slightest detail can lead to the loss of the licensing protection.^[8] Such a situation is very unfavourable for independent artists and goes against the very egalitarian argument of the law provision.

Lawrence Liang, among other researchers, has pointed out several times that the Indian copyright law is overly conservative and procedural to a point where it discourages creativity rather than makes it easier.^[9] In the context of copyright law and copyright societies, the absence of reliable royalties enforcement measures is one of the major points raised in the academic discussions.

Institutional Role of Copyright Societies

Organizations like IPRS are responsible for the distribution and administration of mechanical rights. Simultaneously, copyright societies, which require strict regulatory oversight may turn out to be a source of power and control. As Mark Lemley asserts about IP systems, collective rights management does not only reduce transaction costs but also causes market power problems.^[10]

These kinds of risks that characterize the Indian music industry are very much real due to the lax regulatory environment and limited governance. Daniel Gervais emphasizes that the success of collect licensing arrangements is largely contingent on the quality of institutional design, which is a weakness of India.^[11]

Comparative Analysis: Lesson from the United States

One of the main features of the US legal system is its policy of the central control of the licensing of the use of the works.^[12] Of late, through the Music Modernization Act it created the Mechanical Licensing Collective which led to a transformation in licensing and made it more transparent.^[13]

On the flip side, the Indian ecosystem is old-fashioned, fragmented, and full of red tape. The absence of a central licensing point means that the system is vulnerable to inefficiency and also that people are less inclined to use the statutory licensing route.

Conclusion

Mechanical licensing in India represents a relatively recent and progressive legislative intervention, however, there are still quite a few areas where it is not doing enough or worse, even acting as a deterrent. Section 31C is a case in point where the statute itself paints a very rosy picture but when all is said and done, it is the practical side of the law that throws up problems, be it the unclear legal aspects, complicated procedures, or the weak institutional setup.

The law can only deliver what society expects of it if the underlying features of the system itself get addressed and that is only going to happen if the government steps in and takes the necessary measures. The chief amongst them are the defining clearly of consent, the simplification of the process of compliance, and the creation of a mechanism for the centralized licensing. Even these do not guarantee that mechanical licensing will be anything other than theoretically possible but practically impossible— a semantically correct framework that does not work in ​‍​‌‍​‍‌​‍​‌‍​‍‌reality.

^[1] Copyright Act 1957, s 31C.

^[2] Copyright Act 1957, s 52(1)(j) (prior to amendment).

^[3] William M Landes and Richard A Posner, The Economic Structure of Intellectual Property Law (Harvard University Press 2003).

^[4] Shamnad Basheer, ‘Intellectual Property and Innovation: A Development Perspective’ (2011) 1 NUJS Law Review 1.

^[5] Gramophone Company of India Ltd v Super Cassette Industries Ltd (2010) 44 PTC 541 (Del)

^[6] Indian Performing Right Society Ltd v Eastern Indian Motion Pictures Association (1977) 2 SCC 820 (SC).

^[7] Indian Performing Right Society Ltd v Harsh Vardhan Samor 2010 SCC OnLine Bom 1956.

^[8] Saregama India Ltd v Sky B (Bangla) Pvt Ltd (2012) 50 PTC 1 (Cal).

^[9] Lawrence Liang, ‘Copyright, Cultural Production and Open Content Licensing’ (2005) Sarāi Reader.

^[10] Mark A Lemley, ‘Intellectual Property Rights and Standard-Setting Organizations’ (2002) 90 California Law Review 1889.

^[11] Daniel Gervais, ‘The Landscape of Collective Management Schemes’ (2011) 34 Columbia Journal of Law & the Arts 591.

^[12] US Copyright Act 1976, s 115.

^[13] Music Modernization Act 2018 (US).