Bollywood amendments regarding out-film use of underlying works

The Copyright (Amendment) Bill 2010 will introduce extensive structural changes to the Copyright Act 1957. Among the most contentious provisions in the Copyright (Amendment) Bill 2010 are those which would have the effect of restructuring the relationship between the producers and the authors of underlying works (eg, lyricists) in India’s film and music industry. It is these amendments, proposed to be made to Sections 18 and 19 (with supporting amendments proposed to be made to Section 17) of the Copyright Act 1957, which have caused the most debate.

Under the statute, the producer of a film is considered to be its author, and consequently the first owner of copyright in the film. It has been standard practice for producers to assume all rights in the underlying works contained in films (eg, music compositions and lyrics) through contractual arrangements with the authors of underlying works, and by relying on an interpretation of the Supreme Court's 1977 judgment in Indian Performing Right Society Ltd v Eastern Indian Motion Pictures Association and ors (AIR1977SC1443). As a result of this practice, producers have claimed that they exclusively own all rights in the underlying works incorporated in films, not only for use in conjunction with the film, but also for the purpose of “out-film” use (eg, for ringtones, sheet music and the public performance of music).

Producers have been able to do this because the Supreme Court's 1977 decision held that the copyright in the underlying works included in a film belong to the producer of the film. The definition of a “cinematograph film” in the statute was subsequently amended in 1994. However, the issue of the ownership of underlying works was not revisited by the Supreme Court after the 1994 amendment was passed. Therefore, producers could accrue royalties for the out-film use of underlying works without sharing any of the revenues with the authors of those works.

However, the 2010 amendment bill proposes to change further the legal position created by the 1994 amendment by making extensive structural changes to the act, primarily by inserting an additional proviso to Section 18 of the act and by inserting two additional subsections to Section 19.

The subsections intended to be added to Section 19 would state as follows:

• Section 19(8) - the assignment of copyright in any work contrary to that of the terms and conditions of the rights already assigned to a copyright society in which the author of the work is a member shall be void. 
• Section 19(9) - no assignment of copyright in any work to make a cinematograph film or sound recording shall affect the right of the author of the work to claim royalties or any other consideration payable in case of utilisation of the work in any form other than as part of the cinematograph film or sound recording.

Further, the amendment proposed to be added to Section 18 would state that:

"the author of the literary or musical work included in a cinematograph film or sound recording shall not assign the right to receive royalties from the utilisation of such work in any form other than as part of the cinematograph film or sound recording except to the legal heirs or to a copyright society for collection and distribution and any agreement to the contrary shall be void."

As such, although authors of underlying works would be able to assign their works to a producer, they would be unable to assign the right to receive royalties for the out-film use of the work to the producer, except to a copyright society or to their legal heirs. Thus, in spite of having assigned the works to the producer, the authors of underlying works would have a continuing right to receive royalties for out-film use.

In light of this, although it would be possible for the author of an underlying work to assign both the work and the right to receive royalties for out-film use to a copyright society, if this were not done it could easily lead to a situation where the right to receive royalties and ownership of the work rested in different hands. For example, the author, his or her heirs or a copyright society would have a continuing right to receive royalties for the out-film use of the underlying work, even if ownership of the work vested in the producer. This would in all probability result in complicated royalty-sharing arrangements having to be developed, particularly since there is no indication in the bill as to how royalties for out-film use would be shared.

The Parliamentary Standing Committee, to which the bill was referred for its recommendations, did suggest that the proposed amendments be revised so as to provide greater clarity. However, in principle, the committee was firmly in favour of the amendments proposed for the benefit of the authors of underlying works. In fact, in its report the committee highlighted a footnote in the Supreme Court's 1977 decision where Justice Krishna Aiyar advised that:

"the authors and music composers who are left in the cold in the penumbral area of policy [should] be given justice by recognizing their rights when their works are used commercially separately from cinematograph film, and the legislature should do something to help them."

The committee stated that the proposed amendments to the statute were overdue, and that it was a shame that it had taken more than 30 years for the legislature to act on a suggestion of the Supreme Court.