On June 18 Bombay High Court passed an order noting the consent terms between the parties in Tips v. Wynk copyright dispute. Discussing what the dispute was all about and highlighting the importance of the previous orders especially in the context of application of Section 31D vis a vis streaming, we are pleased to bring to you this post by SpicyIP intern Aditya Bhargava. Aditya is a second-year law student at NLSIU Bangalore. He is interested in intellectual property, AI regulation and tech law. His previous posts can be accessed here.
Parties Settle the Tips v. Wynk Copyright Dispute: Wynk, Wink, and a 12 Crore Nod!
By Aditya Bhargava
The latest settlement order dated 18th June 2024, authored by Justice R.I. Chagla of the Bombay High Court, brings a final resolution to the long-standing dispute between (discussed here, here and here) Tips Industries Limited and Wynk Ltd. (now Xtelify Ltd.). This case, which has seen several significant rulings over the years, primarily addressed the applicability of statutory licensing vis-a-vis streaming or internet broadcasting. The latest settlement not only puts an end to the immediate litigation but also builds upon crucial prior judgments that have shaped the frameworks and discourse for digital streaming platforms, commonly known as OTT platforms, in India.
The said order records the settlement between the parties, including their consent to be bound by the judgment dated April 23, 2019, by the Commercial Court. The order also notes that the defendant has undertaken to pay INR 12,00,00,000 plus applicable taxes as a full and final settlement of its use of the Plaintiff’s repertoire for the period between 1st September 2016 to 10th September 2020 (Para 7).
Revisiting the Legal Context: Section 31D and its Boundaries
In a nutshell, this case revolves around the interpretation of Section 31D of the Copyright Act, which is a provision that deals with statutory licenses, allowing broadcasting organisations, such as radio and television broadcasters, to use copyrighted music upon payment of royalties fixed by the erstwhile Copyright Board (now Commercial Court). WYNK Ltd., a popular online music streaming service, believed it could also enjoy these statutory licenses under the umbrella of being a “broadcasting organisation”. The Bombay High Court, however, saw things differently. The above 2023 decision ruled that Wynk could not access and use music owned by TIPS Industries Ltd. without explicit consent. The Court emphasized that statutory broadcasting rights did not extend to online music streaming and downloading, rendering Wynk ineligible for these licenses.
In 2019, Justice S.J. Kathawalla, who also presided over the Warner/Chappell-Spotify dispute (later settled), ruled in favour of Tips Industries in both cases. He stated that allowing users to download a song from Wynk to their device for offline listening, and enabling them to buy a song through the service for a subscription fee and a one-time payment respectively, amounted to “rent” and “sale.” These actions fall under the exclusive rights of the copyright holder as defined by the Copyright Act. An exclusive right is the right to permit or deny others the ability to perform the same action or acquire the same benefit. In essence, Wynk could not let users download or purchase Tips’ songs without obtaining permission from Tips Industries.
However, this aspect of the case did not deal with Section 31D, which relates to broadcasting or “communication to the public” and serves as an exception to the copyright holder’s exclusive rights. In his judgment, Justice Kathawalla stated that a user’s ability to stream songs on the service for free falls outside the scope of “communication to the public,” which, according to the Copyright Act, is synonymous with “broadcast.” He explained that while making songs available to stream on-demand does constitute “communication of the sound recordings to the public,” he agreed with Tips’ lawyers that Wynk could not invoke Section 31D. This section should be interpreted in conformity with the specific intention for which it was enacted.
According to Justice Kathawalla, Section 31D applies exclusively to radio stations and television channels, as explicitly stated in the section, which refers to the “rates of royalties for radio broadcasting” and “television broadcasting.” In their arguments, Tips’ lawyers cited the specific wording of the section, as well as Rules 29 and 31 of the Copyright Rules, and a report from the Rajya Sabha Standing Committee on the Copyright (Amendment) Bill 2010, all of which specifically refer to radio and television broadcasting.
Justice Kathawalla also acknowledged that internet and digital technologies, such as streaming and downloads, were prevalent when the Copyright Act was amended in 2012. He noted that Section 31D was framed with this context in mind, indicating that it was never intended to include “internet broadcasting” organizations. Additionally, the section specifies that the royalty to be paid to the copyright owner must be fixed by the copyright board before the broadcaster can use the works. Discussed here and here.
Subsequently in 2023, a division bench of the Bombay High Court comprising Justices G.S.Patel & Gauri Godse, reinforced this stance, further clarifying the boundaries of Section 31D. By focusing on the specific language and intent of the legislation, the bench affirmed that Section 31D’s statutory licensing was confined to linear broadcasting mediums, explicitly excluding non-linear, on-demand streaming services. This decision highlighted the need for legislative clarity and adaptation in response to technological advancements. On 23rd October 2023, Praharsh, Swaraj and Sidhi, in this post had argued the legal soundness of the D.B.’s order. Some commenters like Sandhya Surendran, speaking about this order said that it (the order) seemed like good news for record labels and not so much for the streaming industry because it strengthens record label’s hands in negotiations with internet streaming services without the fear of having the Commercial Court intervening to set a licensing fee.
Fast-forward to June 2024, What Happened?
This time a pragmatic resolution through a settlement between the parties was presented before the Court. The settlement, detailed in the Consent Terms dated 17th June 2024, requires Wynk/ Xtelify Ltd. to pay INR 12 crore plus applicable taxes for using Tips’ music repertoire from 1st September 2016 to 10th September 2020. This structured payment schedule ensures financial restitution and sets a precedent for future settlements in similar disputes. What is of utmost importance is that the parties have agreed to abide by the 2019 order, which was also upheld by the Division Bench. Justice Chagla carefully scrutinized the settlement terms to ensure fairness for both parties.
The order reaffirms the judiciary’s interpretation of Section 31D, maintaining its applicability exclusively to traditional broadcasting. This interpretation is critical in preserving the legislative intent and avoiding the misuse of statutory provisions to accommodate technological advancements not envisaged by the original lawmakers.
Future Directions: Legislative Reforms and Industry Impact
The settlement between Tips Industries and Xtelify Ltd. could catalyze further discussions on amending copyright laws to better reflect the realities of the digital age. India’s OTT market, one of the largest globally, generates substantial revenue for the music industry, underscoring the high stakes involved and the urgency for a balanced legal framework that protects copyright holders while fostering innovation and accessibility in digital media. This economic significance highlights the importance of judicial conservatism in statutory interpretation while advocating for proactive legislative measures to address technological advancements. By reinforcing the exclusion of digital streaming platforms from Section 31D’s scope, the judiciary has signalled the need for legislative amendments to keep pace with technological evolution. The Parliamentary Standing Committee’s recommendations to include digital broadcasters under statutory licensing reflect an acknowledgement of this necessity. As outlined by this order, the current legal framework is insufficient to address the complexities introduced by digital streaming, necessitating legislative updates.