The Department for Promotion of Industry and Internal Trade (DPIIT) yesterday i.e. 21st August 2024 issued an Office Memorandum (OM), notifying the withdrawal of OM dated 5th September 2016, which extended the scope of Section 31D of the Copyright Act to Internet Transmissions. Although I could not find the withdrawn OM, it has been discussed by Rahul Bajaj on the blog here.
To put it short, Section 31D, inserted after the 2012 amendment, creates a statutory licensing regime which allows a Broadcaster to communicate a literary or musical work and sound recording, either by way of public performance or broadcast, after paying royalties to the Copyright owner (rates to be fixed by Commercial Court). As Bajaj points out, conspicuous by its absence is the right to broadcast such works ‘online’ using Internet transmission. Internet transmission, for instance, includes online music streaming services such as Spotify, Apple Music, or other such streaming services which broadcasts music using the Internet. It would also include OTT platforms which, too, rely upon the internet to broadcast their content.
This absence of ‘internet transmission’ from 31D was beneficial for Copyright owners since they could exploit the lucrative online market by entering into ‘Voluntary Licensing Agreements’ without having to worry about statutory licenses being issued by the Copyright Board. Precisely to fill this gap, DPIIT issued the OM in 2016, extending the licensing regime to Internet transmission too. The music industry, then, was up in arms against the OM. (here)
The reason for the sudden withdrawal of the notification is the Bombay HC decision (DB) in Wynk Music Ltd. v. TIPS Industries Ltd. It is important to note that the decision came out on 20 October 2022, whereas the present notification came out on 21st August 2024. It is unclear what was the immediate trigger which prompted the DPIIT to issue the OM almost two years after the judgement. In Wynk, to put it briefly, the Court concluded that “statutory licenses under Section 31D are restricted to traditional non-internet-based radio and television broadcasting and performances alone.” In other words, Section 31D had no application to any internet-based streaming service. One of the reasons for arriving at the conclusion it did was ‘legislative intent’ i.e. Although online streaming of music was in existence in 2012, the Legislature consciously chose not to include the word ‘internet.’ Additionally, neither Rule 29 or 30 of the Copyright Rules nor the RS Standing Committee on the Copyright (Amendment) Bill 2010 made a mention of ‘Internet’, which, for the Court, was also indicative of legislative intent. Relying on this Judgement, the OM says, the DPIIT decided to withdraw its notification expanding the scope of 31D. Aditya, in this post, has aptly discussed the background and impacts of the decision.
Who does this notification impact? An obvious answer is the ‘Streaming Industry.’ Praharsh, Swaraj and Sidhi have discussed here how the streaming industry is a hugely lucrative market for the music industry. Realising this, the Parliamentary Standing Committee had recommended to include digital broadcasters under statutory licensing, which would also include digital streaming of music. For now, in the face of Judicial Pushback, the DPIIT has relented. The ball, now, is in the legislature’s court to amend the law and fill this gap in 31D.