In a groundbreaking verdict, the Bombay High Court has delivered a significant blow to online music streaming and downloading platforms. The court’s ruling has far-reaching implications, as it denies these platforms discounted compulsory licenses for music use under Section 31D of the Copyrights Act. This decision is a major victory for record labels like Tips Industries Limited (Tips) and has reshaped the playing field for internet-based music services.

Understanding Section 31D

Section 31D of the Copyrights Act, introduced in 2012, revolutionized the licensing landscape. It allowed for ‘statutory licenses’ for TV and radio, essentially eliminating the need for protracted negotiations with copyright owners. This legislation enabled broadcasting organizations to utilize literary, musical works, sound recordings, and more after providing prior notice and paying royalties at rates determined by the commercial court.

The Omitted Clause

Notably, while Section 31D laid out rates for television and radio, it did not explicitly address internet-based platforms. This omission has been at the heart of a recent dispute that culminated in the Bombay High Court’s ruling.

The WYNK-Tips Dispute

The legal saga began in 2017 when WYNK, part of Bharati Airtel Ltd, contested Tips’ demand for nearly 4.5 crore in fees for using over 25,000 songs over two years, deeming it ‘extortionate.’ In response, WYNK invoked its rights as a broadcaster under Section 31D and proposed paying a royalty rate of 10 paise per download.

Court’s Differentiation between Internet and Non-Internet Services

The pivotal moment in this case arrived when the court differentiated between internet-based services, like streaming platforms, and traditional radio and television networks. The bench recognized that while consumers of TV and radio are subjected to content as determined by the broadcaster, streaming platforms like WYNK offer subscribers the ability to download and curate playlists for a fee.

Interpreting ‘Broadcast’ Under Section 31D

WYNK’s legal defense revolved around the interpretation of the term “broadcast” under Section 31D. They argued that it should encompass all forms of dissemination, including internet-based services, asserting that Section 31D was enacted in the public interest to prevent copyright holders from maintaining a stranglehold over licenses.

Tips’ Counterargument*

Conversely, Tips Industries, represented by Senior Advocate Ravi Kadam and Advocate Rohan Kadam, contended that Section 31D’s scope was limited to traditional radio and television broadcasting. They emphasized that the omission of internet services from Section 31D was intentional and aimed at safeguarding the interests of copyright holders.

The Court’s Verdict

Ultimately, the court sided with Tips Industries, citing that the subsections of Section 31D explicitly mentioned only radio and television. Allowing internet-based platforms to avail themselves of this provision without restraint would jeopardize the rights and interests of copyright holders and lead to unfavorable consequences.

Public Interest Considerations

The court also dismissed arguments pertaining to “public interest.” It pointed out that WYNK, as a profit-driven entity, did not qualify as a charitable organization. WYNK’s primary motivation was to evade the license fees demanded by Tips rather than serve any broader public interest.

Implications for the Industry

This landmark decision has far-reaching implications for the music industry. Online streaming and downloading platforms will now be compelled to negotiate contracts with major record labels for music usage, a departure from the previous practice. The ruling upholds the rights of copyright owners and ensures that artists and labels receive their due compensation for their creative works.

The Bombay High Court’s ruling has reshaped the landscape for online music streaming and downloading platforms. By denying them discounted compulsory licenses under Section 31D, the court has protected the interests of record labels and copyright holders. This decision ensures that fair negotiations will continue to be the norm in the music industry, safeguarding the rights of artists and creators.