Intellectual art can take various forms of innovation and creation including books, articles, songs, musical compositions, films, and software. In the world of creative works, authors hold the rights to their original creations, whether it is a book, song, or an artwork. However, when these works are used to create something new, like a movie based on a book or a remix of a song, the question arises: should the original authors still be entitled to a share of the profits?
The Indian Copyright Act, 1914 was introduced to protect creators’ rights, following the invention of the printing press. Advancements in technology and the rise of modern inventions prompted amendments to the law, eventually leading to the passing of the Copyright Act, 1957 (“Act”). As the art and entertainment industry expanded, courts began to grapple with the complexities of derivative works, those that are based on pre-existing works. It became clear that even small contributions by an author to a new creation, such as a song that is sampled or a scene from a book that becomes part of a film, should be recognized and protected.
The courts have regularly upheld the rights of authors to claim royalties every time their work is communicated to the public. The Copyright (Amendment) Act, 2012 has significantly altered the legal landscape regarding the rights of creators of original works. The amendment ensures that authors receive fair compensation for the ongoing use of their works, even if the original work has been transformed into a derivative creation. Further, these amendments introduced a more structured system for royalty payments, with clear guidelines and rules for collecting and distributing royalties. Copyright societies were also empowered to establish tariff schemes for different types of public performances and uses of works.
The “right to receive royalty” for authors of musical and literary works underwent significant changes with the Copyright (Amendment) Act, 2012. Prior to these amendments, the Act primarily recognized the subsisting copyright in the original works, alongside performer’s right to have an exclusive right over his/her “performance” and special rights for authors. However, the industrial practice at the time was often skewed in favour of large companies, such as producers, publishers, and music labels, where most authors would assign all their rights to these big-ticket entities in exchange of a fixed aggregate without anticipating the future returns of such product. As a result, even if their work became hugely popular, the authors would not receive any share of the profits post such assignment. This position has been substantially altered after the amendments, which addressed this imbalance, and ensured that authors of the underlying works would receive a share of the royalties whenever their work was used, with the only exception being when the work is shown in cinema halls. The authors now have the right to receive royalties equal to those received by the assignees of such rights, excluding royalties from cinema hall exhibitions. This right is inalienable as it cannot be assigned or waived by the authors, except in favour of legal heirs or copyright societies.
A very significant and debated question is whether the “right to receive royalty” is a subset of “copyright” under Section 14 of the Act or a contractual right? In other words, if an author does not receive royalties for their underlying work that has been publicly used, can they claim copyright infringement, or is it simply a breach of contract?
One possible interpretation is that the right to royalties is an inherent part of the copyright, stemming from Section 14 of the Act, which grants the right holder the exclusive right to “do or authorize doing…” If this is the case, the author can file a suit for copyright infringement for failure to pay such royalty under Section 51 of the Act, and, consequently, seek civil remedies. Alternatively, it can be argued that the right to receive royalties cannot be considered as “copyright” and rather, is a contractual obligation between the author (assignor) and the entity receiving the rights (assignee). As such, Sections 18 and 19 of the Act, that impose restrictions relating to assignment/waiver of underlying artists’ rights, merely regulate the performance of contracts, ensuring that the aspect of royalties is included, otherwise rendering such contracts as void or voidable. Additionally, Section 19(3), which specifies that the assignment of copyright must include royalty terms, clarifies that royalty is considered a mandatory contractual obligation.
Theoretically, both interpretations could be applied, however, the second seems more plausible in the scheme of the Act as the third and fourth proviso (amendments upholding the rights of underlying artists with respect to the right to claim royalty) to Section 18 only applies in case of assignment.
The Bombay High Court, in the case of Indian Performing Right Society Ltd. v. Rajasthan Patrika Pvt. Ltd. and Indian Performing Rights Society Ltd. v. Music Broadcast Ltd. (2023 SCC OnLine Bom 944 Bombay High Court) relied upon the Statement of Objects and Reasons of the 2012 Act and the Parliamentary Standing Committee Report on the Copyright Amendment, to positively interpret the change in law and directed the defendants to pay appropriate royalties to the authors of underlying works. This decision reinforced the legal interpretation that ensures the rights of authors to receive royalties for their works.
To simplify, authors have exclusive rights over their creations, regardless of the fact whether it is assigned or not. For third parties who are neither licensees nor assignees, Sections 51 and 55 of the Act secures an author’s right to sue for infringement and unauthorized use without getting an official license or without entering into an assignment. However, where the copyright is assigned for an underlying work, which is used and incorporated to form a derivative work, the law becomes very clear, that an author has remedy under Section 19A of the Act, which specifically empowers authors/assignees to approach the Commercial Court for any such dispute, with the Court having the authority to issue orders, including the recovery of unpaid royalties.
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