The High Court of Madras on December 8, 2021, passed a pivotal judgement concerning performers rights in sound recordings in the recent case of M/s Novex Communications Pvt. Ltd. v. DXC Technology Pvt. Ltd., C.S Nos.407 & 413 of 2020.
To surmise, the judgment, in this case, involved two suit(s) initiated by M/s Novex Communications Pvt. Ltd. (“Novex”), a company engaged in the business of distribution of content, primarily film songs against DXC Technology Pvt. Ltd. (“DCX”). In relation to its business, Novex claimed it dealt in the acquisition of copyright(s) subsisting in the sound recording of various film songs, to which it held a right as the assignee, licensee, or authorized agent of various copyright holders, and had entered into various agreements with owners of sound recordings (including in respect of on-ground public performances thereof) to acquire such rights. By virtue of the same, Novex claimed exclusive ownership rights over such sound recordings and claimed that the usage of certain of its songs at events organized by DXC construed a clear copyright infringement.
In this matter, Novex relied primarily relied on Section 18(2) of the Copyright Act, 1957 (“Act”) in support of its argument, the provisions of which provide that an assignee becomes the rightful owner by virtue of an assignment of copyright. In relation, Novex cited the assignment agreements executed in their favour. Novex also claimed it had the right to issue licenses to any entity as per Section 30 of the Act, by virtue of being the rightful owner of the copyright. In contrast, DCX based its counter-argument on Section 33 of the Act. It was contended that a prima facie reading of the relevant Section made it clear that the legislative intent had been to impose a specific prohibition against businesses from issuing licenses, as the only body authorized to issue licenses was required to be a “…copyright society duly registered under this Act…” under the second proviso of the said Section. Further, DCX claimed that Novex, under the guise of issuing licenses, was guilty of charging exorbitant amounts from entities that attained licenses from them. Novex, in turn, rebutted such claims by stating that “…A combined reading of Sections 18, 30 & 33 of the Act makes it clear that the owner of the copyright is entitled to independently issue licenses and collect royalties legislature did not mandate that the copyright owner should necessarily issue a license and collect the fees only through a copyright society…”
Accordingly, the primary issue for the Hon’ble High Court’s consideration in this matter was whether Novex, not being a copyright society as contemplated under Section 33 of the Act, possessed any legal rights to issue or grant a license under the Act or not. The single judge of the Hon’ble High Court pronounced the judgment in clear favour of DCX by holding that Novex was effectively barred under Section 33 of the Act from issuing or granting any licenses. Specifically, the Hon’ble Court clarified that where an entity (such as Novex) was primarily involved in the business of issuing licenses for copyrighted works, the second proviso of Section 33 became applicable to the same, where such work was incorporated into a cinematograph film or a sound recording. The Court held that the entire cause of action upon which Novex had initiated the suits was misconceived, and DCX was consequently awarded substantial costs.