Streaming and other internet broadcasting services to be covered by copyright statutory licenses: Draft Copyright Rules

In response to the dramatic changes brought about in content sharing and broadcasting through  technological advancements in the digital era, the Department for Promotion of Industry and Internal Trade, Government of India (DPIIT) has proposed to amend the Copyright Rules. The draft rules are the latest in a long series of regulatory action taken by the government to address the entry of internet streaming services into the Indian market.

The Draft Rules were made available to the general public on 30 May 2019, and proposed the following major changes:

  1. Copyright framework to bring each mode of broadcasters under its ambit

Under Section 31D of the Copyright Act, any broadcasting organization that seeks  to communicate a work to the public by a broadcast or a performance, can obtain a statutory license to  do so after giving prior notice and paying royalties to the copyright owner royalties at the rate fixed by the Intellectual Property Appellate Board (IPAB) . The Copyright Rules (Rule 29-31) explains the procedure by which one can get the statutory license.At present, the Act only covers radio broadcasting and television broadcasting. In the first major T amendment to the rules,  all modes of broadcasting are intended to be covered under the ambit of statutory licenses, including internet and over-the top (OTT) media services such as Netflix, Hotstar, Amazon Prime, Gaana, Saavn, and the latest entrant, Spotify.

As far back as September 2016, the Government had released an ‘Office Memorandum’ to  include ‘Internet Broadcasting Organisations’ under the purview of statutory licensing under Section 31D of the Copyright Act, 1957 (the Act). This action had effectively meant that in cases of internet-based streaming rights, copyright owners would be now paid royalty in accordance with the rates fixed by the Copyright Board. Some experts questioned the authority of the government to issue such a memorandum in the absence of regulatory powers to do so. The present draft rules try to overcome this lacuna, but the question of whether internet streaming services should be regulated thus through copyright remains.

Multiple lawsuits around this question have been filed in India, notably by Spotify, which has attempted to use strategic litigation to obtain rights to broadcast content in India, where content rights have been long held by old-school media giants. Although no final award has been issued, most recently, the Bombay High Court, in an April 2019 order in Tips Industries Ltd. Vs. Wynk Music Ltd. and Ors. (Notice of Motion (L) No. 197 of 2018 in Commercial Suit IP (L) No. 114 of 2018, decided on 23-04-2019), held that Internet Broadcasters would not be eligible for compulsory licensing benefits as it extends only to radio and television broadcasters.

The proposed rules, if passed, are likely to affect online streaming content services which may get greater access to the content at better terms and conditions.

It is also to be noted that the draft rules merely prescribe the procedure to implement the license under Rule 31(D). The cloud around the substantive provision remains. It is also moot as to whether these changes are applicable retrospectively to content already broadcast presumptively by virtue of statutory licenses obtained under the office memorandum (Spotify has already done this, for example).

  1. Amendment in the procedure in which the copyright society fix the tariff schemes:

A copyright society is a legal body which protects or safeguards the interest of owners of the work by giving assurance to the creative authors of the commercial management of their works. These societies issue licenses and collects royalties in accordance with a tariff scheme.

In the second major amendment to the rules, the government  has proposed that while fixing the tariffs, copyright societies may also consider the following:

  • cross-sectional tariff comparisons;
  • economic research;
  • the nature and scope of the use of the work
  • the commercial value of the rights in use; and
  • the benefits to licensees.

The amendments also propose to make it mandatory for copyright societies to publish “annual transparency” reports for each financial year on their website. These reports must contain details of activities in the financial year, information on refusals to grant a license, details of the legal and governance structure, besides financial information related to rights revenues for each category of rights administered, among others.

The draft rules also state that in case the royalty due to authors and other owners remains undistributed at the end of the period of three years from the end of the financial year in which the royalty was collected, the copyright society must refund such amount to the licensee within a period of three months from the end of such financial year.

  1. Introduction of electronic means for communication
Finally, the amendments seek to introduce provisions related to accountability, transparency to allow Copyright Office to use electronic means of communication as well as making revision in fees. Rule 82 which provides “Mode of Communication by the Copyright Office” has been substituted to include the electronic means as a mode of communication. The amendment also proposes the use of the phrase “on its website” for the words “in the Official Gazette”.

Comments invited:

These amendments to the rules were published on 30 May 2019, and members of the public are invited to submit their comments to these amendments within a period of 30 days from their publication, to be taken up for consideration before they are finalized.