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Much Debated Statutory Licensing (SL) of Music - Simplified!



What does SL mean in layman terms?

Well, SL is simply a license granted under section 31D of Copyright Act 1957 (‘Act’) to use music owned by music labels or individual artist. It is an exception to the general rule that the owner of music/market forces can decide the price for it unilaterally under a voluntary license (under section 30 of the Act).


Why was this exception made?

This exception was introduced because of the difficulties noticed in the access to music to industries/platforms to which music is the SOUL of the business for Radio or any music centric platform like audio OTTs. The Parliamentary discussions make it amply clear that this exception was made after thorough study of the market scenario, market forces and through a transparent consultative process, to ensure access to music without


(i) subjecting the owners of copyright works to any disadvantages and

(ii) ensuring users are not exploited by the monopolistic practices of the music owners.


How can one exercise SL right under section 31D?

There are 2 basic criteria to exercise this right i.e. –

  1. A rate for music usage for concerned platform needs to be first determined by the Commercial Court (i.e., High Courts).

  2. The user then needs to provide a 5 day advance written notice to the concerned owner of the music of its intention to broadcast their music on the user’s platform and pay the royalties in accordance with the SL Order passed by the courts.

Isn’t it then unfair for to the copyright owner that they cannot determine the price of their product?

Absolutely not. The provisions of section 31D are inherently fair to both creators/owners as well as users of music because:

  • The process of rate determination under Section 31D follows the principles of natural justice. It commences by way of application under section 31D by the interested user.

  • The courts need to mandatorily issue a PUBLIC NOTICE in newspapers and providing reasonable time for the public to send in their objections, recommendations, suggestions and representations BEFORE such rate determination commences.

  • This provision ensures that not only the parties named in the application, but also ANY INTERESTED person in India in given an opportunity to of being heard. The glaring example of the same was first rate determination exercise conducted by the IPAB in year 2020 where even renowned artists were afforded opportunity and time to speak during the proceedings.

  • Thus, it ensures COMPLETE TRANSPERENCY and FAIRNESS and ensures that economic aspects of – the Owners of Music, the Performers and the paying capacity of the users are properly studied before arriving at the SL rates.

  • Even the erstwhile Intellectual Property Appellate Board (now merged with Commercial Courts) mentioned in its first ever SL rate order dated December 31, 2020 that – “Section 31D provides for a mechanism to balance the public interest vis-a-vis the private interest and has got an inbuilt mechanism to take care of the interest of the owner.

  • Further, guidelines under Rule 31(7) and (8) of the Copyright Rules 2013 are followed while fixing rates.Thus, completely opposite to the criticism being levelled against SL, it actually lays the foundations for nurturing a symbiotic relationship between music owners and users.

  • Section 31-D has withstood judicial scrutiny and its constitutional validity has been upheld by division bench of the Madras High Court in South Indian Music Companies Association v. Union of India and Anr.


But compulsory license (CL) provisions already exsited before SL, then why SL?

  • The CL regime only operates ‘in-personam’ i.e. inter-se the parties to the dispute, a Statutory License rate determination order applies ‘in rem’.

  • The SL ensures that the performers and authors are well aware of the rates unlike a voluntary license where they may be short charged due to the confidential nature of the transactions. Artist and performers, first time had the chance to have a say in the rate determination, which is normally restricted between the music labels and users. THEY CAN THUS CLAIM THEIR EQUITABLE REMUNERATION FROM THE MUSIC LABELS WITHOUT BEING SHORT CHARGED. This was also an important objective of the copyright amendments in 2012, which introduced SL provisions.

  • SL does not give rise to multiplicity of litigation, which is inherent in CL and preservs the principles of natural justice i.e. hearing all parties. This reduces the unnecessary burden on the judiciary in addition to substantial reduction in costs of litigation for the parties involved.

  • CL is a closed door proceeding which involves only parties to the dispute, whereas SL is a completely transparent process having a consultative approach.

 

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