The Indian Copyright Act’s centralised scheme for collective licensing is in shambles and lawmakers would do well to remember this when proposing ideas for commercialisation of intellectual property.
The National Intellectual Property Rights (IPR) Policy has garnered attention for its professed objective of placing intellectual property rights at the centre stage of India’s innovation and growth story. It also represents India’s biggest original contribution of knowledge to the world, its rich traditional knowledge bank and aims to protect and popularise the same.
That some of the central government’s proposed measures, such as the empanelment of facilitators to guide startups with obtaining of IPRs, have already been initiated is also a welcome change from the consigning of policy to the bin.
Rights-based initiatives in India have often combined the ease in obtaining entitlements and property rights with the realisation of value from such entitlement.
Food security and education are entitlement-based reforms and have failed to bring about their desired effect because of this inability to keep means separate from the ends. The IPR policy is a welcome change on this front as well.
Realising that IPRs are at best means to an end, the policy devotes an entire segment to the discussion of initiatives that facilitate the commercialisation of IPR. Proposals, such as a feasibility study to explore the creation of an IPR exchange and a platform connecting IPR owners and users with each other, stand out. However, the devil lies in the details. The government, prior to implementing these measures, should address certain worrisome features in the collection of IP licensing that have plagued the Indian IPR system for long.
A good place to begin is the one branch of IPR protection where collective IP licensing systems have been in operation for quite a while – the copyright law. The Indian Performing Rights Society (IPRS) and Phonographic Performance Ltd. (PPL), the two copyright societies that manage copyright in musical works and sound recordings respectively, have been functioning even prior to the 1994 amendment to the Indian Copyright Act of 1956.
This amendment centralised collective copyright licensing by rendering it impermissible for entities other than the registered copyright societies from commencing or carrying on the business of collective copyright licensing. Additionally, it stipulates that the central government shall not ordinarily register more than one copyright society to do business in respect of the same class of works.
The amendment also introduced a comprehensive mechanism for the management and administration of copyright societies and their tariff scheme. Its foundation lay in protectionism and the optimism that wide-ranging supervisory powers vested in the human resource development ministry would guarantee a transparent collective licensing system and equitable distribution of the royalties.
Unfortunately, the actual working of these copyright societies, conferred virtual monopoly status on a platter by the 1994 amendment, reveals a sad story of unaccountable administration and arguably even rampant mismanagement.
These facts went unchecked for the longest period until the Copyright Amendment of 2012 came into effect and these societies had to apply for re-registration.
Ironically, an earlier tiff between sound recording companies that monopolised the IPRS’s administration and music composers and lyricists over the equitable sharing of royalties had motivated the 2012 amendment.
Post 2012, stories began emerging of the IPRS collecting huge royalties from different avenues and not subsequently passing on these amounts to the beneficiary creators. Finally, the government was compelled to take note of these prima facie violations and initiate enquiry proceedings against IPRS in early 2014.
IPRS’s subsequent challenges to this order, including before the Supreme Court, have failed and their registration status is “pending” as on date due to a second governmental enquiry initiated in August 2015.
The Enforcement Directorate (ED) attached IPRS’s investments worth over Rs 70 crore in 2015 following allegations of money laundering. Similarly, last month, the ED provisionally attached PPL’s accounts worth over Rs 13 crore on the grounds that it dishonoured its revenue sharing arrangements with IPRS and withheld payments that were rightfully due to composers and lyricists.
The IRRO has largely been a dysfunctional body ever since its inception gauging from the surprised reactions of the stakeholders when its existence was relied on as a possible solution to the unlicensed photocopying of course packs by photocopiers outside Delhi University.
These experiences with the actual working of a collective licensing system raise interrelated concerns regarding the inequity in the present system that aggrandises content managers at the expense of content creators and the inability of content creators to directly commercialise their work.
Care must necessarily be taken at the policy level to ensure that collective licensing vehicles do not end up being either the rent-seeking middleman, that experience has shown that the IPRS and the PPL have become, or an uninterested one as is the case with the IRRO.
A good start would be to modify the Copyright Act and do away with the present model that vests virtual monopoly with registered copyright societies to collectively license copyrighted content.
Focus must be towards free competition among several licensing bodies with broad regulations in place to facilitate the streamlining of their payment systems, the real-time tracking of licensing agreements entered into between these bodies and content users and the transparent maintenance of content inventory including rights-holder/creator information.
The IPR policy stands out for its philosophy of making intellectual property as integral to the running of the economy as tangible assets and in encouraging free transactions among informed creators and users.
Centralised exchanges are antithetical to this very philosophy and the government should make it abundantly clear by dismantling the present copyright society system and encouraging flexible and lean licensing models that target localised creators and users.
This is particularly so because in a world driven by technology, the state’s regulatory focus should lie less on the process and more on the outcomes. It is remarkably short-sighted in a fast evolving digital space to lock down the evolution of optimal models that best remunerate musicians and other content creators.
Taylor Swift could port her account from Spotify to YouTube precisely because the collective licensing system presented her with that choice.
Unfortunately, present Indian law provides no room for such a choice whether it be on the grounds that the artist feels cheated of royalties that are due to her or simply because the artist wishes to be part of a more localised system of commercialisation that targets users who favor content of a particular kind or in a particular language.
Open standards and free markets should dictate the choices available to content creators, not centralised exchanges that then become the playground for vested interests to creep into their daily administration and deprive creators of licensing autonomy.
Ananth Padmanabhan is Associate, Technology & Public Policy at Carnegie India and author of Intellectual Property Rights: Infringement and Remedies.
Disclosure: The author has acted as counsel for PPL in the past.