DHC strikes the Right Chord Clarifying that a Pending Compulsory License Application Will Not Justify Allegedly Infringing Activity to Continue 

On July 12, 2024, the Delhi High Court (DHC) issued two orders in a matter involving a dispute between Phonographic Performance Limited (PPL) and Al-Hamd Tradenation concerning interim injunctions and compulsory licensing (CL). This post analyses the astuteness of the two orders and the implications this jurisprudence will have on future litigations involving similar matters.

The Interim Injunction Grant…

On July 12, 2024, a single bench (SB) of the DHC granted an interim injunction against Al-Hamd Tradenation in the case of Phonographic Performance Limited vs. Al-Hamd Tradenation. This injunction, a concept we have discussed extensively on this blog (see here), restrains Al-Hamd Tradenation from using PPL’s copyrighted sound recordings.

About the parties briefly: Phonographic Performance Limited (PPL) is an Indian collective rights management organisation that controls the public performance rights of 317 music labels. It holds copyright in sound recordings through assignments from various owners, which grant it public performance and broadcasting rights under Section 18 of the Copyright Act of 1957. For more on PPL’s previous controversies, see here. The other party to this matter is Al-Hamd Tradenation, which was organising an event at a restaurant called ‘Lutyens’ in New Delhi and planned to use PPL’s copyrighted sound recordings on July 14, 2024. PPL had informed Al-Hamd through the restaurant that a license was required for the use of these recordings.

In this matter, it was claimed that the defendant refused to obtain a license for using PPL’s repertoire of sound recordings for its event and was only willing to pay INR 16,500, despite the required fee being INR 55,440. Consequently, PPL filed an application for interim injunction seeking to restrain Al-Hamd from using its repository alleging imminent threat of copyright infringement. In its defense, the defendant argued that it had filed for a CL and contended that it should not be forced to pay what it deemed an unreasonable royalty amount (more on this below). Justice Mini Pushkarna found that the plaintiff had established a prima facie case, with the balance of convenience in its favour and the potential for irreparable harm if the interim injunction were not granted. Consequently, the SB directed the defendant to negotiate with the plaintiff to obtain a license and pay the demanded fees if it wished to use the sound recordings. Most importantly, the SB noted that copyright infringement cannot be permitted despite the pending CL application and required the defendant to address the plaintiff’s demands while the application is still under consideration. Without a valid license, Al-Hamd Tradenation was restrained from using the sound recordings at its event.

…The Request for Compulsory License…

The order issued on July 12, 2024, by the same single bench (SB) of the Delhi High Court in the case of Al-Hamd Tradenation vs. Phonographic Performance Limited complements the previous order. In this matter, Al-Hamd sought a CL, arguing that the respondent’s licensing fees were excessively high. PPL countered that the plaintiff could not seek a CL under Section 31(1) of the Copyright Act, as this section does not grant the power to challenge licensing fees.

PPL’s counsel’s primary arguments were strategised around their interpretation of compulsory licensing provisions, which they did by referring to the Entertainment Network (India) Ltd. v. Super Cassette Industries Ltd. case (discussed here, here and here). They use this precedent to establish how injunctions intersect with compulsory licensing. In that case, Radio Mirchi was using music owned by Super Cassette Industries, the latter of which had sought a permanent injunction. While the case was ongoing, Radio Mirchi applied for a CL under Section 31(1)(b) of the Indian Copyright Act. Addressing the central issue of whether a CL can be granted under these circumstances, the Court noted that CLs can only be granted on the grounds stated in Section 31A of the Indian Copyright Act which allows for such licenses when public access to the work is denied (paras 87 and 113). Since licenses had already been granted to AIR and Radio City so public access wasn’t denied, which dismissed Radio Mirchi’s argument.  

In the current case, Al-Hamd Tradenation cited Paragraph 115 of this judgment, which indicates that there is no rule mandating the disclosure of CL applications, and a single license does not prevent other applicants from seeking their own. Al-Hamd Tradenation argued for its right to obtain a CL if faced with unreasonable licensing fees. Consequently, the Court directed that payment of the license fees by the petitioner should be made as an interim measure, without affecting the parties’ rights or contentions in the ongoing proceedings.

Examining how broadly or narrowly ‘public access’ should be defined has been largely based on judicial precedents, with Entertainment Network being by far the leading one. While the Court is yet to review the arguments of the parties and determine whether public access is being restricted or whether the licensing fees are too high, it would be premature to comment on the correctness of granting a compulsory license at the moment. However, the interim injunction, while the CL grant is pending, seems appropriate and reasoned in the given circumstances, as I discuss in the next segment.

…And All That Jazz

PPL has a history of finding itself amidst CL disputes and these decisions have been significant in shedding light on various facets of these legal battles over the years. For example, in the judgment dated April 27, 2023, from the Madras High Court in M/S. Phonographic Performance Limited v. M/S. Entertainment Network (India) Limited, a similar issue arose involving a compulsory licensing application under Section 31(1)(b) of the Copyright Act, 1957.  The case, spanning over two decades, involved a dispute over licensing fees (see Devangini’s post here for insights on achieving a ‘win-win’ fee determination) and objections to a CL application during an ongoing infringement suit (Para 16). It is the latter point that concerns us here; the DHC clarified that respondents could challenge the CL before the Copyright Board. Since the Board had previously denied the respondent’s evidence, the DHC remitted the case to the Board for reconsideration, allowing both parties to present new evidence and required the appellant to not broadcast the respondent’s recordings.

Overall, across judgements, ‘public interest’ has come out to be the primary aspect for considering the grant of a CL in copyrights, as demonstrated in the cases mentioned above and even for interim CLs, as seen in Super Cassettes Industries Ltd. vs. Music Broadcast Pvt. Ltd. where an interim CL was demanded as there lay a dispute wrt the quantum of the licensing fee. The purpose of granting a CL is to prevent the withholding of public access to a work, with commercial benefit to the publisher being secondary. The Court here commented that unless it can be shown that withholding such a license would harm the public interest, the power to grant a CL should not be implied. 

In the extant case, the DHC has most rightly held to restrict the usage of the music prior to a decision on these matters either in favour or against the grant of a CL. With the circumstances having been gauged upon to meet the three-fold test for granting interim relief: (i) a prima facie case, (ii) a balance of convenience, and (iii) irreparable harm, the SB has given out an appropriate decision to allay the concerns existing at present for the parties. It would be most unfair for PPL to lose out on revenue due to the public display of its copyrighted works when the CL has not yet been granted but solely contemplated. However, it also might just be the first time that, at an interim stage, the Court has issued directions for the payment of the licensing fee to the defendants (instead of directing the defendant to deposit the amount before the Court), especially given that the Court has yet to thoroughly analyse the case and is currently only operating on a prima facie assessment. This certainly raises questions about how far the DHC can go in issuing directions alongside the granting of an injunction. This order adds an important new dimension to the jurisprudence where interim injunctions and compulsory licensing intersect.