Al Hamd Tradenation v. Phonographic Performance Limited

Citation: C.O.(COMM.IPD-CR) 8/2024, I.A. 33181/2024 & I.A. 33182/2024

Date of Judgement: 13.05.2025

Judge: Justice Mini Pushkarna 

Facts

Al Hamd Tradenation (“The Petitioner”), an event organising company based in Delhi, was planning an event for 50 people at Hotel Lutyens, Delhi, where it intended to play some copyrighted music. The Petitioner was informed to apply for a music license from Phonographic Performance Limited (“the Respondent”), a sound recording repertoire company, and that the license fees would be INR 49,500 for an event of 1-150 persons. The Petitioner then checked the Respondent’s website and found that the license fee for an event of 1-150 people was INR 55,440. 

The Petitioner wrote to the Respondent, informing them that, as their event was only for 50 people, they were offering to pay one-third of the license fee, at the rate of INR 16,500. The Respondent refused to issue the license and filed a copyright infringement suit against the Petitioner. Thereafter, the Petitioner, being aggrieved by the arbitrary rates of license fee being charged by the Respondent, filed a case for the grant of a compulsory license and determination of a fair license rate.

Issue

Whether a copyright owner or a licensing society’s insistence on an allegedly excessive and inflexible license fee can amount to a “refusal to license” under the Copyright Act? 

Law

• Section 31 of the Copyright Act, 1957

• Rules 6-8 of the Copyright Rules, 2013

  
  

Analysis

The Petitioner contended that demanding an unreasonable license fee for repertoire of sound recordings amounts to a refusal to republish or allow the performance of the works in public. It was further argued that such demands deprive the public of the sound recordings owned by the Respondent. 

On the other hand, the Respondent contended that as it is the owner of copyright in the sound recordings, it is entitled to determine the rate of license fees. Further, Section 31 (relating to the grant of compulsory licenses) only applies where works have been withheld from the public, but in the Respondent’s case, the works are being freely licensed to multiple entities, including restaurants and hotels. Moreover, the license being sought by the Petitioner was to ‘perform the work in public’ which is limited to literary, dramatic, and musical works, and does not extend to sound recordings. The Respondent’s main argument was that Section 31(1) is limited to the grant of licenses for communication to the public by way of broadcast, and thus it does not extend to the performance of work.

The Delhi High Court rejected the Respondent’s arguments. Firstly, it observed that by jointly reading the words ‘work’, ‘sound recording’, and ‘publication’, it can be concluded that ‘communication to the public’ includes ‘performance in public’, including performance of sound recordings. Thus, Section 31(1)(1) also extends to sound recordings.

Secondly, on the point of compulsory licensing, the court laid down the following five propositions:

1. The Copyright Act maintains a balance between the private interests of copyright owners and the interests of the public to have access to the work.

2. While the owner has exclusive rights in his work, the public has a “substantial interest” in its availability.

3. Compulsory licenses act as an exception to freedom of contract.

4. Since only a few sections of society have access to the work, others may still apply for a compulsory license.

5. As copyright is akin to the right to property, it is not a fundamental right and may be subject to restrictions.

   
   

The court discussed the Supreme Court case of Entertainment Network (India) Limited Versus Super Cassette Industries Limited, (2008) 13 SCC 30, wherein it was held that, irrespective of an offer for negotiation/ grant of license, the work may still be withheld from the public. A downright refusal is not necessary under Section 31(a). If the offer to make the work available is on unreasonable terms, it may amount to refusal. The court is entitled to check for abuse of monopoly by barring arbitrary and unreasonable license fees. In such cases, the court has the authority to direct the grant of compulsory licenses.

In the present case, the fees charged by the Respondent were higher than the prevailing standards in the marketplace. Therefore, the court found the application for the grant of a compulsory license to be meritorious.  

Conclusion

The grant of compulsory licenses serves the core function of intellectual property law of finding the balance between private interests (in terms of having exclusive commercial exploitation rights over the work) and the public interests (of having access to the work). By interpreting the term ‘refusal’ under Section 31 in a broader sense through the inclusion of the charging of arbitrary and unreasonable practices, and refuting the traditional understanding of a ‘downright’ refusal, the court has championed this fundamental principle of IPR.