[Case Brief] Sholay Media and Entertainment Pvt. Ltd. and Ors. v/s Vodafone Essar Mobile Services Ltd. and Ors. – Delhi High Court

[Case Brief] Sholay Media and Entertainment Pvt. Ltd. and Ors. v/s Vodafone Essar Mobile Services Ltd. and Ors. – Delhi High Court

Brief facts and procedural history

Introduction to the parties-

The film Sholay was produced by Sippy Films, a proprietorship concern of Plaintiff No. 2.

Vide Gift Deed dated 14th September, 2000, all rights in the film Sholay were assigned/transferred by Plaintiff No. 2 to Plaintiff No. 1 and it is alleged in the plaint that Plaintiff No. 1 has been exploiting those rights across various verticals such as satellite broadcast, pay television, internet rights etc.

Defendant Nos. 1 and 2 are cellular service provider, which are also offering various value added services such as ringtones, true tunes, caller tunes internet radio etc. to their subscribers.

While Defendant Nos. 3 and 4 are Universal Music India Pvt. Ltd. and Phonographic Performance Pvt. Ltd., respectively, who were impleaded in the suit on the basis of the application filed by them; the suit has been contested by all the four Defendants.

Point of dispute-

Vide deed of assignment dated 7th August, 1978, the predecessor of the Plaintiff granted certain rights in the film Sholay to Polydor of India (now rights acquired by M/s Univeral Music India Pvt. Ltd.). The case of the Plaintiff is that the assignment extended only to (i) the right to make records for sale and distribution and (ii) the right to communicate the sound-recordings by way of radio broadcast, and the remaining rights were reserved by the predecessor of the Plaintiffs and they have continued to exploit those remaining rights. This is also their case that rights in respect of value-added services for mobile phones neither existed nor were in contemplation of parties at the time of assignment. It is alleged that Defendant Nos. 1 and 2 i.e. Vodafone Essar Mobile Services Ltd. and Vodafone Essar Ltd. have been commercially exploiting the copyright work of the film Sholay on mobile and digital platforms without obtaining any license or permission from Plaintiff No. 1 and are offering value-added products in the form of ringtones, true tones, callback/ringback/caller tunes etc. created from the soundtrack of the film Sholay to their subscribers, thereby infringing the copyright which the Plaintiff No. 1 holds in the film Sholay.

Relief Sought-

The Plaintiffs have sought injunction against infringement of their copyright in the film Sholay by the Defendants.

Issues before the court

Whether an absolute right to use the sound track, including songs and music by way of ringtones, true tones, callback/ringback/caller tunes etc (for the sake of convenience is hereinafter referred to as “digital rights”) were assigned to Polydor of India vide Assignment Deed dated 7th August, 1978 or the right to use sound track on digital and mobile platform continue to vest in the Plaintiff company?

Defending arguments by the defendants-

·       The Plaintiffs have no title to the sound-recording of the film Sholay since it stood assigned to Defendant No. 3 in the year 1978. They have disputed that the rights to them were confined to physical records and radio transmission.

·       Requisite royalty was paid to the plaintiffs for the rights assigned to them.

·       Defendant No. 3 executed a deed in title to Defendant No. 4, Phonographic Performance Pvt. Ltd., which is a company engaged in the business of carrying on copyright business of its members in sound-recordings and under that authorization, Defendant No. 4 has been authorized to administer recording and reproduction rights for ringtones in respect of the music catalogue of Defendant No. 3.

·       Another authorization Agreement is alleged to have been executed by Defendant No. 3 in favour of Defendant No. 4 in respect of broadcast/telecast/public performance/simulcast/webcast, true tones/master tones, ring back tones etc. Defendant No. 4 has been authorized by Defendant No. 3 to grant licenses to make, market and sell true tones/master tone/ring back tone etc, using sound-recording of Defendant No. 3.

·       Moreover, Plaintiff is guilty of latches as it did not come to Court for more than six months after receipt of letter dated 11th August 2010 from Universal wherein Universal had asserted its right for exploitation of the sound-recording of the film through digital media.

·       Plaintiff is guilty of suppression of material facts as it did not implead Universal as a Defendant while filing the suit.

Ratio of the judge

Section 18 of the Copyright Act, 1957 provides that the owner of the copyright in the work may assign, the copyright to any person, either wholly or partially and either generally or subject to limitations and either for the whole of the copyright or any part thereof. It further provides that where the assignee of a copyright becomes entitled to any rights comprised in any copyright, he becomes the owner of the copyright so assigned and in respect of the rights which are not assigned, the assignor is treated as the owner of the copyright.

It would thus be seen that the producer of the film Sholay could have assigned the copyright in the sound- recording of the film either wholly or partially. The rights could have been assigned for a particular duration or for a particular territory. The question as to whether the assignment to Polydor of India extended to all the rights in the sound recording or extended only to some of them would depend solely on the construction of the terms of the Assignment Deed.

After considering the various Clauses contained in the Assignment Deed, dated 7th August, 1978, in the light of other facts and circumstance of the case, it would be difficult to take a final view as regards the extent of the rights assigned to Polydor of India, under the Deed of Assignment dated 7th August 1978. There are certain clause in the assignment deed which indicate that the rights to use the sound-recording of the film Sholay on digital and/or mobile platform continued to vest in the assignor. Certain terms of the Assignment deed indicate that the intention of the parties was to assign all the rights in the sound-recording of the film Sholay to Polydor of India.

The documents filed by the parties show that vide letter dated 21st September 2010 Universal Music India Pvt. Ltd. sent a royalty statement from the period 1st October 2011 to 30th March 2010 to Sippy Films and along with a cheque of Rs. 20,16,535/- towards royalty due, as per the statement. The statement pertains to royalty of physical as well as digital and other media. The Plaintiffs vide their letter accepted the aforesaid cheque as part payment of royalty dues, but, did not claim that Universal had no rights to exploit the sound-recording through digital media. However, admittedly, royalty in respect of the use of the sound-recording through digital media was not remitted to the Plaintiff company prior to 21st September 2010.

Though it can be said against the Plaintiff that it accepted royalty in respect of digital media without any protest, the Defendants have also not explained why the royalty payment was not made within the time stipulated in the Deed of Assignment and why half yearly statement in terms of Clause 8(e) of the Deed was not sent to the Plaintiff. It has also come in evidence that the Plaintiff had earlier permitted Mobile 2 Win to use the sound-recording of the film Sholay through digital/mobile media, which made them available, on the network of Defendants No. 1 and 2 and Others. A perusal of the advertisement of Mobile 2 win would show that true tones/ringback tones of the film Sholay were available on Hutch predecessor of Vodafone, which shows that the Plaintiff company had exploited these rights through Mobile 2 Win at that time.

Admittedly, sound-recording of the film Sholay is already being used by the Defendants on digital/mobile platforms. The Assignment Deed provides for payment of specified royalty to the assigner. If the Plaintiffs assign right to use the sound-recording through digital/mobile media to some other person, they would be entitled only to royalty agreed with the assignee. During the course of arguments, it was informed by the learned Counsel for the Plaintiff that the Plaintiff Company has been offered 25% of the sale price as royalty for exploitation of the sound-recording through digital/mobile media. Even the Defendants did not dispute the right of the Plaintiff Company to get royalty in terms of the agreement between the Plaintiffs and Ploydor of India.

In these circumstances, the balance of convenience is in favour of allowing the Defendants to continue to use the sound recording through digital/mobile media while simultaneously safeguarding the financial interest of the Plaintiff company.

Moreover, since this is a case for infringement of the copyright, a delay of about six months in approaching the Court, cannot be said to be fatal to the Plaintiff as to disentitle it from seeking injunction against the alleged infringement. In this case, on the basis of circumstances, it cannot be said that the plaintiff company is guilty of suppression of material facts.

Decision of the court

Defendants 1 and 2 were directed to continue to use the sound-recording of the film Sholay through digital and mobile media subject to the conditions that the defendants will continue to pay royalty to the plaintiffs.  



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