TaxTMI 
TaxTMI 
2009 (4) TMI 1037
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....otograph of any image forming part thereof; (ii) to sell or give on hire or offer for sale or hire, any copy of the film, regardless of whether such copy has been sold or given on hire on earlier occasions; and (iii) to communicate the film to the public. 3. Film production, say the plaintiffs, is a complex, time consuming and costly process, needing a well defined distribution strategy for its commercial success. The plaintiffs refer to development of a well thought out distribution strategy to release the film on its completion, in different states. According to them, generally, the first phase entails release of the film on its completion, in different stages. This involves release of the film in theatres and/or cinema halls. After the film has run its course in the theatres and cinema halls, it is released in other formats and media such as home video, rental, cable and satellite TV. The time difference between the release in theatres and cinema halls and release on other formats may sometimes be separated by a few months and at times by a couple of years. This distribution strategy/system of release within the film industry is commonly referred to as "windows". 4. As the....
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....rmitted for sale or rental outside the US and Canada. 7. The plaintiffs allege that giving (a film) on hire or offering a film for hire without the copyright owner's license is an act of infringement. The plaintiffs allege that the defendant has no rental licenses in his favour and all such acts of rental amount to an act of infringement of copyright under the provisions Section 14 (d) (ii) read with Section 51 of The Copyright Act, 1957. The plaintiffs assert to being copyright owners and assignees of several such films. 8. It is alleged that DVDs are coded according to specific geographical zones. The DVDs meant for sale in the USA and Canada are Zone 1 DVDs. DVDs meant for sale in India are Zone 5 DVDs. Zone 1 DVDs are not authorized for sale or rental in Zone 5 countries like India. The DVDs stocked and rented by the Defendant are largely Zone 1 DVDs. The plaintiffs allege that the Defendant has a website at www.cinemaparadisoshop.com where it has been stated as under: First DVD store with all license Though DVDs are easily available, piracy is rampant, Cinema Paradiso is an exception. Great caution has been exercised to ensure that only ....
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....tances, the plaintiffs seek permanent injunction and damages. 12. The defendant, in the written statement, disputes that the plaintiffs can maintain the proceeding; it is alleged that being associates and affiliated companies of assignees or co-owners of copyright in films is insufficient to clothe the plaintiffs with authority to maintain the suit. Hence the plaintiffs cannot raise claims in respect of works for which they are not themselves the owners of the copyright. 13. The defendant submits that in the absence of statutory exceptions to the infringement of copyright of cinematographic films, common law exceptions such as fair use apply to cinematographic films. Accordingly, the hire or circulation of a cinematographic film cannot per se be infringement without considering the circumstances in which the hire or circulation is made or its purposes. 14. The defendant further submits that this Court should also take into account the Constitutional imperative that providing entertainment is a part of the fundamental right of freedom of speech and expression. Therefore, when a business seeks to exercise its fundamental right to provide entertainment as part of its freedom ....
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....utory exemption, in favour of such video libraries would render the said Act unconstitutional. 17. The Defendant states that there is no infringement of the copyright of the plaintiffs as it (the Defendant) purchases the DVD's/CD's from the authorized sources outside India. Since, such copies of those movies are purchased by the Defendant from authorized sources, there cannot be any violation of the copyright owned by the plaintiffs. 18. The plaintiffs rely on a list of movies in which they own or are assigned copyrights; they have also produced CDs. In addition, they rely on other documents such as a letter written by Cinema Paradiso, claiming that only original copies of DVDs and CDs, bought from foreign stores, were offered for renting. The plaintiffs have also placed on record receipts allegedly issued by the defendant cinema Paradiso to indicate the amounts claimed as rental fee, and caution deposit. Copies of web-shots of the defendant's website have also been relied on by the plaintiff. 19. Initially, this Court, at the stage of entertaining the suit, had issued notice on an application for appointment of local commissioner, and later, required the defen....
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....ve order. plaintiffs contentions 21. The plaintiffs submit that under the relevant part of Section 13, copyright is created on the production of a film, evident from the expression "copyright shall subsist" in all cinematograph films which are either first published in India or the author (producer) is a citizen of India. The plaintiffs contend that unlike trademarks and patents, existence of the right comes into being merely on creation. Trade mark rights are acquired by use or registration, patent and design rights require compulsory registration. For copyright protection, even on a world-wide basis, mere creation of the work is required. It is submitted that Section 40 extends copyright protection to all cinematograph films first published in a foreign country or the author (producer) is a citizen of a foreign country. The "foreign countries" are defined in the International Copyright Order, 1999. 22. The plaintiffs contend that the expression "copyright" connotes not one, but a bundle of rights. Section 14(1)(d) of the Act, thus spells out several rights. Under Section 14(d) the copyright owner has the exclusive right "to do or authorize the doing" any of the following....
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....ry to consider Section 2(m) (ii) of the Act, which defines "an infringing copy", as a copy which is "made or imported in contravention of the provisions of this Act". Thus, infringement is not restricted to the act of "making" but also extends to "importation". The main pre- condition is that such act should be in contravention of the provisions of "this Act" ie. the Copyright Act, 1957. 25. Elaborating what is "making" of a cinematograph film, the plaintiffs contend that the exclusive right to make or authorize the making a copy of a film is vested with the owner [Section 14 (d) (i) read with Section 17 (author shall be first owner) and Section 2(d) (author of a cinematograph film is the Producer) and Section 2(uu) (which defines who is a "producer")]. The act of "making or authorize the making" can be territorial in nature (Section 19(2) and Section 30A). A producer can therefore, authorize the making of a film in a particular territory only. It is submitted that reading the above provisions together, any copy of a film in which the producer has not assigned or licensed the right of making that copy in India, would be "in contravention of the provisions of "this Act", and ther....
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....bmitted that likewise, Section 52A (2)(b) will also have to be viewed from an Indian context and none of the films can have such a declaration. Violation of Section 52A makes the defendant liable under Section 68A. 29. It is submitted that in State of Andhra Pradesh v. Nagoti Venkataramanna 1996 (16) PTC 634 SC the Supreme Court held that: The object of amending the Copyright Act by amendment 65 of 1984, as noted above, was to prevent piracy which became a global problem due to rapid advances in technology. The legislature intended to prevent piracy and punish the pirates protecting copyrights. The law, therefore, came to be amended introducing Section 52A. Thereafter, the piracy of cinematograph films and of sound recordings etc. could be satisfactorily prevented. Moreover the object of the pirate is to make quick money and avoid payment of legitimate taxes and royalties. The uncertified films are being exhibited in a large scaled. Therefore, apart from increasing the penalty of punishment under law it also provides the declaration on the offence of infringement and video films to display certain information on recorded video films and containers thereof. It i....
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....k. The section therefore covers the cases where ....(b) the article was made abroad by a person who owned the copyright in that territory (but not in the UK) or who had a license in that territory (but not for the UK).... ....Thus the owner of the UK copyright, or the UK exclusive licensee, can object to the importation of and subsequent dealings in copies made abroad without his license. This is so even though the article made abroad were legitimately purchased there on the open market (so called "grey copies"), since the sale of articles in the ordinary course of business in one territory without restrictions on resale does not carry with any implied license to import and sell those articles in another territory. The purchaser obtains the same rights as the purchaser of any other chattel, and the rights which flow from acquisition and ownership do not involve any such implied license. UK copyright law has never recognized the principle of "international exhaustion", and is now bound by European Directive not to do so in relation to sales outside the EC. 32. Parallel imports or "grey imports" are banned in most countries around the world, say the plaintiffs. They....
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....ndant states that it does not "make" any copy. The original DVDs used by the Defendant can never be "infringing copies". 35. The defendant contends that Section 14 deals with various classes of works. In the case of original copyrightable works, namely, literary, musical, dramatic or artistic works even issuance of the copies to the public is an exclusive right exercised by the owner. However this right does not apply in relation to cinematograph film and sound recordings since they are derivative works, which embody original works. In the case of cinematograph films and sound recordings, the exclusive rights of the owner are restrictive in nature. Even in relation to original literary works once a copy is in circulation, no rights can be exercised by the owner. This is also clear from the Explanation to the section itself. Once a sale is made, it is clear that the owner cannot exercise control. It is submitted that, for instance, once a rental Copy is sold in the USA to a Rental library the owner would not be entitled to prescribe the price on which the video library will rent the said DVD. Any contrary interpretation would mean that owners have a "long hand control" on the DVD....
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....s Act, 1999, which are as follows: Section 30: ... (1) ... (2) ... (3) Where the goods bearing a registered trade mark are lawfully acquired by a person, the sale of the goods in the market or otherwise dealing in those goods by that person or by a person or by a person claiming under or through him is not infringement of a trade by reason only of - (a) the registered trade mark having been assigned by the registered proprietor to some other person, after the acquisition of those goods: or (b) the goods having been put on the market under the registered trade mark by the proprietor or with his consent. (4) Sub-section (3) shall not apply where there exists legitimate reasons for the proprietor to oppose further dealings in the goods in particular, where the condition of the goods has been changed or impaired after they have been put on the market. 38. The Notes on Clauses, to the above provision, say the defendants, specifically state that the section recognizes the principle of "exhaustion of rights". It also specifically states that marketing of goods in a geographical area....
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....l exhaustion is prescribed, it has been by means of a conscious amendment in their Act. Examples of such nations are U.K. Australia and New Zealand. 40. The plaintiffs in this case have submitted that the DVDs contain the zone numbering i.e. Zone 1, Zone 2, etc. These zones indicate that they have to be used in a particular territory. The defendant submits that zoning is a matter of convenience in terms of technology and not a copyright notice, as claimed by the plaintiffs. The mere mention of zone 1 does not either expressly or impliedly mean that the said DVD cannot be used or sold in a Zone 2 territory. It is a convenient method of informing retailers and purchasers about technologies and compatibility and is not to be construed as a limitation in the negative i.e. if it is a PAL DVD there is no bar on using it in a NTSE environment so long as it is technically feasible and possible. At best zoning, say the defendants, is a way of asserting market dominance rather than enforcing an Intellectual property right. None of the Rental DVDs available and openly sold in the USA have a prohibition on renting outside of the USA. If the copyright owner does not put conditions on the DVD....
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....portation market in copyright protected goods of the same description, for then reasonable traders will expect to be able to do likewise. (3) ... (4) In cases where prima facie an implied licence would exist, a rights owner who wishes to exclude parallel imports should give timely and adequate notice, eg by labeling or general warning to the trade, to prevent traders being taken unawares. If he fails to take this precaution he may not be able to oppose parallel imports.... In fact there is neither any prohibition nor any specific stipulation in the Indian statute prohibiting import of genuine rental copies. In view of the absence of such express prohibition the Principle of International Exhaustion has to be incorporated into the statue in as much as Article 6 of the TRIPS specifically recognizes the right of nations to apply principles of Exhaustion as they deem fit. In India, as a principle of public policy International Exhaustion of IPRs has been recognized and copyright is no exception to that. The provisions of the Act have to be read in a manner so as to recognize international exhaustion and not in a manner inconsistent with that....
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....ough its statement of objects and reasons, felt it necessary to spell out the rights of Copyright owners and limitations under which they could enjoy such rights through a self-contained law on the subject "in the light of growing public consciousness ... and in the light of experience gained in the working of the existing law during the last 50 years". Parliament also took note of emerging technology in 1957 and new developments to fashion the terms of the new enactment. Unlike other laws, the definition clause does not define copyright, instead it is left to Section 14 to spell out what is copyright, in relation to different activities or creative manifestations such as literary works, dramatic or musical works, computers programs, artistic works, cinematographic films, sound recording etc. 43. Copyright, under Section 14 is declared as the "exclusive right" - "subject to provisions of the Act, to do or authorize any of the ..... acts in respect of a work or any substantial part thereof"; after which the various rights in respect of each class of work, be it literally, dramatic or musical [Section 14 (a)] ; computer programs [Section 14 (b)]; artistic works [Section 14 (c)]; c....
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.... authorised by him, to the exclusion of all other persons (including the owner of the copyright), any right comprised in the copyright in a work, and "exclusive licensee" shall be construed accordingly. Section 2 (m) defines infringing copy as follows: (m) "infringing copy" means,- (i) In relation to a literary, dramatic, musical or artistic work, a reproduction thereof otherwise than in the form of a cinematographic film; (ii) In relation to a cinematographic film, a copy of the film made on any medium by any means; (iii) In relation to a sound recording, any other recording embodying the same sound recording, made by any means; (iv) In relation to a programme or performance in which the such a broadcast reproduction right or a performer's right subsists under the provisions of this Act, the sound recording or a cinematographic film of such programme or performance, If such reproduction, copy or sound recording is made or imported in contravention of the provisions of this Act;]. 45. Section 3 and 4 spell out the circumstances in which publication of a work is deemed or not deemed t....
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....arate copyright in any work in respect of which a substantial part of which, the film, or as the case may be, the [sound recording] is made. (5) In the case of a work or architecture, copyright shall subsist only in the artistic character and design and shall not extend to processes or methods or construction. 14. Meaning of copyright- For the purposes of this Act, "copyright" means the exclusive right subject to the provisions of this Act, to do or authorise the doing of any of the following acts in respect of a work or any substantial part thereof, namely: (a) In the case of a literary, dramatic or musical work not being a computer programme,- (i) to reproduce the work in any material form including the storing of it in any medium by electronic means; (ii) to issue copies of the work to the public not being copies already in circulation; (iii) to perform the work in public, or communicate it to the public; (iv) to make any cinematograph film or sound recording in respect of the work; (v) to make any translation of the work; (vi) to make any adapta....
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.... first published in any territory outside India to which the order related in like manner as if they were first published within India; (b) To unpublished works, or any class thereof, the authors whereof were at the time of the making of the work, subjects or citizens of a foreign country to which the order relates, in like manner as if the authors were citizens of India; (c) In respect of domicile in any territory outside India to which the order relates in like manner as if such domicile were in India; (d) To any work of which the author was at the date of the first publication thereof, or, in case where the author was dead at the date, was at the time of his death, a subject or citizens of foreign country to which the order relates in like manner as if the author was a citizen of India at that date or time, and thereupon, subject to the provisions of this Chapter and of the order, this Act shall apply accordingly. Provided that - (i) before making an order under this section in respect of any foreign country (other than a country with which India has entered into a treaty or which is a party to a convention relating to ....
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....s either for the purposes of trade or to such an extent as to affect prejudicially the owner of the copyright, or (iii) By way of trade exhibits in public, or (iv) Imports [***] into India, any infringing copies of the work: [Provided that nothing in Sub-clause (iv) shall apply to the import of one copy of any work, for the private and domestic use of the importer.] Explanation - For the purposes of this section, the reproduction of a literary, dramatic, musical or artistic work in the form of a cinematograph film shall be deemed to be an "infringing copy". 47. It would be apparent from the above discussion that "cinematograph films" are defined in wide terms under Section 2 (f); in relation to them the producer is deemed to be an author [Section 2 (d) (v)]. By virtue of Section 13, copyright mandatorily subsists throughout India - subject to the conditions spelt out in that provisions and other parts of the Act, in relation to cinematographic films [Section 13 (b)]. Section 13 (2) spells out the conditions that copyright will not subsist unless the work first published in India or where the work is first published outs....
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....inematographic films, copyright would mean the doing or authorizing the doing- in respect of work (i.e. the cinematographic films) or any substantial part thereof - (i) making a copy of the film including the photograph of any image forming part thereof; (ii) selling or giving on hire or offer for sale or hire any copy of the film regardless of whether such copy has been sold or given on hire on earlier occasions, (iii) to communicate the film to the public. The explanation states that "for the purposes of this Section, a copy which has been sold once shall be deemed to be a copy already in circulation. 49. More than 30 years ago, in Indian Performing Right Society v. Eastern Indian Motion Pictures Association and Ors. [1977]3SCR206 , evocatively described copyright in a film as a "felicitous blend, a beautiful totality, a constellation of stars ..... that ensemble which is the finished produced orchestrated performance by each of the several participants, although the components may, sometimes, in themselves be elegant entities." In the earlier part of the judgment the Supreme Court likened the various rights - to the lyrics, music, screenplay and still photographs, other desig....
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....of performing the work in public i.e. to cause the film in so far as it consists of visual images to be seen in public and in so far as it consists of the acoustic portion including a lyric or a musical work to be heard in public without securing any further permission of the author (composer) of the lyric or musical work for the performance of the work in public. In other word, a distinct copyright in the aforesaid circumstances comes to vest in the cinematograph film as a whole which in the words of British Copyright Committee set up in 1951 relates both to copying the film and to its performance in public. Thus if an author (composer) of a lyric or musical work authorises a cinematograph film producer to make a cinematograph film of his composition by recording it on the sound track of a cinematograph film, he cannot complain of the infringement of his copyright if the author (owner) of the cinematograph film causes the lyric of musical work recorded on the sound track of the film to be heard in public and nothing contained in Section 13(4) of the Act on which Mr. Ashok Sen has strongly relied can operate to affect the rights acquired by the author (owner) of the film by virtue ....
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....tion are synchronized. 50. The bundle of copyrights does not only relate to the content of the film - it extends to the 'doing' or 'authorizing the doing' of: 1. making copies of the films or photographs of the images; 2. sell, or offer for sale any copy of the film, regardless of whether such copy has been sold or hired earlier; 3. give on hire, or offer for hire, any copy of the film regardless of whether such copy has been sold or given on hire earlier; 4. to communicate the film to the public. The "bundle of exclusive rights", thus has the widest content. In films, it includes making copies - which can extend to any medium, VCDs, DVDs, HDDs, or Blue Ray format, Video Cassettes, or any other form enabled through technologies. Section 17 declares that subject to provisions of the Act, the author of a work [which includes a film, by Section 2 (y) (ii)] is the first owner of the copyright in it. Due to Section 17 (c), unless there is a contract to the contrary, copyright in the work of an employee - in the case of films - vests in the employer. By reason of Section 18, a copyright owner can assi....
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....stributes either for the purposes of trade or to such an extent as to affect prejudicially the owner of the copyright, or... (iv) Imports [***] into India, any infringing copies of the work: [Provided that nothing in Sub-clause (iv) shall apply to the import of one copy of any work, for the private and domestic use of the importer.+" The definition of "infringing copy" under Section 2(m) makes it clear that the reproduction, copy or sound recording made or imported in relation to a copy, is deemed to be an infringing copy. 52. In respect of works published outside India, Section 40 enables the Central Government to, by order, publish in the Official Gazette, and direct that all or any provisions of this Act, shall apply (in relation to) .... works "first published in any territory outside India to which the order related in like manner as if they were first published within India" . The Central Government, pursuant to this enabling power, published the International Copyright Order, 1999 (hereafter "the Order") which states, by Para 3 that "Subject to the provisions of paragraphs 4,5 and 6, all the provisions of the Copyright Act, 1957 (14 of 1957),....
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.... had parted with the title to one who had acquired dominion over it and had given a satisfactory price for it? It is not denied that one who has sold a copyrighted article, without restriction, has parted with all rights to control the sale of it. The purchaser of a book, once sold by authority of the owner of the copyright, may sell it again, although he could not publish a new edition of it. In this case the stipulated facts show that the books sold by the appellants were sold at wholesale, and purchased by those who made no agreement as to the control of future sales of the book, and took upon themselves no obligation to enforce the notice printed in the book, undertaking to restrict the retail sales to a price of one dollar per copy. 55. The next decision was Quality King Distributors, Inc. v. L'anza Research International, Inc. 523 U.S. 135 (1998). L'Anza's products, mostly cosmetics, were priced higher in US markets than in others. It used to distribute them through distributors networked zonally. Some of its products were imported to Malta; three of those shipments found their way back to the US, and were sold through unauthorized retail networks. L'Anza s....
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....this title has the exclusive rights to do and to authorize any of the following: (1) to reproduce the copyrighted work in copies or phonorecords; (2) to prepare derivative works based upon the copyrighted work; (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and "(6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission. Section 109(a) Notwithstanding the provisions of Section 106(3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owne....
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....sent of the owner as a result of the transfer of ownership. In this way, the owner is in control of the distribution of copies since he decides the time and the form in which copies are released to the public. Content-wise the distribution right are to be understood as an opportunity to provide the public with copies of a work and put them into circulation, as well as to control the way the copies are used. The exhaustion of rights principle thus limits the distribution right, by excluding control over the use of copies after they have been put into circulation for the first time. 59. As seen in the earlier discussion, L'Anza was decided in the context of a "round trip" transaction of products, sold unauthorizedly after importation, although exported by legitimate means. The decision was premised on the interplay between Section 106(3); 109, 501 and 602 of the US Copyright Act. In the US, there is a clear provision embodying out the "exhaustion" principle. It is said that the US, by virtue of its laws, follows the "international exhaustion" principle, where once a copyright owner places his product in the market, he loses the right to restrict or exercise domain or control o....
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....hen the "trade" taking place, or the "but commercial" being sought, concerns the work itself; when the trade is a trade in some consumer good with which the work is only incidentally related, para. (c) is not triggered... 93 Each of paras. (a) to (c) must be interpreted in a manner consistent with the view that Section 27(2) is meant to protect authors from the unauthorized appropriation of the gains of their authorship; 61. The Canadian Supreme Court significantly noted the difference in language between its statute and the US laws. The principle of exhaustion, therefore, has to depend on the structure of the enactment. In the US, for instance, the relevant provision of the Copyright Act, (similar, if one may like it so to Section 14) is Section 106. It empowers the copyright owner to exploit various rights. Yet, it is expressly subject to other provisions; notably Section 109, which states that: Notwithstanding the provisions of Section 106(3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose ....
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....r by the projection of no more than one image at a time, to viewers present at the place where the copy is located. In a recent decision, Brilliance Audio, Inc v. Haights Cross Communications, 474 F. 365 (2007) (US Court of Appeals for the Sixth Circuit) it was held that: ....In passing the record rental exception, Congress made a specific policy choice that personal property rights in a certain type of work- sound recordings of musical works- should give way to ensure that copyright owners receive the protections envisioned by the Copyright Act as a whole. 29. By doing this, Congress effectively altered the traditional copyright bargain and extended the copyright monopoly for a limited set of works. In order to protect the bargain between copyright owners and personal property owners, we will not construe this exemption from the first sale doctrine any more broadly than explicitly mandated by Congress..." The court is of opinion therefore that the existence or applicability of the "exhaustion" principle cannot be inferred automatically; it would have to depend on the situation, and the structure of the legislation in question. 63. The defe....
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....e copyright owner of other kinds of work, to place such restrictions. 64. The second reason is that Section 14(1)(d) provides that the copyright owner has, in case of cinematographic films, the exclusive right to sell or give on hire or offer for sale or hire, any copy of the film, regardless of whether such copy has been sold or given on hire on earlier occasion. The copyright owner, therefore continues to be entitled to exercise rights in a particular copy of the film regardless of whether it has been sold previously- in express contrast to literary works, which are "already in circulation". This is reinforced by Section 51 (b) (i), which unambiguously provides that copyright in a work shall be infringed if a person does anything the exclusive right do which is by the Act, conferred upon the owner of the copyright; it is also emphasized by Section 51(b) (i) which makes for sale or hire, or sells or lets for hire, or by way of trade displays or offers for sale or hire, any infringing copies of the work. The proviso, crucially, exempts from the definition importation of a single infringing copy for "the private and domestic use of the importer". As noted earlier, importation int....
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....ion 51 (a) (i), other provisions, such as Section 51 (a) (ii), Section 51 (b) (i), (ii) and (iii)all emphasize the commercial character of the prohibited behavior, which constitutes "infringement". Each of these clauses talks of either sale, hire, "for trade" or distribution "for trade"; or exhibits "for trade", or permission of use of the copy for communication of the work to the public "for profit". The underlying theme, uniformly is that whenever the activity seeks to profit from the copy, or work, or uses it commercially, contrary to the terms of the copyright owner's permission, or authorization, or without his permission or license, infringement occurs. Correspondingly, wherever the use is not commercial, or does not amount to the prohibited degree, the alleged infringer can potentially argue that in fact, there is no infringement. 67. The express indication in Section 14(a)(ii) that a copyright owner of literary works cannot exercise domain over copies in circulation, shows that exhaustion, if one may term it, applies only in relation to the class of copyrights in Section 14(a) and to the extent specified in Clause (ii). Thus, the copyright owner of a literary work, c....
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....omputer programmes, authorizing such owners to prohibit or permit such rentals. Such obligation does not exist, in relation to cinematographic works. However, the existence of such exclusive copyright in respect of rental copies, or the right to authorize the hiring of copies, in the Copyright Act, 1957, by virtue of Section 14(d) is undeniable. 69. In view of the foregoing reasons, Issue Nos 1 and 3 are concluded against the defendant. It is held that importation of rental copies for purpose of rental use or hiring, and in respect of CDs, DVDs, etc of cinematograph films for which the plaintiffs have not issued rental licenses, without the plaintiffs' license or authorization, for commercial use, or profit, or for hiring or rental, constitutes infringement under Section 51 (a)(i) as well as Section 51 (b) (iv). Issue No. 2 (2) Whether the importation into India by the Defendant for giving on hire or rent in India copies of cinematograph films authorized for sale or rental in a particular territory outside India, in which cinematograph films the plaintiff claims copyrights, constitutes infringement of copyright under Section 51(b) (iv) i.e. importatio....
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....iate- Professor of Commercial Law, University of Auckland, describes the phenomenon thus: Parallel importing or grey market importing occurs when a business organisation in a country obtains products directly from licensed or authorised sources outside that country's borders, by-passing any authorised domestic suppliers or licensees. As, Rothnie ( W Rothnie, Parallel Imports (Sweet & Maxwell, London 1993)) aptly describes the process: Some enterprising middleman buys stocks in [a] cheaper foreign country and imports them into [a] dearer domestic country. Hence, the imports may be described as being imported in 'parallel' to the ... distribution network [as set up and authorised by the intellectual property right owner+. The result of parallel importing copyrighted products through non authorised channels is to place those parallel imported products (which, it needs to be emphasised, are not pirate copies but items lawfully made and put into circulation in a foreign country with the permission of the copyright holder) into competition with the very same goods produced or imported through exclusive channels established by the c....
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....iers to entry reinforced by both civil and criminal sanctions. Under the principle of international exhaustion, once a legal copy of a product has been put into circulation somewhere in the world with the consent of the right owner, the rights in relation to that copy are exhausted. Hence any authorised first making available, wherever it is in the world, exhausts the owner's rights. There also exists the hybrid principle of regional exhaustion best exemplified by the European Economic Area (EEA) where a number of countries treat themselves as one economic entity so that re-sale rights are considered exhausted if products are first distributed anywhere within that trading block. 73. In the previous discussion, the court had noted Section 11(2) of the Customs Act, and the prohibition of importation, by virtue of the guidelines which inter alia, mandate that (i) "The importer of the film shall comply with the provisions of all applicable Indian laws governing the distribution and exhibition of films, including the requirement of obtaining a certificate of public exhibition prescribed under the Cinematograph Act, 1952." and bans import of unauthorized films : "(iii) import of a....
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....inged. Any importation of infringing copies is therefore an infringement unless it is for the importer's own use. American books may be lawfully published in America. But when the copies of those publications are imported into this country, an action for infringement would lie in this country against the importer in respect of those copies. An action would also lie against any person who for instance sold or distributed such copies here. Because the books have been imported and sold without the licence of the owner of the copyright or his exclusive licensee. 23. "Infringing copy" is defined in Section 2 (m) . An infringing copy means a copy "imported in contravention of provisions of the Act." The central provision in Section 51 which says that copyright shall be deemed to be infringed where any person without a licence granted by owner of the copyright "does anything, the exclusive right to do which is by this Act conferred upon the owner of the copyright." The owner of the copyright or his licensee has the "exclusive right" of printing, or otherwise multiplying, publishing and vending copies of the copyrighted literary production in India. India Distributors ar....
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....as amended by the Copyright (Amendment) Act 1983) . The Act treats infringement of copyright as "infringement of a right" in property. Copyrights considered as unique forms of property and monopoly, are essentiality pecuniary rights. In its most elementary form copyright means "the exclusive right to multiply copies of a book. XXXXXXXX XXXXXXXXX 37. While publication generally refers to issue to public, importation for the specified purpose may be a necessary step in the process of issuing to the public, and therefore of publishing. It appears to me that the exclusive right of Penguins to print, publish and sell these titles in India would extend to the exclusive right to import copies into India for the purpose of selling or by way of trade offering or exposing for sale the books in question. [Time-Life (supra) p. 267]. This is the true meaning of the word 'publish' as used in Section 14 (1) (a) (ii) . 38. It is also an infringement of copyright knowingly to import into India for sale or hire infringing copies of a work without the consent of the owner of the copyright, though they may have been made by or with the consent of th....
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....ies. The Single Judge of the High Court, made an interim order permitting the appellant to inspect the consignment of cassettes and if any of the cassettes were thought to infringe the its copyright, they were to be kept apart until further orders of the Registrar. After causing the necessary inspection to be made, the Registrar was directed to deal with the application under Section 53 of the Copyright Act in accordance with law after hearing interested parties. The Registrar was directed to deal with the application within eight weeks from the date of the High Court's order. In the event of any of the cassettes held back by the appellant being found not to infringe any provision of the Copyright Act, the appellant was to pay damages as assessed by the Court. 76. The consignee appealed against the Single judge's order; a Division Bench held that the word "import" did not merely mean bringing the goods into India, but comprehended something more, that is, "incorporating and mixing, or mixing up of the goods imported with the mass of the property in the local area". The learned Judges thought it would be wrong to say that there was importation into India, the moment the g....
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....s of that Act shall not vest in the Government, but shall be delivered to the owner of the copyright. 27. The question is what does the word 'import' mean in Section 53 of the Copyright Act ? The word is not defined in the Copyright Act though it is defined in the Customs Act. But the same word may mean different things in different things in different enactments and in different contexts. It may even means different things at different places in the same statute. It all depends on the sense of the provisions where it occurs. Reference to dictionaries it hardly of any avail, particularly in the case of words of ordinary parlance with a variety of well- known meanings. Such words take colour from the context. Appeal to the Latin root won't help. The appeal must be to the sense of the statute. Hidayatullah, J. in Burmah Shell v. Commercial Tax Officer [1961]1SCR902 has illustrated how the contextual meanings of the very words 'import' and 'export' may vary. 28. We may look at Section 53, rather than elsewhere to discover the meaning of the word 'import'. We find that the meaning is stated in that provision itself. If w....
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....pyright Act cannot bear the narrow interpretation sought to be places upon it to limit it to import for commerce. It must be interpreted in a sense which will fit the Copyright Act into the setting of the international conventions. 30. The Calcutta High Court thought that goods may be said to be imported into the country only if there is an incorporations or mixing up of the goods imported with the mass of the property in the local area. In other words the High Court relied on the 'original package doctrine' as enunciated by the American Court. Reliance was place by the High Court upon the decision of this Court in the Central India spinning and Weaving & Mfg. Co. Ltd., the Empress Mills, Nagpur v. Municipal Committee, Wardha [1958]1SCR1102 . That was a case which arose under the C.P. and Berar Municipalities Act and the question was whether the power to impose "a terminal tax on goods or animals imported into or exported from the limits of a municipality" included the right to levy tax on goods which "were neither loaded nor unloaded at Wardha but were merely carried across through the municipal area". This Court said that it did not. The word 'import....
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.... 32. We have, therefore, no hesitation in coming to the conclusion that the word 'import' in Sections 51 and 53 of the Copyright Act means "bringing into India from outside India", that it is not limit to importation for commerce only, but includes importation for transit across the country. Our interpretation, far from being inconsistent with any principle of international law, is entirely in accord with International Conventions and the Treaties between India and Nepal. And, that we think is as it should be. 33. We have said that an order under Section 53 may be made by the Registrar of Copyrights on the applications of the owner of the copyright, but after making such enquiry as the Registrar deems fit. On the order being made the offending copies are deemed to be goods whose import has been prohibited or restricted under Section 11 of the Customs Act. Thereupon the relevant provisions of the Customs Act are to apply, with the difference that confiscated copies shall not vest in the Government, but shall be delivered to the owner of the copyright. One fundamental difference between the nature of a notification under Section 11 of the Customs Act and a....
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....ate and domestic use of the importer" This would mean that the proviso allows for the importation of an infringing work, for private and domestic use of the importer, and not commercial use. 78. The defendant's argument that the plaintiffs lost the power to deal with the copy, once placed in the market place, in the United States, is also unsupportable as too broad a proposition. In the context of the Act, the argument is more hopeful, than convincing. Even in the United States, it has been held (United States v. Wise 550 F 1180 9 Cir. 1977 that though, after "first sale," a vendee "is not restricted by statute from further transfers of that copy", yet a first sale does not, however, exhaust other rights, such as the copyright holder's right to prohibit copying of the copy he sells. The Federal Appellate court noted that "other copyright rights (reprinting, copying, etc.) remain unimpaired". It is clear therefore that the copies in question are infringing copies. Therefore, their importation, and more importantly, use for any of the purposes under Section 51, other than the one spelt out in it the proviso is in contravention of the Act. The question, however, is whether ....
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....Bank Ltd. v. United Yarn Tex (P) Ltd. AIR2007SC1584 . It is well settled that the language of the statutes is to be properly understood. The usual presumption is that the legislature does not waste its words and it does not commit a mistake. It is presumed to know the law, judicial decisions and general principles of law. The elementary rule of interpretation of the statute is that the words used in the section must be given their plain grammatical meaning. Therefore, we cannot afford to add any words to read something into the section, which the legislature had not intended. 80. Apart from the issue of parallel importation, and the lack of authority to import and hire the DVDs, there is, in the opinion of the court, one vital consideration which negatives the defendant's argument. Section 52A of the Copyright Act reads as follows: 52A. PARTICULARS TO BE INCLUDED IN SOUND RECORDING AND VIDEO FILMS. (1) No person shall publish a sound recording in respect of any work unless the following particulars are displayed on the sound recording and on any container thereof, namely: (a) the name and address of the person who h....
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....hased by the defendant is permitted, it would hinder the right to carry on business, guaranteed under Article 19(1) (g) of the Constitution of India and consequently, in public interest, the court must adopt an interpretation that would further such fundamental right, not extinguish it. 83. The plaintiffs counter the defendant's plea, and says that a challenge to the validity of the Copyright Act is beyond the scope of this litigation. It is argued that in any event the Union is not a party to the litigation. The plaintiff also say that assertion of intellectual property rights by the copyright owner, and their enforcement, does not constitute infringement of anyone's fundamental rights, much less that of an infringer. 84. The plaintiffs are correct in saying that the validity of copyright law, is beyond the scope of this litigation. However, the issue is whether the interpretation urged by it is inconsistent with any Constitutional provisions. 85. It has been recognized, in the United States, for instance, that there exists a seeming tension between copyright and certain rights; most notably, free speech. Yet, the express terms of the US Constitution enjoin Congre....