Tuesday, December 6, 2022
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Why India needs to modernise its copyright laws for the digital era

The Covid-19 pandemic has made the shift to digital an imperative, and has rekindled numerous debates on copyright on the internet.

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The Registrar of Copyrights recently invited comments from industry stakeholders on amending the Copyright Act 1957, recognising that creative “industries are performing and evolving in the light of changes brought about by use of internet, digitalisation and an increasingly globalised market for digital content. This development provides India an opportunity to realign its priorities for creation and distribution of creative content online, under a durable legal framework.

India’s content consumption is moving online at a steady pace. About 95 per cent of Indian consumers listen to music via on-demand streaming, according to the Music Consumer Insight Report, 2018 released by the International Federation of the Phonographic Industry. Consumers are also warming up to OTT platforms as a means to access films and television series. A FICCI-EY report on Media & Entertainment in 2020 notes that subscription to OTT platforms doubled in 2019. Their contribution to total digital segment revenues increased from 3.3 per cent in 2017 to 13 per cent in the same year. Wide internet penetration, low data prices, and a proliferation of smartphone users are responsible for this shift in consumer behaviour. The Covid-19 pandemic has made the shift to digital an imperative, and has rekindled numerous debates on copyright on the internet.


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Balancing twin objectives of copyright

Copyright aims to strike a balance between incentivising creators to generate more content, and maximising public access to them. To encourage innovation, the Copyright Act provides a voluntary licensing mechanism, which allows the copyright owner to make his/her works available to the public at different prices. At the same time, the Act contains mechanisms that can ensure access to content in case of market failure. For example, compulsory licensing provisions protect against the monopolisation of content by copyright owners. Copyright is also subjected to a limitation period of 60 years for most content in India, so that they become freely accessible after the creator has had the opportunity to monetise it. ‘Fair use’ exceptions protect such works from infringement suits if they are being accessed for private use, research, academic or journalistic purposes, among other things. These examples demonstrate how the copyright regime enables commercial exploitation while balancing public interest.

The economic efficiency of copyright is maintained when the benefits to create additional content outweigh the cost of restricting access, according to scholars William M. Landes and Richard. A Posner. However, the growth of the internet disrupted the balance between incentives and access to new creative content. This is because the digitisation of copyright industries, such as print and audio-visual media, lowered distribution costs, removed entry barriers to the market and diminished returns on creative content. While this is a boon for audiences and consumers, it has also made it difficult for creators and to thrive in an increasingly competitive market. The accessibility of content on the internet necessitates a move towards a modern copyright regime that reinstates the incentive to create new content.

Recent government action to prescribe a mandatory data sharing regime and extend statutory licensing beyond its legislative intent, are examples of state intervention that threatens to dilute copyright protection. These changes ignore the balance between incentives and access under the Copyright Act, by enabling access and use of intellectual property, bypassing the need to negotiate with copyright holders.


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Copyright and Datasets

Several entities that operate in the digital ecosystem store their data in datasets. Such datasets are the intellectual property of the entities which collect, create, and process data. In 1994, India amended Section 2(o) of the Copyright Act to protect databases, in line with its obligations under the TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement. India provides this protection to “compilations of data which exhibit creativity in the selection and arrangement of data as a ‘literary work’, according to the agreement. However, recent policymaking efforts such as the Draft National E-Commerce Policy, 2019 and the Draft Non-Personal Data Governance Framework appear to be in conflict with international obligations and domestic copyright law.

Specifically, the Draft E-Commerce Policy and the Draft NPD Framework both make references to the mandatory sharing of proprietary data. They highlight that large platforms possess vast amounts of data and enjoy outsized benefits due to network effects, which are analogous to economies of scale in traditional markets. Therefore, both the frameworks suggest mandatory data sharing as a remedy to level the playing field between start-ups and larger enterprises in the digital sphere. However, in the explainer on non-personal data, we caution that the Draft NPD framework proposes to regulate non-personal data without appreciating its intellectual property aspects, which can have a detrimental effect on innovation and public interest. The Draft National E-Commerce Policy suffers from similar infirmities.

Generating value from datasets involves considerable investment of time and resources. It also requires creativity in identifying relevant data and arranging it in a manner that allows entities to derive more information and shape their strategies. For example, ride-sharing companies like Uber and Ola analyse traffic data collected by their vehicles to predict demand according to location, time and day. This enables them to manage their fleet and provide better services to their customers. The effort involved in organising data has also been noted by the judiciary. In The Himalaya Drug Co. vs Sumit (2005), the Delhi High Court observed that the company had invested significant time, labour, skill and money in curating a herbal database. It held the defendants had infringed the company’s copyright by reproducing this database on their website.

In such a scenario, mandatory data sharing regimes can erode incentives to invest time and effort in creating and generating new datasets. A future legal framework to govern the digital sphere should seek to incentivise the creation of more datasets, like copyright does.


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Methods of licensing

Copyright facilitates access to creative content through licensing. India’s Copyright Act enables three kinds of licensing mechanisms: voluntary licensing, compulsory licensing, and statutory licensing. Under normal circumstances, the copyright owner negotiates with interested parties to provide a license to use the work on mutually agreed terms, that is voluntary licensing. Compulsory and statutory licensing provisions are triggered in situations where a copyrighted work is inaccessible, or where negotiation is not feasible, such as in the case of market failure.

Compulsory licensing was introduced to provide access to content that would otherwise be withheld from the public. For instance, in cases where the author of a work is unknown or deceased, the law allows individuals to approach the Intellectual Property Appellate Board (IPAB) and obtain licenses at a fixed fee. Conversely, Parliament introduced statutory licensing under copyright law for a narrower purpose. The mechanism allows broadcasters to approach the IPAB for licenses directly, without the requirement of negotiating with the copyright owner. Therefore, statutory licencing is an exceptional component of Indian copyright law.

The Rajya Sabha Parliamentary Standing Committee Report on the Copyright (Amendment) Bill, 2010 noted that statutory licensing was proposed to ensure public access to musical works over FM radio because of market failure in the music industry. Copyright owners and collective management organizations were setting unreasonable conditions under the voluntary licensing framework. Statutory licensing was introduced in a very specific context and meant to address a limited problem. This was reaffirmed by the Bombay High Court in Tips Industries vs Wynk Music (2019), where Wynk Music sought a statutory license to broadcast the musical works owned by Tips Industries. The Court held that the constraints pertaining to FM radio content mentioned above do not apply to digital radio.

A review of the Copyright Act should appreciate the economic rationale behind licensing. The thumb rule is that the state should intervene in voluntary negotiations only in case of market failure. These are bound to be less frequent on the internet, given the distributional efficiencies that it brings. More content is generated on the internet everyday, as compared to the decades of content generated on traditional mediums. For example, India consumed over 75 exabytes of data, which is the same as over 16 billion DVDs worth of data in 2019 alone, according to the Ericsson Mobility Report 2019. Thus, while the Copyright Act contains various licensing mechanisms, not all of them may be suited for the digital sphere. Any efforts to modernise the Act must provide greater incentives to create new works online, than those which exist for traditional media.


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Way forward

Copyright has existed as a legal right in India since 1957 and in other parts of the world since 1710, when Parliament of Great Britain legislated the Statute of Anne. Since then, creators have been rewarded with the exclusive right to commercially benefit from their original works. At the same time, copyright principles account for public interest in creativity, through mechanisms that enable access. This framework provides the ideal base for promoting innovation and creativity in the digital world. Preventing the dilution of copyright is the first step towards a copyright law that is suited to the digital economy. The next is to modernise the law in India, to account for the new dynamics of content creation and consumption on the internet.

Many jurisdictions have recognised the need to modernise copyright for a digital era. The United States enacted the Musical Works Modernisation Act in 2018 that introduced a compulsory license for the mechanical reproduction of musical works, without any creative inputs. It also passed a law to empower creators to seek a speedier redressal route for low-value works, called the Copyright Alternative in Small-Claims Enforcement Act, 2019. Similarly, South Korea improved the administrative mechanism for copyright by establishing the Korean Copyright Office and Korean Copyright Protection Agency. India should look at a similar mix of holistic and progressive measures to bolster the domestic copyright framework.

The authors work at Koan Advisory Group, a technology policy consulting firm. Views are personal.

This article is part of ThePrint-Koan Advisory series that analyses emerging policies, laws and regulations in India’s technology sector. Read all the articles here.

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