Sholay: Locking Horns Over Digital Rights

19 September 2012

The Indian film industry has produced many cult films, including Sholay (meaning Embers). An action adventure film, Sholay was released in 1975 and is considered among the greatest films in the history of Indian cinema. The film is the story of two criminals hired to capture a ruthless dacoit, or bandit. Recently Sholay Media & Entertainment, the company which owns all rights to the film filed a lawsuit against telecom giant Vodafone Essar Mobile Services, alleging copyright infringement over Vodafone’s sale of music and dialogues from the movie as ringtones and callertunes. After hearing the plaintiff, the Court granted an ex-parte injunction restraining the defendants, until further orders, from offering ringtones and callertunes from Sholay without prior permission from the plaintiffs. After the ex-parte order, Phonographic Performance (PPL) and Universal Music India joined the suit and argued the case with the defendants. The case was later heard on the plaintiff’s application for interim injunction and the defendant’s application for setting aside of the exparte injunction order.

The film Sholay was initially produced by Sippy Films, which transferred all rights in the film in 2000 to Sholay Media. But in 1978, the predecessor of Sholay Media granted certain rights in the film to Polydor, now known as Universal Music India. In turn, Universal has an agreement with PPL, a copyright society administering copyright in sound recordings for music companies. In 2006, PPL granted all rights to Vodafone for exploitation of sound recordings on mobile services. Telecom operators like Vodafone distribute the content to end users, acting as a content aggregator and platform company, providing ringtones and callertunes based on the content licensed from music companies.

The dispute in this case pertains to the scope of the rights assigned to Universal as to whether an absolute right to use the sound recordings by way of ringtones and callertunes (digital rights) was assigned to Polydor/Universal Music in 1978 or whether the digital rights continue to vest in the plaintiff company. Section 18 of the Copyright Act, 1957 provides that the owner of the copyright in the work may assign to any person either wholly or partially and either generally or subject to limitations and either for the whole term of the copyright or any part thereof. The Court thus opined that the question as to whether the assignment to Polydor/Universal extended all rights in the sound recordings or only some of them would depend on the construction of the terms of the assignment deed.

Sholay Media argued 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. It also advanced the case that rights in respect of value-added services for mobile phones neither existed nor were in contemplation of the parties at the time of assignment. In pertinent parts of the assignment agreement, where there is an assignment of copyright in the work, the clause states “Save as aforesaid the Assignor reserves to himself the copyright in the said work.” This could be interpreted to mean that anything other than specifically mentioned in the agreement was reserved to the Plaintiffs and not transferred to Polydor/Universal. As a logical consequence, the plaintiffs argued that residual rights in future mediums like ringtones were never transferred in the impugned assignment deed.

However the assignment deed in the defining the term “record” mentions “to include disc, tapes or any other device in which sounds are to be embodied,” which conveys that all rights in the sound recording, including digital rights which were neither available nor in contemplation at the time of the execution of the assignment deed, were assigned to Polydor/Universal. To this, the plaintiffs argued the application of ejusdem generis, which when applied would translate “any other device” as a physical device and not a digital device.

The defendant’s case is that the plaintiffs have no title to the sound recording of the film as it stood assigned to them in 1978 while they disputed that the assigned rights are confined to only physical records and radio broadcast. They contended that the residual rights in the assignment deed means the remaining rights in the film and not the remaining rights in the sound recording. This, however, was vehemently contested by the plaintiffs, who contended that the rights to exploit the film in any case was not the subject matter of the assignment and, therefore, the rights reserved under the clause are those rights in the sound recording not expressly assigned to Polydor/Universal.

The Court was of the opinion that the assignment deed could be interpreted in both ways and the crux of the issue was the definition of “record” and whether “any other device” could mean incorporating the digital medium. This question was left as an issue for the trial and the Court disposed off the interlocutory applications by passing interim orders.

The Court held that Vodafone can continue using the sound recording of the film through digital and mobile media subject to the condition that Universal will pay royalties regularly as agreed in the assignment deed, also covering the exploitation of digital rights by Vodafone. Vodafone was directed not to allow the use of the film’s sound recordings except on the terms as ordered by the Court.

The significance of this case lies within the realm of the unfairness and invalidity of contracts covering future assignments where rapid advancements in technology keep changing the character of intellectual property rights.

LEX ORBIS Intellectual Property Practice

709/710, Tolstoy House, 15-17,

Tolstoy Marg, New Delhi - 110 001,

India

T: +91 11 2371 6565

F: +91 11 2371 6556

E: mail@lexorbis.com

W: www.lexorbis.com

Law firms

Build and defend: All-around strategies for corporations to manage trade secrets and assert rights of trade secrets in China

26 October 2024