the film industry from within. Moreover, its "director-centered production system"39 causes a drain in technical and artistic talent.40 External factors include the political and economic landscape after Hong Kong's handover to China,41 strong competition from foreign films,42 and rampant piracy.43

## **2.1 Factors Within the Core Model of the Hong Kong Film Industry**

The core model is characterized by a director-centered production system coupled with investor pressure and a weakening industry infrastructure. These factors resulted in the decrease in the quality of local films.

From previously well-established production houses, the film industry production style is now that of "a cottage industry compris[ing] independent productions known for its filmmakers' frantic work style."44 The director-centered production system results in a form of "guerrilla filmmaking," in which directors dive into the filmmaking process armed with solely a general plot or storyline.45 He or she improvises throughout the process without any completed scripts.46 This process undermines the value and the creative integrity of scriptwriters,47 which often results in a

47 *Id.*

39David Desser, *Triads and Changing Times: The National Allegory of Hong Kong Cinema, 1996– 2000,* 26 QRFV 179, 186 (2009) ("The director-centered nature of boutique production"); Mirana M. Szeto & Yun-chung Chen, *To Work or Not to Work: The Dilemma of Hong Kong Film Labor in the Age of Mainlandization*, 55 JUMP CUT 1, 3–4, 12 (2013), *available at* https://www. researchgate.net/profile/Yun\_Chung\_Chen2/publication/258967573\_To\_work\_or\_not\_to\_work\_ the\_dilemma\_of\_Hong\_Kong\_film\_labor\_in\_the\_age\_of\_mainlandization/links/ 5670d2fe08ae2b1f87acf85a/To-work-or-not-to-work-the-dilemma-of-Hong-Kong-film-labor-in-theage-of-mainlandization.pdf ("The 'director subcontracting' model features a mixed system (1970– 1990), under which "apart from controlling the basic theme and the budget limit, studios remain hands-off, leaving hiring and other decision making to the director." "The flexible independent system (1990s) and the following cross-border production (2000s) were featured by the 'directorcentered' model." "Traditionally, the director-centered production system has dominated Hong Kong film production, making collective creativity difficult."); Cindy S. C. Chan, *Housekeeper of Hong Kong Cinema: The Role of Producer in the System of Hong Kong Film Industry*, 2 WIDE SCREEN 1, 1–2, 7–8 (2010) ("directors routinely started shooting without completed scripts and improvisation on the set was the norm... the directors, instead of the producers, [were] centers of power and creative control... In Hong Kong cinema, the producer, not positioned in [a] vertical relationship with the director, is no auteur or brand name.").

40Chan, supra note 1, at 21.

41Vivienne Chow, *Handover Hangover: Hong Kong's Film Industry Faces an Uncertain Future,* VARIETY (May 17, 2017), *available at* http://variety.com/2017/biz/news/wong-kar-wai-1202430867-1202430867

42LegCo, supra note 29.

43 *Id.*

44Chan, supra note 39, at 1.

45 *Id.*

46 *Id.*

drain of talent. Directors, investors, and even actors participate in "scriptbutchering,"48 often diluting the storyline. Despite the establishment of the Hong Kong Screenwriters' Guild (HKSWG) in 1991, scriptwriters remain weak and unprotected due to the absence of the right to collective bargaining.49 Famous actors like Chow Yun Fat have vowed never to return to Hong Kong unless the scripts are better.50

Additionally, many filmmakers have succumbed to investors' pressure on decisions over cast and content.51 This has proved to be detrimental to the industry, since it has inhibited creativity and resulted in an "over-heated and over-exploited" market.52 The pressure to create one blockbuster hit after another has led to lackluster and formulaic films. As a result, the interest of the viewing public has waned, ultimately affecting the demand for Hong Kong films.53

The overall poor infrastructure of the industry, particularly in terms of education, production, and distribution, explains the industry's inability to keep up with their foreign counterparts. Hong Kong lacks educational facilities for film staff,54 which leads to brain drain. The production infrastructure is marked by a lack of technical facilities for postproduction and distribution.55 This has forced the industry to outsource these services to foreign countries,56 thus affecting Hong Kong's position as a leading film hub. With regard to distribution, the dearth of local cinemas has also greatly spurred the decline of the industry. Cinemas have dramatically declined in number from 119 in 1993 to 47 in 2015 (Fig. 4), and the number of screens available per 100,000 persons ranks second lowest compared to other major Asian cities (Fig. 5).57

#### **2.2 External Factors**

Apart from issues within the industry, external factors have likewise contributed to the decline. A fundamental reason is the changes arising from the political and economic climate in Hong Kong. Hong Kong's reunification with China in 1997

48Szeto & Chen, supra note 39, at 12.

49 *Id*. at 5

50*Hong Kong Movie Industry, Martial Arts Films, Triads and Ghosts*, Facts and Details, *available at* http://factsanddetails.com/china/cat7/sub42/item244.html

51Chan, supra note 1, at 18.

52 *Id.*

53 *Id.*

54Ge, supra note 34.

55Chan, supra note 1, at 21. LegCo, *supra* note 29.

56Chan, supra note 1, at 21.

57Legislative Council Brief on Facilitating Cinema Development, LC Paper No. CB(4)801/16–17(05), *available at* https://www.legco.gov.hk/yr16-17/english/panels/itb/papers/ itb20170410cb4-801-5-e.pdf (last accessed Jul. 26, 2018).

**Fig. 4** Number of cinemas, screens, and seats in Hong Kong from 1993 to 2015. (Source: Legislative Council Brief Facilitating Cinema Development LC Paper No. CB(4)801/16-17(05))

signified its access to and economic integration with the Mainland market.58 However, the onslaught of the 1998 Asian Financial Crisis and the SARS epidemic heavily affected the Hong Kong film industry, causing an economic crisis.59

The Mainland offered to boost Hong Kong's economy and strengthen trade relations between the two sides and entered into the Closer Economic Partnership Arrangement (CEPA) in 2003 with Hong Kong.60 Under CEPA, Hong Kong and the Mainland developed bilateral rules governing the quota limitations and coproductions of Chinese language motion pictures produced in Hong Kong and the Mainland.61

58Chi, supra note 9, at 81.

59Chow, supra note 41.

60Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), TRADE AND INDUSTRY DEPARTMENT, *available at* https://www.tid.gov.hk/english/cepa/further\_liberal. html

61Closer Economic Partnership Agreement, Annex 4, 2. Communication Services.

**Fig. 5** Comparison with some major cities in Asia. (Source: Legislative Council Brief Facilitating Cinema Development LC Paper No. CB(4)801/16-17(05)

Chinese language motion pictures produced in Hong Kong may be imported for distribution in the Mainland on a quota-free basis, after vetting and approval by the relevant Mainland authority.62 The benefit does not apply to every Hong Kong film. CEPA defines "Chinese language motion pictures produced in Hong Kong" as those "made by production companies which are set up or established in accordance with the relevant laws of the Hong Kong Special Administrative Region, and which own more than 75% of the copyright of the motion pictures concerned."63 It further requires that more than 50% of the total principal personnel involved in the particular film be Hong Kong residents.64

CEPA introduced co-productions between Hong Kong and the Mainland. Co-produced films are considered to be "Mainland motion pictures for the purpose of distribution in the Mainland."65 No limits are imposed on the "percentage of principal creative personnel from Hong Kong."66 However, it requires that "at least

62 *Id.*

63 *Id.*

64 *Id.*

2. Chinese language motion pictures produced in Hong Kong refer to those motion pictures made by production companies which are set up or established in accordance with the relevant laws of the Hong Kong Special Administrative Region and which own more than 75% of the copyright of the motion pictures concerned. Hong Kong residents should constitute more than 50% of the total principal personnel in the motion pictures concerned.

65 *Id.*

3. Motion pictures jointly produced by Hong Kong and the Mainland are treated as Mainland motion pictures for the purpose of distribution in the Mainland. Translated versions of the motion pictures in languages of other Chinese ethnic groups and Chinese dialects, which are based on the Putonghua (Mandarin Chinese) version, are allowed to be distributed in the Mainland. 66 *Id.*

one-third of the leading artistes must be from the Mainland."67 It also requires that storylines and main characters to be associated with the Mainland.68

The Hong Kong film industry believed that CEPA would revitalize the film industry. While CEPA opened the massive Mainland Chinese market to Hong Kongproduced films, increased investments, and generated more jobs,69 it also inhibited freedom in the creative process by means of censorship. This translated to revising plot lines and casting actors appealing to the massive Mainland market, regardless of their allure to the local market.70 Ultimately, the appeal of the massive Mainland Chinese market drove some Hong Kong filmmakers to forfeit their artistic integrity and creative freedom, to the detriment of the Hong Kong film industry's distinct identity.71

The ease of co-production improved the business performance of the Hong Kong film industry. At least 50% of Hong Kong films were co-productions with filmmakers from the Mainland, and these co-produced films generated more box office receipts, at HK\$234 million.72 However, co-production comes with the price of regulation by Mainland film censorship authorities.73 This effectively restricted expression and creativity shared through film, diminishing the distinct flavor of locally produced films. Consequently, the interest of local audiences waned due to the absence of cultural relevance and diversity in Hong Kong films.74

Another contributing factor is the influx and rising popularity of foreign films from Hollywood, as well as Bollywood and other neighboring countries. On account of Hollywood's "newly aggressive push…in the Asian market,"75 local films had great difficulty in sustaining its market size.76 In 2015, 80% of box office receipts were held by foreign films, while only 20% were held by local films.77 This demonstrates consumers' loss of interest in Hong Kong films and increasing appetite for "fast-paced and star-studded Hollywood mega productions."78

The decline is also attributable to piracy. The Hong Kong film industry has been a victim of rampant piracy. Bootlegged VCDs and DVDs collectively contributed to

67Closer Economic Partnership Agreement, Annex 4, 2. Communication Services. 68 *Id.*

4. For motion pictures jointly produced by Hong Kong and the Mainland, there is no restriction on the percentage of principal creative personnel from Hong Kong, but at least one-third of the leading artists must be from the Mainland; there is no restriction on where the story takes place, but the plots or the leading characters must be related to the Mainland.

69LegCo, supra note 29.

70Hong Kong Free Press, supra note 35.

71 *Id.*

72Legislative Council of the Hong Kong Special Administrative Region of the People's Republic of China, supra note 29.

73Chan, supra note 1, at 21, 22.

74Chow, supra note 41.

75Chi, supra note 9, at 81.

76LegCo, supra note 29.

77 *Id.*

78Chan, supra note 1, at 22.

a loss of around HK\$300 million to the industry in 1998.79 Illegal streaming and peer-to-peer file-sharing platforms, such as BitTorrent, are threats to the film industry.80 These internet streaming services resulted in an industry loss of US\$308 million in 2012.81 Rampant piracy has allowed consumers to easily access films, both classic and newly released, at no cost or for a minimal fee.82 If eliminated, it will contribute to a 15% increase in box office receipts.83 But if left unchecked, piracy may deter investors, affect the quality of films produced, and cause the ultimate downfall of the Hong Kong film industry.

Overall, the inherent weaknesses of the core model of the film industry and other external factors have gravely crippled the growth of the industry and contributed to the decline in the film industry and the loss of its competitive edge in the global market.

#### **3 The Road to Revival of the Hong Kong Film Industry**

The Hong Kong government has played a pivotal role in the revival of the Hong Kong film industry. While it is incumbent upon filmmakers to improve the quality of films and upon viewers to support local film culture, the government is in a crucial position to protect and promote the local film industry. For this reason, the government has developed and institutionalized several policies to promote the creative industries which ultimately affect Hong Kong's economy and cultural identity.84

#### **3.1 Hong Kong Film Development Council**

The Hong Kong Film Development Council (FDC) is the government's arm geared toward the promotion and development of the film industry.85 Established in 2007, the FDC acts as an advisory body on various policies and strategies put in place for the sustainable development of the film industry.86 Through the FDC, industry stakeholders, primarily producers, directors, and film critics collectively collaborate with the government to revive the film industry.

79LegCo, supra note 29.

80Carnegie Mellon University "The Dual Impact of Movie Piracy on Box-Office Revenue: Cannibalization and Promotion", Hong Kong's Piracy Landscape 2018, Feb. 2017 http://hkisa. film/contenthtml/Information\_Material/2018/Hong-Kong-Piracy-Landscape-2018\_v4.pdf

81*Hong Kong Film Industry Furious at YouTube 'Piracy'*, Asia One, Apr. 25, 2012, *available at* http://www.asiaone.com/News/Latest%2BNews/Showbiz/Story/A1Story20120425-342040.html 82 *Id.*

83Hong Kong's Piracy Landscape 2018, supra note 80.

84Chan, supra note 1, at 83.

85Hong Kong Film Development Council, Home Page, *available at* http://www.fdc.gov.hk/en/ home/index.htm

86Chan, supra note 1, at 82.

#### **3.2 Hong Kong International Film and TV Market and Hong Kong International Film Festival**

In an effort to promote Hong Kong as a global film production and distribution hub, Hong Kong hosts the Hong Kong International Film and TV Market (FILMART) and the Hong Kong International Film Festival (HKIFF), among other industry highlights. Established by the Trade Development Council in 1997, FILMART promotes linkages across various media and platforms for the industry.87 This film and TV marketing exhibition is integral to the industry's revival since it advances Hong Kong's status as a core player in the global film industry.88 Through FILMART, foreign filmmakers are introduced to Hong Kong as a platform to connect with the global market, including that of the Mainland.

While FILMART focuses on the infrastructure of the film industry, HKIFF dedicates itself to promoting film culture and creativity. Set up in 1977, HKIFF is one of the world's oldest film festivals.89 Through its efforts, HKIFF is now "Hong Kong's largest cultural event" and is aimed at promoting "international appreciation of Asian, Hong Kong, and Chinese film culture."90 HKIFF is likewise integral to the industry's revival due to its dedication to promoting Hong Kong film culture to the world and recognizing new talents capable of further developing Hong Kong film culture to its fullest.

#### **3.3 Film Development Fund**

To further the growth of the industry, the government established a Film Development Fund (FDF) as means of financing small-to-medium productions and locally produced Cantonese films for distribution in the Mainland.91 Through FDF, the government invested HK\$300 million in 2007 and HK\$200 million in 2015.92 Additionally, it infused HK\$20 million in 2016 to aid distribution of Cantonese films in the Mainland.93 The Film Production Grant Scheme (2015) and First Feature Film Initiative (2013) were launched to further encourage production of Hong Kong

87Hong Kong International Film & TV Market (FILMART), Fair Report, *available at* http://m. hktdc.com/resources/fair/1819/hkfilmart/s//4129/1527476733800\_Fair-Report-FILMART2018- 23May-Eng.pdf

88FILMART hosted 8000 global visitors and 800 exhibitors from 35 countries and regions, including over 220 exhibitors from Mainland China in 2017.

89Hong Kong International Film Festival Society, About Us, *available at* http://www.hkiff.org.hk/ society/#/AboutUs/historyCulture

90 *Id.*

91Hong Kong Film Development Council, Services, *available at* http://www.fdc.gov.hk/en/services/services2.htm

92 *Id.*

93 *Id.*

films.94 The Film Production Grant Scheme awards cash subsidies to films with a budget of \$ten million or less in order to reduce the risk of film producers and "create nurturing opportunities for practitioners of the film industry."95 The First Feature Film Initiative offers support to filmmakers without experience in commercial filmmaking by creating jobs for "new on-screen talents and first-timer recruits to film production crews."96 Through these endeavors, the government provides support to filmmakers and equips them with the financial capacity to produce quality films and tap into the Mainland Chinese and overseas markets.

## **3.4 Create Hong Kong (CreateHK) and Hong Kong Arts Development Council**

CreateHK and the Hong Kong Arts Development Council focus on driving the creative and art industries, including film.97 CreateHK, a government agency, aims to "build Hong Kong into a regional creative capital" by facilitating creative development.98 It assists in film production by coordinating between filmmakers and "over 3,000 organisations on the use of their premises for location filming, and published reference materials on locations for the industry."99 Hong Kong Arts Development Council endeavors "to establish Hong Kong as a dynamic and diverse cultural metropolis."100 It aids art practitioners, including those in the film industry, by granting fund allocations, promoting art through policy and development, and establishing cultural exchanges.101

## **3.5 Closer Economic Partnership Agreement**

As previously discussed, the CEPA assists in uplifting the Hong Kong film industry by doing away with quota limitations on the distribution of Hong Kong films in the Mainland and by establishing co-production initiatives between Hong Kong and the rest of China.

94Legislative Council Panel on Information Technology and Broadcasting, *Film Development Fund Review*, LC Paper No. CB(4)187/17–18(02), *available at* https://www.legco. gov.hk/yr17-18/english/panels/itb/papers/itb20171113cb4-187-2-e.pdf

95 *Id.*

96 *Id.*

97Hong Kong Free Press, supra note 35.

98Create HK, About Us, *available at* https://www.createhk.gov.hk/en/about.htm#

99Create HK, Services, *available at* https://www.createhk.gov.hk/en/service\_film.htm

100Hong Kong Arts Development Council, Cultural Exchange, *available at* http://www.hkadc.org. hk/?p=435&lang=en

101 *Id.*

## **4 The Implications of the Hong Kong Copyright Framework on the Film Revival**

While the above efforts aiming at the revival of the film industry are laudable, they fail to address the issue at its core. A common thread among the government's undertakings is the focus on developing infrastructural solutions and improving financial support. However, the means to fully propel the industry to greater heights lies in creating innovative, diverse, and quality Hong Kong films that celebrate the industry's creativity and ingenuity. Despite the government's efforts, the current mechanisms to develop state-of-the-art films continue to face legal barriers in the form of stringent copyright protection.

While movies can be easily pirated as intangible intellectual products, their production and distribution require huge investment. Therefore copyright is paramount in the film industry. According to the statistics published by the Motion Picture Association of America (MPAA) in 2007 (the last year in which the MPAA collected this information), the total average budget for releasing a feature film is US\$106.6 million.102 Compared to creators of other categories of cultural products, copyright holders of films have a stronger demand for copyright that allows them to exclusively exploit their films and to recoup investment. Like other jurisdictions, Hong Kong also includes films in copyright law and grants the copyright owners exclusive rights to copy the work;103 to issue copies of the work to the public;104 to rent copies of the work to the public;105 to make available copies of the work to the public106 to perform, show, or play the work in public;107 and to broadcast the work or include it in a cable program service,108 among others. These rights expire at the end of the period of 50 years from the end of the calendar year in which the death occurs of the last to die of the following persons: the principal director, scriptwriter, author of the dialogue, or the composer of music created for and used in the particular film.109 However, as we will discuss in the following sections, some Hong Kong copyright rules are inconsistent with the nature of the film and impede the development of Hong Kong's film industry.

102MPAA, Entertainment Industry Market Statistics (2007) at 7, available at https://wikileaks.org/ sony/docs/03\_03/Mktrsch/Market%20Research/MPAA%20Reports/2007%20Market%20 Statistics.pdf

103Copyright Ordinance of Hong Kong (Cap. 528) (2009 amended), section 23.

104 *Id.* section 24.

105 *Id.* section 25. (Section 25 The rental of copies of any of the following works to the public is an act restricted by the copyright in the work – (a) a computer program, (b) a sound recording, (c) a film, and (d) a literary, dramatic, or musical work included in a sound recording.)

106 *Id.* section 26.

107 *Id.* section 27.

108 *Id.* section 28.

109 *Id.* section 19.

#### **4.1 Co-authorship of Films**

Hong Kong copyright law regards a film as a work jointly authored/owned by the producer and the principal director,110 unless the film is made by an employee in the course of his employment, in which case the employer will be the copyright owner but the producer and the principal director remain the co-authors.111 Figure 6 shows how this approach differs from many other major film-producing countries.

The major difference between Hong Kong and other jurisdictions is that Hong Kong, which follows the British tradition, allows the director to jointly exploit the film with the producer, while in other countries it is the producer who is solely entitled to exploit the film. Despite the difference of authorship rules, many countries including Italy, France, Germany, China, and Korea grant the right of exploitation to the producer exclusively. Though the USA and Japan subject the film ownership to the work-for-hire doctrine like Hong Kong, they concentrate the exploitation right on a single party, often the producer, when the film is not an employee's work. Under Japanese copyright law, the exploitation right belongs to either the production company in the case of a film made for hire (Art.15) or "the person that makes a creative contribution to the overall shaping of the work through responsibility for its production, direction, staging, filming, art direction, etc." (Art. 16), which most likely refers to the film producer according to the definition of "producer" in other countries (see Fig. 6). In the USA, if a film does not fall into the scope of a work made for hire, the producer will be regarded as the sole author because of the stringent conditions of joint authors.112

In Hong Kong, nevertheless, a film is co-owned by the producer and the principal director unless it constitutes an employee's work under a contract of service or of apprenticeship.113 However, the film labor system in Hong Kong that changed from contract labor (1930–1970), then a mixed mode of contract and noncontract labor (1970–1990), to flexible, noncontract labor (since 1990) might reduce the number of films that can be considered employee works.114 Even if there is a contract, it might be between the director and other employees due to the long-standing direc-

110 *Id.* sections 12(2) and 11(2) (b).

111 Id. section 14. TSE MUI CHUN v. HKSAR – [2003] HKCU 1408 ("As to ownership of copyright, the 'author' of the work is, prima facie, the first owner of the copyright (s.13). But if the 'author' has made the work as an employee in the course of his employment, the employer is the first owner of the copyright (s.14). Note that the employee remains the 'author' but the employer owns the copyright.")

112 In *Casa Duse v. Alex Merkin*, the Second Circuit court rejected a film director's claim to be the copyright owner of the film and held the producer to be the sole author ("A co-authorship claimant in the Second Circuit generally must show that each of the putative co-authors (1) made independently copyrightable contributions to the work; and (2) fully intended to be co-authors." 791 F.3d 247, 255 (2d Cir. 2015). Some courts added a "control" criterion, requiring the putative co-authors to exercise control over the work as a whole and serve as its "superintendent" or "mastermind." *See Aalmuhammed v. Lee,* 202 F.3d 1227, 1234 (9th Cir. 2000).

113Copyright Ordinance of Hong Kong (Cap. 528) (2009 amended), section 198.

114Szeto & Chen, supra note 39, at 3–4.

**Fig. 6** Comparison of the rules of authorship and ownership in a film

a 17 USC § 101 "Motion picture" was introduced to US copyright law in 1912 as a category of made-for-hire work

b Law for the Protection of Copyright and Neighboring Rights in Italy (2010 amended), article 44 c Id. article 46

d Id. article 45

e Intellectual Property Code of France (2003 amended), article L113-7

f Id. article L132-24

g Id. article L132-23

h Act on Copyright and Related Rights of Germany (2017 amended), article 8 i Id. *articles* 89 and 94

j Copyright Law of Japan (2009 amended), article 15(1) and article 16

k Copyright Law of Japan (2009 amended), article 15(1) and article 16

l Copyright Law of the People's Republic of China (2010 amended), article 15

mCopyright Act of the Republic of Korea (2009 amended), articles 75 (1) and 76 n Id. article 2

o Copyright Ordinance of Hong Kong (Cap. 528) (2009 amended), section 12(2) and section 11(2) (b). Copyright, Designs and Patents Act 1988 of UK (Chapter 48) (2017 amended), section 9(2) (ab) and section 10(1A)

p Copyright Ordinance of Hong Kong (Cap. 528) (2009 amended), section 14. Copyright, Designs and Patents Act 1988 of UK (Chapter 48) (2017 amended), section 11(2)

q Copyright Ordinance of Hong Kong (Cap. 528) (2009 amended), section 198. Copyright, Designs and Patents Act 1988 of UK (Chapter 48) (2017 amended), section 178

tor-centered production system,115 whereas the judges have tended to hold films to be co-owned by the producer and director rather than being an employee's work owned by the director.116 However, joint ownership is prone to conflicts, including conflicts between the interests of the producer and principal director and the conflicts of applicable laws when the joint owners are from different jurisdictions such as in the case of co-production.

Further, joint ownership adds to the difficulties and costs of identifying copyright owners. Neither "principal director" nor "director" is defined under Hong Kong law.117 Departing from the definition of "producer" in other countries normally featured by responsibility (Fig. 6), the Hong Kong counterpart, defined as "the person by whom the arrangements necessary for the making of the film are undertaken,"118 is confusing in regard of the "necessity" of the arrangements. For example, in *Century Communications v Mayfair Entertainment*, 119 a film made in China (under the control of the plaintiff) was held to be produced by a Hong Kong company (the defendant). Despite the plaintiff's arrangements such as engaging directors and employing actors, the court ruled in favor of the defendant, reasoning that it was the defendant who initiated the filmmaking and paid for it.120 In *Beggars Banquet v Carlton Television*, the court decided that the person directly responsible for finance, rather than the person who paid the money, should be the producer.121 In *A &M Records Ltd. v. Video Collection International Ltd.*, the person who initiated the process and contracted conductors, rather than the conductor who booked and paid for the orchestra and the studio, was considered the producer who makes necessary arrangements.122

As a special feature of Hong Kong film, the co-authorship, or the co-ownership enjoyed by the producer and director, suited the "director-centered production system"123 very well. The advantage of this system was especially evident in the

115 *Id.* at 4.

116*Century Communications v Mayfair Entertainment*, [1993] EMLR 335. Although this is a British case, the Hong Kong Copyright Ordinance inherits it and adopts the same copyright rule as Britain.

117Though Laddie, Prescott, and Vitoria's Fourth Edition indicates that the principal director is "likely to be the person who has creative control of the making of the film" (para 7.41), it is not a Hong Kong authority.

118Copyright Ordinance of Hong Kong (Cap. 528) (2009 amended), section 198.

119 [1993] EMLR 335. Although this is a British case, the Hong Kong Copyright Ordinance inherits the British tradition and also regards a film as a work of joint authorship.

120 [1993] EMLR 335.

121 [1993] EMLR 349.

122 [1995] EMLR 25l. Although this is a case of sound recording copyright, the definition of "producer" applies to both sound recordings and films. Cap 528, § 198.

123 *See* supra note 39.

kung fu genre124 and brought Hong Kong's film industry to the golden age from the 1980s to the early 1990s. However, a wide range of films that spawned later, from adventure films and comedies to dramas and musical films, rely heavily on other talents such as scripters and composers, not only directors.125 The privilege of directors may hold up the collaborative filmmaking process and may even drive homegrown talent to seek greener pastures in the film industries of foreign countries.126 Perhaps concentrating the exploitation right on a single party with a clear definition of ownership can reduce the cost of negotiation, clarify the scope of film copyright, and facilitate co-production with other regions. In fact, the Law Reform Commission in Hong Kong suggested that the producer should become the sole copyright owner of a film, although the proposal failed to be finally adopted.127

#### **4.2 Unclear Scope of "Copy" and Insufficient Protection for Secondary Creation**

Section 7(4) of Hong Kong Copyright Ordinance explicitly claims that "copyright does not subsist in a film which is, or to the extent that it is, a copy taken from a previous film."128 Undoubtedly, copyright "does not subsist in a copy taken from a previous film" because originality is the basic requirement to attract copyright protection. Disputes arise because of the ambiguity contained in the provision "copyright does not subsist in a film which *to the extent is a copy* taken from a previous film." Specifically, "to the extent is a copy" is a gray area between a verbatim, exact copy without any change to the previous film and a derivative, new film which gains copyright protection because of its originality and substantial difference from other works. Hong Kong Copyright Ordinance acknowledges that both copying a whole work and copying any substantial part of the work constitute a copy129 but fails to

124Many kung fu directors are turned from martial arts actors or instructors and play significant roles in arranging the entire filmmaking process. Sek Kei, Rolanda Chu, and Grant Foerster, A Brief Historical Tour of the Hong Kong Martial Arts Film, January 1, 2001, Bright Lights https:// brightlightsfilm.com/wp-content/cache/all/brief-historical-tour-hong-kong-martial-arts-film/#. W3rD4egzY2x ("Most professional directors were not actually familiar with martial arts techniques, and … required the help of martial arts directors such as Sammo Hung and Han Ying Chieh. With the emphasis on martial arts techniques as the new backbone of the genre, contributions from actual martial artists became increasingly significant.").

125F. Jay Dougherty, *Not a Spike Lee Joint--Issues in the Authorship of Motion Pictures under the US Copyright Law*, 49 UCLA L REV 225, 285 (2001).

126Chan, supra note 1, at 21.

127The Law Reform Commission of Hong Kong Report: Reform of the Law Relating to Copyright (Topic 22), p 22, 63 https://www.hkreform.gov.hk/en/docs/rcopyright-e.pdf ("3.4 The 'maker' of a cinematography film is the owner of the copyright (section 13(4)), in this case defined as "the person by whom the arrangements necessary for the making of the film are undertaken (section 13(10)" … "7.10 The employee has no right to be identified as author. A film director is treated in a similar fashion if he is an employee.").

128Copyright Ordinance of Hong Kong (Cap. 528) (2009 amended), section 7(4).

129 *Id*. section 22 (3)(a).

define "substantiality." Hong Kong case law, although it lacks clear guidance regarding the boundary of substantial taking in the field of films,130 indicates that even a small amount of taking, such as taking a short musical snippet from another's song,131 reproducing a smaller version of the front page of a rival newspaper,132 and copying a small part of a questionnaire,133 will fall into the scope of copyright infringement.

Following this reasoning, a film created from several clips of one or more previously existing films, a remixed film, a colorized or extended version of a film, a director's cut (namely, an edited version of a film that is supposed to represent the director's own approved edit134), or a digitally enhanced or restored print will likely be classified as "a copy" in which copyright does not subsist.135 The indiscriminate, bald opposition against copying crucially misunderstands the nature of films. As a transnational cultural product,136 a film appeals to its audience by providing a novel experience of a new culture. However, the new product and experience should not be too far away from knowledge that the audience already has. This is a sophisticated balance between similarities and differences,137 between unknown cultural secrets and easy accessibility.138 As Abraham Drassinower notes, culture is copying, and copying per se is not wrong.139 It is copying that makes the connection between similarities and differences, which explains the continual popularity of movie series such as the Harry Potter series and the Marvel series.

Some may argue that this provision merely prohibits the copying of expression, while the idea is still in the public domain, freely available for everyone. But the boundary between idea and expression is as vague as the boundary between copying and recreation. For instance, Steven Chow, the director for *Shaolin Soccer*, might exclude others from making a similar *kung fu* soccer film by arguing that he created his own original *kung fu* expressions based on the idea of soccer playing, but it is also reasonable to regard soccer as an expression (action and speed) and *kung fu* as an idea (power, strength of will, hard work, and dignity).140 The real cultural copy-

130Doreen Weisenhaus, Hong Kong Media Law: A Guide for Journalists and Media Professionals 235 (Hong Kong University Press, 2004).

131*Ladbroke (Football) v William Hill (Football)* [1964] 1 WLR 272.

132*Group Ltd v Apple Daily Ltd* [1999] 4 HKC 131.

133*Lam Tai Hing v Koo Chih Ling, Linda* [1993] 2 HKC 1.

134Wikipedia's interpretation of "Director's Cuts", *available at* https://en.wikipedia.org/wiki/ Director%27s\_cut

135Pascal Kamina, Film Copyright in the European Union 106 (Cambridge University Press, 2016).

136Laikwan Pang, Cultural Control and Globalization in Asia: Copyright, Piracy, and Cinema 10 (New York: Routledge, 2006).

137 *Id*. at 6.

138 *Id,* at 55.

139Abraham Drassinower, What's Wrong with Copying? 1, 9 (Harvard University Press, 2015).

140Pang, supra note 136, at 53.

ing practice is more complex than what is written in copyright law.141 Actually, as Laikwan Pang noted, the artificial dichotomy of idea/expression is designed more for satisfying capitalist interests than for promoting creativity and culture.142 It enables Hollywood to rapidly and effectively appropriate other cinematic traditions, to remake films, and then to exclude others from exploiting the same stories.143 But for the domestic industry, the blurred boundary between idea and expression, along with the difficulty in distinguishing copying and recreation, will obstruct the production of movies of the same style and hinder Hong Kong films from forming a collective identity.144

The prohibitive effect of copyright law is even exacerbated by the lack of copyright exceptions providing some breathing space for secondary film creation.145 This is extremely crucial in the Internet age, where various kinds of user-friendly tools empower a large number of untrained ordinary people to engage in filmmaking themselves such as DIY cinema, newsreel films,146 short films,147 and microfilm.148 As section 2 of the chapter shows, Hong Kong's government has made great efforts in promoting filmmaking, both professional and amateur, whereas legal support is still to be desired. Encouraged by the open-ended fair use doctrine in the USA,149 the Australian initiative incorporating parody and satire into fair dealing exception, the Canadian exception for noncommercial user-generated content, and the UK fair dealing exception for parody, caricature, and pastiche,150 Hong Kong's Copyright (Amendment) Bill 2014 introduced a safety valve for "parody, satire, caricature, or pastiche."151 Nevertheless, the Hong Kong bill ultimately failed to be adopted into law, mainly because copyright owners insisted on the existing copyright ordinance

141 *Id.*

142 *Id*. at 51.

143 *Id*. at 70.

144 *Id*. at 98.

145 Joseph P. Liu, *Copyright and Breathing Space*, 30 Colum. J.L. & Arts 429, 429 (2006).

146Newsreels were short films shown in movie theaters, generally along with cartoons and feature films. Princeton University Library, https://libguides.princeton.edu/c.php?g=84226&p=540944

147According to the Academy of Motion Picture Arts and Sciences, "a short film is an original motion picture that has a running time of 40 min or less, including all credits" https://www.oscars. org/sites/oscars/files/88aa\_rule19\_short.pdf. Many websites such as YouTube, Snoovies, CinemaClubby, and Vimeo encourage the creation and distribution of user-created short films.

148Microfilm, or microcinema, "refers to a gathering of video and filmmakers, music video producers, amateurs, and semiprofessionals, to publicly project, exhibit, and share their creations among groups of friends and neighbors." Jesse Drew, A Social History of Contemporary Democratic Media 45 (London: Routledge, 2013).

149Though the US fair use doctrine does not explicitly list parody as an exception, many case laws have regarded parody as fair use. e.g., *Campbell v. Acuff-Rose Music*, 510 U.S. 569 (1994), *Leibovitz v. Paramount Pictures Corp.*, 137 F.3d 109 (2d Cir. 1998), *Suntrust v. Houghton Mifflin Co*., 268 F.3d 1257 (11th Cir. 2001), *Mattel Inc., v. Walking Mountain Productions,* 353 F.3d 792 (9th Cir. 2003).

150Legislative Council Brief of Copyright (Amendment) Bill 2014, at 7–9.

151Copyright (Amendment) Bill 2014 of Hong Kong, section 39A.

with no amendment at all and users feared that the government might imprison users who engage in secondary creation other than "parody, satire, caricature, or pastiche."152

In the past, most secondary creations were private and thus remained unregulated by the government or tolerated by copyright holders. However, due to the participatory and hyperconnected web,153 a transformation which Henry Jenkins called "from home movies to public movies" occurs, and a much wider audience gets involved.154 The popularity of homemade movies and the big business behind them inevitably move those secondary creations, which were originally in the gray area, to the front, directly facing the challenge of copyright law. If the law insists on illegalizing or even criminalizing these uses, these new modes of filmmaking will be stifled, and the potential of mass creativity unleashed by the Internet age will be inhibited.

#### **4.3 Criminal Liability for Copyright Infringement**

Hong Kong copyright law imposes harsh penalties, both civil and criminal, on copyright infringement. As the Court of Appeal of Hong Kong has noted, copyright infringement "is not simply a matter of the private interests of the copyright owners" but "a matter of public interest to Hong Kong generally"; hence "the remedies available for infringement of copyright can be extensive."155 Civil remedies include compensation in the form of damages, injunction, an account of profits, and an order for delivery up.156 Criminal penalties include a fine of up to HK\$50,000 for each infringing copy and imprisonment of a maximum of 4 years,157 which specifically pertain to end users who possess, copy, and distribute an infringing copy of certain types of work for the purpose of trade or business.158 However, if the distribution is to such an extent as to prejudice the copyright owner, the distributor will be subject to criminal sanction irrespective of the types of copyright works and the

152Peter K. Yu, *The Quest For A User-Friendly Copyright Regime In Hong Kong*, 32 AM. U. INT'L L. REV. 284, 288 (2016).

153Nicholas A Christakis and James H Fowler, Connected: The Surprising Power of Our Social Networks and How They Shape Our Lives 10 (Little, Brown 2009).

154David Thorburn & Henry Jenkins, Rethinking Media Change: The Aesthetics of Transition 309 (Cambridge: The Mit Press, 2004).

155*Commissioner of Customs and Excise v. Golden Science Technology Ltd*, [1999] 4 HKC 169.

156Copyright Ordinance of Hong Kong (Cap. 528) (2009 amended), sections 107–109.

157Copyright Ordinance of Hong Kong (Cap. 528) (2009 amended), section 119.

158End users engaging in the following two types of copyright infringement will attract criminal liability: (i) unauthorized possession of an infringing copy of copyrighted software, movies, television dramas, and musical (sound or visual) recordings for use in business and (ii) unauthorized copying and distribution of an infringing copy, either an electronic or hard copy, of books, newspapers, magazines, and periodicals for use in trade or business. Hong Kong's Amended Copyright Law: Guidance Note on Prevention of End-User Piracy in Business at 2, available https://www.ipd. gov.hk/eng/intellectual\_property/copyright/booklet\_piracy\_in\_business\_e.pdf

purpose of distribution.159 These liability rules are not simply written but also efficiently enforced.160

The world's first case imposing criminal liability upon an individual using BitTorrent for P2P sharing, *Chan Nai Ming v HKSAR*, 161 occurred in Hong Kong.162 The key issue was whether uploading files constitutes "distribution."163 The defendant used the legal loophole that "distribution" is nowhere defined in Hong Kong Copyright Ordinance, claiming that the prosecutor cannot prove that Chan's act of uploading violates the right of distribution because there is no delivery of "physical copies."164 As a response, Justice Beeton extended "distribution" to "digital dissemination," reasoning that "'distribution' in its ordinary meaning, is clearly capable of encompassing a process in which the distributor first takes necessary steps to make the item available and the recipient then takes steps of his own to obtain it." Through a liberal interpretation of the Copyright Ordinance, the Court decisively gave the law proper effect in combating piracy. The criminalization of copyright infringement has indeed become an evident character of Hong Kong copyright law. From a case search in Lexis HK,165 we found 42 cases addressing film copyright, among which 27 cases involved criminal liability of copyright infringement.166

However, rigorous liability and harsh punishment from copyright law have failed to fulfill the goal of eliminating piracy. According to a report from Carnegie Mellon University, in 2017 65.9 million BitTorrent movie and TV programs were

159 *Id.*

160 e.g., *HKSAR v Elegant Technology Ltd*, [2004] 3 HKC 37; *HKSAR v Ho Hon Chung Danel & ORS,* [2004] 3 HKC 304; *HKSAR v Re Affluence Pictures Ltd,* [2008] HKCU 1807; *HKSAR v SZE Chak Ming & ANOR,* [2006] HKCU 724; *HKSAR v Mega Laser Products (HK) Ltd & ORS,* [1999] 3 HKC 161.

161*CHAN NAI MING v HKSAR*, [2007] 3 HKC 255.

162Michael Filby, *Big Crook in Little China: The Ramifications of the Hong Kong BitTorrent Case on the Criminal Test of Prejudicial Effect,* 21 Int Rev. Law Comput Tech 275, 278 (2007). 163*HKSAR v Chan Nai Ming* [2005] 4 HKLRD 142.

164One of the key defenses was that although the Copyright Ordinance stipulates the civil remedies for "making available of copies to the public" in section 26, for imposing criminal liability, the prosecutor should demonstrate that Chan's act of uploading violates the right of distribution, but "distribution" is nowhere defined in the Ordinance. *HKSAR v Chan Nai Ming* [2005] 4 HKLRD 142

165By using the term "All Hong Kong Cases" as the source, "atleast3(film) AND atleast3(copyright)," "atleast3(motion picture) AND atleast3(copyright)," and "atleast3(movie) AND atleast3(copyright)" as the search terms respectively three times. "Atleast" is used to search for terms occurring at least so many times in a document. For example, atleast3(film) requires the term "film" to appear in the document at least 3 times. "And" can be used to search for terms located in the same document. For example, "atleast3(film) AND atleast3(copyright)" requires both terms "film" and "copyright" to appear in the document at least 3 times. We used 3 to preliminarily screen cases irrelevant to film copyright.

166We obtained 76 cases with "atleast3(film) AND atleast3(copyright)" as the search term, 12 cases with "atleast3(movie) AND atleast3(copyright)" as the search term, and 5 cases with "atleast3(motion picture) AND atleast3(copyright)" as the search term. After reading the decisions of each ease, excluding duplicating cases, we ultimately obtained 42 relevant cases. http://www. lexisnexis.com.eproxy.lib.hku.hk/ap/ui/go.aspx/hk/lexis/default/api?ipf=t

downloaded, and a loss of HK\$ 286 million was caused to the Hong Kong box office.167 Online piracy of films, video clips, music, and animation is leading to a monthly loss of around HK\$120 million to Hong Kong's creative industries.168 Penalties alone are insufficient to deter infringement. The deterrent effects of law depend upon two factors, the probability of being caught and the severity of the punishment.169 For most private pirates, the probability of being caught is very low because of the high cost of tracing anonymous pirates, each of whom merely causes minimal loss to the copyright owners. As Peter Yu concluded, criminal penalties under Hong Kong copyright law are "likely to be selectively enforced and therefore highly unfair."170

The governance of piracy should take an approach integrating the reasons why piracy originated and became popular. Piracy promises consumers easy access to films, both classic and newly released, at no cost or for a minimal fee.171 However, audiences have to bear a long lag time between a film's first release in theater and the release of pirated DVDs or the release of pirated films online and to endure the low quality of early-release pirated films such as camcorder captures in cinemas.172 By contrast, authorized films promise the latest movies immediately upon cinema release, an awesome big-screen experience, and sometimes even film appreciation activities such as a face-to-face encounter with film directors or actors and postscreening sharing sessions.173 But consumers need to pay for the movie ticket.

Assuming the price of a movie ticket remains the same, the best way to solve piracy is to improve the movie theater experience. A film is not only a commodity but a complex system of representation and cultural experience,174 and this experience highly relies on the equipment. The experience of watching movies with fuzzy images on a small and cheap VCD set or in a small PC screen at home can never compare with the experience of watching HD movies in a cinema with state-of-theart facilities.175 This is why Gabe Newell, the CEO and cofounder of Valve, pointed out that "piracy is a service problem."176 Hong Kong's government seems to recognize the cinema experience approach to combating piracy, making it a policy to

169Robert Cooter & Thomas Ulen, Law and Economics 4–5 (Boston: Pearson, 6th ed., 2010).

167Hong Kong's Piracy Landscape 2018, supra note 80.

168Alice Shen, *Online piracy clampdown in Hong Kong deprives errant websites of HK\$6.5 million in monthly ad revenue,* South China Morning Post, Mar. 22, 2018, *available at* https://www.scmp.com/ news/hong-kong/law-crime/article/2138287/online-piracy-clampdown-hong-kong-deprives-errant-websites

170Peter K. Yu, *Digital Copyright Reform and Legal Transplants in Hong Kong*, 48 U. Louisville L. Rev. 693, 704 (2010).

171 "Hong Kong Film Industry Furious at YouTube 'Piracy'," supra note 81.

172William Fisher, Promise to Keep: Technology, Law and the Future of Entertainment 68 (Stanford University Press, 2004).

173Legislative Council Brief on Facilitating Cinema Development, LC Paper No. CB(4)801/16–17(05), supra note 57, at 4.

174Pang, supra note 136, at 64.

175 *Id*. at 91.

176Greg Tito, *Valve's Gabe Newell Says Piracy Is a Service Problem*, The Escapist (Nov. 28, 2011) *available at* http://www.escapistmagazine.com/news/view/114391-Valves-Gabe-Newell-Says-Piracy-Is-a-Service-Problem

facilitate the construction of movie sets in commercial complexes, such as incorporating a cinema requirement in land leases to give a hardware boost.177

Criminal penalties not only have failed to combat piracy but also have become barriers for individual, noncommercial file-sharing activities which might be considered to occur "to such an extent as to affect prejudicially the copyright owner" due to the hyperconnected Internet and the unprecedented scope of distribution. Criminalizing file sharing violates the long-standing principle that punishment should fit the crime178 and will gradually breed disrespect for and distrust of the legal system. This partly explains the public's fear about the government's prosecution against users who use online-copyrighted material for secondary creation or mocking politicians179 even though the Copyright (Amendment) 2014 Bill clarified the threshold of criminal liability regarding the existing prejudicial distribution offenses.180 Imposing criminal penalties upon file-sharing activities which are common or even popular with the general public also has huge implications for government finance, prison management, and jurisdictional issues.181 We therefore concur with many scholars and are of the opinion182 that copyright protection for individual, private, and noncommercial online copying and distribution should be decriminalized. Without such a move, the revival of Hong Kong's film industry will remain a fiction.

#### **5 Conclusion**

From its humble beginnings, the Hong Kong film industry catapulted itself to an international film powerhouse status. Through the years, it introduced the world to *kung fu* films of Bruce Lee, Jackie Chan, and the like. However, a variety of factors ranging from the industry's director-centered production system, prevailing investor pressure, and weak infrastructure to political and economic conditions, popularity of foreign films, and rampant piracy all led to its decline. In an effort to revive the industry, the government established infrastructural and financial reforms by means

177LegCo, supra note 29.

178Yu, supra note 187, at 704.

179Stuart Lau, *Five reasons the Hong Kong copyright bill failed,* South China Morning Post, Mar. 4, 2016, https://www.scmp.com/news/hong-kong/politics/article/1920569/five-reasons-hong-kong-copyright-bill-failed

180Legislative Council Brief of Copyright (Amendment) Bill 2014 of Hong Kong, supra note 150, para.9–10, at 6–7.

181Cooter & Ulen, supra note 169, at 489–491.

182Yu, supra note 169, at 217. Yu, supra note 185, at 701. Jojo Y.C. Mo, *The Copyright (Amendment) Bill 2014 in Hong Kong: A Blessing or a Curse?* 38 Stat. L. R. 211, 213 (2017). Christophe Geiger, Challenges for the Enforcement of Copyright in the Online World: Time for a New Approach in Research Handbook on the Cross-Border Enforcement of Intellectual Property 706, 718 (Paul Torremans ed., Edward Elgar Pub., 2014).

of exhibitions, film festivals, and co-productions with the Mainland. While laudable, these efforts remain insufficient to fully propel the Hong Kong film industry to greater heights.

Restoring Hong Kong to its status as the "Hollywood of the Far East" would require the production of innovative, creative, and quality Hong Kong films. However, the traditional Hong Kong copyright framework poses a legal barrier to further innovation and development. The revival of the film industry relies on breaking down these barriers through copyright reform, such as concentrating copyright ownership to a single party who is clearly defined, making copyright exceptions for secondary creation and decriminalizing individual, noncommercial online sharing activities.

#### **References**

#### *Codes and Statutes*

Act on Copyright and Related Rights of Germany (2017 amended). Closer Economic Partnership Agreement (CEPA). Copyright Act of the Republic of Korea (2009 amended). Copyright, Designs and Patents Act 1988 of UK (Chapter 48) (2017 amended). Copyright Law of Japan (2009 amended). Copyright Law of the People's Republic of China (2010 amended). Copyright Ordinance of Hong Kong (Cap. 528) (2009 amended). Intellectual Property Code of France (2003 amended). Law for the Protection of Copyright and Neighboring Rights in Italy (2010 amended). United States Copyright Act, 17 U.S.C.

#### *Jurisprudence*

A &M Records Ltd. v. Video Collection International Ltd. [1995] EMLR 25l. Beggars Banquet v Carlton Television, [1993] EMLR 349. Campbell v. Acuff-Rose Music, 510 U.S. 569 (1994). Century Communications v Mayfair Entertainment, [1993] EMLR 335. Chan Nai Ming v HKSAR, [2007] 3 HKC 255. Commissioner of Customs and Excise v. Golden Science Technology Ltd, [1999] 4 HKC 169. HKSAR v Chan Nai Ming [2005] 4 HKLRD 142. HKSAR v Elegant Technology Ltd, [2004] 3 HKC 37. HKSAR v Ho Hon Chung Danel & ORS, [2004] 3 HKC 304. HKSAR v Mega Laser Products (HK) Ltd & ORS, [1999] 3 HKC 161. HKSAR v Re Affluence Pictures Ltd. (2008). *HKCU*, 1807. HKSAR v SZE Chak Ming & ANOR, [2006] HKCU 724. Leibovitz v. Paramount Pictures Corp., 137 F.3d 109 (2d Cir. 1998). Mattel Inc., v. Walking Mountain Productions, 353 F.3d 792 (9th Cir. 2003). Suntrust v. Houghton Mifflin Co., 268 F.3d 1257 (11th Cir. 2001).

#### *Books*

#### *Journal Articles*

#### *Official Reports*

HKTDC Research. (2018, March 15), *Film & Entertainment Industry in Hong Kong*. Available at http://hong-kong-economy-research.hktdc.com/business-news/article/Hong-Kong-Industry-Profiles/Film-Entertainment-Industry-in-Hong-Kong/hkip/en/1/1X000000/1X0018PN.htm

#### *Newspapers & Websites*

**Open Access** This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

The images or other third party material in this chapter are included in the chapter's Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter's Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.

## **Contemporary Challenges of Online Copyright Enforcement in India**

Arpan Banerjee

#### **Abstract**

This chapter discusses legal strategies to enforce copyright online in India, with a focus on the film industry. The chapter begins by acknowledging various limitations of online copyright enforcement. Then, in Sect. 2, the chapter provides a broad overview of the landscape concerning film piracy in India. In Sect. 3, the chapter discusses a proposed (and unimplemented) recommendation to target end-users in India. In Sect. 4, the chapter discusses recent developments concerning website-blocking injunctions, which is a strategy that the industry has consistently pursued in recent years. In Sect. 5, the chapter discusses the adsupported financial model of pirate websites, referencing a study conducted in India. The chapter concludes by reflecting on the efficacy of non-litigious measures, such as the targeting of ad-supported piracy and negotiations with search engines.

#### **Keywords**

India · Copyright · Internet · Piracy · Film · Website blocking · Ad-supported piracy

A. Banerjee (\*)

Jindal Global Law School, Sonipat, Haryana, India

University of New South Wales, Sydney, Kensington, Australia e-mail<EMAIL_ADDRESS>
#### **1 Introduction**

Legal concerns regarding online copyright infringement date back to the first half of the 1990s, when even dial-up Internet was at a nascent stage. The first Clinton administration—at the initiative of Vice President Al Gore—formed the Information Infrastructure Task Force (IITF), to articulate the US government's vision for the so-called National Information Infrastructure (NII). As a part of this initiative, a working group submitted a report, in 1995, discussing the impact of the Internet (then in its infancy) on copyright law. The report presciently observed:

The NII has tremendous potential to improve and enhance our lives. It can increase access to a greater amount and variety of information and entertainment resources that can be delivered quickly and economically from and to virtually anywhere in the world in the blink of an eye. For instance, hundreds of channels of "television" programming, thousands of musical recordings, and literally millions of "magazines" and "books" can be made available to homes and businesses across the United States and around the world.1

The report acknowledged that the growth of the Internet could "upset the balance" between copyright owners and users but felt that the challenge could be addressed by "no more than minor clarification and limited amendment" to existing copyright legislation.2 The report's main recommendations were that traditional rights of distribution and performance be widened to include the digital transmission of works.3 The same year, in one of the earliest law review articles on the subject, Jane Ginsberg advanced a similar view.4

Today, nearly 25 years later, the online piracy environment has changed in at least four major ways compared to the early dial-up Internet era, owing to faster and cheaper broadband connection speeds. First, piracy concerns in the dial-up Internet era mostly centred around the sharing of songs in the MP3 format or books in the PDF format, where files were no larger than a few megabytes. Today, the focus has shifted to the sharing of films and television programmes, often in high-resolution formats running into a few gigabytes per file. Second, the growth in websites offering inexpensive (often free) online storage means that vast numbers of such files can be uploaded and shared with ease. This contrasts with the dial-up era, when copying large video files onto CDs and other physical storage devices was the usual and practical method of distributing them. Third, from an era where users could only access low-quality streaming content using software like RealPlayer and Windows Media Player, the Internet has now progressed to a stage where high-resolution content can be easily shared and accessed through YouTube, Dailymotion and Vimeo or local variants of such websites (such as Youku in China). Fourth, Internet

1 Information Infrastructure Task Force (1995). Intellectual Property and the National Information Infrastructure: The Report of the Working Group on Intellectual Property Rights, p. 8.

2 Ibid at 14, 17.

3 Ibid at 213.

4Ginsburg, J. 1995. Putting Cars on the "Information Superhighway": Authors, Exploiters, and Copyright in Cyberspace. *Columbia Law Review* 95: 1466, 1482.

access in developing countries and emerging economies has widened greatly, to the point where China ranks first and India second in terms of numbers of Internet users. Other economies in the top ten include Brazil, Russia and Indonesia.5 This has led to a significant amount of piracy occurring across borders.6

Notwithstanding the above, it can be argued that the views advanced by the IITF Working Group and Ginsberg still hold good today. Many copyright laws worldwide date back to the dial-up era, simply expanding the applicability of traditional rights in an online environment. Yet, they are arguably sufficient to target almost every type of major infringing activity online (although sometimes requiring judicial creativity in their application). If there is dissatisfaction with the prevalence of online piracy, it arguably pertains less to "law lag" (i.e. the principle that the law always lags behind technology7 ) than to issues simply beyond the scope of law. The hard reality is that the enormous global scale of global Internet usage and filesharing means that piracy can at best be curbed in spurts. Furthermore, to quote the High Court of Ireland, "Among younger people, so much has the habit grown of downloading copyright material from the internet that a claim of entitlement seems to have arisen to have what is not theirs for free".8 In this scenario, there are serious limits to what the law can achieve. For India's film industry, which this chapter will focus on, there are three factors that especially curb the utility of online copyright enforcement—the prevalence of physical piracy, the hosting of pirated content in servers outside India, and, above all, a general deficit of infrastructure in the civil and criminal justice system.

With reference to the first factor, in the late 1990s, when Internet penetration in India was still limited, a government study identified video parlours and cable operators as the major sources for the dissemination of pirated films. The study observed that "[a]ll parties involved in the legitimate transaction of films—from the producers to the theatre owners"—lost "heavily because of widespread video or cable piracy" and that the government also lost potential tax revenues.9 Nearly a decade later, the government constituted a high-level committee on piracy ("Committee") to examine the issue in more detail. In contrast with the older study, the Committee noted the rise of Internet penetration in India and predicted that piracy was "set to

5 International Telecommunications Union (2017). Internet users by region and country, 2010– 2016. https://www.itu.int/en/ITU-D/Statistics/Pages/stat/treemap.aspx

6For instance, in 2015, China registered the most number of illegal downloads of the popular US TV show House of Cards, followed by the USA and then closely by India. See Spangler, T. (2015). "House of Cards" Season 3 Pirated, With China Top Country for Downloaders. Variety. http:// variety.com/2015/digital/news/house-of-cards-season-3-pirated-with-china-top-country-fordownloaders-1201444023/

7Hurlbut, B. (2015). Remembering the Future: Science, Law, and the Legacy of Asilomar. In Jasanoff, S. & Kim, S. (Eds.), *Dreamscapes of Modernity: Sociotechnical Imaginaries and the Fabrication of Power* (pp. 126–151). Chicago: University of Chicago Press. Hurlbut is generally critical of the concept of law lag, stating: "[T]he notion of law lag is an expression of the imaginary of governable technological emergence. Law inevitably lags, and must lag, if science is to be free to generate novelty".

8EMI v. Eircom (2010) I.E.H.C. 108, ¶ 5.

9National Productivity Council. (1999). Study on Copyright Piracy in India, p. 14. http://copyright. gov.in/documents/study%20on%20copyright%20piracy%20in%20india.pdf

explode" with the growth of broadband Internet in India.10 But while the number of Internet users in India has no doubt grown exponentially since the 1990s, when expressed as a percentage, it still amounts to merely 30% of India's population. Moreover, connection speeds in India are often slow. In fact, one study estimates that India's 4G download speeds are among the slowest in the world.11 Thus, in contrast with developed countries, physical piracy, via sales of DVDs by street vendors, is still a popular form of consumption of pirated cinema in India, greatly defeating the purpose of online enforcement.12

With reference to the second factor, the Indian film industry earns substantial revenue from the Indian diaspora, especially in developed countries. Most major Indian films are released in theatres in these countries. These audiences even form the primary target audience for some producers, due to higher ticket prices in comparison to India.13 However, there also exist high levels of consumption of pirated films within this audience.14 The Indian film industry lacks the resources to enforce its copyright adequately worldwide. While the Indian government has approached foreign governments for assistance on behalf of the film industry, little action seems to have emerged.15

With reference to the third factor, as Marc Galanter has observed, Indian laws are "notoriously incongruent" with "attitudes and concerns"16 and that "[d]elays of *Bleak House* proportions are routine in many sorts of litigation".17 According to the Indian government's own data, several million cases are pending before Indian courts, and there exists a severe shortage of judges.18 In the context of criminal copyright enforcement, the matter falls under the jurisdiction of state governments rather than the national governments. As a result, copyright enforcement becomes

10Ministry of Information & Broadcasting. (2009). Report of the Committee on Piracy, pp. 45–6.

11Dovall, P. 2018. 4G speed in India slowest in world. Times of India. https://timesofindia.indiatimes.com/business/india-business/4g-speed-in-india-slowest-in-world/articleshow/63021612. cms

12US Trade Representative. (2014). Out-of-Cycle Review of Notorious Markets, p.16 (listing bazaars in India where pirated DVDs are sold); Liang, L. & Sundaram, R., (2011). India. In Karganis, J. (Ed.), *Media Piracy in Emerging Economies* (pp. 339–398, 348–50). New York: Social Science Research Council.

13Banerjee, A. 2011. A Case for Economic Incentives to Promote "Parallel" Cinema in India. *Media & Arts Law Review* 16: 21, 23–6.

14For example, according to one report, the hit Bollywood film Kaminey was downloaded illegally 350,000 times within a week of its release, with a third of the downloads originating from outside India. Frater, P. 2009. Online Piracy in India a Global Problem. Hollywood Reporter. http://www. hollywoodreporter.com/news/online-piracy-india-global-problem-92365

15Banerjee, A. 2016. Copyright Piracy and the Indian Film Industry: A "Realist" Assessment. *Cardozo Arts & Entertainment Law Journal* 34: 609, 639–40.

16Galanter, M. (1967). The Uses of Law in Indian Studies. In *Language and Areas: Studies Presented to George V. Bobrinskoy* (pp. 37–44, 38).

17Galanter, M. 2010. World of Our Cousins. *Drexel Law Review* 2: 365, 368.

18Government of India (2012). National Court Management Systems, Policy and Action Plan.

weak in less developed regions, with instances of corruption and inefficiency.19 When criminal cases proceed to trial, complainants face further challenges. One report has observed that criminal copyright cases, "most of the time, have not yielded effective and deterrent results", with problems such as accused being awarded bail easily, lengthy delays, loss of evidence, low conviction rates and low amounts of fines where convictions are awarded.20 In the context of civil litigation, cases tend to proceed slowly following the interim stage. As the Supreme Court of India has observed, "[I]n the matters of trademarks, copyrights and patents, litigation is mainly fought between the parties about the temporary injunction and that goes on for years and years and the result is that the suit is hardly decided finally".21

With the above caveats, this chapter discusses online copyright enforcement in India. In Sect. 2, the chapter provides a broad overview of the landscape concerning film piracy in India. In Sect. 3, the chapter discusses a proposed (and unimplemented) recommendation to target end-users in India. In Sect. 4, the chapter discusses legal issues concerning website-blocking injunctions, which is a strategy that the industry has aggressively pursued in recent years. In Sect. 5, the chapter discusses the issue of ad-supported piracy, which may well be the next battleground for rights owners in India. The chapter concludes by reflecting on the efficacy of nonlitigious measures, such as the targeting of revenue-generating ads and negotiations with search engine websites. Although the focus of this chapter is on the Indian film industry, to a great extent it will automatically subsume the Indian music industry. Unlike in many countries, the majority of Indian films are musicals. Most popular musicians in India release songs as part of film soundtracks. Thus, film consumption in India is frequently synonymous with music consumption, and copyright ownership of films and sound recordings often lie with the same entity.22

#### **2 The Piracy Landscape in India**

The Indian film industry is the world's largest in terms of films produced and tickets sold,23 third largest in terms of box-office size24 and fastest-growing overall.25 Globally, Indian cinema enjoys popularity among the Indian diaspora, as well as

19Liang & Sundaram, *supra* note 12, at 342.

20 International Intellectual Property Alliance (2014), Special 301 Report on Copyright Protection and Enforcement, p. 43 http://www.iipa.com/rbc/2014/2014SPEC301INDIA.PDF

21Vardhman v. Chawalwala (2009) 41 P.T.C. 397, ¶ 3 (S.C.).

22See generally, Morcom A. (2007). Hindi Film Songs and the Cinema. London: Ashgate.

23UNESCO Institute for Statistics (2014). Diversity and the Film Industry: Analysis of the 2014 UIS International Survey on Feature Film Statistics, p. 9. http://uis.unesco.org/sites/default/files/ documents/diversity-and-the-film-industry-an-analysis-of-the-2014-uis-survey-on-feature-filmstatistics-2016-en\_0.pdf

24Motion Picture Association of America (2016). Theatrical Market Statistics, p. 7. https://www. mpaa.org/wp-content/uploads/2017/03/MPAA-Theatrical-Market-Statistics-2016\_Final.pdf

25PricewaterhouseCoopers (2014). Global Entertainment and Media Outlook 2014-2018: India Summary, pp. 3-4. https://www.pwc.com/gx/en/global-entertainment-media-outlook/assets/ indian-summary.pdf

among non-Indian populations in certain parts of Asia and Africa, and forms a component of India's global "soft power".26 However, the industry suffers from high levels of piracy. According to an industry study, piracy causes the Indian film industry annual financial losses of around US\$1 billion, along with around 600,000 annual job losses.27 Even if one may dispute how such figures have been computed, it is undeniable that a culture of piracy is widely prevalent throughout India. Pirated DVDs are openly sold in markets in Indian cities, while illegal file-sharing and downloading are common.

There are multiple ways in which pirated copies of films are produced and distributed online in India (as in many other countries). Of these, four are noteworthy. First, prints of films have been leaked internally by entities within the production and distribution chain.28 Second, pre-release prints of films (called "screeners") have been leaked via film festivals, industry insiders and even the Indian film classification board.29 Third, at the post-release stage, film pirates have used camcorders inside theatres to copy films and subsequently distribute them online. With advances in the quality of mobile phone cameras, pirates are increasingly using mobile phones to record films, making them difficult to detect.30 Fourth, also at the post-release stage, films can simply be copied from legitimate sources and shared online, whether from DVDs or streaming services like Netflix and Amazon Prime.

The motives for the above acts can vary. There have been instances where individuals have shared copyrighted content simply out of enthusiasm and without any apparent financial motive. However, a significant amount of piracy is motivated by financial gain. The Committee has described piracy as a "high rewards" business.31 Some years ago, a single raid against a prominent pirate in India reportedly yielded pirated DVDs worth over US\$ 1 million.32 Of late, online piracy yields significant revenues through advertising. In 2014, a report by a then British member of parliament, serving as intellectual property advisor to Prime Minister David Cameron,

26Thussu, D. (2013). Communicating India's Soft Power: Buddha to Bollywood, pp. 127–154. Palgrave MacMillan: London.

27US-India Business Council & Ernst & Young (2009). The Effects of Counterfeiting and Piracy on India's Entertainment Industry, pp. 3, 31.

28For example, clips from *Baahubali 2*, a big-budget film, were leaked online before the film's release by a young graphic designer who was a part of the editing team. See Roy, G. 2016. Baahubali 2 War Sequence Leaked, Graphic Designer Arrested. NDTV. http://movies.ndtv.com/ regional/baahubali-2-scenes-leaked-graphic-designer-arrested-1628731

29For example, a major Bollywood film, Udta Punjab, was leaked online in entirety when the film was pending review with the Indian film classification board. See Datta, A.N. 2016. "Udta Punjab" leak: CBFC claims innocence as all fingers point at them. DNA. http://www.dnaindia.com/entertainment/report-udta-punjab-leak-cbfc-claims-innocence-as-all-fingers-point-at-them-2224252

30Pillai, S. 2016. The Piracy Nightmare. The Hindu. http://www.thehindu.com/features/cinema/ The-piracy-nightmare/article14593263.ece

31Report of the Committee on Piracy, *supra* note 10 at 14.

32Selvaraj. A. 2013. CB-CID Unearths Rs 7cr Worth Materials from Video Pirate. Times of India. http://timesofindia.indiatimes.com/city/chennai/CB-CID-unearths-Rs-7cr-worth-materials-fromvideo-pirate/articleshow/18096084.cms

quoted estimates that 600 pirated websites generated over US\$ 200 million through advertising revenues in 2013, with nearly a third of the advertisements being those of "household" brands.33 According to the report, most businesses were unaware of their advertisements appearing on such websites.34 In India, a study by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Strategic IP Information (SIPI) tracked 1143 pirate websites offering Indian films and found 73% to be supported by advertisements. Over half were found to be advertisements of well-known brands.35

A section of academicians and activists in India have viewed film piracy as an altruistic activity. For example, Lawrence Liang has declared himself to be "a defender of film piracy",36 while the Alternative Law Forum (an organisation promoting open access) has dismissed WIPO's advocacy efforts against piracy.37 The most common justification advanced by sympathisers of piracy is that it facilitates access to culture. This was even an argument once advanced by defendants, accused of running an unlicensed DVD rental, in a copyright infringement case.38 However, the ad-supported financial model of pirate websites (discussed later in Sect. 5) must bring into question how altruistic the motives of pirates actually are. To illustrate, in 2014, two websites offering pirated versions of a popular Bollywood film were tracked down to pirates based in Latvia, ostensibly with little cultural affinity towards India and motivated entirely by profit.39 In the FICCI-SIPI study, of the websites tracked, the largest number of server locations was in North America, then Europe and then Asia.40 Furthermore, unlike a decade ago, there are now many avenues for accessing licensed content in India at nominal prices, through streaming websites like YouTube, Netflix and Hotstar (an India-focused website run by the Star television network).

33Weatherley, M. (2014). "Follow the Money": Financial Options to Assist in the Battle Against Online IP Piracy. http://www.olswang.com/media/48204227/follow\_the\_money\_financial\_ options\_to\_assist\_in\_the\_battle\_against\_online\_ip\_piracy.pdf

34 Ibid at 2 (stating, "[I]n the majority of instances, display advertising that appears next to infringing material is not intended by the advertiser, its agency or intermediary companies involved in the trading of advertising").

35Federation of Indian Chambers of Commerce (FICCI) and Industry & Strategic IP Information (SIPI) (2017). Badversiting. http://verisiteglobal.com/Badvertising\_Report.pdf

36Liang, L. 2014. Insights on Film Piracy. *Economic and Political Weekly* 47: 29, 30.

37Alternative Law Forum. Right02Copy. http://altlawforum.org/productions/right02copy

38Warner Bros. v. Santosh 2 M.I.P.R. 25 (2009), ¶ 15. The defendants argued (unsuccessfully) before the court that that they were "solving the problem of an "artificial shortage" of entertainment in India.

39Banerjee, *supra* note 15.

40FICCI & SIPI, *supra* note 35, at 20.

## **3 Targeting End-Users: A Graduated Response Proposal**

Indian copyright law recognises the rights of reproduction, distribution and communication to the public, as well as their applicability in an online environment.41 There is an absence of Indian case law comprehensively discussing the liability of end-users for downloading infringing content. Outside India, however, there exists ample judicial precedent supporting liability. For example, in the USA, in a wellknown case involving the file-sharing service Napster, it was observed:

Napster users who upload file names to the search index for others to copy violate plaintiffs' distribution rights. Napster users who download files containing copyrighted music violate plaintiffs' reproduction rights. […] The district court concluded that Napster users are not fair users. We agree.42

In a later case, it was reiterated: "[D]ownloading copyrighted songs cannot be defended as fair use, whether or not the recipient plans to buy songs she likes well enough to spring for".43 In a more recent case, involving movie torrent downloads, the Federal Court of Australia observed that "the downloading of a sliver of the film from a single IP address" constitutes copyright infringement, even if the size of the sliver is "very small", and it infringes the right of communication to the public.44 In a decision of the European Court of Justice, an exemption has been provided to Internet users who stream content where only a temporary cached copy is created in the user's hard disk.45 But while this would exempt users from liability from viewing pirated streams on websites like YouTube and Dailymotion, the exemption would seemingly not exist if a user actively downloads these videos (e.g. by using websites such as www.keepvid.com) or if a permanent cached copy is created in the user's disk.

There is no reason why the legal position in India should be any different from that above. However, targeting end-users is always an unpopular and controversial strategy anywhere in the world. It has rarely been followed by rights owners in India. In recent years, some developed countries have adopted the so-called "graduated response" systems as a milder way to target end-users.46 Graduated response systems can be divided into the "publicly and privately arranged", the former originating in statutes and the latter in agreements between Internet service providers

41Copyright Act of 1957, s. 14

42A&M Records v. Napster 239 F.3d 1004, 1014–5 (9th Cir. 2001).

43BMG Music v. Gonzalez 430 F.3d 888, 890 (7th Cir. 2005).

44Dallas Buyers Club v. iiNet (2015) F.C.A. 317, ¶¶ 28–30 (Fed. Ct. Aust.).

45Newspaper Licensing Agency v. Meltwater (2014) A.C. 1438, ¶¶ 26, 27, 29, 30, 33–38, 46, 49–52 (Case C-360/13) (Eur. Ct. Justice).

46The countries with such a mechanism currently in place include the USA, UK, France, New Zealand, Ireland, South Korea and Taiwan. See Giblin, R. 2014. Evaluating Graduated Response. *Columbia Journal of Law & Arts* 37: 147.

(ISPs) and rights owners.47 The common feature of these schemes is that they "generally require that the ISP take some action against users suspected of infringing copyright, ranging from issuing warnings, to collating allegations made against subscribers and reporting to copyright owners, to suspension and eventual termination of service".48 Arguments in favour of graduated response systems hold that such schemes can act as "digital scarecrow[s]" and deter large numbers of Internet users from infringing copyright and that they represent a cheaper and fairer alternative to suing individual Internet users.49

At present, ISPs and other intermediaries in India are governed by a set of rules requiring them to inform users not to *host* or *upload* "any information" that "infringes any…copyright or other proprietary rights".50 In case users breach this policy, the ISP or intermediary "has the right to immediately terminate the access or usage rights of" the user.51 Although uploading is a natural consequence of using file-sharing software, there is little evidence to suggest that, in the absence of court orders, ISPs have voluntarily disconnected users who upload pirated content by using such software. Indeed, as many subscribers may purchase high-speed Internet connections with the purpose of downloading pirated films, it is questionable whether ISPs even desire to enforce such rules. The Committee accordingly suggested the institution of a "three stage strike model" where "[a]t the first stage, the errant subscriber could be let off with a warning appearing on his screen; at the second stage, a more severe punishment could be given while the third time, the subscriber's services could be disrupted for a few hours or so".52

The issue of disconnecting a user is no doubt the most contentious aspect of graduated response systems. The Indian constitution grants all citizens the fundamental right to "freedom of speech and expression", subject only to certain "reasonable restrictions".53 The Supreme Court has held that this right includes a "right to… information, knowledge and entertainment"54 and that the "content of the right… remains the same whatever the means of communication including internet communication".55 Therefore, it could be argued that the right to access information

47 Ibid at 153.

48Suzor, N. & Fitzgerald, B. 2001. The Legitimacy of Graduated Response Schemes in Copyright Law. *UNSW Law Journal* 34:1.

49Yu, P. 2010. The Graduated Response. *Florida Law Review* 62:1374, 1381–3.

50 Information Technology (Intermediaries Guidelines) Rules 2011, Notification No. G.S.R. 314(E), s. 3(2)(d).

51 Ibid at s. 3(5).

52Report of the Committee on Piracy, *supra* note 10 at 35–36.

53Constitution of India, Article 19.

54Secretary, Ministry of Information v. Cricket Association of Bengal (1995) A.I.R. S.C. 1236, ¶ 91.

55Shreya Singhal v. India AIR 2015 SC 1523 ¶ 86.

and entertainment through the Internet is a fundamental right under the Indian Constitution.

Outside India, the High Court of Ireland has observed that while disconnection is a "serious sanction", it does not completely deprive persons of Internet access, as they "have only to walk down to their local town centre" and use a cybercafé.56 However, France's highest court, the Constitutional Council, struck down as unconstitutional a provision in the first version of France's graduated response system, under which subscribers could be disconnected for up to 1 year and barred from entering into contracts with other ISPs during this period.57 The fact that the Committee referred to "disruption" for a few hours, rather than a lengthy "disconnection", indicates that the Committee may have been hinting at bandwidth reduction rather than outright disconnection. Such a measure would perhaps be easier to defend as a permissible "reasonable restriction".

It has also been argued that graduated response systems deny "end-users due process by subjecting them to unverified suspicion of infringing activities", and the technology used to identify infringing users is also not accurate.58 In Ireland, for example, a technical glitch led to an ISP incorrectly sending almost 400 subscribers copyright infringement notifications.59 In France, the Constitutional Council held that by "reversing the burden of proof" and fixing "presumption of guilt" on Internet user, the first version of France's graduated response system had contravened the French constitution.60 An easy way to overcome this problem could be to dispense with the penalty of disruption altogether and simply send users persuasive warnings. Such a model has been attempted in the UK. However, the efficacy of such a model is yet to be determined. One critic has described the UK model as "toothless".61

Even if a graduated response mechanism may be constitutionally defensible in India, such a measure would still be unpopular among the public, especially as Internet access is still restricted to a minority of India's population and out of reach of economically weak sections. Furthermore, it is not unreasonable to assume that, among poorer sections of the population, several users may share an Internet connection between themselves, meaning that non-infringers may be penalised. It is, therefore, not a surprise that the Committee's proposal has not found legislative or political support. Instead, rights owners have preferred to use website-blocking injunctions as an anti-piracy strategy. However, the question of targeting end-users has again reared its head, following an order of the Delhi High Court in a recent website-blocking case. The court observed that "since website blocking is a

56E.M.I. v. Eircom (2010) I.E.H.C. 108, ¶ 9.

57Conseil Constitutionnel [Constitutional Court] decision No. 2009–580, June 10, 2009, J.O. 9675 (Fr.) ("HADOPI case"), translated in Act Furthering the Diffusion and Protection of Creation on the Internet, Décision n° 2009–580, 4 (June 10, 2009), ¶¶ 9-10, 19, 39 available at http://www. conseil-constitutionnel.fr/conseil-constitutionnel/root/bank/download/2009580DC2009\_580dc. pdf

58Yu, *supra* note 49, at 1394-6.

59E.M.I. v. Eircom (2012) I.E.H.C. 264, ¶¶ 1.1–1.3.

60HADOPI case, supra note 57, at ¶¶ 18, 39

61Solon O. (2014). ISPs Launch Toothless Four Strikes Anti-Piracy Initiative. Wired. http://www. wired.co.uk/news/archive/2014-07/21/four-strikes-copyright

cumbersome exercise" and the majority of downloaders are "youngsters" who may be unaware of copyright law, the government should frame a policy where users are warned "if technologically feasible in the form of e-mails, or pop-ups or such other modes", and fined in the event of not heeding the warnings62.

## **4 Website-Blocking Injunctions**

As mentioned earlier, what most plaintiffs in civil infringement actions in India realistically look for is an interim injunction. Here, the Delhi High Court has been liberal in granting such injunctions speedily and ex parte, through the so-called "John Doe" orders. A John Doe order is an order restraining anonymous infringers. It is often referred to as an "Ashok Kumar" order in India. The first such order in India was passed by the Delhi High Court, in a case involving pirated live broadcasts of the 2002 FIFA World Cup by unlicensed cable operators. The plaintiffs held rights to broadcast the event and had sublicensed those rights to specific cable operators in India. At the time, broadband penetration in India was very low, and streaming technologies were underdeveloped worldwide. Thus, the plaintiffs were focused on curbing television broadcasts. The plaintiffs named a handful of cable operators who were already broadcasting the matches without a licence as defendants but added unknown "Ashok Kumar" parties as remaining defendants. The plaintiffs argued that the "enforcement of rights against cable operators is a virtual nightmare" and that "if they were to wait and identify specific parties and collect evidence of infringement by such specific parties, they would lose a great amount of time".63 Citing decisions from the USA, the UK, Canada and Australia, the plaintiffs argued for a John Doe order against the additional, unknown defendants. The court agreed with the plaintiffs' contentions and granted the order. Justice Dalveer Bhandari (who would go on to be appointed to the Supreme Court of India and the International Court of Justice) observed:

The judicial systems of all these countries have basic similarity with our judicial system. Therefore, looking to the extra ordinary facts and circumstances of the case, in the interest of justice the courts in India would also be justified in passing 'John Doe' orders. … Undoubtedly the cable operators in India have a long history of violating copyrights. … The cable operators are encouraged owing to the unique nature of cable piracy and the unstructured nature of the cable industry, the speed with which any trace of infringement can be erased by the cable operators, enforcement of rights in conservative nature is unlikely to effectively redress the plaintiffs' grievance.64

In the context of online piracy, a number of rights owners have obtained broadly worded ex parte John Doe orders from the major High Courts (particularly Delhi) to compel ISPs to pre-emptively block infringing websites—a trend visible from 2011 onwards. In what is thought to be the first of such cases, the Delhi High Court

62UTV v 1337X.to, Civil Suit No 724/2017, ¶ 104, Delhi High Court, 10 April 2019, https://indiankanoon.org/doc/47479491/.

63Taj Television v. Mandal (2003) F.S.R. 22, ¶ 7 (Del. H.C.).

64 Ibid ¶ ¶ 16, 17.

granted an injunction in connection with a big-budget Bollywood film, *Singham*. Applying Justice Bhandari's decision in an online context, the court stated:

[D]efendants, and other unnamed and undisclosed persons, are restrained from communicating or making available or distributing, or duplicating, or displaying, or releasing, or showing, or uploading, or downloading, or exhibiting, or playing, and/or defraying the movie "Singham" in any manner without proper license from the plaintiff or in any other manner which would violate/infringe the plaintiff's copyright in the said cinematograph film "Singham" through different mediums like CD, DVD, Blue-ray, VCD, Cable TV, DTH, Internet, MMS, Tapes, Conditional Access System or in any other like manner.65

Thus, the court passed a very broad order encompassing various actors in the online piracy chain, from those indulging in camcording to uploaders and downloaders, as well as actors involved in physical piracy. This order was followed by a large number of similar orders in the coming months and years, using similar language.66

Unsurprisingly, ISPs did not take kindly to such orders being passed against them ex parte. An association of ISPs wrote to the Indian government complaining that various law firms had been sending ISPs legal notices annexing copies of John Doe orders and that the government's Department of Telecommunications (DoT) notification was the correct authority to instruct a website to be blocked.67 However, a film company countered this by impleading the DoT as an additional party in a subsequent suit before the Delhi High Court. The court held that even the DoT was required to block "various websites (named and un-named)…primarily indulged in hosting, streaming or providing access to infringing and illegal" copies of the film in question.68

The wide ambit of such orders has met with considerable criticism. One of the earliest criticisms was that ISPs were blocking entire websites (such as Vimeo and Daily Motion) instead of specific pages within the website hosting infringing content.69 In one instance, a consumer court directed an ISP to pay compensation to a

65Reliance v. Jyoti Cable, Civil Suit No. 1724 of 2011 (Del. H.C., Jul. 20, 2011), http://delhihighcourt.nic.in/dhcqrydisp\_o.asp?pn=135357&yr=2011

66See, e.g. Reliance v. Jyoti Cable, Civil Suit No. 2066 of 2011 (Del. H.C., Aug. 26, 2011), http:// delhihighcourt.nic.in/dhcqrydisp\_o.asp?pn=173116&yr=2011 (similarly worded order concerning the Bollywood film Bodyguard); Reliance v. Multivision, Civil Suit No. 3207 of 2011 (Del. H.C., Dec. 19, 2011), http://delhihighcourt.nic.in/dhcqrydisp\_o.asp?pn=269404&yr=2011 (similarly worded order concerning the Bollywood film Don 2). See also John Doe Orders – Stop Piracy, Oct. 8, 2014, NAIK NAIK & CO., http://naiknaik.com/john-doe-orders (contains a table with details of John Doe orders awarded by courts, including the Bombay, Madras and Calcutta High Courts).

67Letter from the Internet Service Providers Association of India to the Secretary, DoT (2011). http://www.ispai.in/UI/uploads/submissionAttach/dot(1).pdf

68See, e.g. Fox v. Macpuler, Civil Suit No. 2066 of 2011, ¶ 7 (Delhi High Court, May 14, 2015), http://delhihighcourt.nic.in/dhcqrydisp\_o.asp?pn=110404&yr=2015

69Dua, K. 2012. Confusion Reigns as Indian ISPs Block Vimeo, Torrent Websites. NDTV. http:// gadgets.ndtv.com/internet/news/confusion-reigns-as-indian-isps-block-vimeo-torrent-websites-223340. Pawa, N. Update: Files Sharing Sites Blocked In India Because Reliance BIG Pictures Got A Court Order. Medianama. http://www.medianama.com/2011/07/223-files-sharingsites-blocked-in-india-because-reliance-big-pictures-got-a-court-order

subscriber who could not access a website for over a month.70 High Courts have since attempted to rectify this flaw. In 2013, the Madras High Court stated that only pages specifically hosting infringing content ought to be blocked, rather than entire websites.71 In 2016, the Delhi High Court passed a similar order.72 The same year, the Bombay High Court refused to grant a John Doe order, where the plaintiff requested for a block on 800 websites, finding the plaintiff's suit to be "sketchy and formless".73 The judge directed the plaintiff to instead produce "a list of individual links to downloads", further stating that "a technically competent officer" of the plaintiff must check "if not all, at least a sufficient sampling of these links so as to warrant the grant of an injunction".74

However, the Delhi and Bombay High Courts both later backtracked. The Delhi High Court recalled its order and held that "rogue websites" indulging in "rank piracy" ought to be blocked outright, rather than specific pages within the website.75 The Bombay High Court, in a subsequent order by the same judge, blocked all websites submitted by the plaintiff in a list, numbering 110.76 The list of websites included full websites, such as www.limetorrents.cc, www.thepiratebay.org and www.ugtorrents.com, instead of specific pages. Recently, amidst uncertainty regarding the actual legal position, the popular website www.archive.org (which hosts thousands of valuable historical materials in the public domain) was blocked in entirety by ISPs, following a John Doe order of the Madras High Court. Some users had apparently uploaded pirated copies of two films on the website. However, the plaintiffs named the website in entirety in the infringement suit, and the court granted the plaintiffs the relief they sought without any rider distinguishing the website in entirety versus the infringing pages within it.77

70Vinay v. Airtel, Consumer Complaint 226 of 2012 (District Consumer Disputes Redressal Forum, Shimoga, Aug. 3, 2012), http://<IP_ADDRESS>/ncdrcrep/judgement/18533120803153733968226- 202.pdf

71Vodafone v. R.K. Productions (2013) 54 P.T.C. 149, ¶ 4 (Mad. H.C.) (quoting an earlier order where the court had stated that "the interim injunction is granted only in respect of a particular URL where the infringing movie is kept and not in respect of the entire website".).

72DEITY v. Star, First Appeal Order No. 57 of 2015 (Del. H.C. March 10, 2016), http://delhihighcourt.nic.in/dhcqrydisp\_o.asp?pn=54187&yr=2016

73Balaji Motion Pictures v. Bharat Sanchar Nigam, Civil Suit No. 694 of 2016 (Bom. H.C. July 1, 2016), ¶ 6, http://spicyip.com/wp-content/uploads/2016/07/Great-Grand-Masti-1.pdf

74 Ibid at ¶¶ 7-8.

75DEITY v. Star, Review Petition in First Appeal Order No. 57 of 2015, ¶ 14(Del. H.C. July 29, 2016), available at http://lobis.nic.in/ddir/dhc/PNJ/judgement/29-07-2016/ PNJ29072016REVIEWPET1312016.pdf

76Balaji Motion Pictures v. Bharat Sanchar Nigam, Civil Suit No. 694 of 2016 (Bom. H.C. July 8, 2016), ¶ 4, http://s3.documentcloud.org/documents/2944079/Great-Grand-Masti-Order-Dated-8th-July-2016.pdf

77 Internet Archive blocked in India, thanks to Lipstick Under My Burkha & Shah Rukh Jab Harry Met Sejal. 2017. India Today. https://www.indiatoday.in/technology/news/story/internet-archiveblocked-in-india-thanks-to-lipstick-under-my-burkha-and-shah-rukh-jab-harry-met-sejal-1029036-2017-08-10

## **5 Ad-Supported Piracy**

The prevalence of ad-supported piracy has been highlighted in recent studies. This section discusses the FICCI-SIPI study in more detail. The study is only among a handful conducted on the subject worldwide and perhaps the only one in India. As mentioned earlier, the study tracked 1143 pirate websites offering pirated copies of Indian films. These roughly fell into five categories—torrent and other peer-to-peer file-sharing websites, direct download websites, linking websites and streaming websites. The study found 786 different entities advertising on 835 websites. Of this number, 46% concerned categories such as adult dating, pornography, unregulated products and gambling. The remaining 56% concerned mainstream products and services.78 The latter spanned industries like telecommunications, automobiles, entertainment and retail and included ads for well-known brands like Lufthansa, AirAsia, Nissan, Hyundai, Religare (an Indian financial services group) and Flipkart (a popular Indian online retail website).79

The study blamed the appearance of such ads on the way digital advertisers function. The study reported that up to 85–90% of the digital advertising budget of brands was spent on search engines, social media and legitimate livestreaming platforms. However, the remaining amount was funnelled by ad agencies or marketing teams to "ad networks that provide cheap and efficiency driven media campaigns", such as Google AdSense, DoubleClick (a subsidiary of Google), PopAds, Propeller Ads, BlueKai, AppNexus and Lotam.80 These networks typically operate on a costper-click basis and exercise low levels of control.81 This means, for example, that an ad for Lufthansa placed through such networks may appear on a pirate website offering a copy of the newest *Avengers* film, rather than a news website, if the former attracts 100,000 visitors a day, while the latter attracts 10,000 a day.

In a report titled *How Google Fights Piracy*, Google has stated that it "takes the challenge of online piracy seriously" and is "a leader in rooting out and ejecting rogue sites" from ad networks.82 Google has claimed that it has terminated over 11,000 AdSense accounts for copyright violations.83 However, the FICCI-SIPI study found that Google and DoubleClick collectively provided ad network services to over half the sample websites in the study, with AdSense supplying nearly 20%.84 This may suggest that either Google has not devoted much attention to concerns of

186

78FICCI & SIPI, *supra* note 35, at pp. 4–5.

79 Ibid at 40–42.

80 Ibid at 6.

81 Ibid.

82Google, How Google Fights Piracy 9 (2016). https://drive.google.com/ file/d/0BwxyRPFduTN2TmpGajJ6TnRLaDA/view

83 Ibid at pp. 4, 16.

84FICCI & SIPI, *supra* note 35, at p. 7.

Indian copyright owners or that the sheer scale of piracy means that AdSense accounts violating copyright keep proliferating rapidly. Either way, it clearly demonstrates that income is generated from the piracy of Indian films. While this income, as demonstrated by the FICCI-SIPI study, only draws a small chunk of the digital advertising budget of corporations, it may be considered large in relation to the minimal investment made by pirate websites and the large number of viewers such websites may attract (thus maximising returns from a cost-per-click ad policy).

Yet, even if Google and reputed brands address the problem more seriously and choke funding for pirate websites, it is important to remember that, per the FICCI-SIPI study, almost half the ads were from dodgy businesses. In India, for example, pornography is technically illegal, while gambling is banned in virtually every Indian state. It is doubtful whether a pornography or gambling website would be as conscious of its brand reputation and prestige as a mainstream corporation would. For such businesses, pirate websites may actually be the best way to advertise their products and services to the youth. Thus, attempting to curb piracy by throttling ad revenues may only be a partly successful strategy.

#### **6 Conclusion**

The chapter began by drawing attention to the fact that there are limits to how the law can curb online piracy. Enforcement in India presents additional obstacles. In this context, rights owners have carved out website-blocking injunctions as a convenient strategy, which has certainly yielded benefits. Nevertheless, this is still not an ideal remedy. In the absence of judicial authority, especially a Supreme Court decision, laying down the exact criteria for blocking websites in entirety versus specific infringing pages, it is still open to judges to be cautious and insist on blocking specific infringing pages only. In such a situation, a pirate can easily migrate to a different, unblocked page within the same website. Furthermore, even if judges block websites in entirety, this can still allow the blocked website to shift to a different website altogether. For example, a pirated music website blocked by the Calcutta High Court did precisely this. The court ordered the blocking of the website www. songs.pk, with the rider that the "order of blocking should be confined to" that specific website and "should not otherwise interfere with internet service".85 The website subsequently migrated to the website www.songspk.pk. 86 In the time that a rights owner approaches a court for a second time to block a new website, a substantial amount of piracy may already have occurred.

85Sagarika v. Dishnet, Civil Suit 23 of 2012 (Cal. H.C., Jan. 27, 2012).

86Saxena, A. 2012. Songs.Pk Relaunched as Songspk.pk. Mediaama http://www.medianama. com/2012/03/223-songs-pk-relaunched-as-songspk-pk-ad-networks

Additionally, questions should be raised about the manner in which legitimate websites, such as www.archive.org., were blocked. Although it is probable that many judges are not expert Internet users and tend to give plaintiffs the benefit of doubt, the blocking of legitimate websites can constitute a violation of consumer rights and even a violation of the right to freedom of expression.

Amidst this dilemma, rights owners can perhaps explore non-litigious strategies as a more efficient and less contentious measure. For instance, online piracy is increasingly being viewed as a money laundering and tax evasion issue, where pirates profiting from advertisements can use payment gateways to stay anonymous. In the UK, the government has established the Police Intellectual Property Crime Unit (PIPCU). The PIPCU performs a range of anti-piracy functions, notable among which are efforts to disrupt the revenue stream of pirate websites.87 Recently, following reports of the widespread piracy of Telugu-language films, the state of Telangana in India established the Telangana Intellectual Property Crime Unit (TIPCU), modelled on the PIPCU.88 Following Telangana, the state of Maharashtra (which is home to Bollywood) announced the establishment of the Maharashtra IP Crime Unit (MIPCU).89 By bypassing courts and working with police officials likely to be more knowledgeable about cybercrime and technology, the industry can possibly counter piracy more efficiently.

Another strategy for rights owners could be to approach the Advertising Standards Council of India (ASCI), a self-regulatory body monitoring misleading advertisements, and alert well-known corporations to the problem of their advertisements appearing on pirate websites. Legally, there is no requirement regarding the medium through which traders can advertise their products in India, and the matter would not directly be under the ASCI's ambit. But this does not preclude rights owners from lobbying with the ASCI to initiate discussion among advertisers. In the USA, a joint effort by the Association of National Advertisers, the American Association of Advertising Agencies and the Interactive Advertising Bureau has resulted in the formation of the Trustworthy Accountability Group. This initiative has, according to one study, significantly reduced ad revenues for pirate websites in the USA, curbing revenues by over US\$ 100 million.90 Possibly, the ASCI could initiate a similar measure.

87Weatherley, *supra* note 33, at 7–9.

88TIPCU to Tackle Online Piracy. 2016. The Hindu. http://www.thehindu.com/news/national/ andhra-pradesh/tipcu-to-tackle-online-piracy/article8771496.ece

89Parmar, M. 2017. FICCI Frames'17. Maharashtra to form IP Crime Unit to fight online piracy. Indian Television. TIPCU to Tackle Online Piracy, THE HINDU, June 25, 2016, http://www.thehindu.com/news/national/andhra-pradesh/tipcu-to-tackle-online-piracy/article8771496.ece

90Ernst & Young, Measuring Digital Advertising Revenue to Infringing Sites. (2017) https://www. tagtoday.net/hubfs/Measuring%20digital%20advertising%20revenue%20to%20infringing%20 sites.pdf?t=1518474032751

Yet another strategy for rights owners could be to tackle what is arguably the elephant in the room—Google and its ad networks. Recently, Google has initiated measures to block hate speech websites and prevent advertisements from showing up on these websites. This measure was taken under pressure from corporations displeased at their advertisements inadvertently appearing on such websites.91 Copyright owners could enter into discussion with Google for similar technological measures with respect to pirated content. However, copyright infringement is undoubtedly viewed much less seriously than hate speech. Moreover, unlike hate speech, there is a greater degree of acceptance and participation among youth in the consumption of pirated content.

In the end, online piracy is best tackled through a series of measures. However, as this chapter has pointed out, rights owners must be realistic about the limitations of each measure and thus at best only hope to curb the extent of piracy.

## **References92**

Alternative Law Forum. Right02Copy. http://altlawforum.org/productions/right02copy

91Solon. O. 2017. Google's bad week: YouTube loses millions as advertising row reaches US. Guardian. https://www.theguardian.com/technology/2017/mar/25/google-youtube-advertising-extremistcontent-att-verizon

92All online information accessed on February 1, 2018

US Trade Representative. (2014). *Out-of-cycle review of notorious markets*.

**Open Access** This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

The images or other third party material in this chapter are included in the chapter's Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter's Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.

## **Continued Economic Benefit to the Author: Royalties in the Indian Film Industry – Historical Development, Current Status, and Practical Application**

Renuka Medury

#### **Abstract**

The chapter traces the stance that Indian copyright law has adopted on the issue of royalty payments to authors of literary and musical works, through the years. It delineates the court judgments that have exerted a significant impact on the subject, the development of the law, and the practical realities and application of the law. The first part of the chapter details the structuring of music production deals in India. The next section explores the relevant judicial precedents and the issues with the copyright societies in India. The third section traces the amendments introduced in 2012, thereby changing the royalties landscape, and the last part assesses the aftermath of these amendments.

The chapter is specific to the Indian law on the subject of royalties and the significance of royalties given the massive scale at which content, i.e., movies, television programs, and now web-based content, is produced and exploited in India. Music production has continued to play an important role in the realm of content production and distribution in India ("In its 103-year-old history, songs have been an integral part of Hindi movies ever since the first talkie, Alam Ara, released in 1931. Over the years, apart from their cultural and aesthetic significance, songs have added tremendous business value to films. …. The industry believes that songs become the identity of films in India, especially due to a marketing culture that relies on film stars and little else." Is Bollywood still wary of 'song-less' films? Mint (April 21, 2016).), and music production, as detailed in the chapter, assumed immense significance in the context of the statutory royalties introduced vide the amendments to the Indian copyright law in 2012.

© The Author(s) 2019 193

R. Medury (\*)

ARCIALA, School of Law, SMU, Singapore, Singapore

K.-C. Liu, U. S. Racherla (eds.), *Innovation, Economic Development, and Intellectual Property in India and China*, ARCIALA Series on Intellectual Assets and Law in Asia, https://doi.org/10.1007/978-981-13-8102-7\_9

#### **Keywords**

Copyright royalties · Indian copyright · Content exploitation · Equal royalties · Independent copyright · Copyright societies · Copyright amendments

#### **1 Introduction**

…. one of the plain objectives of the proposed legislation is to ensure that the authors of the works, in particular authors of songs included in cinematograph films or sound recordings, receive royalty for the commercial exploitation of such works.1

The importance of music in cinematograph films created in India cannot be overstated. Many films produced in India are identified by the music. A lot of the music that is created in connection with cinematograph films in India is actually incorporated in the films, interspersed at regular intervals throughout the progression of the story. Hence, music holds a special significance in the context of content, in particular, Indian cinema.

Given the immense popularity of film music in India, it is unimaginable that the creation of music and accompanying lyrics would not constitute a lucrative business for the authors of these works. However, a close scrutiny of the status quo establishes that while the musical composition and the lyrics are the intellectual work of the respective authors, the substantial remuneration that accrues from the exploitation of the music actually flows to entities that may have procured the rights to it for a monetary consideration without any intimate involvement in the creative process.

This chapter explores the laws relating to equitable remuneration or "royalties" as the term is understood and used under the Indian copyright law. In particular, it explores the historical position on royalties, the current law on the subject, and the continuing complexities. At the outset, it is appropriate to clarify that the statutory concept of royalties was introduced in the Indian copyright law only in the year 2012. Hence, while prior to 2012, the payment of royalties was recognized as a requirement and an entitlement; there was no statutory mandate on it.

#### **2 Music Deals: Indian Context**

Each piece of music amalgamates several independent works. It includes the musical works composed by a music composer and the lyrics authored by a lyricist unless the music constitutes the background score for the particular cinematograph film. The musical work and literary work are fused together in a sound recording by the producer of the sound recording. This sound recording is usually incorporated in

1Paragraph 10.20, Clause 7: Section 19: "Mode of Assignment," Two Hundred Twenty-Seventh Report on the Copyright (Amendment) Bill, 2010, Rajya Sabha Secretariat.

the cinematograph film. The musical work, the literary work, the sound recording, and the cinematograph film each constitute a separate and independent class of work. The definition of a "work" as detailed in the Copyright Act, 1957 ("Act"), disambiguates this conceptual differentiation.2

While certainly not all, but a large part of the music in India is for incorporation in films or other forms of content such as television programs or web series. The structure of music deals in the Indian film industry3 usually involves the following processes:

The spectrum of rights that is assigned to the producer of the film, and subsequently to the music label, usually assumes the format of an "all inclusive" assignment including all rights of exploitation and the entire copyright in the music. The music label is hence entitled to exploit the music through all modes and mediums of exploitation, including those that are only anticipated to be invented at a future date. The constant evolution and development of technology have expanded the scope of the modes through which music can be exploited. While earlier, the most commonly used medium for accessing and listening to music in India was the radio, cassettes, and later compact discs, in the present day the most ubiquitous medium is digital platforms. It is also important to bear in mind that digital platforms have supplemented, not supplanted radio and compact discs, which continue to be used by many people in India. Further, music companies also exploit the songs in audiovisual format, through authorizing various television and digital platforms to exhibit either the full-length songs or snippets from the songs.

2Section 2(y) of the Act provides that "work" means any of the following works, namely—(i) a literary, dramatic, musical, or artistic work; (ii) a cinematograph film; and (iii) a sound recording.

3While this chapter refers to the "Indian film industry," it is important to note that there is no "a" Indian film industry. Bollywood is undoubtedly India's most prominent and internationally recognized film industry. However, apart from Bollywood, there are several regional film industries in different parts of India.

The equal right to royalties4 accruing from exploitation of literary and musical works arose in the context of the rampant monetization of music by producers of films and music companies and the concomitant exclusion of music composers and lyricists, from a share in this commercialization. The amendments introduced in 2012 to the Act attempted to address three interrelated concerns of authors of literary and musical works incorporated in cinematograph films and sound recordings:

4 Introduced vide the Proviso to Section 18 of the Copyright Act, 1957, through the amendments enacted in 2012. Please see infra Note 32.

5The historical precedent to the introduction of the proviso was the withholding of "ringtone" related royalties to authors of literary and musical works, a format of music exploitation that garnered immense popularity in India in the early 2000s; see Prashant Reddy T., The Background Score to the Copyright (Amendment) Act, 2012, 5 NUJS L. Rev. 469 (2012).

6Paragraph 9.18, Clause 6: Section 18: Assignment of Copyright, Two Hundred Twenty-Seventh Report on the Copyright (Amendment) Bill, 2010, Rajya Sabha Secretariat.

## **3 Historical Perspective**

#### **3.1 Judicial Backdrop to the Amendments**

An oft-used argument by producers of cinematograph films to deny royalties to authors related to the commissioned status of the works created by such authors. A work is considered to be "commissioned" under the Act if it is created at the instance of another person. Section 17 of the Act encapsulates the principle of "commissioned" works. The relevant portion of the erstwhile provision as it read prior to the amendments in 2012 is reproduced below:

(b) subject to the provision of clause (a)*,* in the case of a photograph taken, or a painting or portrait drawn, or an engraving or a cinematograph film made, for valuable consideration at the instance of any person, such person shall, in the absence of any agreement to the contrary, be the first owner of the copyright therein.7

The provision operated to vest first ownership of the identified classes of works in the person who extended "valuable consideration" and at whose "instance" the cinematograph film was made.8 Since one of the enumerated classes of works was cinematograph films, producers of such works argued that the entire copyright in the underlying works, such as musical works and literary works, incorporated in a cinematograph film, was owned by the producer by virtue of the qualifying status of the film as a commissioned work. It is perhaps apposite to explain here that under the Indian copyright laws, authorship and ownership of a work are bifurcated. An author of a work may not be the first owner of the work in all instances. The general proposition is that the author is also the first owner of the work. However, this general principle is defeated in cases of a work created in the course of employment and in the cases of commissioned works.9 Producers of cinematograph films used the "commissioned" status of the films to argue that by implication, authors were also

7Section 17(b) of the Act as last amended by Act No. 49 of 1999.

8Section 17(b) of the Act as last amended by Act No. 49 of 1999.

9See Section 17 of the Act (reproduced in part):"First owner of copyright.—Subject to the provisions of this Act, the author of a work shall be the first owner of the copyright therein: Provided that—(a) in the case of a literary, dramatic or artistic work made by the author in the course of his employment by the proprietor of a newspaper, magazine or similar periodical under a contract of service or apprenticeship, for the purpose of publication in a newspaper, magazine or similar periodical, the said proprietor shall, in the absence of any agreement to the contrary, be the first owner of the copyright in the work in so far as the copyright relates to the publication of the work in any newspaper, magazine or similar periodical, or to the reproduction of the work for the purpose of its being so published, but in all other respects the author shall be the first owner of the copyright in the work;(b) subject to the provisions of clause (a), in the case of a photograph taken, or a painting or portrait drawn, or an engraving or a cinematograph film made, for valuable consideration at the instance of any person, such person shall, in the absence of any agreement to the contrary, be the first owner of the copyright therein; (c) in the case of a work made in the course of the author's employment under a contract of service or apprenticeship, to which clause (a) or clause (b) does not apply, the employer shall, in the absence of any agreement to the contrary, be the first owner of the copyright therein.".

divested of their right to receive royalties, in conjunction with the copyright in their works, to the producer of the film who would be deemed the first owner of the film including all works incorporated therein. The stance employed by the producers was bolstered by a decision of the Supreme Court of India in Indian Performing Right Society Ltd. v. Eastern India Motion Pictures Association. 10 The Indian Performing Right Society (IPRS)11 instituted an appeal against the order of the Calcutta High Court which held that the producer of a film could oust the first ownership of the literary or musical works incorporated in a cinematograph film, by the authors of such works, in cases where the film constituted a commissioned work under Section 17(b) of the Act:

In our opinion, therefore, when a composer of lyric or music composes for the first time for valuable consideration for purposes of a cinematograph film, the owner of the film at whose instance the composition is made, becomes the first owner of the copyright in the composition. The composer acquires no copyright at all either in respect of the film or its sound track which he is capable of assigning.12

The Supreme Court affirmed the decision of the Calcutta High Court. The Supreme Court held that when a literary or musical work is commissioned by a producer for incorporation in a cinematograph film, the copyright in the entire film, including the underlying literary and musical works, vests with the producer by virtue of Section 17 of the Act:

This takes us to the core of the question namely, whether the producer of a cinematograph film can defeat the right of the composer of music … or lyricist by engaging him. The key to the solution of this question lies in provisos (b) and (c) to section 17 of the Act reproduced above which put the matter beyond doubt. According to the first of these provisos viz. proviso (b) when a cinematograph film producer commissions a composer of music or a lyricist for reward or valuable consideration for the purpose of making his cinematograph film, or composing music or lyric therefore i.e. the sounds for incorporation or absorption in the sound track associated with the film, which as already indicated, are included in a cinematograph film, he becomes the first owner of the copyright therein and no copyright subsists in the composer of the lyric or music so composed unless there is a contract to the contrary between the composer of the lyric or music on the one hand and the producer of the cinematograph film on the other…. It is, therefore, crystal clear that the rights of a music composer or… lyricist can be defeated by the producer of a cinematograph film in the manner laid down in provisos (b) and (c) of section 17 of the Act.13

10 1977 AIR 1443. "The Cinematograph Exhibitors Association of India also filed objections challenging the right of the IPRS to charge fees and royalties in respect of performance in public of the musical works incorporated in the sound track of the films. Besides raising contentions identical to those raised by various associations of producers they averred that copyright in a cinematograph film which vested in the producers meant copyright in the entirety of the film as an integrated unit including the musical work incorporated in the sound track of the film and the right to perform the work in public…".

11 IPRS is the primary copyright society in India for literary and musical works. It issues licenses and collects and distributes royalties, in respect of literary and musical works.