TMI Blog2009 (4) TMI 1037X X X X Extracts X X X X X X X X Extracts X X X X ..... r offer for sale or hire, any copy of the film, regardless of whether such copy has been sold or given on hire on earlier occasions; and (iii) to communicate the film to the public. 3. Film production, say the plaintiffs, is a complex, time consuming and costly process, needing a well defined distribution strategy for its commercial success. The plaintiffs refer to development of a well thought out distribution strategy to release the film on its completion, in different states. According to them, generally, the first phase entails release of the film on its completion, in different stages. This involves release of the film in theatres and/or cinema halls. After the film has run its course in the theatres and cinema halls, it is released in other formats and media such as home video, rental, cable and satellite TV. The time difference between the release in theatres and cinema halls and release on other formats may sometimes be separated by a few months and at times by a couple of years. This distribution strategy/system of release within the film industry is commonly referred to as windows . 4. As the first stage of the distribution strategy generally involves theatrical re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e plaintiffs allege that giving (a film) on hire or offering a film for hire without the copyright owner's license is an act of infringement. The plaintiffs allege that the defendant has no rental licenses in his favour and all such acts of rental amount to an act of infringement of copyright under the provisions Section 14 (d) (ii) read with Section 51 of The Copyright Act, 1957. The plaintiffs assert to being copyright owners and assignees of several such films. 8. It is alleged that DVDs are coded according to specific geographical zones. The DVDs meant for sale in the USA and Canada are Zone 1 DVDs. DVDs meant for sale in India are Zone 5 DVDs. Zone 1 DVDs are not authorized for sale or rental in Zone 5 countries like India. The DVDs stocked and rented by the Defendant are largely Zone 1 DVDs. The plaintiffs allege that the Defendant has a website at www.cinemaparadisoshop.com where it has been stated as under: First DVD store with all license Though DVDs are easily available, piracy is rampant, Cinema Paradiso is an exception. Great caution has been exercised to ensure that only original DVDs are stocked. In fact, Cinema Paradiso is the first DVD store in India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ten statement, disputes that the plaintiffs can maintain the proceeding; it is alleged that being associates and affiliated companies of assignees or co-owners of copyright in films is insufficient to clothe the plaintiffs with authority to maintain the suit. Hence the plaintiffs cannot raise claims in respect of works for which they are not themselves the owners of the copyright. 13. The defendant submits that in the absence of statutory exceptions to the infringement of copyright of cinematographic films, common law exceptions such as fair use apply to cinematographic films. Accordingly, the hire or circulation of a cinematographic film cannot per se be infringement without considering the circumstances in which the hire or circulation is made or its purposes. 14. The defendant further submits that this Court should also take into account the Constitutional imperative that providing entertainment is a part of the fundamental right of freedom of speech and expression. Therefore, when a business seeks to exercise its fundamental right to provide entertainment as part of its freedom of speech and expression limitations should be restricted to those based on societal needs and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17. The Defendant states that there is no infringement of the copyright of the plaintiffs as it (the Defendant) purchases the DVD's/CD's from the authorized sources outside India. Since, such copies of those movies are purchased by the Defendant from authorized sources, there cannot be any violation of the copyright owned by the plaintiffs. 18. The plaintiffs rely on a list of movies in which they own or are assigned copyrights; they have also produced CDs. In addition, they rely on other documents such as a letter written by Cinema Paradiso, claiming that only original copies of DVDs and CDs, bought from foreign stores, were offered for renting. The plaintiffs have also placed on record receipts allegedly issued by the defendant cinema Paradiso to indicate the amounts claimed as rental fee, and caution deposit. Copies of web-shots of the defendant's website have also been relied on by the plaintiff. 19. Initially, this Court, at the stage of entertaining the suit, had issued notice on an application for appointment of local commissioner, and later, required the defendant to file an affidavit in respect of the manner it kept accounts; the defendant was also dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which are either first published in India or the author (producer) is a citizen of India. The plaintiffs contend that unlike trademarks and patents, existence of the right comes into being merely on creation. Trade mark rights are acquired by use or registration, patent and design rights require compulsory registration. For copyright protection, even on a world-wide basis, mere creation of the work is required. It is submitted that Section 40 extends copyright protection to all cinematograph films first published in a foreign country or the author (producer) is a citizen of a foreign country. The foreign countries are defined in the International Copyright Order, 1999. 22. The plaintiffs contend that the expression copyright connotes not one, but a bundle of rights. Section 14(1)(d) of the Act, thus spells out several rights. Under Section 14(d) the copyright owner has the exclusive right to do or authorize the doing any of the following acts- (i) to make a copy of a film - This will include the right to make a copy of the film on (a) celluloid, (b) VCD format, (c) DVD format, (c) Blue Ray format, (d) HD DVD format, (d) on the internet or computer CD Rom ; (ii) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such act should be in contravention of the provisions of this Act ie. the Copyright Act, 1957. 25. Elaborating what is making of a cinematograph film, the plaintiffs contend that the exclusive right to make or authorize the making a copy of a film is vested with the owner [Section 14 (d) (i) read with Section 17 (author shall be first owner) and Section 2(d) (author of a cinematograph film is the Producer) and Section 2(uu) (which defines who is a producer )]. The act of making or authorize the making can be territorial in nature (Section 19(2) and Section 30A). A producer can therefore, authorize the making of a film in a particular territory only. It is submitted that reading the above provisions together, any copy of a film in which the producer has not assigned or licensed the right of making that copy in India, would be in contravention of the provisions of this Act , and therefore, an infringing copy . The act of importing such an infringing copy would be an act of infringement of copyright [Section 51(b)(iv)]. The plaintiffs contend that all their films are made under an assignment or license (of the plaintiffs) in the USA. Such films are not authorized to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court held that: The object of amending the Copyright Act by amendment 65 of 1984, as noted above, was to prevent piracy which became a global problem due to rapid advances in technology. The legislature intended to prevent piracy and punish the pirates protecting copyrights. The law, therefore, came to be amended introducing Section 52A. Thereafter, the piracy of cinematograph films and of sound recordings etc. could be satisfactorily prevented. Moreover the object of the pirate is to make quick money and avoid payment of legitimate taxes and royalties. The uncertified films are being exhibited in a large scaled. Therefore, apart from increasing the penalty of punishment under law it also provides the declaration on the offence of infringement and video films to display certain information on recorded video films and containers thereof. It is contended that Section 16 stipulates that no person can claim any entitlement to copyright or any other similar right in any work . The Defendant's contention that common law should apply, is therefore completely foreclosed. 30. The plaintiffs rely on provisions of the Customs Act, 1962, viz. Section 11(2) (n), w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. This is so even though the article made abroad were legitimately purchased there on the open market (so called grey copies ), since the sale of articles in the ordinary course of business in one territory without restrictions on resale does not carry with any implied license to import and sell those articles in another territory. The purchaser obtains the same rights as the purchaser of any other chattel, and the rights which flow from acquisition and ownership do not involve any such implied license. UK copyright law has never recognized the principle of international exhaustion , and is now bound by European Directive not to do so in relation to sales outside the EC. 32. Parallel imports or grey imports are banned in most countries around the world, say the plaintiffs. They rely on World Copyright Law by J.A.L.Sterling, 1998 Ed. 309. 33. It is submitted that In fact, providing for rental rights is enshrined in Article 11 of the TRIPS Agreement of which India is a signatory. The plaintiffs rely on the said provision, which reads as follows: Article 11 - Rental Rights In respect of at least computer programs and cinematographic works, a Member shall provide author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in relation to cinematograph film and sound recordings since they are derivative works, which embody original works. In the case of cinematograph films and sound recordings, the exclusive rights of the owner are restrictive in nature. Even in relation to original literary works once a copy is in circulation, no rights can be exercised by the owner. This is also clear from the Explanation to the section itself. Once a sale is made, it is clear that the owner cannot exercise control. It is submitted that, for instance, once a rental Copy is sold in the USA to a Rental library the owner would not be entitled to prescribe the price on which the video library will rent the said DVD. Any contrary interpretation would mean that owners have a long hand control on the DVD sold by them. Since Section 14(d) (i) refers to making a copy of the film which is an exclusive right of the owner, once the owner makes a copy of the film and thereafter, sells it in the market, he has exercised his right of ownership by putting the work into the market. After having so sold, the owner does not have a right to impose conditions on the further utilization of the wok for the purpose it is made and sold. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the registered proprietor to some other person, after the acquisition of those goods: or (b) the goods having been put on the market under the registered trade mark by the proprietor or with his consent. (4) Sub-section (3) shall not apply where there exists legitimate reasons for the proprietor to oppose further dealings in the goods in particular, where the condition of the goods has been changed or impaired after they have been put on the market. 38. The Notes on Clauses, to the above provision, say the defendants, specifically state that the section recognizes the principle of exhaustion of rights . It also specifically states that marketing of goods in a geographical area cannot be prohibited once they are lawfully acquired by a person. The said note on sub-clauses (3) and (4) of Section 30 reads as follows : Sub-clause (3) and (4) recognize the principle of exhaustion of rights by preventing the trade mark owner from prohibiting on ground of trade mark rights, the marketing of goods in any geographical area, once the goods under the registered trade mark are lawfully acquired by a person. However, when the conditions of goods are changed or impaired after t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or impliedly mean that the said DVD cannot be used or sold in a Zone 2 territory. It is a convenient method of informing retailers and purchasers about technologies and compatibility and is not to be construed as a limitation in the negative i.e. if it is a PAL DVD there is no bar on using it in a NTSE environment so long as it is technically feasible and possible. At best zoning, say the defendants, is a way of asserting market dominance rather than enforcing an Intellectual property right. None of the Rental DVDs available and openly sold in the USA have a prohibition on renting outside of the USA. If the copyright owner does not put conditions on the DVD, no right can be enforced. 41. The defendant relies on the following extract from Laddie, Prescott Vitoria's Modern Law of Copyright Designs 2000 (3rd edn): 32.27 : We now arrive at one of the most difficult topics in copyright law. It is our ambition to expound this subject as clearly as possible but inevitably this involves exposing some troublesome problems which lurk not far beneath the surface. The basic idea is simple. It has long been the policy of copyright law in the UK and other countries which foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing import of genuine rental copies. In view of the absence of such express prohibition the Principle of International Exhaustion has to be incorporated into the statue in as much as Article 6 of the TRIPS specifically recognizes the right of nations to apply principles of Exhaustion as they deem fit. In India, as a principle of public policy International Exhaustion of IPRs has been recognized and copyright is no exception to that. The provisions of the Act have to be read in a manner so as to recognize international exhaustion and not in a manner inconsistent with that principle. Article 6 of TRIPS is relied upon; it reads as follows: Article 6 Exhaustion For the purposes of dispute settlement under this Agreement subject to the provisions of Articles 3 and 4 nothing in this agreement shall be used to address the issue of the exhaustion of intellectual property rights. The rights of commercial rental, world over, have been introduced by specific legislation in relation to cinematographic films and Software, such provision is to be adopted as a principle of public policy in view of what is contained in Article 11 of TRIPS; the same is as follows: Article 11 Rental Righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matic or musical works, computers programs, artistic works, cinematographic films, sound recording etc. 43. Copyright, under Section 14 is declared as the exclusive right - subject to provisions of the Act, to do or authorize any of the ..... acts in respect of a work or any substantial part thereof ; after which the various rights in respect of each class of work, be it literally, dramatic or musical [Section 14 (a)] ; computer programs [Section 14 (b)]; artistic works [Section 14 (c)]; cinematographic films [Section 14 (d)] and sound recording [Section 14 (e)] are spelt out. 44. Section 2 defines various terms such as adaptation [Section 2 (a)]; artistic work is defined in Section 2 (c); it means painting, sculpture, drawings, an engraving or a photograph regardless of whether they possess artistic quality, works of architecture or other works of artistic craftsmanship. Section 2 (d) defines author, which is as follows: (d) author means, - (i) in relation to a literary or dramatic work, the author of the work; (ii) in relation to a musical work, the composer; (iii) in relation to an artistic work other than a photograph, the artist; (iv) in relati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und recording or a cinematographic film of such programme or performance, If such reproduction, copy or sound recording is made or imported in contravention of the provisions of this Act;]. 45. Section 3 and 4 spell out the circumstances in which publication of a work is deemed or not deemed to be so, as the case may be. They read as follows: 3. Meaning of publication - For the purposes of this Act, publication means making a work available to the public by issue of copies or by communicating the work to the public. 4. When work not deemed to be published or performed in public- Except in relation to infringement of copyright, a work shall not be deemed to be published or performed in public, if published, or performed in public, without the licence of the owner of the copyright. 46. For the purposes of this case, Sections 13, 14, 40 and 51 are relevant. They read as follows: 13. Works in which copyright subsists- (1) Subject to the provisions of this section and the other provisions of this Act, copyright shall subsist throughout India in the following classes of works, that is to say - (a) Original, literary, dramatic, musical and artistic works, ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slation of the work; (vi) to make any adaptation of the work; (vii) to do, in relation to a translation or an adaptation of the work, any of the acts specified in relation to the work in sub Clauses (I) to (vi) (b) In the case of a computer programme,- (i) to do any of the acts specified in Clause (a) (ii) to sell or give on commercial rental or offer for sale or for commercial rental any copy of the computer programme: Provided that such commercial rental does not apply in respect of computer programmes where the programme itself is not the essential object of the rental.] (c) In the case of an artistic work,- (i) to reproduce the work in any material form including depiction in three dimensions of a two dimensional work or in two dimensions of a three dimensional work; (ii) to communicate the work to the public; (iii) to issue copies of the work to the public not being copies already in circulation; (iv) to include the work in any cinematograph film; (v) to make any adaptation of the work; (vi) to do in relation to an adaptation of the work any of the acts specified in relation to the work in sub Clauses (i) to (iv); (d) In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e protection in that country of works entitled to copyright under the provisions of this Act; (ii) the order may provide that the provisions of this Act shall apply either generally or in relation to such classes of works or such classes of case may be specified in the order; (iii) the order may provide that the term of copyright in India shall not exceed that conferred by the law of the country to which the order relates; (iv) the order may provide that the enjoyment of the rights conferred by this Act shall be subject to the accomplishment of such conditions and formalities, if any, as may be prescribed by the order; (v) In applying the provisions of this Act as to ownership of copyright, the order may make such exceptions and modifications as appear necessary, having regard to the law of the foreign country; (vi) the order may provide that this Act or any part thereof shall not apply to works made before the commencement of the order or that this Act or any part thereof shall not apply to works first published before the commencement of the order. 51. When copyright infringed - Copyright in a work shall be deemed to be infringed - (a) When any person, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght, before analyzing Section 14, it would be worthwhile noticing as to what is the content of copyright, summarized most inimitably by Justice Holmes in While-Smith Music Pub. Co. v. Apollo Co. 209 U.S. I 1908: In copyright property has reached a more abstract expression. The right to exclude is not directed to an object in possession or owned, but is in vacuo, so to speak. It restrains the spontaneity of men where but for it there would be nothing of any kind to hinder their doing as they saw fit. It is a prohibition of conduct remote from the persons or tangibles of the party having the right. It may be infringed a thousand miles from the owner and without his ever becoming aware of the wrong. It is a right which could not be recognized or endured for more than a limited time, and therefore, I may remark in passing, it is one which hardly can be conceived except as a product of statute, as the authorities now agree. The ground of this extraordinary right is that the person to whom it is given has invented some new collocation of visible or audible points, - of lines, colors, sounds, or words. The restraint is directed against reproducing this collocation, although but fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in a sound track which is associated with the film. Section 13 recognises 'cinematograph film' as a distinct and separate class of 'work' and declares that copyright shall subsist therein throughout India. Section 14 which enumerates the fights that subsist in various classes of works mentioned in Section 13 provides that copyright in case of a literary or musical work means inter alia (a) the right to perform or cause the performance of the work in public and (b) to make or authorise the making of a cinematograph film or a record in respect of the work. It also provides that copyright in case of cinematograph film means among other rights, the right of exhibiting or causing the exhibition in public of the cinematograph film i.e. of causing the film in so far as it consists of visual images to be seen in public and in so far it consists of sounds to be heard in public. Section 13(4) on which Mr. Ashok Sen has leaned heavily in support of his contentions lays down that the copyright in a cinematograph film or a record shall not affect the separate copyright in any work in respect of which or a substantial part of which, the film, or as the case may be, the record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporating or recording it on the sound track of a cinematograph film cannot restrain the author (owner) of the film from causing the acoustic portion of the film to be performed or projected or screened in public for profit or from making any record embodying the recording in any part of the sound track associated with the film by utilising such sound track or from communicating or authorising the communication of the film by radio-diffusion, as Section 14(1)(c) of the Act expressly permits the owner of the copyright of the cinematograph film to do all these things. In such cases, the author (owner) of the cinematograph film cannot be said to wrongfully appropriate anything which belongs to the composer of the lyric or musical work. Any other construction would not only render the express provisions of Clauses (f), (m), (y) of Section 2, Section 13(1) (b) and Section 14(1)(c) of the Act otiose but would also defeat the intention of the Legislature, which in view of the growing importance of the cinematograph film as a powerful media of expression, and the highly complex technical and scientific process and heavy capital outlay involved in its production, has sought to recognise i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and territorial extent of such assignment. (3) The assignment of copyright in any work shall also specify the amount of royalty payable, if any, to the author or his legal heirs during the currency of the assignment and the assignment shall be subject to revision, extension or termination on terms mutually agreed upon by the parties. (4) Where the assignee does not exercise the rights assigned to him under any of the other sub sections of this section within a period of one year from the date of assignment, the assignment in respect of such rights shall be deemed to have lapsed after the expiry of the said period unless otherwise specified in the assignment. (5) If the period of assignment is not stated, it shall be deemed to be five years from the date of assignment. (6) If the territorial extent of assignment of the rights is not specified, it shall be presumed to extend within India. (7) Nothing in sub section (2) or sub section (3) or sub section (4) or sub section (5) or sub section (6) shall be applicable to assignments made before the coming into force of the Copyright (Amendment) Act, 1994. 51. Section 30 deals with licensing of copyright; like Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight in cinematograph films, vesting in the author, in India, even though they are first published in the United States. Resultantly, the question which has to be addressed is whether the plaintiff's copyright is violated, by the defendant's importation of copies sold in the United states, for the purpose of renting out. 53. The defendant argues that once the plaintiffs placed their copies in the US market, and they were purchased legitimately, long arm restrictions expressed on the concerned copies are of no consequence; it lost or exhausted the right to control further sale or commerce in that copy. They draw inspiration from what is termed as the doctrine of exhaustion . Reliance is placed on two decisions of the US Supreme Court, and an English decision, Zino Davidoff, in support of this contention. The plaintiffs, on the other hand, argues that those decisions were in the context of peculiar circumstances, and that the principle of exhaustion does not apply in India; they rely on the text of the Copyright Act. 54. The first decision was Bob Merill Co. v. Straus 210 US 339 (1908); the US Supreme Court had to decide whether enforcement of a condition that soug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Like the exclusive right to vend that was construed in Bobbs-Merrill , the exclusive right to distribute is a limited right. The introductory language in Section 106 expressly states that all of the exclusive rights granted by that section-including, of course, the distribution right granted by subsection (3)-are limited by the provisions of Section 107 through 120. 12. One of those limitations, as we have noted, is provided by the terms of Section 109(a), which expressly permit the owner of a lawfully made copy to sell that copy not with standing the provisions of Section 106(3). 13. After the first sale of a copyrighted item lawfully made under this title, any subsequent purchaser, whether from a domestic or from a foreign reseller, is obviously an owner of that item. Read literally, Section 109(a) unambiguously states that such an owner is entitled, without the authority of the copyright owner, to sell that item. Moreover, since Section 602(a) merely provides that unauthorized importation is an infringement of an exclusive right under Section 106, and since that limited right does not encompass resales by lawful owners, the literal text of Section 602(a) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 106, actionable under Section 501.... 56. In Zino Davidoff (supra) the principle of exhaustion of rights was explained thus: O+nce the rights holder has put protected products on the market or has consented to such marketing, he loses all rights to object to further exploitation. This effect is indefeasible What is exhaustion 57. The doctrine of exhaustion of copyright enables free trade in material objects on which copies of protected works have been fixed and put into circulation with the right holder's consent. The exhaustion principle in a sense arbitrates the conflict between the right to own a copy of a work and the author's right to control the distribution of copies. Exhaustion is decisive with respect to the priority of ownership and the freedom to trade in material carriers on the condition that a copy has been legally brought into trading. Transfer of ownership of a carrier with a copy of a work fixed on it makes it impossible for the owner to derive further benefits from the exploitation of a copy that was traded with his consent. The exhaustion principle is thus termed legitimate by reason of the profits earned for the ownership transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs into Canada, without obscuring the logos of those chocolate bars, on the basis that the logos are copyrighted. The court said: 89 As mentioned above, para. (e) of Section 27(2) prohibits the importation into Canada of any copy of a work that would have infringed copyright had it been made in Canada by the person who made it, if that importation is for the purpose of doing anything referred to in paras. (a) to (c) of Section 27(2). Liability under para. (e) therefore relies on a finding that the defendant intended to commit on act enumerated in paras. (a) to (c), which prohibit the selling, renting out, distribution with a prejudicial effect, or dealing with by way of trade of copies of a work. How are we to interpret these prohibitions in light of the foregoing review of the purpose of Section 27(2)(e) and of the Copyright Act as a whole?.... ...It provides that it is an infringement to, by way of trade distribute, expose or offer for sale or rental, or exhibit in public a copy of a work. It must be noted that the modifier by way of trade clearly applies to all of the actions referred to in para. (c). This can be seen more clearly by referring to the French version o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... program (including any tape, disk, or other medium embodying such program) by rental, lease, or lending, or by any other act or practice in the nature of rental, lease, or lending. Nothing in the preceding sentence shall apply to the rental, lease, or lending of a phonorecord for nonprofit purposes by a nonprofit library or nonprofit educational institution. The transfer of possession of a lawfully made copy of a computer program by a nonprofit educational institution to another nonprofit educational institution or to faculty, staff, and students does not constitute rental, lease, or lending for direct or indirect commercial purposes under this subsection. ************** ************* (4) Any person who distributes a phonorecord or a copy of a computer program (including any tape, disk, or other medium embodying such program) in violation of paragraph (1) is an infringer of copyright under Section 501 of this title and is subject to the remedies set forth in Sections 502, 503, 504, 505, and 509. Such violation shall not be a criminal offense under Section 506 or cause such person to be subject to the criminal penalties set forth in Section 2319 of title 18. (c) Notwiths ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be a copy already in circulation.+ Though attractive, this contention is unfeasible for more than one reason. The reference to copies in circulation is in the context of copyright in literary, artistic, dramatic or musical work, - not computer programme - (Section 14 (a); the statute enables the copyright owner to issue copies of the work to the public not being copies already in circulation . But for the explanation, it could arguably be said that the copyright owner lost his domain, or right to control the manner of further dealing in copies which were in circulation. Yet, a careful reading of Section 14 would reveal that the content of copyrights in respect of each nature of work (literary, dramatic, or musical work, on the one hand, computer programme, artistic work, cinematograph film, etc on the other) are distinct - evident from the listing out of such rights, separately, in Clauses (a) to (f) of the section. The reference to copies in circulation has to be therefore, in the context; the phrase is used to limit the copyright owner's right to dictate further use of a literary, musical and dramatic work (Section 14(a) (ii)). None of the owners of other classes of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es uninhibitedly. Thus, for instance, if a distributor is given a copy to exhibit a film in territory A, or hire them in that territory; he could, by extension of the defendants' logic, travel beyond that territory, or use a rental copy to exhibit the film, in another territory, where it has not been released, or even rent it in such territory, and so on. To give another instance- the purchase of a rental copy meant to be used in the southern region, in India, designated by the copyright owner, analogically, can according to the defendant, be rented out in other regions too, whether or not such films are released in those regions. Such renting out may have catastrophic commercial consequences: one of the hirers might well be a cinema theatre, which may exhibit it, in public. This would completely defeat the copyrights owner's right to commercially exploit its rights, and for that purpose, partition the market at its convenience. The safeguard provided by Section 51 (b) (iv) proviso, in the case of importation of one infringing copy, amply testifies that if importation is for private use of the importer, which specifically alludes to the non-commercial use by such a person o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enerality of the main enactment by providing an exception and taking out from the main provision, a portion, which, but for the proviso would be a part of the main provision. A proviso must, therefore, be considered in relation to the principal matter to which it stands as a proviso. A proviso should not be read as if providing something by way of addition to the main provision which is foreign to the main provision itself. 68. As far as TRIPS is concerned, the question of how to deal with rental rights, of copies of cinematograph films is left open to be dealt with suitably by the concerned party state. This is evident from the following extract of Article 11, which obliges that in respect of computer programmes, the member state must enable the owner or successor in interest to prohibit or authorize the sale of copies, or the: ...commercial rental to the public of originals or copies of their copyright works. A member shall be excepted from this obligation in respect of cinematographic works unless such rental has led to widespread copying of such works which is materially impairing the exclusive right of reproduction conferred in that Member on authors and their successor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 1995, [1996] R.P.C. 441) correctly pointed out. Grey and mysterious may only be the distribution channels by which these goods find their way to the importing country. In the importing country, such goods may create havoc particularly for entrepreneurs who sell the same goods, obtained via different distribution channels and perhaps more expensively. In order to exclude such unwelcome competition, intellectual property rights have sometimes been of help. If products sold or imported by third parties fall within the scope of patents, trademarks or copyrights valid in this particular country, such sale or importation by third parties is generally deemed infringing. Owners of products covered by intellectual property rights have the exclusive right to put such products on the market. On the other hand, there is little doubt that once the owner of an intellectual property right has put such goods on the market either himself or with his consent, there is little he can do about further acts of commercial exploitation, such as re-sale, etc., on the domestic market. Even if a car is covered by a number of patents, once the car maker has put that car on the market, there is a consensus t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existing ones. The debate over parallel importing restrictions is waged between those stakeholders who push the principle of national exhaustion of rights and those who support the counter notion of international exhaustion of rights. The first group comprises, in the main, copyright owners and their licensees who have joined forces across national boundaries in order to present their time honoured trading advantage (the explicit right to prevent the cross border passage of grey market goods) as both natural and indispensable, instead of the historical accident that it arguably is. They assert that rights are to be exercised territorially and hence that when right holders make their genuine (non pirated) copyrighted works available in a particular country, that sale or disposition exhausts their rights only as far as that particular country is concerned. They insist that authorisation for importation must be obtained for each and every country and right holders should be able to legally prevent goods that have been put into circulation in another country with their consent from being subject to parallel importation. The second group is largely comprised of importers and would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t either wholly or partially of the rights of the copyright owner is permissible under the Act. (Section 18) . 18. Now Penguins are exclusive licensees as they are the assignees of copyrights from the authors in some cases and publishers in others and have an exclusive right to print, publish and market these twenty three titles in India. Section 55 (1) provides civil remedies for infringement of copyright, namely, injunction, damages, accounts as are or may be conferred by law for the infringement of a right . So Penguins are entitled to sue for the infringement of a right. 19. It is not the case of India Distributors that they were not aware of Penguins' copyright or had no knowledge that copyright subsisted in them under a territorial arrangement with the authors or publishers of those books. Penguins are the assignees of the copyright and entitled to any right comprised in the copyright - so assigned. (Section 18 (2) . XXXXXXXX XXXXXXXXX 22. Importation of books which are infringing copies of the work is an infringement. So is the sale thereof. If any person, without the licence of the copyright owner, imports into India for the purpose of selling or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an infringing copy . Because there is infringement of territorial restrictions. Penguins' case is that they hold a territorially exclusive licence coupled with an interest so far as India is concerned. Generally speaking whenever there is misappropriation of intellectual property of which the primary beneficiary is the copyright owner there is infringement of copyright. Copyright is a property right. Throughout the world it is regarded as a form of property worthy of social protection in the ultimate public interest. The law starts from the premise that protection should be as long and as broad as possible and should provide only those exceptions and limitations which are essential in the public interest. The courts adopt a purposive approach to statutes. 25. Importation of infringing copies is prohibited by the Act. Because if made in India these titles would infringe the copyright of Penguins. Not only this. India Distributors are publishing these titles. Publication means in the case of a literary work, the issue of copies of the work, either in whole or in part, to the public in a manner sufficient to satisfy the reasonable requirements of the public having rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ettes sent by Universal Overseas Private Ltd., Singapore to Ms Sungawa Enterprises, Kathmandu, Nepal, had arrived at Calcutta Port by ship and was awaiting despatch to Nepal. The appellant learnt that a substantial number of cassettes were pirated works , due to the broken condition of the consignment lying in the docks. The appellant sought the intervention of the Registrar of Copyrights for action under Section 53 of the Copyright Act, 1957. This provision enables the Registrar, after making such enquiries as he deems fit, to order that copies made out of India of a work which if made in India would infringe copyright, shall not be imported; it also enables the Registrar to enter any ship, dock or premises where such copies may be found and to examine such copies. Expeditious action was not taken on the application of the appellant and it was apprehended that the pirated cassettes would be released for transportation to Nepal. The appellant filed a writ application in the Calcutta High Court seeking mandamus to compel the Registrar to pass an appropriate order under Section 53 of the Copyright Act and to prevent release of the cassettes from the custody of the customs authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be goods of which the import has been prohibited or restricted under Section 11 of the Customs Act, 1962, and all the provisions of that Act shall have effect accordingly : Provided that all such copies confiscated under the provisions of the said Act shall not vest in the Government but shall be delivered to the owner of the copyright in the work. This provision empowers the Register of Copyrights to make an order that copies made out of India of any work which if made in India would infringe copyright, shall not be imported. This the Registrar may do on the application of the owner of the copyright in that work or by his duly authorised agent on payment of the prescribed fee and after making such enquiry, as he deems fit. The effect of such an order by the Registrar is to deem all copies to which the order applies to be goods of which the import has been prohibited or restricted under Section 11 of the Customs Act, 1962, and to attract all the provisions of the Customs Act on that basis, including the liability to be confiscated, with the slight modification that copies confiscated under the provisions of that Act shall not vest in the Government, but shall be deliver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did find favour with the Division Bench of the Calcutta High Court in the judgment under appeal. In the first place, the language of Section 53 does not justify reading the words 'imported for commerce' for the words 'imported'. Nor is there any reason to assume that such was the object of the Legislature. We have already mentioned the importance attached by international opinion, as manifested by the various international conventions and treaties, to the protection of copyright and the gravity with which traffic in industrial, literary or artistic property is viewed, treating such traffic on par with traffic in narcotics, dangerous drugs and arms. In interpreting the word 'import' in the Copyright Act, we must take not that while the positive requirement of the Copyright conventions is to protect copyright, negatively also, the Transit Trade Convention and the bilateral Treaty make exceptions enabling the Transit State to take measures to protect copyright. If this much is borne in mind, it becomes clear that the word 'import' in Section 53 of the Copyright Act cannot bear the narrow interpretation sought to be places upon it to limit it to import f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving Mfg. Co. Ltd., The Empress Mills, Nagpur v. Municipal Committee, Wardha [1958]1SCR1102 . So derive no help from this case. As we said, we prefer to interpret the words import' as it is found in the Copyright Act rather than search for its meaning by referring to other statutes where it has been used. 31. The learned Counsel for the appellant invited our attention to Radhakishan v. Union of India 1965CriLJ154 ; Shawhney v. Sylvania and Laxman 77 Bom LR 380; Bernado v. Collector of Customs AIR1960Ker170 , to urge that importation was complete so soon as the customs barrier was crossed. They air cases under the Customs Act and it is needless for us to seek aid from there when there is enough direct light under the Copyright Act and the various conventions and treaties which have with the subject 'copyright' from different angles. We do not also desire to crow our judgment with reference to the history of the copyright and the customs legislations in the United Kingdom and India as we do not think it necessary to do so in this case. 32. We have, therefore, no hesitation in coming to the conclusion that the word 'import' in Sections 51 and 53 of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia. Rather, they have been made in the US and imported into India. As noticed earlier, copyright in a work published abroad, in a Berne Convention country, like the United States, entitles its owner to assert copyright in India; such rights are as if the works were published in India (Section 40 and provisions of the Order). An infringing copy is one ...made or imported in contravention of the provisions of this Act . In this context, the proviso to Section 51(b) (iv) in the court's view, provides they key to Parliamentary intention. It carves only one exception, permitting import of one copy of any work for the private and domestic use of the importer . The plaintiffs' argument is that there would have been no need to enact this exception, if there were no restriction on import of cinematograph films, genuinely made outside India. The effect of the proviso to Section 51(b)(iv) is plainly, not to relax the importation of genuinely made cinematographic films but to allow for the importation of one copy of any work for the private and domestic use of the importer This would mean that the proviso allows for the importation of an infringing work, for private and domestic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction, [ 218 use, sale or import of any product; (b) importation of patented products by any person from a person who is duly authorised under the law to produce and sell or distribute the product, shall not be considered as a infringement of patent rights In the opinion of the court, the existing of express provisions, enabling importation, in circumstances spelt out in the Patents Act and the Trademarks Act, and its being dealt with in a different manner in the Copyright Act (definition of infringing copy including imported copies; Section 51 (b) (iv) etc) contrary to the argument of the defendants, leads to the inference that such intendment did not exist in relation to copyrights. One principle of statutory construction is that the legislature is deemed to know existing law, and judicial interpretations, when it enacts a law, or amends it; its providing a particular situation, or omitting it, has to be viewed in the context of this attributed knowledge. This was held in Greater Bombay Coop. Bank Ltd. v. United Yarn Tex (P) Ltd. AIR2007SC1584 . It is well settled that the language of the statutes is to be properly understood. The usual presumption is that the leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iffs; the defendant's action, giving on hire or rent in India, copies of cinematograph films authorized for sale or rental in a particular territory outside India, in which cinematograph films the plaintiffs claim copyrights, would constitute infringement of copyright under Section 51(b) (iv), as long as the plaintiff's authorization is not secured. Issue No. 4: Whether the restriction on the Defendant to conduct the rental business in India, using a copy of a cinematograph film procured from outside India which is authorized for sale or rental in a particular territory outside India only, without a license from the copyright owner, would amount to infringement of the Fundamental Rights, guaranteed under Article 19(1) of the Constitution of India. 82. It is urged that if the plaintiffs' claim to copyright in respect of copies of films, and DVDs of films, validly purchased by the defendant is permitted, it would hinder the right to carry on business, guaranteed under Article 19(1) (g) of the Constitution of India and consequently, in public interest, the court must adopt an interpretation that would further such fundamental right, not extinguish it. 83. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of patent, inventiveness. Just as the owner of real property, or a material object is entitled to legitimately assert his domain over it, and protect it from unfair appropriation by another, the intellectual property owner is, by these laws, enabled to protect unwarranted exploitation or unauthorized use of what are his property rights. So viewed, the provisions of law, particularly Sections 14, 53 and 51, to the extent they prohibit the sale or hiring of copies - for commerce or profit, by anyone, even the buyer of a copy, without the authority or permission of the copyright owner, amounts to protection of that property right. There is no public interest in insisting that such copies should be permitted, on the ground that the cinematograph films are not made available in the country. If that is the position, the defendant is always free to negotiate the terms of a license, in such of the films as are not available, for the purpose of their publication or performance in India. In these circumstances, it is held that the defendant's argument that the interpretation adopted by the court, defeats its right to carry on trade, business or profession, has no force; it accor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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