Royalties on sound recordings in India

An Irish SME engaged in the business of operating private FM radio stations decided to launch an FM private radio station in India after it had noticed that it had gained substantial success with audience from Indian origins in Ireland. The EU company was well aware of the necessity to enter into agreements with an Indian Copyright society to obtain the necessary rights to broadcast copyright-protected songs in the country. The EU company identified a suitable Copyright Society and entered into a licencing agreement which permitted the EU company to operate its business and broadcast music in several Indian cities. As part of the agreement, the Irish SME was required to pay royalties to the Copyright Society collecting them on behalf of artists or music companies. After a few years of successful presence on the Indian market, and as the licencing agreement was about to expire, the Irish SME contacted the Copyright Society in order to renew the licensing agreement with the same terms and conditions as in the earlier contract. The Copyright Society however demanded an augmentation of the fees, and in addition claimed that the use of sound recordings for broadcast also implied the use of literary and musical works on which the sound recordings are based. So far, the Irish SME had only paid fees corresponding to the rights on the sound recordings, but had not paid those related to the use of the literary and musical works on which these were based. The Copyright Society claimed that, since this aspect had not been paid for under the earlier contract, it required the Irish SME to pay the corresponding additional fees for the period covered by said contract. The Irish SME rejected this demand. Consequently, the Copyright Society filed a suit claiming that it had infringed copyright on the songs subject to the licensing agreement and sought a permanent stay order restraining the EU company from broadcasting the music to the public. The Irish SME upon receiving the legal notice from the Copyright Society consulted a legal expert to formulate the best strategy how to deal with these accusations.