Ownership of Copyright in a Literary Work

Background

The law governing copyrights is highly subjective and tedious, despite the clear and decipherable nature of the legal framework enshrined in the Copyrights Act, 1957 (“the Act”). The issue of ownership in copyright has received extensive judicial treatment, owing to the multitude of unique facts and circumstances affecting the outcome of any given dispute. While there are numerous issues and concepts indigenous to this area of copyright law, this article will evaluate:

• The current legal position on first ownership of copyright in a literary work; and
• The methods prescribed under the Act for transfer of ownership of copyright.

Legal Position – Ownership of Copyright

Section 2 (o) of the Act defines “literary work” to include computer programmes, tables and compilations including computer databases. Section 17 of the Act identifies the first owner of a copyright in different scenarios. Section 17 (a) states that in the case of a literary work (that is not 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) the author shall be the first owner of the copyright in the work. Section 17 (b) provides for an exception to the aforesaid rule, but only in relation to specific types of artistic works; where the person who commissioned such a work, for valuable consideration, will be the first owner of the copyright therein. Further, Section 17 (c) states that ownership of a work made in the course of the author’s employment under a contract of service or apprenticeship, shall, in the absence of any agreement to the contrary, subsist with the employer.

 It must be noted that a ‘contract of service’ is entirely different from a ‘contract for service’. Conceptually, the two are frequently conflated, and thus have been the subject of significant judicial interpretation. In short, the nature of a contract of service is identical to that of an employer –  employee / master – servant relationship, as against a contract for service, which is representative of a principal to principal / service provider – recipient relationship. Judicial precedent[1] prescribes the ‘supervision and control test’ to determine if a ‘contract of service’ exists, and courts are required to consider several factors such as: (a) the appointing authority; (b) the pay master; (c) who can dismiss the employee; (d) how long alternative service lasts; (e) the extent of control and supervision; (f) the nature of the job, e.g. whether, it is professional or skilled work; (g) nature of the establishment; and (h) the right to reject work.

As Section 17 of the Act does not contain a similar carveout for the ownership of copyright in a literary work commissioned under a ‘contract for service’; it would follow that ownership in such a scenario would be governed by Section 17 (a) and the author of such a work (i.e., the service provider) would be the first owner of copyright in such a work. This has interesting implications, for example, where a company has engaged a software developer for development of a proprietary software which the company intends to use for its business.  In such a scenario, Section 17 (a) would apply, and the software developer would own the copyright in the software, whereas if the software were developed by an employee of the company, the company would have been able to rely on Section 17 (c) to claim ownership of the copyright. How then, should the company go about obtaining ownership of copyright in the software they have commissioned? To this end, Section 18 of the Act permits transfer of ownership in copyright, by way of assignment, and Section 19 of the Act provides the prescribed manner for such assignment.

The prerequisites for a valid assignment of copyright under Section 19 of the Act, require the assignment:

• To be in writing, and signed by the assignor;
• To identify the work, and specify the rights assigned thereunder; including the duration and territorial extent of such assignment;
• To specify the amount of royalty and any other consideration payable to the author during the currency of the assignment; and
• To clarify that if such rights have not been exercised by the assignee within a period of 1 (one) year from the date of assignment, the assignment shall not be deemed as lapsed.

Ordinarily, the inclusion of simple language in an agreement identifying the commissioner of the work (i.e., the company engaging the software developer) as the owner would effectively operate as a transfer of ownership, however, as the Act specifically provides for the elements constituting a valid assignment; failure to meet the conditions prescribed by Section 19 would result in an ‘imperfect’ assignment of ownership. In such cases, Courts have not hesitated to step in and apply the provisions of the Act to the elements of the assignment with lacunae. The Delhi Hight Court in Pine Labs[2] applied Section 19 (5) of the Act to an imperfect assignment and clarified that the provisions of Sections 19 (5) and 19 (6) would be attracted if the assignment deed is silent about the duration and / or territorial extent, thus restricting the assignment of copyright in such work to 5 (five) years from the date of assignment and only within India.

Assignment: Do’s and Don’ts

An assignment of copyright clause must ensure it is drafted in a manner that satisfies all the requirements of Section 19, as omitting or failing to satisfy any of the prescribed conditions can hinder the transfer of ownership. While some of these requirements are self-explanatory and simple to incorporate, the following elements of a valid assignment are easy to overlook or overcomplicate: (a) the requirement to specify the rights being assigned; (b) the requirement to specify the royalty and consideration payable; and (c) inclusion of the non-obstante preventing expiry of the assignment, if the rights being assigned are not exercised by the assignee within 1 (one) year.

For requirement (a) it would be sufficient to state that all the rights, titles, entitlements, and interests of the assignor, in all possible forms, modes and mediums past, present, or future, whether registered or not, are being assigned thereunder. If the assignor wishes to retain certain rights in respect of the work, then it would be necessary to include language specifically carving out such rights from those being assigned. Requirement (b) can be problematic in situations where no royalty or consideration is being paid for the assignment. This is usually the case when the assignment is between two related parties or part of a services agreement, where the consideration being paid is for the provision of services, and not specifically for the assignment of copyrights. Nonetheless, in such a scenario, it is advisable that the parties involved specify a nominal fee representing the consideration payable for the assignment to avoid any ownership issues or disputes cropping up in the future. Requirement (c) is the simplest to satisfy but is easy to overcomplicate. A common approach to satisfy this requirement would be to replicate the language contained in Section 19 (4) of the Act, verbatim. While this approach is not detrimental to the assignment itself, it does not add any value to the agreement / clause being drafted. Instead, the inclusion of simple language stating that the assignment is “irrevocable irrespective of whether the assignee is using the license or not”, provides the same result that replicating the language in Section 19 (4) of the Act does.

Conclusion

Theoretically, the laws surrounding ownership of copyright appear straightforward and easy to grasp. However, as ownership is linked to the nature of the relationship existing between two parties, identifying the first owner of a work can be a more complicated exercise. An effective mechanism to ensure protection of ownership rights when drafting agreements, is to first identify the nature of the relationship existing between the contracting parties and then assess whether assignment of ownership rights is actually required. If an assignment is needed, then one must ensure that the assignment of copyright is compliant with the provisions of Section 19 of the Act. Failure to do so would empower the judiciary to step-in and limit the transferee’s rights and / or even declare the transfer of ownership void.

The views and opinions expressed in this article belong solely to the author and do not reflect the position of Tatva Legal, Hyderabad.

[1] Workmen of Nilgiri Coop. Mkt. Society Ltd. vs. State of Tamil Nadu and Ors. (2004) 3 SCC 514

[2] Pine Labs Private Limited vs. Gemalto Terminals India Private Limited and others (FAO 635 of 2009 and FAO 636 of 2009)