Doctrine of Exhaution in Indian Copyright Law
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Doctrine of Exhaustion in Indian Copyright Law
Apoorva Agrawal(A. Introduction
Copyright is a form of intellectual property protection granted
to the creators of original works of authorship such as literary
works (including computer programs, tables and compilations,
computer databases expressed in words, codes, schemes or in any
other form, including a machine readable medium) dramatic, musical
and artistic works, cinematographic films and sound recordings. A
copyright is a bundle of intangible rights which bestow on the
owner of a copyright an exclusive privilege, for a specific period
of time, to make copies of his work for production and sale. The
works protected by a copyright cannot and do not exist in
seclusion. Such works are given a tangible form through one medium
or the other. The main debate this paper deals with is regarding
the legal status of the copy of the work which has been sold, and
whether or not the owner of the copyright in the work can have a
hold over consequent sales.Background
The first copyright statute was the BritishStatute of Anneof
1709, An Act for the Encouragement of Learning, by vesting the
Copies of Printed Books in the Authors or purchasers of such
Copies, during the Times therein mentioned. Copyright laws are
partially standardized through international and regional
agreements such as theBerne Conventionand the European copyright
directives. Even though the copyright laws of a nation are
consistent, each jurisdiction has separate and distinct laws and
regulations covering copyright. National copyright laws on
licensing, transfer and assignment of copyright still vary greatly
among countries and copyrighted works are licensed on a territorial
basis. Copyright in respect of each work generally subsists for a
period of sixty years after the death of its author. In the Indian
Copyright Act, 1957, this bundle of rights is defined under Section
14. As per the Section, the precise rights which the owner of a
copyright enjoys in respect of a work, would vary depending on the
nature of the work. The rights under Section 14 can be exercised
only by the owner of copyright or by any other person to whom the
original owner transfers the ownership of the copyright. The rights
include the right of adaptation, right of reproduction, right of
publication, right to make translations, communication to public
etc.B. Doctrine of Exhaustion
The Exhaustion Doctrine or the First Sale Doctrine is one of the
basic rules of intellectual property (IP) system, and is applied to
many IP rights, from copyrights to trademarks. The term exhaustion
or first sale describes a concept or a rule, wherein, after the
first sale of a particular legitimate work, the IP owner loses the
right to control any subsequent sales of that particular copy of
the work. Applying the principle more specifically to copyrights,
the purchaser of the copy of the work may sell that copy of the
work without the consent or the authorization of the owner, and
would not, by the said sale, infringe the copyright subsisting in
the work. Thus, the doctrine of exhaustion has the power to
interfere with the copyright owners exclusive market position,
reducing any scope for price differentiation and exposing the
product to intensified price competition.
Illustration: A (owner of a copyrighted work) publishes his
work. B purchases a copy of the work . B can, without any
authorization of A, sell that copy of the work to C and will not
infringe the copyright that exists in the work.The exhaustion
doctrine is grouped into three kinds: a) international
exhaustion
b) national exhaustion and c) territorial or regional
exhaustion.a) International Exhaustion
When a country recognizes the doctrine of international
exhaustion, an IPR holders right to control movement is
extinguished when a good or service is first sold or marketed
anywhere in the world.
b) National Exhaustion
When a country recognizes the doctrine of national exhaustion,
an IPR holders right to control movement of a good or service is
only extinguished by the first sale or marketing of a good or
service within the territory of that country.
c) Territorial or Regional Exhaustion
When a country recognizes the doctrine of territorial/regional
exhaustion, an IPR holders right to control movement is
extinguished when a good or service is first sold or marketed in
any region of the country.
Even though the rule of exhaustion deals primarily with the
control and nature of goods and services that embody an IPR, it
plays a very important role in trade. Without the said rule, trade
and different types of uses, transfers, characteristics and
activities (whether political, social or economic) of goods and
services will be harshly impaired as too much control will be
granted to the IPR holder. For example, common acts like lending a
book to a friend to read, selling an already used CD or recycling a
used juice container and turning it into a useful bag or any other
accessory, can be forbidden by the IPR holder. This would lead to
too much a restriction on the free exchange of goods and services
in the national, regional and global markets. The main assumption
here is that free exchange of goods and services in all the markets
is advantageous for commerce, economic development, increased
innovation and the sharing of cultures and knowledge. In a way,
exhaustion regulates how the physical personifications of IPR are
controlled and transferred in order to ensure that there is an
equilibrium between the rights of IPR holders and those of the
general public and, on a large-scale, the larger international
community.C. The Doctrine under the Indian Law
Article 6 of the Trade-Related Aspects of Intellectual Property
Rights (TRIPS) addresses the exhaustion of intellectual property
rights. The concept of exhaustion plays an enormously important
role in determining the way the intellectual property rules affect
the movement of goods and services in international trade. Our
Indian law also, is not ignorant to the issue of the exhaustion of
the copyright owners rights and the provisions of the Act could be
interpreted to appreciate the exhaustion doctrine and its
applicability in the various copyrighted works.Section 14 contains
a number of provisions which deal with different kinds of works,
and it is under the provisions of this Section that copyright
owners have the right:
to issue copies of a literary, dramatic or musical work to the
public, not being copies already in circulation;
(a) to issue copies of a computer programme to the public, not
being copies already in circulation and (b) to sell or give on
commercial rental or offer for sale or for commercial rental any
copy of the computer programme where the programme itself is the
essential object of the rental;
to issue copies of an artistic work to the public, not being
copies already in circulation;
to sell or give on hire, or offer for sale or hire, any copy of
a film, regardless of whether such copy has been sold or given on
hire on earlier occasions; and to sell or give on hire, or offer
for sale or hire, any copy of the sound recording regardless of
whether such copy has been sold or given on hire on earlier
occasions;
Therefore, the owners of literary, dramatic, musical, or
artistic works as well as of computer programmes have the same
right: to issue copies of the works they own to the public provided
those copies are not already in circulation. An Explanation affixed
to Section 14 states that for the purposes of this section, a copy
which has been sold once shall be deemed to be a copy already in
circulation.
The owners of computer programmes also have an added right: the
right to sell or give on commercial rental or offer for sale or for
commercial rental any copy of the programme unless the rental of
the programme is only incidental.
And, lastly, the owners of films and sound recordings enjoy the
right to sell or give on hire, or offer for sale or hire, any copy
of their works whether or not that copy has already been sold or
given on hire. As it can clearly be seen, there is a significant
dissimilarity in the way in which various kinds of copyrighted
works are treated in Section 14 of the Act. Owners of copyright
have the exclusive right to issue copies of their work to the
public only in accordance with the provisions of this Section read
in concurrence with Section 51 which deals with
infringement.Literary, Dramatic, Musical and Artistic Works and
Computer ProgrammesUnder Section 14 of the Act, it is the right of
those who own the copyright in literary, dramatic, musical and
artistic works, as well as computer programmes to issue copies of
the work to the public not being copies already in circulation.
Copies once sold are supposed to be copies already in circulation.
A question which has frequently cropped up in regard to the
exhaustion of rights in literary works is as to the place where the
rights of the copyright owner under Section 14(a)(ii) are
exhausted; is it only within the particular territory/country of
sale, worldwide or, is it in the territory designated by the
copyright owner for its sale.According to the Act, once a copy has
been sold, it is supposed to be in circulation. However, the Act
does not make clear where it is supposed to be in circulation. If
it is deemed to be in circulation in India, it would follow that it
is that right of the copyright owner to issue copies of the work to
the public, such work not being in circulation in India. As such,
the copyright owner would have lost or exhausted his right to
re-issue that copy only in India. His rights beyond the territory
of India would remain the same. However, to reach such a
conclusion, the reasoning one would have to use could be not very
direct. It would probably be necessary to rely on the territorial
nature of copyright, and the fact that the Act applies only to
India. The second possibility is that the rights are exhausted in
those territories where the copyright owner intends that the work
be sold. This is a possibility which the Indian Courts have tended
to bend towards, although the logic has not always been very clear.
The final possibility is that once a lawful copy of a work is
lawfully sold, the copyright owner loses all rights in respect of
the resale of that copy of the work throughout the world. This
would be supported by the fact that the Explanation to Section 14
does not state that the first lawful sale would result in the sold
copy being deemed to be in circulation only within India. Also, if
one were to consider Section 51 of the Act which defines
infringement, copyright infringement would occur only when a person
imports into India any infringing copies of a work. There is
nothing in Section 51 which speaks about the export of copyrighted
works. Therefore, it should be possible to conclude that Indian law
would allow such export, and if that were the case, it would seem
that India could be considered to follow a principle of
international exhaustion with respect to copyright. This final
interpretation is not one which the courts have wholeheartedly
approved though. The Courts have veered towards respecting the
divisions of rights along territorial lines by publishers a form of
division which is supported by Sections 19(2), 19(6) and 30A of the
Act and have been inclined to hold that as far as literary works
are concerned, the exhaustion of rights takes place on the first
legal sale of a copy of a work only within the territory in which
the copyright owner planned the work to be sold. Thus, the
copyright owner would go on to enjoy the right of resale in respect
of all other territories in India.Rental Right and Software
The Rental Right is a rather new right in copyright
jurisprudence. TRIPS specifically mandated its recognition with
respect to computer programmes and films although the right was not
introduced by TRIPS and has an older genesis.
In India, the rental right first appeared in the Act in 1994,
and was projected to facilitate the flow of remuneration to
copyright owners which (notably in the case of cinematograph film)
may be assisted by appropriate collective administration through
copyright societies, these rights will also provide an added
safeguard against distribution of infringing copies. The Rental
Right came into being due to concerns that the commercial rental of
computer programmes promotes programmes which are rented to be
illegitimately reproduced by those who rent them leading to people,
who indulge in it, not needing to buy their own copies of the
programmes. This would decrease the revenues made by the copyright
owners, and thereby diminish proceeds on their investment which
would further lead to the decrease in the incentive of the authors
of works protected by copyright to create new works.
Besides the right to issue copies of software to the public
which are copies not already in circulation, the owners of computer
programmes have the right, under Section 14(b)(ii), to sell or give
on commercial rental or offer for sale or for commercial rental any
copy of the relevant computer programme as long as the programme
itself is the essential object of the rental. In the case of
software, in addition to the right to issue copies of computer
programmes not already in circulation to the public under Section
14(a)(ii) of the Act, copyright owners enjoy an additional right:
the rental right under Section 14(b)(ii). The latter provision was
amended in 1999 to restrict the scope of the right to commercial
rentals where the relevant computer programme itself was not the
essential object of the rental. This is a straightforward exception
to the first sale doctrine. However, the right of resale in
Sections 14(b)(ii) and 14(a)(ii) overlap and their cumulative
effect is ambiguous.Given that the two Sections contain
contradictory positions, there may be different ways to construe
their cumulative effect. Firstly, Section 14(a)(ii) may weaken or,
possibly, even negate 14(b)(ii). If this were the case, as far as
subsequent resale is concerned, the principle of exhaustion would
apply to computer programmes (with all its vagaries) in the same
manner that it applies to literary works under Section 14(a)(ii).
Secondly, Section 14(b)(ii) is to take preference over Section
14(a)(ii), which would be convincing since Section 14(b)(ii) has
been drafted exclusively in respect of computer programmes. If this
second interpretation were accurate, there would be a clear cut
exception to the Exhaustion Doctrine under Indian law with regard
to computer programmes.Films and Sound Recordings
The 1994 Amendment provided that the copyright owner would have
the exclusive right to sell or give on hire, or offer for sale or
hire, any copy of the work, regardless of whether such copy has
been sold or given on hire on earlier occasions; the work in
question could have been a computer programme, film, or sound
recording. Due to this, films and sound recordings enjoy a special
position under the Act: copyright owners continue to control the
resale and/or hire of a copy of a film or sound recording even
after its first sale. This provision was, as mentioned earlier,
introduced in the 1994 amendment to facilitate the flow of
remuneration to copyright owners. This has prevented the
development of a legitimate second-hand market in films without the
assent of the copyright owners, and disallowed the recognition of
the doctrine of exhaustion with respect to either films or sound
recordings.Further, Article 11 of TRIPS also requires that the
Rental Right be recognised in respect of computer programmes and
films. However, given how closely connected the Indian film and
music industries are, it may not have been sensible to limit the
application of provisions relating to the Rental Right to films,
and to eliminate sound recordings. The result has been that Indian
copyright law does not recognise the Doctrine of Exhaustion with
regard to either films or sound recordings. By letting copyright
owners to control sales succeeding to the first sale of a copy of a
film or sound recording, and to forbid the hire of copies which
have been legally purchased, the period of exploitation of such
copies could be considered to have been increased. Popular belief
is that this helps to increase revenues for the copyright owners,
usually film production houses or music companies, and that such
increased revenues assure the owners of the copyright in films and
sound recordings returns on their investment and, further, that
such increased revenues ultimately result in a trickle-down effect
which increase the dues payable to the authors of the underlying
works contained in films and sound recordings. While Sections
14(d)(ii) and 14(e)(ii) would almost certainly increase the
revenues of production houses and music companies, it is not very
clear as to what extent they do so, and it is also not very clear
whether any trickle-down effect benefitting the authors of
underlying works actually exists.D. Conclusion
Thus, the recognition given to the Doctrine of Exhaustion under
the Indian Copyright Act is limited, and there are a number of
exceptions to it. The Copyright (Amendment) Bill, 2010 has proposed
to recognise the principle of international exhaustion in respect
of all classes of works by amending Section 2(m) of the Act which
defines infringing copies and Sections 14(d)(ii) and 14(e)(ii)
which affect films and sound recordings. However, these proposed
amendments would not affect the rental right. The Bill proposes to
add a proviso to Section 2(m) of the Act stating that a copy of a
work published in any country outside India with the permission of
the author of the work and imported from that country into India
shall not be deemed to be an infringing copy. If this proposed
amendment were to become law, it would become quite clear that
India follows a principle of international exhaustion. In the case
of the publishing industry, international exhaustion would, inter
alia, damage the Low Priced Edition (LPE) programme on which
innumerable Indian students rely, decrease royalties payable to
authors, and weaken the revenue streams of publishers. This is
because there would be little incentive for publishers to publish
LPEs in India if the Indian market was insecure and LPEs could
legally be leaked abroad, thereby weakening primary markets.The
film and music industry, too, would be negatively affected as films
and sound recordings would no longer enjoy a special position under
the Act. The Bill proposes to delete the words regardless of
whether such copy has been sold or given on hire on earlier
occasions from Sections 14(d)(ii) and 14(e)(ii) of the Act. This
could mean that films and sound recordings would be treated in the
same manner as literary, dramatic, musical and artistic works. A
second, more probable interpretation would be that the words
proposed to be deleted are merely a clarification and are devoid of
any substantive value. However, in spite of the interpretation
adopted, it would probably be far-fetched to say that the Bill
would not lead to international exhaustion in regard to films and
sound recordings. By forbidding copyright owners from controlling
sales successive to the first sale, the period of exploitation of
films and sound recordings would decrease. This, in turn, would
probably reduce the revenues generated by the sale of DVDs/VCDs.
The accumulation of potentially lower revenues to distributors may
unfavourably affect the amount distributors are willing to pay for
acquiring distribution rights, and that the possibility of lower
amounts being paid to producers would have a trickle-down effect
which would be to the loss of all those involved in film production
and the authors of underlying works.
Instead of crafting straightforward provisions which would
benefit the authors of underlying works, the Copyright (Amendment)
Bill, 2010 appears to create an extremely confusing situation which
is most likely to benefit those who focus on interpreting the law,
and not those in regard to whom the law would apply.It is uncertain
why the Bill proposes to have international exhaustion apply across
the board in the sphere of copyright although the aim might be to
bring Indian copyright law into line with patent and trade mark
law, both of which recognise international exhaustion. However, the
copyright industries follow unusual business models, and the
recognition of international exhaustion might not be ideal.
E. Bibliography
Books:
Resource Book on TRIPS and Development, UNCTAD, Cambridge,
2005.
Lals Commentaries on Law of Copyright by A.S. Srivastav, Delhi
Law House, 2000.
An Unhurried View of Copyright by Benjamin Kaplan.
International Copyright and Neighbouring Rights: The Berne
Convention and Beyond by Sam Ricketson, Vol. 1, second edition,
Oxford, 2006.
Cases referred:
Eurokids International Pvt. Ltd. v. India Book Distributors
Egmont Books Ltd., 2005 (6) BomCR 198. John Wiley & Sons Inc.
& Ors. v. International Book Store & Anr., CS (OS) No.
2488/2008 & IA No. 2856/2009 dated May 20, 2010. John Wiley
& Sons Inc. & Ors. v. Prabhat Chander Kumar Jain &
Ors., IA No. 11331/2008 in CS (OS) No. 1960/2008 dated May 17,
2010. Penguin Books Ltd. v. India Book Distributors and Ors., AIR
1985 Delhi 29. Warner Bros. Entertainment Inc. and Ors. v. Mr.
Santosh V. G., (2009) 2 MIPR 175 (Del).( Student of the IIIrd year
of the V year Law course, ILS Law College, Pune.
MacQueen, Hector L, Charlotte Waelde and Graeme T Laurie (2007).
HYPERLINK
"http://www.google.com/books?id=_Iwcn4pT0OoC&dq=contemporary+intellectual+property&source=gbs_navlinks_s"
Contemporary Intellectual Property Law and Policy; Oxford
University Press.
Berne Convention for the Protection of Literary and Artistic
Works, Sept. 9, 1886, as revised at Paris on July 24, 1971 and
amended in 1979, S. Treaty Doc. No. 99-27 (1986), available at
[http://www.wipo.int/treaties/en/ip/berne/trtdocs_wo001.html]
Section 14, Copyright Act, 1957:-
For the purposes of this Act, "copyright" means the exclusive
right subject to the provisions of this Act, to do or authorise the
doing of any of the following acts in respect of a work or any
substantial part thereof, namely:-
(a) in the case of a literary, dramatic or musical work, not
being a computer programme, -
(i) to reproduce the work in any material form including the
storing of it in any medium by electronic means;
(ii) to issue copies of the work to the public not being copies
already in circulation;
(iii) to perform the work in public, or communicate it to the
public;
(iv) to make any cinematograph film or sound recording in
respect of the work;
(v) to make any translation 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 case of cinematograph film, -
(i) to make a copy of the film, including a photograph of any
image forming part thereof;
(ii) to sell or give on hire, or 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;
(iii) to communicate the film to the public;
(e) In the case of sound recording, -
(i) to make any other sound recording embodying it;
(ii) to sell or give on hire, or offer for sale or hire, any
copy of the sound recording regardless of whether such copy has
been sold or given on hire on earlier occasions;
(iii) to communicate the sound recording to the public.
Explanation: For the purposes of this section, a copy which has
been sold once shall be deemed to be a copy already in
circulation.
Or, in US terminology, the First Sale Doctrine This common law
doctrine is codified at 17 USC Section 109(a).
UNCTAD, Resource Book on TRIPS and Development (2005), pg
94.
Id.
Id.
TRIPS, Article 6: For the purposes of dispute settlement under
this Agreement, subject to the provisions of Articles 3 (National
Treatment) and 4 (Most-Favoured-Nation Treatment) nothing in this
Agreement shall be used to address the issue of the exhaustion of
intellectual property rights.
UNCTAD, Resource Book on TRIPS and Development (2005), pg
92.
Section 14(a)(ii), Copyright Act, 1957.
Section 14(b)(i) and (ii), Copyright Act, 1957.
Section 14(c)(iii), Copyright Act, 1957.
Section 14(d)(ii), Copyright Act, 1957.
Section 14(e)(ii), Copyright Act, 1957.
Although this Part refers to literary works, analogous
principles apply to dramatic, musical and artistic works, as well
as to computer programmes.
A.S. Srivastav, Lals Commentaries on Law of Copyright, Delhi Law
House, Delhi, 2000.
Section 51(b)(iv), Copyright Act, 1957.
(a) Penguin Books Ltd. v. India Book Distributors and Ors. AIR
1985 Delhi 29;
(b) Eurokids International Pvt. Ltd. v. India Book Distributors
Egmont Books Ltd. 2005 (6) BomCR 198;
(c) John Wiley & Sons Inc. & Ors. v. Prabhat Chander
Kumar Jain & Ors. IA No. 11331/2008 in CS (OS) No. 1960/2008
dated May 17, 2010;
(d) John Wiley & Sons Inc. & Ors. v. International Book
Store & Anr. CS (OS) No. 2488/2008 & IA No. 2856/2009 dated
May 20, 2010.
Section 19(2), Copyright Act, 1957: The assignment of copyright
in any work shall identify such work, and shall specify the rights
assigned and the duration and territorial extent of such
assignment.
Section 19(6), Copyright Act, 1957: If the territorial extent of
assignment of the rights is not specified, it shall be presumed to
extend within India.
Section 30A, Copyright Act, 1957: The provisions of sections 19
and 19A shall, with any necessary adaptations and modifications,
apply in relation to a licence under section 30 as they apply in
relation to assignment of copyright in a work.
TRIPS, Article 11: in respect of at least computer programs and
cinematograph works, a Member shall provide authors and their
successors in title the right to authorize or to prohibit 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 had led to
widespread copying of such works which is materially impairing the
exclusive right of reproduction conferred in the Member on authors
and their successors in title. In respect of computer programs,
this obligation does not apply to rentals where the program itself
is not the essential object of the rental.
Statement of Objects and Reasons appended to the 1992 Amendment
Bill (No. 105 of 1992) states, in para 16.
Section 14(a)(ii) is applicable to computer programmes vide
Section 14(b)(i), Copyright Act, 1957.
In all probability, because there were issues of implementation
since most products used some form of software and accordingly the
rights of resale and hire to copyright owners created problems
since these rights hampered the resale and hire of products into
which computer programmes were only incidentally embedded.
Section 14(b)(ii), Copyright Act, 1957.
Section 14(d)(ii), Copyright Act, 1957.
Section 14(e)(ii), Copyright Act, 1957.
Warner Bros. Entertainment Inc. v. Santosh V.G., (2009) 2 MIPR
175 (Del).
Statement of Objects and Reasons appended to the 1992 Amendment
Bill (No. 105 of 1992), Para. 16.
Section 2(v), Copyright Amendment Bill, 2010: In clause (m), the
following proviso shall be inserted, namely: Provided that a copy
of a work published in any country outside India with the
permission of the author of the work and imported from that country
into India shall not be deemed to be an infringing copy.
Section 3(ii)(b), Copyright Amendment Bill, 2010: for sub-clause
(ii), the following sub-clause shall be substituted, namely: (ii)
to sell or give on commercial rental or offer for sale or for such
rental, any copy of the film.
Section 3(iii)(b), Copyright Amendment Bill, 2010: for
sub-clause (ii), the following sub-clause shall be substituted,
namely: (ii) to sell or give on commercial rental or offer for sale
or for such rental, any copy of the sound recording.
