The Indian media and entertainment industry, consisting of films, music, television, radio and live entertainment, is considered to be the fastest growing sector in the country, outperforming the economy with its growth rate of more than 30% and providing employment to about 5 million people.
The Indian film industry, producing more than 1000 films every year, is the world's largest producer of feature films. While the bulk of films produced are from the southern part of the country, Hindi films retain prime stakes in terms of box office collections.
Unlike the US and UK, where aggregate box office collections of films are accounted to a central agency, in India it is virtually unfeasible to compute the magnitude of the film industry, as no analogous central agency exists. In such a scenario one is forced to rely on industry costs as a proxy marker. They have been pegged at Rs21.5 billion ($451.2 million). However, according to the Film Federation of India, illegal copying and distribution costs the film industry about Rs5 billion ($105 million) annually.
Piracy of films in India-the problem
Copyright is essentially a bundle of rights available for exploitation either through licensing or assignment of that copyright. These rights include theatrical rights, home video rights, rental rights, satellite rights, terrestrial rights and video-on-demand rights. Producers choose to exploit each of these rights in different formats within different periods according to a pre-planned schedule. (Each of these formats is referred to as a window). It is essential for producers to maintain the time frame between each window in order to optimize returns on investments. Therefore, a departure from the pre-planned schedule implies a cutback in revenues to the producer. A producer would aim at maximizing the time period in each window in order to capitalize on the profits generated in each of them before moving on to the next window.
By way of illustration, a producer would first aim at a theatrical release of the movie, which is his first window. To maximize his returns from this window, it is crucial that the film is not available on any other format (such as cable or DVD), thus creating a monopoly of sorts of the film in a particular format for a specified period of time. If a cable operator concurrently broadcasts the film, revenues generated by the theatrical release of the film stand diminished.
Piracy of films therefore, breaks the producer's monopoly in the window of his pre-planned schedule or distribution strategy compromising on his proceeds from the film. To counter piracy or at the very least restrain the degree to which its effect extends, film producers are forced to reduce time-frames between various windows. The inability to optimize returns from each window is reflected in the fall in projected income of a film and also profit margins of various links in the distribution and exhibition system.
The problem of piracy is not confined to Indian films alone but extends without discrimination to international movies as well. While release of Hollywood/British films in India is usually deferred to a few months after its US/UK release, pirated copies of such films are nevertheless readily available before its official release in the country.
Furthermore, while the advantages of technological developments in the film industry cannot be disputed, they have nevertheless also spurred piracy in general. Copying of films, whether on video cassettes or optical discs has not only become more technologically advanced, but also significantly easier, with considerably better quality than in the past. Technology, which otherwise would have provided additional rights of exploitation as also supplementary revenue streams to the producer, often results in the exact opposite, with loss of revenues on account of piracy.
Films, which were earlier grabbed directly from the screen can now be punched into beta recording machines and then copied onto VCDs, after which there is no limit on the number of copies that can be produced. With the introduction and effortless accessibility of CD writers, which are now available at a price as low as Rs40,000 ($839), copying films has become even more uncomplicated.
The film industry has seen a growth of 17% in film exports over the past year as overseas territories have been progressively more profitable to Indian producers with several Indian films realizing almost 30% of their total net revenue from overseas.
However, inadequate control over the distribution process, especially in overseas territories has further given impetus to piracy of films in India. It is generally considered easier to make copies of films from the overseas print of the film. Overseas distributors receive the print of the film three or four days before its actual release, which provides more than adequate time-frames for copying.
Cable operators broadcast pirated versions of films concurrently or shortly after the theatrical release of the film. VCDs and DVDs of the film materialize in marketplaces long before legal versions of the same are available and at a fraction of the legitimate price.
In a country such as India, with a low per capita income and a large population below the poverty line, this translates into an ability to watch the latest releases at a fraction of the cost. With films being a family outing, watching the latest movie entails an expense of about Rs160($3.36) in ticket costs alone for a family of four. Compare this with the Rs 300($6.30) paid by the family to watch an average of three movies a month apart from other television entertainment. In this milieu, it is inevitable that piracy intensifies as cable operators compete to broadcast the latest release.
Anti-Piracy law in India
The legislations which can be invoked to counter piracy in India include the Cable Television Networks (Regulation) Act, 1995 (the Cable TV Act) and the Copyright Act, 1994 (the Copyright Act). India is also a signatory to the two major copyright conventions, ie, the Berne Convention for the Protection of Literary and Artistic Works and the Universal Copyright Convention.
The Cable TV Act
The Cable TV Act was enacted in 1995 with retrospective effect from 1994 to regulate the operation of the cable television networks in the country. The Act is based on the presumption that cable operators are unaware of their obligations with respect to the use of material protected by copyright.
Under the Cable TV Act, a cable television network has been defined as a system consisting of a set of closed transmission paths and associated signal generation, control and distribution equipment, designed to provide cable services for subscription by multiple subscribers.
The Act introduced the registration of cable operators and provided a procedure as also conditions precedent for the same. Registration was made compulsory and failure to do so would invite seizure apart from other penalties, including imprisonment.
By the Cable Television Networks (Regulation) (Amendment) Act of 2000 (the Amendment Act), the Cable TV Act and rules thereunder were amended to reflect the changing scenario and increased levels of awareness with respect to copyright infringements. One significant amendment brought about by the Amendment Act was to Rule 6 of the Cable Television Network Rules (the Cable TV Rules) relating to the Programming Code to be adhered to by all cable operators. The amendment prohibited cable operators from carrying programmes in respect of which a copyright subsisted under the Copyright Act, unless the owner of the copyright had granted a license for the same to him.
Therefore, violation of the Programme Code by infringement of a protected copyright was made an offence making cable operators liable to criminal prosecution under the Act.
The Amendment Act also strengthened the authorized officers who were empowered to control networks.
However, in spite of these noteworthy legislative changes, piracy continues unabated. Distributors not only receive pirated signals from their head ends, (which in turn have built-in LD/VCD/DVD players or video cassette players), but also have the facility to produce their individual signals through the installation of their own LD/VCD/DVD players or video cassette players.
To avoid detection by enforcement officers, cable operators make clever use of reverse signal technology. By use of reverse signal technology, the origin of the pirated movie is protected in a cable home, which is the source of the signal generation. Therefore, at the time of conducting a raid at the distribution source neither the LD/VCD/DVD or video cassette player nor the pirated film can be discovered.
The Copyright Act
The law relating to copyright in India has come a long way since the Copyright Act of 1847, which was the first copyright statute in India. In 1911, the Copyright Act was codified in England and was the law in force in India as well. However, the Governor-General of India enacted the Copyright Act in 1914. In view of technological progress, especially in the area of broadcasting, the Copyright Act was enacted in 1957 and was brought into effect in 1958. The Copyright Act is fundamentally consistent with the Berne Convention and the Universal Copyright Convention.
The Copyright (Amendment) Act of 1984 (the 1984 Amendment Act) was the first notable legislation to introduce changes in the Copyright Act with particular reference to piracy. The objects of the 1984 Amendment Act were as set out below:
To increase the punishment provided for infringement of copyright, ie, imprisonment of three years, with a minimum punishment of imprisonment of six months and a fine up to Rs2 lakhs ($4,197), with a minimum of Rs15,000 ($315);
To provide for enhanced punishment in case of second and subsequent convictions;
To provide for the declaration of the offence of infringement of copyright as an economic offence so that the period of limitation provided in the Code of Criminal Procedure 1973 for offences would not be applicable to these offences;
To specifically make the provisions of the Act applicable to video films and computer programmes; and
To require the producers of records and video films to display certain information in the record, video films and containers thereof.
The Amendment Act of 1984 inserted a new provision, Section 52-A, in relation to the last object set out above with the primary focus of curbing video piracy. As a result of this, in case of video films, the following information was to be displayed both in the video film as also on the videocassette or other container:
The certificate granted by the Board of Film Certification;
The name and address of the producer of the film and details of the necessary licences and consents; and
The name and address of the owner of the copyright in the work.
However, the technological boom of the 1980s rendered the anti-piracy provisions of the 1984 Amendment Act practically ineffective. In view of the discontent with the said Act, the Government of India set up a working group in 1987 to appraise the provisions of the same in the context not only of scientific innovations in communications technology such as video, satellite and other instantaneous communication, but also the country's obligations under the Berne Convention and Universal Copyright Convention, and accordingly recommend appropriate revisions.
As a consequence of this exercise, the Copyright (Second Amendment) Bill was introduced in Parliament in 1992. The Bill was referred to a Joint Committee of both Houses of Parliament. The committee considered the Bill along with representations and recommendations of various interest groups. Numerous modifications were made in the Bill before it was finally enacted as the Copyright (Amendment) Act, 1994 (the 1994 Amendment Act).
The key modifications prompted by the 1994 Amendment Act included provisions for copyright societies seeking to promote collective administration or rights of authors, composers and other creative artistes and enhanced protection to cinematograph films and sound recordings.
The 1994 Act was amended once again by the 1999 Amendment Act.
The Copyright Act as it stands today provides that copyright in case of a cinematograph film extends to:
making a copy of the film;
taking a photograph of any image forming a part of the film;
selling, giving on hire or offering for sale or hire any copy of the film (irrespective of earlier sale or hire); and
communicating the film to the public.
The Act, in Section 63, stipulates a minimum mandatory punishment of six months' imprisonment, extending up to three years in case of infringement of a copyright in a work, and also a fine from Rs50,000 ($1,049) up to Rs200,000 ($4,197). Furthermore, provision has also been made for enhanced penalties in case of subsequent convictions. Therefore, the minimum mandatory punishment for subsequent convictions is one year imprisonment extending up to three years with a fine of Rs100,000 ($2,099) to Rs200,000.
However, the chief impediment in Section 63 is the obligation to establish that the infringement or abetment was carried out "knowingly" by the defendant. The law on this issue calls for urgent modification in view of the reverse signal technology used by cable operators to avoid detection. Shifting the onus of proof onto the defendant by creating a presumption of knowledge of copyright ownership by the defendant (or a presumption of the standard of the reasonable man in that the defendant should have reasonably known of the same) would facilitate the process of anti-piracy.
Nevertheless, the law courts are progressively appreciating the necessity for copyright protection. In a landmark judgment, and the first of its kind, in 1998 the Delhi High Court, recognizing the problem of film piracy, passed an order against cable operators restraining them from broadcasting the film Kareeb. Local commissioners were appointed by the court with instructions to conduct raids in the event of complaints of infringement by V V Chopra, the film producer, or his authorized representatives. The local commissioners were also empowered to seize incriminating equipment and other items discovered at the site.
Since then, courts are increasingly open to conducting raids in cases of piracy as also awarding convictions with (at least) the minimum mandatory sentence.
Copyright societies
Before the 1994 Amendment Act, provisions existed for performing rights societies, which issued licences for the performance of any work in India in which a copyright subsisted, which was, by implication, restricted to copyrights in literary, dramatic and musical works. By the 1994 Amendment Act, the operation of these performing rights societies was extended to cover all works in which a copyright subsisted under the Act.
Authors of creative works who did not possess the business awareness or resources to optimize exploitation of their works or avert infringement of their works, licensed copyright societies to administer the same on their behalf. Copyright societies have gradually grown to several hundreds of members and are giving effect to the aims enunciated in the 1994 Amendment Act.
These copyright societies, with their collective wherewithal have had a fair measure of achievement in issuing licences for the public performance of copyrighted works and also conducting surveillance to restrain infringements. In the case of infringements of copyrights of members, copyright societies have been effective participants in conducting raids as also commencing appropriate legal action against the defendants.
The primary advantage of copyright societies, apart from their cooperative resources, is their capacity to network efficiently with other analogous watchdog organizations and also liaise with the police and courts at an institutional level. The future of copyright infringement deterrence therefore, appears to be copyright and other similar regulatory groups as has been seen in the case of associations such as the Motion Picture Association.
Lack of protection threatens industry
Indian cinema has come a long way from the first screening of films by the Lumiere Brothers in 1896. Poised at the edge of an international film boom and being the largest film industry in the world today, there is an urgent need to afford ample copyright safeguards to films in India. While undoubtedly, the country is on the right track, a lack of robust copyright protection is becoming an obstacle in fully realizing the potential of the industry.
