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When an employee or consultant obtains works without a license and they are used within a business (such as photographs or software), they will infringe copyright. In the ordinary course, employers are vicariously liable for the acts of employees during the course of their employment and for the acts of independent contractors. A copyright owner is likely to have several courses of recovery for the infringement against:

the employee or consultant for authorising the infringement by the employer;

the employer on the basis of vicarious liability;

a person responsible for a place of public entertainment, for allowing or permitting to be used for performance of a literary, dramatic or musical work;

a person providing the means by which to reproduce the work.

Obviously, the employer is the most likely target for a claim to damages, as they are seen to be 1. a stable enterprise with a vested interest in avoiding litigation followed by a damages payment; and 2. the employee is more than likely not going to be in a position to satisfy a judgment and the legal fees incurred in the conduct of a claim.

The Measure of Compensation

Damages are said to be at large in copyright cases, as they are not fixed to any particular measure. Damage caused by infringement of copyright is quantified by the value by which the copyright is diminished as a chose in action.

The measure of pecuniary damage likely to be ordered in an action for copyright infringement is that of its commercial value. The commercial value of a work in the circumstances of infringement is reached by one of two methods. Firstly, where the infringing works are sold (by the defendant), the commercial value is represented by the loss of profit to the owner, as the owner has been deprived of the opportunity to sell licenses for the work. The alternate means applies where the work is simply used by the defendant, and not resold by them.

Sales of Goods and Diversion of Customers

When a copyright work is copied and sold, the owner of copyright is entitled to recover their loss of profit caused by the diversion of trade to the defendant. Thus, in a case where the claimant was in the business of producing Christmas cards and offering them for sale to the public, the claimant was awarded the profits that the claimant was deprived by the actions of the defendant.

This is not to say that the claimant would be entitled to recover for all of the sales made by the defendants, as the claimant may not have sold as many as the infringer; whether the claimant will be entitled to recover for all of the infringing sales of the defendant depends on the circumstances of the case at hand. In the events that the particular copyright work is sold at reduced prices serves aggravate the damage suffered by the claimant.

The owner is also entitled to recover for the loss to the reputation of the original copyright work. A loss of reputation will take place where the works are sold at a reduced price, at a reduced quality or in a vulgar or distasteful fashion, such the claimants’ own sales in the future would be prejudiced.

Reproductions without Sale

Where the defendant does not trade in the goods copied, such as using photographs on a website, or uses infringing software, the method of calculation described above (which accounts for loss of profits for diversion of trade) is not the appropriate measure for calculating damages. The proper measure in these circumstances is a reasonable license fee that the copyright owner would reasonably charge for a license to use the photographs in the particular circumstances. The award of damages will be that of a willing copyright owner and a person in the position of the notional licensee, being the defendant.

Conclusion

Simply because a copyright owner seeks to recover from business, does not prevent the business seeking recovery from the employee or consultant who was responsible for, that is, authorized the infringement by obtaining the copyright work unlawfully and making it available to the business for use.

Despite frequent claims of excessive damage by owners, they are not in a position to enforce a claim for a sum of compensation greater than the loss that they are able to prove with reasonable certainty. This process takes in a process of ascertaining on the particular facts what the copyright owner would in fact be entitled to recover at law.

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M/s Entertainment Network (India) owner of FM Radia “Radio Mirchi” Ltd filed an appeal in the Supreme Court against M/s Super Cassette Industries Ltd owner of “T-Series” brand.

The matter involved interpretation of Section 31 of the Copyright Act, 1957.

On applications of various Radio Stations for grant of compulsory license to all the radio stations, the Copyright Board at Hyderabad in terms of Section 31(1)(b) of Copyright Act, the Board vide its judgement dated 19.11.2002 fixed the standard rate of payment for a period of two years.  Super Cassettes was not a party therein. The Board fixed royalties initially for a period of two years. An appeal there against was preferred before Bombay High Court.

Meanwhile on 28.1.2003, the appellant filed an application before the Copyright Board at Delhi for grant of compulsory licence in terms of Section 31(1)(b) of the Act against Super Cassettes i.e. respondents. The respondents filed an objection contending that as the suit for infringement was pending before the Delhi High Court, no application for compulsory license could be entertained. The High Court, on an application filed by the appellant, clarified that the respondent was free to canvas its submissions before the Copyright Board that the person infringing the Copyright should not be granted compulsory license. The Board directed the parties to come with their respective witnesses. However, when respondent intended to present oral evidence, it was declined and application was allowed granting a compulsory license to Appellant.

Appellant filed an appeal against the said order before the Bombay High Court questioning the rates of compensation only and was tagged with various other appeals filed against the order dated 19.11.2002 passed by the Copyright Board at Hyderabad. Bombay High Court opined that in terms of Section 31 of the Act, grant of compulsory license on reasonable remuneration is permissible

Respondents preferred two-fold appeals before the Delhi High Court and by judgment dated 30.6.2004, the respondent’s appeal was allowed remitting the matter back to the Copyright Board to reconsider the application of the appellant for grant of compulsory license under Section 31 of the Act after giving adequate opportunity to the parties to adduce evidence and to dispose of the same by a reasoned order. The High Court furthermore directed that the appellant must file an undertaking that it would not broadcast the sound recordings of the respondent. Against said order the present appeal was filed before the Supreme Court of India.

The supreme Court has to deal with two judgments one from the Bombay High Court and another from the Delhi High Court. Whereas the Bombay High Court opined that in terms of Section 31 of the Act, grant of compulsory license on reasonable remuneration is permissible; the Delhi High Court held otherwise.

The Supreme Court vide its judgement dated May 16, 2008 held that as it was a case of abuse, the Board had the jurisdiction to entertain any application for grant of compulsory licence. How far and to what extent appellant has infringed the right of the respondent is a matter which may be taken into consideration by the Board. A suit was filed and injunction was granted. Apart from the fact that the appellant offered to take a license held negotiations with the respondents in the suit as soon as it came to know that Super Cassettes is not a member of PPL, it gave an undertaking. Each case must be considered on its own facts. However, we do not approve the manner in which the Board has dealt with the matter. It has refused to examine the witnesses. It took up the matter on a day for hearing which was fixed for production of witnesses. Supreme Court was of the opinion that the order of the Board should be set aside and the matter be remitted to the Board again for the consideration of the matter afresh on merit and on those terms appeal was allowed.

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