Analysis of the licensing of Internet Broadcasts under the Copyright Act in terms of

economics and utilitarian jurisprudence: Examining the controversial provision “Section

31D” of the Copyright Act through the lens of Kaldor-Hicks Compensation criterion and
Jeremy Bentham’s Utilitarian principles to emanate the fundamentals of Intellectual
Property Rights in the law.

A Synopsis submitted in partial fulfillment of the requirements for the

Internal Evaluation of IPR – I Course B.A. LL.B. (Hons)

Amartya Sahastranshu Singh Faculty Supervisor

Roll No: 974 Dr. M.R. SREENIVASA MURTHY

Section: A ASSOCIATE PROFESSOR

Semester: VI NUSRL RANCHI

Batch: 2019-24
 National University of Study and Research in Law, Ranchi

At- Nagri, P.O.- Bukru, Kanke – Pithoria Road,

Kanke, Ranchi, Jharkhand 834006

MARCH 2022

INTRODUCTION

In June 2012, the Government of India notified the Copyright (Amendment) Act. Section 18 of
the Amendment Act introduced Section 31D into the Copyright Act, which was further
supplemented by rules 29, 30, and 31 of the Copyright Rules, 1958. What the scheme actually
did was grant “any broadcasting organization” the right to communicate to the public, by way of
broadcast or performance, a previously published literary or musical work, and sound recording.
All that the broadcasting organizations needed to do was give notice of their intent to do so to the
owner and pay decided royalties. This notice is given after the process of determining the rate of
royalty, which is completed by the Intellectual Property Appellate Board.

A challenge has been made to the Section on the grounds that it does not permit a reciprocal
understanding between owners of copyrights and those who grant licenses, violating Articles 14,
19(1)(g), 21, and 300A. By doing so, it allows broadcasters to unilaterally publish copyright
owners' works without allowing them any representation, thus removing their incentive to create
original works and benefit from their intellectual output by collecting their 'IP reward'.

In this paper, what I seek to analyze is the two facets of the same story. First, its constitutionality,
and second, its economic efficiency. The reason why I chose the concept of economic efficiency
in this particular subject is that IP law has a strong economic connotation. This law was
fundamentally developed to incentivize the owner of intellectual property and reward them for
their labor. In doing so, I would be using the Kaldor-Hicks compensation principle along with the
jurisprudence of utilitarianism from Jeremy Bentham and John Stuart Mill. This will not only
help in understanding the actual efficiency of the law but also help us in eliminating the norm of
morality from the entire equation. Hence, the constitutional validity, as well as economic facility,
will be put to test without the interference of any abstract entity such as morality.

Upon a bird’s eye view, it can be understood that this analysis will help us in determining the
crucial question of whether the law (in my opinion) is constitutional or not? And Whether it is
economically efficient or not? If it is efficient, for whom and for how long? And if it is
inefficient, why is the government still implementing it?

SIGNIFICANCE OF THE STUDY

The significance of the study lies in the analysis of the economic aspects of the law. Testing the
efficiency of the scheme on the anvil of compensation criterion will give us a completely new
lens to analyze the impact of the law on micro and macro levels. This will also enable us to
understand what trend will the law create and if the trend will be efficient in the fast-changing
communication industry.

OBJECTIVE OF THE STUDY

The objectives of the research paper are mentioned as follows:

1. To analyze if the law is constitutional, in accordance to the constitutionality tests developed in

the Indian Jurisprudence.
2. To examine the law in terms of the principles of proportionality, since the law limits the rights
of the owner of the copyright.

3. To interpret the law in terms of economic efficiency using the Kaldor-Hicks Compensation
Criterion and Utilitarian Principles by Jeremy Bentham and John Stuart Mill.

4. To speculate if the law will stand the changes in the fast-growing communication industry (on
economic grounds).

SCOPE OF THE STUDY

In this study, the scope has been limited to the following aspects:

1. The study of constitutionality has been done through the Doctrine of Ultra Vires developed
through leading cases.

2. The study of proportionality has been done through a test developed in the landmark case of
Modern Dental College and Research Centre and Ors. v State of Madhya Pradesh.

3. The economic efficiency of the law has been done through Keldor-Hicks Compensation
Criterion, which has been further interpreted in the light of utilitarian principles developed by
Jeremy Bentham and John Stuart Mill.

4. The emergence of internet broadcasters, their inclusion and exclusion in the law, and the
industry shifts has been done through legal, statistical, comparative analysis.

LIMITATION OF THE STUDY

The study has the following limitations:

1. It does not cover the morality aspect of Intellectual Property jurisprudence.

2. It does not present any solution or alternative measure that would either increase the efficiency
of the law (if it is efficient) or will make it efficient (if it is found inefficient).

3. The speculative part of the research is based on statistical data analysis, requiring certain
assumptions to present the research. Hence, these might not produce a holistic analysis, since
some key aspects, such as trends in consumer behaviour and market shift, will be assumed to be
constant.

RESEARCH QUESTIONS

1. Whether the amendment, i.e. Section 31D of the Copyright Act, is constitutional?

2. Whether the said provision stands the test of proportionality, as laid down by landmark
judgements of the Supreme Court of India?

3. Whether the said provision is economically efficient in terms of its nominal and distributive
structure?

HYPOTHESIS

1. The amendment, i.e. Section 31D of the Copyright Act is unconstitutional.

2. The said provision does not pass the test of proportionality, as per Indian case law precedents.

3. The provision is economically inefficient, when analysed through the lens of Kaldor-Hicks
Compensation criterion.
 METHODOLOGY

The researcher has opted for doctrinal method of research. Within this, the researcher has
attempted to perform inter-disciplinary research by adding theories and tools of economics to
analyse Intellectual Property laws. Secondary data from books, articles, research papers, official
statistics, and other on-line resources has been utilised.

REVIEW OF LITERATURE

1. An Economic Analysis of Copyright Law: In this research paper, authors William M. Landes
and Richard A. Posner have explained the working of the theories of Economics in intellectual
property law specifically the copyright law. The authors seem to be particularly interested in
positive analysis, and specifically in the question of to what extent copyright law can be
explained as a means for promoting efficient allocation of resources.

2. An Empirical Analysis Of The Economics Of Copyright: How Valid Are The Results Of Studies
In Developed Countries For Developing Countries: In this research, Richard Watt attempts to
provide a synopsis of the empirical literature, in the field of economics, concerning copyright.
The paper is not intended to be a full literature survey, but rather attempts to identify the main
areas that have been studied, and to offer an overview of what the literature says by means of an
analysis of representative publications. The principal objective is to attempt to provide guidance
to economists interested in undertaking empirical research on the economics of copyright,
particularly in developing countries and countries with economies in transition.

3. Economics Of Copyright: Challenges And Perspectives: This article by Aleksandar Stojkov,

Goce Naumovski, & Vasko Naumovski outlines the prominence of economic analysis of
copyright, not only within the academic community, but also in the legal practice. The successful
cooperation of law and economics in the field of copyright calls for advanced microeconomic
analytical skills and a high level of legal understanding of intellectual property. The study
highlights the central dilemma between access of copyright users and incentives to authors, by
raising important issues under the umbrella of the microeconomics of copyright and
macroeconomic consequences of piracy.

4. Welfare Economics, The Kaldor-Hicks Compensation Principle: In this module, Randhir

Kumar explains the meaning and application of the Keldor-Hicks compensation principle. Study
about the meaning of the principal as per Nicholas Keldor and JR Hicks has been presented
along with its application its assumption as well as the criticism of the theory.

5. The History of Utilitarianism: In this research, Julia Driver discusses about utilitarianism, its
history as well as its impact on legal philosophy and jurisprudence. Thorough research has been
presented by the author in terms of the nuances of this school of thought and its applicability in
the judicial and legal realm.

SCHEME OF THE STUDY (TENTATIVE)

The research has been divided into four parts. Based on those parts, the research paper has been
divided into several chapters. A tentative chapterisation has been extended below.

PART I : BACKGROUND.

Chapter 1. Introduction

Chapter 2. Defining the foundation: Kaldor-Hicks Compensation Criterion and Utilitarian

Jurisprudence.

PART II: ANALYSIS IN THE LIGHT OF CONSTITUTIONAL PRINCIPLES.

Chapter 3. Is the provision ultra vires the principles of the Constitution?

Chapter 4. Test of the provision on the anvil of proportionality principle.

PART III: ANALYSIS IN TERMS OF ECONOMIC TOOLS AND PRINCIPLES.

Chapter 5. Is the provision economically efficient?

Chapter 6. Data Analysis.

PART IV: CONSLUSION OF THE AUTHOR

Chapter 7. Conclusion