Indian phonographic industry

Chapter 1

Introduction

"Music expresses feeling and thought,without language; it was

below and before speech,and it is above and beyond all words."

Robert G. Ingersoll.

The association of music with human life travels back to time immemorial,from music being a medium of intense expression,to recreation and entertainment,to being a requiem of love. In the early days,attending a live performance by an artist or having a musician play in private for entertainment was the only means to enjoy music. This made the concept of musical entertainment restricted to the privileged classes of the society,though the lower classes could at least sing or use primitive instruments to fulfil their desire of enjoying music. As time went by music was made more accessible to the common man resulting in a medium of entertainment for the masses. Since the past few decades,technology has been able to take recreation and entertainment to a new and much higher level than ever before and it is now much easier to communicate and reach across to people all over the world.

To appreciate the online music industry in India,it first needs to be understood what online music is all about. Online music refers to music that has been digitized and can be downloaded. It is a web based business,where songs are sold on a per song or subscription basis. The Internet's first free high fidelity online music archive of downloadable songs was the " Internet Underground Music Archive. It was started by Rob Lord,Jeff Patterson and Jon Luini from the University of California,Santa Cruz. It has,since then,spread all over the world,wherever there is a strong internet presence.

In India,the concept of internet based music emerged roughly 4 to 5 years back. Once music companies in the Indian market,like T-Series,HMV,Saregama and Sony BMG started digitizing their songs,the online music market also started rising. Currently,the physical sale of cassettes,CDs and MP3s stand at 55% and the digital sales account for as much as 45%. It had been speculated that by the end of 2008,due to a surge in internet usage,the Indian market would see a reversal of roles with the digital sales at 55% and the physical sales at 45%.

Webster's dictionary defines Piracy as (a) the unauthorized use of another's production,invention,or conception especially in infringement of a copyright (b) the illicit accessing of broadcast signals. In other words piracy means unauthorized reproduction,importing or distribution either of the whole or of a substantial part of works protected by copyright.

The TRIPS Agreement defines "pirated copyrights goods" as any goods which are copies made without the consent of the right holder or person duly authorized by the right holder in the country of production and which are made directly or indirectly from an article where the making of that copy would have constituted an infringement of a copyright or a related right under the law of the country of importation".

Also,trade mark infringement is normally described as "counterfeiting",which means that any product,including packaging,bearing without authorization a trademark which is identical to the trademark validly registered in respect of such product,or which cannot be distinguished in its essential aspects from such a trademark,and which thereby infringes the rights of the owner of the trademark in question under the law of the country of importation".

The problem of piracy has arisen with the rapid advance of technology. New techniques of printing,recording and fixation of broadcast or recorded programmes have emerged,making it easy for pirates to carry on their illegal activities. Music piracy is generally described as the deliberate infringement of copyright and/or trade marks for commercial gain. Considering the damaging effect that,piracy has on the legitimate industry,counterfeiting and piracy have been considered criminal activities almost since the inception of IP laws in most national legislations. As a result music piracy is a great threat being faced by the International and Indian music industry and is rapidly proliferating into many markets worldwide. The technology used constantly keeps evolving,which makes the job of curbing piracy all the more difficult.

India is one of the top countries in the world facing a threat. Approximately 64% of all music which is downloaded is illegal and even though the Indian government is making serious efforts to counter this intellectual property theft,the lack of proper IP laws or more correctly,the enforcement of these laws allow the perpetrators to get away scot-free.

Piracy to start with is an illegal and criminal activity in India. The Indian Music Industry,defines piracy as,the unauthorized duplication of an original recording for commercial gain without the consent of the rights owner.

The pertinent Statute existent in India is the Copyright (Amendment) Act,1999 which deals with the issue of piracy in musical works under the head of 'infringement of copyright'. Copyright infringement is the unauthorized use of material that is protected by intellectual property rights. Particularly,the use of a copyright ed work in a manner that violates one of the original copyright owner's exclusive rights,such as the right to reproduce or perform the copyrighted work,or to make derivative works that build upon it,is known as Copyright violation.

The Federation of Indian Chambers of Commerce and Industry (FICCI)-Price Waterhouse Coopers (PWC)'s annual report for 2007 put the current size of the,entertainment,sector at Rs.437 billion ($10 billion approx) and predicted that the industry will see 18 percent compound annual growth rate (CAGR). The projected size of the industry will be Rs.1 trillion ($23 billion approx) by 2011. The report was presented at the FICCI-Frames event that took place in Mumbai in 2007. Concluding plausibly from the above it is safe to say that the entertainment sector is enormous for India,and needless to mention,it is an essential aspect to the Indian economy,making the successful curbing of piracy all the more important.

MUSIC PIRACY

The reasons behind copyright piracy in sound recordings are numerous,the foremost among these being pecuniary interests. If certain products are available at a lower price,who wouldn't mind buying these even if they may be pirated ones. The pirates can afford to sell 'pirated' products at lower prices because there is no expenditure on advertising,infrastructure and payments towards the state. As a result,pirates always enjoy price advantages compared to the legitimate sellers. The only discrepancy to beat pirated recordings is the quality of the product. Usually pirated products are assumed to be of lower qualities. But with advancement of technology,copying has become easier and inexpensive. Nowadays pirated products are almost the same quality,which makes the task of legitimate producers very complex.

Besides the above,piracy also thrives because of the demand-supply gap. When there is demand for a product and the legitimate market is not in a position to supply,piracy creeps in. The distribution network with respect to audio products is still not very strong in many countries,latest albums and soundtracks are available online much before they are available in stores.

While piracy is an integral part of the Indian music market,the exact extent of it is very difficult to predict with certainty. The IFPI Market Report shows that in 1995 India was the world's third largest pirate market in volume terms and the sixth largest in value terms. The pirated sale in value has also increased from $ 69 million to $ 82.1 million during the same period,thus achieving a growth rate of 19 percent.

INTERNET PIRACY

The term 'internet piracy' covers several different ways in which infringing music is distributed or downloaded illegally. Websites such as allofmp3.com host large amounts of music but do not have permission to copy it or deliver it over the internet. These sites generally offer music either for free or at very low prices because they do not pay artists or other rights holders for their work. This form of internet piracy thrives in particular in countries where intellectual property rights are not effectively enforced or where such rights are weak. The IFPI is right in concluding that downloading can easily be done in these countries without legal and other repercussions. Moreover,most of these countries are financially weak and the people do not have the resources to spend it on buying CD's and MP3's.

"Peer to peer" (P2P) networks facilitate file-sharing directly between individual users allowing distribution of a music file to millions of others. Uploading copyrighted files onto P2P networks without the permission of the rights holder is illegal virtually everywhere in the world. P2P network operators have been found liable for copyright infringement in countries around the world. Services such as Grokster (now shut down after a US Supreme Court ruling in 2005) and Kazaa (found infringing by the Australian Federal Court) became well-known engines of copyright infringement. In 2006,the Belgian and Swiss authorities took action and shut down the world's biggest eDonkey P2P server called Razorback. There is one more new development in the file-sharing technology called 'BitTorrent',which was designed to distribute large amounts of data between users without utilizing expensive server and bandwidth resources.

The eDonkey and BitTorrent protocols are similar in that they are principally P2P decentralized networks - shared data is stored on and transferred between peer clients,not centralized servers. The centralized aspect only handles source management and other very minor peer or file information.

Also,neither network is anonymous and your IP will always be visible to all of your connected peers. It's actually easier to pick up IP addresses from BitTorrent,thus making it even less secure than eDonkey. But the greatest advantage of BitTorrent is indeed speed. As soon as you get connected to a BitTorrent tracker,downloads will usually start instantly at the maximum download rate,regardless of the number of files queued. Unlike eDonkey there are no credits or queues in BitTorrent. Moreover,BitTorrent delivers out of the box,it's fairly straight forward to use. On the other hand,eDonkey is more complicated,and you cannot get it to work efficiently and reliably before getting used to it and reading online guides. Therefore,it can be safely concluded that in totality BitTorrent is a better server than edonkey.

Apart from the above there are other forms in which internet piracy takes place such as the 'FTP' (or file transfer protocol) sites which are one of the 'traditional' forms of internet piracy and typically the first place where pirate copies of new recordings appear. Users can make material available on FTP sites enabling music and other files to be downloaded from the 'server' computer by thousands of people. Internet relay chat (IRC) was designed to facilitate communication in discussion forums such as news groups and fan sites but has also become a vehicle for music piracy."

The above mentioned are various ways in which internet based music piracy usually takes place,causes a huge amount of loss to the music industry every year. Piracy may also take place in different phases,i.e. before or after release. In this regard,pre-release piracy poses a major threat to the music industry.

PRE-RELEASE PIRACY

Pre-release piracy is a growing problem for the music industry. New releases are the lifeblood of the music industry and pre-release piracy has a serious effect on legal sales and on record companies' ability to reinvest in new artists. New recordings can be posted on the internet through a range of distribution platforms including websites and P2P networks. They have the potential to reach mass distribution within hours. In 2006,key new releases by Placebo,Franz Ferdinand,The Strokes,The Flaming Lips and,most recently,The Red Hot Chilli Peppers,were available illegally online weeks before release.

On 24 April 2009,in Sydney the New South Wales Police,assisted by investigators from the Australian Federation Against Copyright Theft (AFACT) and Music Industry Piracy Investigations (MIPI),stopped a 38-year-old woman and recovered more than 600 suspected pirated movie and music discs from her. Amongst the discs seized were infringing copies of the new Hugh Jackman movie "X-Men Origins: Wolverine",which had not yet been released in cinemas in Australia or anywhere around the world,and popular children's music titles including "The Wiggles" and "Hi-5".

It is believed that these new websites and FTP sites are most certainly the first source of illegal music on the internet. The news of the leak spreads very quickly and files begin to appear in P2P networks which multiply over the subsequent period of weeks. Because of the fact that it spreads at such a fast rate,pre-release piracy has a distressing effect on the online music industry.

Thus,the IFPI and its member record companies actively combat pre-release piracy by concentrating as closely as possible on the source of the problem. The priority is to tackle the first leaks on the internet,thereby limiting the subsequent spread of illegal copies,and potentially stopping millions of illegal downloads.

In early 2006,IFPI tracked the illegal distribution of Placebo's new album 'Meds',via the internet and as physical copies over a period of 10 weeks from the day of the first leak. This lead to an intense and co-ordinated pre-release anti-piracy effort. A large number of "notice and take-down" warning letters were sent to facilitate the removal of the infringing content. The focus was on the first leaks via web/FTP sites. Within only the first two weeks of the leak of 'Meds',these actions potentially prevented some 450,000 illegal downloads based on an assumption of average downloads per day. This figure would have multiplied rapidly in subsequent weeks,with files being transferred to other channels of distribution and further proliferating.

By release week,some 14,000 uploaded copies of 'Meds' had been made available for download on P2P networks - far less than would have been available without the anti-piracy measures in the early weeks.

Factors leading to the rise of music piracy

High price of originals

This is one of the major causes of music piracy,an original recording on a compact disc of English music costs anywhere between Rs. 525 to Rs. 325,depending on the artist. Usually there are only a few songs in the entire album that are actually popular and that people would listen to,therefore,spending such an amount on Music media for just 2 to 3 tracks in particular is not really worth this price,especially when there exists a cheaper option. Notwithstanding the quality and sound of such disc's,the price of these discs are so high owing to another set of factors mentioned below:

Quality: The quality of original media can never be doubted; the said discs are manufactured using state of art technology,as a result,enhanced and superior sound quality. These discs are manufactured under strict quality control apart from other standards that are maintained. Obviously to employ such techniques there is a cost involved,which is ultimately passed on the end consumer. Though,generally pirated products are of lower qualities.? But with advancement of technology,copying has become simpler and less costly.? Therefore,many a times pirated products are also equally of good quality,which makes the task of legitimate producers more difficult.

Taxes: Taxes play a vital role in the determination of costs of CD's and cassettes,Due to the high and varied tax rates the cost of original recordings increase substantially. It would be imperative to mention the excerpts of a presentation made on the same issue by the Indian Music Industry in association with FICCI to the Ministry of Information and broadcasting -

"Presently different states in India have different levels of Sales Taxes on Music cassettes & CDs. There is a wide disparity in rates e.g.: 15.3 % in Maharashtra,15% in Bihar and 4.6% in Rajasthan. This disparity gives rise to infiltration of material from one state to other and the legitimate sales in states with higher tax suffers. (E.g. Material sold or billed to say Rajasthan is sold in Bihar. Although it is sold in Bihar it is seen as sales in Rajasthan at 4.6% ST). The higher the taxes the higher are the difference between the authorized and pirated product (Pirates do not pay any taxes). The margins of the legitimate producer and thus their growth suffer. The enforcement of copyright law is not very forceful in our country due to various reasons. The government can at least bring down the taxes so that the encouragement to pirates (although indirect and unintentional) is denied and the additional burden on the legitimate producer is reduced".

As seen above taxes play a vital role in the costing of a C.D or a cassette,which in turn increases these prices and raises the difference between the original and the pirated products.

Internet: The rapidly increasing technology has made the Internet a medium for many areas including unlawful,illegitimate music recordings. Like traditional forms of music piracy,widespread unauthorized copying and transmission of recorded music over the internet damages the sale and returns of the legitimate market. This damages the interest of the legitimate market in two ways- (a) by a decline in the sale of legitimate recordings,especially in the case of tracks released by artists individually,without a corresponding album released,and (b) by hampering the sale of legitimate tracks over the internet.

The scale of internet piracy is massive and in February 2001,some 2.8 billion songs were traded on Napster. By 2005,the IFPI estimated almost 20 billion songs to have been illegally downloaded. This was based on consumer research in 10 music markets (including the US,Germany,UK and Brazil) and third party surveys. While this shows an extremely high piracy rate for online music,it also illustrates the vast potential for legal digital music.

This aspect of music piracy would be examined in detail in the next chapter,where figures relating to music piracy as published by the Govt. of India as well as the reports on piracy by the RIAA (Recording Industry Association of America) and BCI (UK's Trade Association) have been taken into consideration in order to ascertain the extent of piracy prevalent in India and the world,and to examine the role that the law enforcing authorities play in the curbing of music piracy.

This paper is based on the premise that rampant music piracy on the internet has a worldwide influence on the music industry. I would be discussing the IP laws of different jurisdictions of the world such as USA and the UK,and what they have laid down in numerous judicial precedents to tackle the said problem effectively and efficiently,keeping in consideration that the problem is now a global problem. By doing so I would explore the possibility of curbing internet based music piracy by adopting these laws in the Indian context and examine if these laws would better serve the purpose than the prevalent laws existent in India. Ultimately,my goal would be to firstly study the laws on Music Piracy as they stand in India as of now,examine their effectiveness and weaknesses,and suggest improvements or amendments to the current state of affairs,regard being made to laws and precedents followed in other countries which have more advanced laws in this respect.

Alongside,I would like to identify the authorities in India responsible for the curbing of Music Piracy and most importantly examine the possible grounds behind the failure of these authorities in it.

Another aspect of retrospection is the TRIPS agreement and India's compatibility with it. Though the issue is pertinent to the present topic of discussion,paucity of space would only permit a cursory glance at this issue. Although India being a developing nation has taken measures to modernize its copyright laws to be more compatible with the entertainment industries of developed nations such as the United States,it still does not satisfy the TRIPS Agreement requirements. Prior to the adoption of the TRIPS Agreement,the lack of harmonization in intellectual property protection across countries enabled analysis of locational determinants for investment and knowledge transfer. Analysts hypothesized that the TRIPS Agreement would reduce investment selectivity decisions based on strength of IPR protection,and investors would focus on regions with high rate of returns.

The TRIPS Agreement created an international enforcement mechanism for IPR and obligated World Trade Organization (WTO) members to provide minimum standards of protection of IPR. The agreement gave developing countries an additional five years from the date of entry into force of the TRIPS Agreement (i.e. until January 1,2000) to meet certain obligations and an additional ten years in specified circumstances. Though I would not be dealing with India's non conformities with TRIPS and what it can do to remedy the same at length,certain suggestions in this respect have been made in the last chapter of this paper.

Chapter 2

The existing state of affairs and the piracy prevention entities in india

India's first copyright law,the Copyright Act of 1914 (1914 Act),substantially resembled Britain's copyright law of 1911. Following its independence,India adopted the Copyright Act of 1957,which retained some 1914 Act provisions,yet introduced several modifications and additions. The next amendment to the Copyright Act of 1957 occurred on August 9,1984 with the adoption of The Copyright (Amendment) Act of 1983. Numerous revisions were introduced in order to conform the act in line with the Berne Convention and Universal Copyright Convention (UCC),to which India is a party.

India adhered to certain general terms of the conventions; however,the international community raised serious criticisms against the Copyright Act of 1983,basically stemming from India's increasing piracy problem. In response,the Indian Parliament in 1984 enacted another amendment to India's copyright law and introduced provisions discouraging and preventing widespread piracy of film and records.

The act of 1984,also suffered from defects on several grounds. The Act did not succeed in dealing with the nuances of copyright infringements and piracy substantially. Consequently,the Act failed to meet the standards set by the international community and USA named India a Priority foreign country in 1991 because Copyright piracy was rampant in India,and the U.S. copyright industry estimated that lost sales resulting from piracy in India of U.S. motion pictures,sound recordings,musical compositions,computer programs,and books totalled approximately $500 million in 2004. By adding India to this list,the United States wanted to influence the country to change its copyright laws to better protect U.S. intellectual property rights abroad. In response to this and under the likelihood of US trade sanctions,India finally amended and passed a new act in 1994,which came into force in 1995.

With the passing of the 1994 Act,India strengthened its position on protecting intellectual property and modernized its law,thus ensuring the interests of artists all over the world. In addition to the above,the Indian Government established the Copyright Enforcement Advisory Council to advise the government on measures to improve copyright enforcement in India.

Though the amendment in the year 1994 was quite comprehensive,only minor changes were introduced through the 1999 amendment to bring the Act in conformity with the TRIPS Agreement. Therefore,the original Act of 1957 has been amended in the year 1983,1984,1992,1994,and recently in 1999.

Section 51 read together with section 14(a) of the Indian Copyright Act brings out that if a person without the consent or license of the owner of copyright does or authorizes the doing of any of the following acts he will be guilty of infringement of copyright in that work-

"To reproduce the work in any material form including the storing of it in any form by electronic means- Thus the act of illegally downloading music from the internet would constitute of acts of infringement.

In most jurisdictions,copyright infringement may be established by reproduction of the copyrighted work. This reproduction can often be shown by the presence of an authorized electronic copy of the work on a server. In these types of cases the most common defenses to copyright infringement,such as the first sale doctrine and fair use do not fare well in courts. The reason being that the 'first sale doctrine' is a defence to infringement of the distribution right. It permits a lawful purchaser of a copyrighted work to resell or otherwise dispose it off. This,however,is not a defence to the reproduction right. Though,fair use is an affirmative defence but its application will vary greatly depending on the facts and circumstances of the case.. Courts have held that a non-commercial use is not fair use when it has a substantial market effect. In cases with a small-scale impact,courts are still more receptive to arguments regarding the effect on the copyright owner's market or potential market.

Indian music market

The Indian music industry estimates approximately 15 crores of legitimate unit sales of music cassettes and CD's in a year,with an average realization of Rs.40-45. This brings the size of the industry to about Rs.670 crores (USD 149 million). On a conservative basis,the music industry was pegged to grow at 3% over the next five years and was expected to touch Rs.777 crores by 2009.

The industry has shrunk to INR 10 billion from INR 13.5 billion in the last four years,as the onslaught of piracy,the high cost of acquisition of film music and the low priority accorded to the sectoral issues by the authorities have somewhat upset its business viability.Moreover,the music industry is suffering an annual loss of Rs 650 crore due to piracy although there has been a minor decline during the past few years,according to a consortium of music companies. V.J. Lazarus,President of the Indian Music Industry stated in 2006 that "The annual loss to the music industry due to piracy is about Rs. 650 crore. The size of the industry is also about Rs. 600 crore,so we lose an industry each year due to piracy."

I shall briefly discuss the losses that the Indian Music Industry faces in comparison to the other markets around the world due to Piracy,both monetarily and otherwise. The majority of music piracy is accruable to Asia. China is the highest pirate territory in the world with its piracy rate at 90% at an estimated value of $ 600 million.

The Indian music industry is the fifth largest consumer of music units in the world (181.1 million units). However due to rampant piracy and lack of deterrent punishment to pirates and other issues being faced by IMI,it lacks way behind at no. 18 in the world in terms of music value (0.6 per cent of world sales).

Levels of piracy in the top 6 nations in piracy

The IFPI has estimated that India has a piracy level of 56% and is in the top ten priority countries for the first time due to a large increase in commercial internet piracy and CD-R burning. It is also believed that long court procedures ultimately result in the acquittal of the pirates.

Piracy prevention authorites

There are two authorities that essentially control Music piracy in India. The Indian Music Industry and the police force which are to work in tandem with each other.

Indian Music IIndustry

It was established on 28th Feb 1936 as the IPI,and is Second oldest music companies' associations in the world engaged in defending,preserving and developing the rights of phonogram producers,and actively promoting and encouraging advancement of creativity and culture through sound recordings.The IPI was later renamed as the Indian music industry (IMI) in 1994. It is also affiliated to the IFPI,which is the international authority responsible to curb music piracy.

IMI members includes major record companies like Saregama India Ltd. (HMV),Universal Music (India),Tips,Venus,Sony BMG Music Entertainment (India),Crescendo,Virgin Records,Magnasound,Milestone,Times Music and several other prominent national and Regional labels that represent over 75 % of the output in legitimate recordings and a wide range of musical repertoire.

IMI is constantly evolving toward an improved and more efficient IPR protection entity in and has vastly adapted a considered law-enforcement and intelligence platform that works on to tackle the new-age,technology-savvy pirate world. Also,a well-structured Anti-piracy Organization has been set up by IMI covering the entire country that has been split into specific regions. These regions are headed by senior ex-police officers (appointed as regional coordinators) and assisted by teams at various places within their regions.

The functions of these anti-piracy teams essentially entail:

Anti-piracy Campaign.

Promoting copyright law and its enforcement.

Assisting Law Enforcement authorities to conduct raids on those violating Copyright Law.

Providing documentation needed in the course of investigations along with necessary evidence,witnesses etc. for the successful completion of the case.

Supporting International Copyright conventions.

Promoting new technologies mainly for assisting right owners.

The last few years have seen a remarkable rise in the number of successful raids carried out by IMI under the leadership of some of the best known names in law enforcement. With even more stringent law enforcement and efficient intelligence networks,IMI has been immensely successful in expunging pirates across the length and breadth of the country. As a result,IMI has progressed from a mere organization to an indispensable,international player in curbing piracy.

ROLE & SHORTCOMINGS OF THE POLICE IN PIRACY PREVENTION

As mentioned above the IMI and the Police are supposed to work jointly toward the curbing of piracy in the Indian market. The police are empowered with all the necessary powers to crack down on Piracy suo moto but in most instances they fail to do so. The Copyright Act gives police officers the power to seize infringed copies of movies. However,both copyright owners and the Indian justice system continue to face major problems obtaining cooperation from the police.

Section 64 of the Indian Copyright Act confers the power on the police to seize infringed copies of copyrighted works. The section authorizes any Police officer,not below the rank of a sub-inspector,to seize without warrant all copies of the work wherever found if he is satisfied that an offence under Section 63 in respect of the infringement of copyright in any work has been,is being,or is likely to be committed and all copies and plates so seized shall,as soon as practicable,be produced before a Magistrate.

The Police,in general,admit that infringement of copyright work has not been extended as high a priority as in the case of murders,law and order problems,etc. The police personnel lack the orientation towards copyright laws,such as knowledge of penalties for violations etc. Also,the lack of training in the area of copyright law is the primary cause of these problems among police personnel. Despite much debate,no clear solution exists regarding copyright enforcement as no training programmes are being conducted due to the scarcity of personnel & funds,shortfall of good trainers etc.resently most Indian states lack distinct copyright units within their police departments.

Reasons for Failure to effectively control piracy

The failure of the authorities or IMI to effectively curb the rise in the rate of music piracy may be attributed to various reasons. In this head I shall try to throw light on what could be the most probable causes towards the aforesaid problem.

Untrained Staff

One of the major hindrances lies in the fact that most of the police staff hardly even know the complexities and technologies used in piracy,let alone being able to apprehend the wrongdoers. It is only with the help of the IMI that certain officials have been trained to tackle this problem.

It must be remembered that online piracy uses a very high level of technology and equipment and in order for the law enforcement authorities to control this,they must be aware of the technology itself. Untrained staff is thus one of the most major problems faced by the entities that seek to curb music piracy in India.

Lack of Public Awareness.

The responsibility to reduce piracy lies primarily with the customer who buys and uses pirated products,and it is the apathy of customers and their demand for cheaper products that give rise to copyright violations. Customers continue to download pirated music because they lack knowledge of the copyright laws and the effects of infringement on the online music industry.

Lack of action by the police suo moto.

There have been instances of police personnel conducting raids on their own motion,but these instances have been rare and few to say the least. One of the reasons that the lack of action by the police may be attributed to is the fact that the police are unaware of the IPR laws themselves,as a result they are not really aware of when does an infringement occur.

Problems with the Indian Court System

Another difficult problem lies at the lower criminal judiciary level where copyright cases remain the lowest priority. India's criminal system is extremely slow and cumbersome,which severely delays the litigation process and becomes an expensive endeavour for the copyright holder who seeks immediate enforcement against copyright violators.

The slow and cumbersome Criminal Court system has been detrimental not only to the enforcement of copyright laws on the national front,but also internationally,by failing to conform to international standards set forth in the TRIPS Agreement. The current condition of the Indian court system violates Articles 41(2),42,and 61 of the TRIPS Agreement,provisions that are specifically concerned with fair and equitable treatment towards litigants. If India does not immediately reform its Criminal Court system,the international community will be reluctant to invest in India's entertainment industry.

Another reason,which may be attributed to online piracy is the skyrocketing cost of a single audio CD. The soaring prices of an original compact disc need to be tackled in order for people to buy original CD's. This problem could be tackled by cost cutting and reducing the taxes that are levied on audio CD's & cassettes.

In order to curb online music piracy all the aforementioned reasons have to be taken into consideration and steps taken. Staff needs to be trained at a priority basis through workshops and other means,public awareness about copyright violation needs to be increased,the Judicial system needs to be improved and sped up and lastly,attempts need to be made to reduce the high cost of original CD's and cassettes. If these measures are taken effectively and efficiently,a substantial improvement in the current scenario can be expected. Further discussion on this aspect would be entailed in the final chapter to this paper.

Chapter 3

Analysis of significant judicial decisions

This Chapter seeks to highlight the most influential and landmark pronouncements by the American,British and the Australian judiciary so as to portrait the development of the law regarding online music piracy over the years. Case laws cited in this chapter have led to substantial debate and have ignited considerable academic and judicial thought. A survey of the case law will bring about common aspects as well as the sharp differences in the law laid down in various countries and will also reveal the manner in which the Courts and Tribunals have tried to balance the rights of the Prosecutor on the one hand and the accused on the other.

In Universal Music Australia Pty Ltd v. Sharman License Holding Ltd also known as the famous Kazaa Case the win for the record companies has set an important worldwide precedent as it was the first time that a case targeting piracy on peer-to-peer file sharing networks was subject to a full trial.

One of the primary arguments of distributors of P2P software was that they were not actually engaging in the copying and transfer of the music themselves,but had merely provided the software. However,Federal Court Justice Murray Wilcox found that the respondents - Sharman Networks,LEF Interactive,Nicola Anne Hemming,Altnet Inc,Brilliant Digital Entertainment Inc and Kevin Glen Bermeister had infringed the Copyright Act 1968 by "authorizing" the users of its Kazaa software to make a copy of sound recordings and communicating the recordings to the public without the license of the copyright holders.

Justice Wilcox further held that each of the six respondents named had also entered into a "common design,with each of the other infringing respondents,to carry out,procure or direct the said authorization".

As well as being a precedent for other jurisdictions,Williams said the actual effect of the orders would be felt internationally because of the way the Kazaa software was distributed,and the fact that they had indicated they could not separate their Australian users from those in other jurisdictions. The Court gave two months to the Respondents to put out a new version [of the software] that has got filters in it. That necessarily meant that anyone who receives the software anywhere will be receiving the new version of the software. The effect of the orders is not confined to Australia.

The Judge also ordered that the software program received by all new users of the Kazaa software contain non-optional key-word filter technology that excludes all works identified by the applicants

Moreover,the Court as an interim step,ordered Sharman Networks,one of Kazaa's operators,to modify its software to include a 3,000 word copyright filter which will be updated every two weeks. Implementing the key word filter was a condition of a stay on the copyright judgment which otherwise provided for the shutdown of Kazaa.

John Kennedy,Chairman and CEO of IFPI,said: "Three months ago the Court found Kazaa guilty of massive copyright infringement. Now the time has come for action. The music industry is watching closely to see that the court's order for the introduction of this filter is respected and implemented."

Kazaa's owner,Sharman,was also sued in Los Angeles by the major record labels and motion pictures studios and a class of music publishers. Wherein,the US Supreme Court had ruled in clear and unequivocal terms that "technology distributors cannot build a business by promoting copyright infringement. And,in doing so,the Court has given a boost to the development of the legitimate on-line market and the millions of creators and investors,artists and producers working within it,not only in the US but worldwide.".

Therefore,the file-sharing service "Kazaa" which was one of the biggest engines of copyright theft and one of the most well-known brands in music piracy worldwide was held liable for massive copyright infringement and ordered it to implement filtering. Kazaa had been the world's biggest single internet piracy operation with 2.4 million users worldwide. Victory over Kazaa in the courts was a major development in the evolution of a healthy legitimate market. This judgment acted as a resounding indication to other unauthorized file-swapping networks and that they should acclimatize their systems and become legitimate as it quite simply destroyed the argument that peer-to-peer services bear no responsibility for illegal activities that take place on their networks.

Along with the strengthening of copyright laws has come a series of legal actions aimed at shutting down file sharing technologies. InA&M Records v. Napster legal action had been initiated against the Famous P2P network for copyright infringement and illegal distribution of music over the internet. Napster was an online operator which allowed registered users to exchange indexed music files in a compressed format (MP3) and do so freely and anonymously. Following a law suit filed by RIAA,Napster was found guilty of Copyright infringement.

This was an important IP case in which the United States Court of Appeals for the Ninth Circuit ruled that the defendant,Napster,could be held liable for contributory infringement of the plaintiff record company's copyrights. The court also rejected the suggestion that it imposes a compulsory licensing arrangement on the plaintiff record company. This proved to be the first major case to address the application of the copyright laws to peer-to-peer file-sharing.

The year 2000 witnessed two major court cases by RIAA members make a significant impact on commercial enterprises engaged in or contributing to internet piracy. The case againstMyMp3.com for uploading 45,000 CDs to an internet database resulted in an order finding 'willful' infringement and statutory damages due in the amount of $25,000 per CD infringed. Including settlements reached with some of the pirates,MP3.com had accrued at least $170 million to pay damages for this infringement.

Another pertinent case worth a mention on this subject is the case ofMGM Studios,Inc. v. Grokster,Ltd.. Commonly known as the 'Grokster' case,it instituted against the defendants on the ground that the defendant company was promoting copyright infringement via its P2P file share program (through illegal distribution of music).

Grokster came before the Supreme Court having already won in two previous courts. The United States District Court for the Central District of California originally dismissed the case in 2003,citing theBetamaxdecision. Then a higher court,the Ninth Circuit Court of Appeals,upheld the lower court's decision after acknowledging that P2P software has legitimate and legal uses. The Court in this case opined- "We hold that one who distributes a device with the object of promoting its use to infringe copyright,as shown by clear expression or other affirmative steps taken to foster infringement,is liable for the resulting acts of infringement by third parties."

Concurring opinions were written by Justice Ginsburg,who was joined by Chief Justice Rehnquist and Justice Kennedy; and by Justice Breyer,joined by Justice Stevens and Justice O'Connor.

On November 07,2005 Grokster announced that it would no longer offer its peer-to-peer file sharing service. The notice on their website said,"The United States Supreme Court unanimously confirmed that using this service to trade copyrighted material is illegal. Copying copyrighted motion picture and music files using unauthorized peer-to-peer services is illegal and is prosecuted by copyright owners." As part of a lawsuit Grokster was forced to pay $50 million to the music and recording industries.

In the case against the record setting 'Allofmp3.com' which is a Russian-based website that was not licensed to offer IFPI members' recordings for download,either in Russia or anywhere else,proceedings were taken against allofmp3.com both in Russia and internationally. The company claimed to have a license from alleged Russian collecting society ROMS. However this society had not been authorized by IFPI members and was not recognized nationally or internationally. Ronald Mooij,the secretary-general of BIEM,the international organization that represents rights societies,said "Allofmp3.com is a notorious website which is illegally making available music internationally without paying composers and songwriters. ROMS,the body in Russia which allofmp3.com claimed has given them the license,did not have any authorization whatsoever to license allofmp3.com for the members' mechanical rights." In Russia,the criminal trial of allofmp3.com's former director is in progress,and more criminal investigations are ongoing. Outside Russia,a German Court had granted an injunction against the website. Also,in the UK,the first court action was also being taken against allofmp3.com. and in June 2006 the UK High Court issued proceedings against the operator of the site and was given permission to serve those proceedings in Russia.

At last,all over the world there has been a rise in the number of cases upholding the rights of Copyright holder's. In February 2006,the Danish Supreme Court ruled that under EU law,ISPs can be obliged to terminate the connections of customers who illegally upload material. Also,in May 2006 the American operators of BearShare agreed to cease to operate any music or film download services and sell its assets to the legal file-sharing service iMesh. Lastly,in June 2006 the Dutch Court of Appeals ruled against zoekmp3.com,effectively declaring that deep linking to infringing mp3 files is illegal in the Netherlands.

As we can now appreciate,along with strengthening of copyright laws has come a series of legal actions aimed at shutting down file sharing technologies. Moreover,it is evident?through these examples that the proliferating music piracy through the internet has become a real threat to the growing music industry and the economic growth of countries is dependent on it as it causes catastrophic income losses as well as loss of reputation,honour,and integrity of the author/producer of such phonograms. Various international conventions are aiming to route out such infringements and protect the rights of the right holders.

The legal landscape for P2P networks changed significantly in 2005 and early 2006. The Court's in the recent past have started acknowledging the great threat being posed by online music piracy and have at last started recognizing the rights of Author's and Copyright holder's. A string of court judgments across the world has established the liability of P2P operators for the infringement that they endorse and benefit from it and at the same time,have rejected the perception that unauthorized file-sharing is innocent,naive,legal or victimless.

Chapter 4

Conclusion & Suggestions

Pirates are criminals,usually operating on a large and organized scale,engaging in the theft of the products of other people's talents,skills and investment. Worldwide,P2P sites are depriving recording artists,composers,authors and record companies of the right to choose the value of their creative property in a free and open market. Unauthorized downloading is also depriving governments of income from sales and excise taxes which would otherwise be paid for the sale of sound recordings on physical carriers such as CDs and tapes,which are displaced by downloading unauthorized copies from the internet.

Piracy has definitely taken a toll on the Indian music industry,with industry associations noting a loss of 60% of potential sales. Possibly due in part to the prevalence of digital music piracy and an industry sector that is more organized than the film industry,the IMI has been relatively successful in its anti-piracy activities,accounting for approximately 50% of the criminal copyright actions.

The devastating damages caused by music piracy have already been made evident though the previous chapters of this paper. It is time for the Government authorities to take note of the dreadful situation present in India with regard to online music piracy and protect the interests of the Artist's and the Copyright holder,thereby preserving the entertainment sector which is one of the largest sector's in the world today. In the event of a failure to protect the aforementioned,the very existence of the industry itself may be endangered. At this point,it becomes imperative to emphasize on solutions to overcome the various problems mentioned in the chapters above.Therefore,I shall try and suggest measures that would tackle such a lackadaisical approach towards enforcement of the Copyright Act and that would lead to its implementation in an efficient and effective manner.

State-of-the-Art Legislation

India's copyright laws have developed extensively since the implementation of its first Copyright Act in 1957 due to both national and international pressure. Presently,India has become a leading nation in Copyright laws as a result of the stringent copyright provisions enacted most recently in the Copyright Act of 1994. However,it still fails to match up to the international community's standards. Given the expansion in technology,the legislature must ensure that its laws are up-to-date and are amended from time to time,to effectively tackle the menace of music piracy prevalent in India.

There are no National or Federal laws existing that directly address and deal with the enforcement of copyright laws. Instead,each individual Indian State has its own State laws which deal with measures of enforcement separately from the other States. This lack of a federally established copyright enforcement policy leads to inconsistent copyright case law throughout India and thus forbids the recognition of a consistent and an unified Copyright Law.

Moreover,certain deficiencies in the current Copyright Act lead to pirates going unpunished. The current Copyright Act requires the copyright owner to prove the pirate's "actual knowledge" of the infringement. The legislature should amend the statutes to include presumptive language of the plaintiff's copyright ownership and lower the standard of proof from actual knowledge of infringement to "willful" knowledge of copyright piracy. By amending the Copyright Act of 1994 to include these new standards,police officers will no longer have to catch a pirate in the act to make an arrest,and copyright owners will receive justice from courts without having to meet such a high burden of proof.

Proceeding further,the existing law casts the entire onus of proving the amount of damages suffered on the right holder. Therefore,the IIPA has recommended that India should introduce a system of statutory damages in civil cases to provide right holders with an alternative to proving actual damages. At the same time,India should also consider awarding restitution (e.g. damages) to right holders in criminal cases on the basis of per unit seized,given the ineffective civil system in India.

Though India has taken measures to be more compatible with the laws of developed nations,such as the United States,it still does not completely satisfy the TRIPS Agreement requirements.The main reason for this is the ineffective execution procedures and the problematic enforcement issues. For India to become a TRIPS-compatible nation,to prevent world scrutiny,and to lift the current U.S. trade sanctions,India must strengthen its copyright enforcement tactics.

Specialized IP Courts or IP Judges

Specialized IP courts that deal with piracy and related issues would help in a quick and effective measure in the attainment of justice. The Law Courts in India are overburdened with work already and setting up of IP courts will significantly improve the effectiveness of the time taken by the court in granting justice. Moreover,this would act as an additional benefit as these Courts will be able to handle IP cases in a more efficient manner as they would possess specialized knowledge and a better understanding of the Copyright laws and violations.

The IIPA has made numerous recommendations to the Indian Government regarding judicial reform,including dividing cases among judges to expedite trials and move dockets more quickly. Implementing these proposals would empower the courts,deterring illegal conduct and reducing the level of piracy. The IIPA and Indian officials also recommended that special courts to deal solely with copyright cases should be set up. By establishing separate copyright tribunals,the numerous copyright cases would move through the judicial system more quickly and efficiently.

In addition to the above,India could modernize its enforcement policy by establishing a centralized body dedicated to intellectual property enforcement. India does not have any national organizations dedicated to enforcement,which makes each State responsible for implementing its own legislation. If India adopted an effective "all-India" enforcement policy or National enforcement coordination,police officers and court systems could work nationally to fight copyright infringement,and to decrease the high level of online piracy.

Eestablishing specialized IP courts or IP judges would lead to speedier adjudication of criminal and civil cases. The government should also introduce court reform to decrease the burdens,costs,and delays facing those seeking copyright enforcement. Also,in order to increase deterrence,higher fines and more stringent imprisonment should be brought in for offences under the Copyright Act.

IPR Training programs for Police officials

Undoubtedly this is one of the biggest issues that hamper the curbing of the menace of music piracy in India.The fact that the new Copyright Act has classified copyright offenses as "cognizable" is comforting to know but the lack ofsuo moto action on the part of the police almost defeats this provision of the act. The police should ensure that moresuo moto actions against piracy crimes in all copyright sectors are taken and act in the best interests of the copyright holders to effectively enforce the provisions of this Act.

Police in most cases are unaware of the specific IP clauses and what is intended to be protected by these laws. The police personnel lack the orientation towards copyright laws,such as knowledge of penalties for violations etc. It is suggested that special IP units should be set up within the police force who possess specialized and an in depth knowledge of the IP laws.

At present maximum number of States in India lack distinct IP units within their police department. Therefore,because of the widespread piracy problem in India the Government should enact a special legislation creating specialized IP units within the police department and recuperate those units already in existence. The Government should provide these special IP units with significantly increased resources and establish specialized IP prosecutors. This would increase the cooperation of the Special IP units with special prosecutors which would in turn minimize the delays currently linked with copyright enforcement.

Special IP cells within the police infrastructure could also be set up,at present the IMI provides for this,they have IP cells in each of the four zones in India,but in order to achieve effective implementation of the laws these cells need to be set up within the police force as well.

Under such legislation,the special IP units could tackle the copyright-related crimes in an effective and efficient manner. Also,an in depth training on the Laws relating to the IP in India needs to be given to the police in form of workshops,Manuals,and through practical training.

Increase Public Awareness

The Indian Government should take urgent measures to reach out to the general public and deter the increasing frequency of music piracy. A massive publicity campaign should be launched by the Indian Government,law enforcing authorities and the copyright owners to educate the average consumer about the harms of copyright violation. IMI has carried out extensive public awareness campaigns through the press and TV to educate the public about the source of piracy,but they are not wide spread and few apart. The campaign should focus on identification of pirated products and discuss the measures that should be taken upon recognition of pirated products.s

In my opinion an education campaign should target schools and colleges because students are the main consumers of pirated products. College curriculum should incorporate education about copyright laws and violations for students entering industries facing major copyright problems because of the reason that short term avenues,such as advertising,are inadequate and insufficient.

Education about copyright has a vital role to play in promoting a digital music business. IFPI runs multi-country educational projects aimed at enhancing awareness of copyright and issues surrounding music on the internet. These have been cited as best practice by the European Commission,endorsed by the International Chamber of Commerce and jointly launched with governments including Austria,Italy,Ireland,Hong Kong and Netherlands. They include:

• Young People,Music and the Internet is a clear and simple guide aimed at parents. It explains "file-sharing" and "peer-to-peer" as well as how the technology works,helping them to keep their children safe,secure and legal on the internet.

• Digital File Check is freely-available software for all computer users to download from www.ifpi.org. It can help remove or block any of the unwanted file-sharing programmes commonly used to distribute copyrighted files illegally. It allows consumers to avoid becoming unwitting illegal file-sharers.

• www.pro-music.org is a website branded "everything you need to know about music online"available in six languages,that acts as a gateway to more than 350 legitimatesites and is a centralresource of information about music onthe internet.

• Copyright Use and Security for Companies and Governments is a guide for employers,clarifying their responsibilities to keep their computer networks free from copyright infringement. The guide is produced jointly with the Motion Picture Association and International Video Federation and is endorsed by the International Chamber of Commerce. Copies can be obtained from IFPI.

• National campaigns have been run by various IFPI national affiliates,such as the 'Truefan' kite mark for legal music websites in the Netherlands; a film aimed at young people called 'A thousand jobs in the music industry' in France and a lesson pack for schools produced in cooperation with the Ministry of Education in Finland.

ISP's Intervention To Control Piracy

ISP's have a key role to play in substantially reducing online piracy. Most ISP's provide in their terms and conditions of service a clause forbidding the customers from using the Internet forillegal purposes and threaten the suspension or disconnection of the services as a punishment.

IIPA proposed and reviewed a new draft for Copyright amendments in 2005. It believes that under the Treaties (WCT and WPPT) enforcement obligations,though not directly referenced in the Treaties,the issue of secondary liability of ISPs and exceptions to such liability has been dealt with in the laws of most countries implementing them. Clarity on such issues is indispensable to the fight against online piracy. The draft on the face of it appears to deal with this issue,but that treatment is far too abrupt and oversimplified as to be appropriate for this complex area. IIPA has urged that this provision be substantially revised or replaced by detailed provisions modeled on the way these sets of issues were dealt with in the U.S.,the EU and in many other countries in Asia. Thus suggesting that clear provisions be laid down pertaining to ISP's and their liability and exceptions when it comes to music piracy.

In the United Kingdom,the BPI had written to two ISP's,Tiscali and Cable & Wireless,to ask them to suspend 59 users who were illegally uploading copyrighted material onto the internet. In Denmark,the Supreme Court confirmed in February that ISPs can be obliged to terminate the connections of customers engaged in internet piracy,ruling in a case brought by the Danish Anti Piracy Group against telecoms firm TDC.

Promoting Legal Services

The emergence of legitimate digital music services has played a key role in pushing back of online piracy. With consumers being offered a vast catalogue of record companies' repertoire via diverse channels,many are opting for legitimate online legal services. In 2005,this amounted to a fast-growing US$1.1 billion market. Publicity of these legitimate sources would further their popularity.

An independent research from market analysts Jupiter carried out in 2005 revealed that more than a third of Europeans who file-share said they have cut back or stopped their activities. This research also found that in the two biggest European markets,the UK and Germany,more people regularly buy music from legitimate services (5%) than regularly download music illegally (4%). A similar research by TNS in the UK conducted in 2006 suggests that more than half of people (56%) who have begun downloading in the last six months are using legal services,compared with just two-in-five people (41%) who have been downloading for more than a year."

Moreover,if the recording industry takes stringent action against pirates,more and more people would avoid availing their services,as was clear from the researches mentioned above.

Virus Fears Surround Illegal P2P

Most P2P sites carry viruses that no consumer would want on their systems. Concerns about P2P spyware,viruses and threats to privacy play a significant part in deterring illegal file-sharing. StopBadware.org,an organisation based in Harvard and Oxford Universities,says that 60 million people's computers in the US now have software that hampers the machine's performance. Kazaa,one of the most popular P2P networks,was a prime source of such spyware. Research from TruSecure concluded that 45 per cent of the executable files downloaded through Kazaa contain malicious code like viruses and Trojan.

P2P network worms also spread using these services. The most widespread are Kazaa P2P network worms which usually locate a Kazaa client shared folder and copy themselves there with an attractive name,of a popular song for example. Sometimes such worms replace real sound files and can host dangerous viruses. In addition to this,in some cases,paedophiles have used P2P communities to distribute pornographic materials and make contact with children.

Publicizing these negative effects that pirated online music may have on one's system would surely be a deterrent for many to use them. Research by analysts Jupiter showed that of those Europeans who said they have given up or cut down their illegal file-sharing activity,35 per cent did so because they were worried about the effects of viruses on their computers. If used for the right purpose,this virus fear can act as a boon for the music industry as it discourages people from downloading illegal music online!

The above mentioned are various suggestions through which the tribulations that are being faced by the Indian music industry could be tackled with effectively and efficiently.

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