CS (OS) No. 1682/2006. Case: Warner Bros. Entertainment Inc. and Ors. Vs Mr. Santosh V.G.. High Court of Delhi (India)

Judgment:

S. Ravindra Bhat, J.

1. The plaintiffs sue the defendant for permanent injunction and damages, claiming that the latter has infringed their copyrights in respect of films, by hiring, and offering for hire, infringing copies, in India.

2. The Plaintiffs, their associated and affiliated companies carry on business of film production and are the owners, co-owners, assignees, licensees of rights, titles and have interests in and to the copyrights in the films produced by them. They contend that all the films in which they claim copyrights have been first published in a country included in the first schedule of the International Copyright order, 1991 and therefore, under the Copyright Act, 1957 and the Copyright Amendment Act, 1994 they have the exclusive right inter alia to (i) to make a copy of the film including a photograph of any image forming part thereof; (ii) to sell or give on hire or offer for sale or hire, any copy of the film, regardless of whether such copy has been sold or given on hire on earlier occasions; and (iii) to communicate the film to the public.

3. Film production, say the plaintiffs, is a complex, time consuming and costly process, needing a well defined distribution strategy for its commercial success. The plaintiffs refer to development of a well thought out distribution strategy to release the film on its completion, in different states. According to them, generally, the first phase entails release of the film on its completion, in different stages. This involves release of the film in theatres and/or cinema halls. After the film has run its course in the theatres and cinema halls, it is released in other formats and media such as home video, rental, cable and satellite TV. The time difference between the release in theatres and cinema halls and release on other formats may sometimes be separated by a few months and at times by a couple of years. This distribution strategy/system of release within the film industry is commonly referred to as "windows".

4. As the first stage of the distribution strategy generally involves theatrical release as the first window, it is vital that the film be available to the public only at the theatres. The time period set for the first window release varies, depending on several factors. After a film is exhibited in theatres/ cinema halls, it is generally released through a second window, normally in the form of home videos. Thereafter the stage is set for release of the film through other windows and media. The plaintiffs, assert that at each stage, it is important to protect the film from being distributed on any media other than that selected by the copyright owner, according to his strategy.

5. The plaintiffs contend that films are also distributed and made available to the public in different formats at different times. It is normal for the Plaintiffs to first release their films are theatres in the United States of America. By the time the film is released in theatres in other countries outside the USA, it is probable that in the USA, the films are already released in home video format. Accordingly, at the time that a film is theatrically released in India, it is possible that the same film has already been released on home video format in the US by the plaintiffs and/or their respective licensees. It is critical that this home video product released in the US is not authorized or licensed for sale (or rental) outside the US and/or USA and Canada.

6. The Defendant, allege the Plaintiffs, is the Proprietor/ partner of the concern by the name and style of Cinema Paradiso. It (the Defendant, hereafter called Paradiso) carries on business from four premises; the plaintiffs allege that it is rapidly expanding its operations all over India. The plaintiffs therefore say that there is an imminent threat that the Defendant will also expand its operations in Delhi. The plaintiffs say that the modus operandi adopted by the defendant is simple; it has two categories of members, individual and corporate. The Defendant charges refundable "caution deposit" of Rs. 2000/- and a "processing" and "application fee". Thereafter a rental fee of Rs. 75/- and in some cases Rs. 100/- is charged against each title rented. The rental DVDs are collectible by the customers from the shop or delivered to them. Several DVDs so hired out by the Defendant, bear the warning that they (such DVDs) are not permitted for sale or rental outside the US and Canada.

7. The plaintiffs allege that giving (a film) on hire or offering a film for hire without the copyright owner's license is an act of infringement. The plaintiffs allege that the defendant has no rental licenses in his favour and all such acts of rental amount to an act of infringement of copyright under the provisions Section 14 (d) (ii) read with Section 51 of The Copyright Act, 1957. The plaintiffs assert to being copyright owners and assignees of several such films.

8. It is alleged that DVDs are coded according to specific geographical zones. The DVDs meant for sale in the USA and Canada are Zone 1 DVDs. DVDs meant for sale in India are Zone 5 DVDs. Zone 1 DVDs are not authorized for sale or rental in Zone 5 countries like India. The DVDs stocked and rented by the Defendant are largely Zone 1 DVDs. The plaintiffs allege that the Defendant has a website at www.cinemaparadisoshop.com where it has been stated as under:

   First DVD store with all license

   Though DVDs are easily available, piracy is rampant, Cinema Paradiso is an exception. Great caution has been exercised to ensure that only original DVDs are stocked. In fact, Cinema Paradiso is the first DVD store in India to obtain complete license for its functioning. Further, it is the only store to have obtained legal consultations and the assent of the registered organization against film piracy. What's more, each DVD in the store is copyrighted to avoid any issues pertaining to piracy.

9. It is alleged that this claim is made despite the Defendant not being licensed by any of the Plaintiffs. The Plaintiffs combat piracy in the US through their association, the Motion Picture Association of America (MPAA). The Defendant has obtained no legal consultations or assent of the MPAA or the MPA.

10. According to the plaintiffs, a search on internet thereafter disclosed that the Defendant, in fact, commenced its rental operations in 2004. A press release dated December 10, 2004 states that:

    Recently commencing the third outlet in Bangalore, after Chennai and Hyderabad Cinema Paradiso is soon planning to expand it outlets to various other cities all over India with a primary agenda of making good films accessible to all

11. The plaintiffs assert that investigations conducted at their behest have revealed an alarming situation where many new films, in which they have copyrights, are being shamelessly made available for rental purposes through outlets such as those of the Defendant, without any authority whatsoever from the copyright owners. Such acts constitute infringement of copyright under the provisions of Section 14 (d) (ii) and Section 51 of the Copyright Act, 1957. In fact, the investigations disclose a deep rooted nexus between persons and outfits, such as the Defendant herein who is engaged in the import of pirate prints and cable operators. These outfits, such as the Defendant, import titles of films of the Plaintiffs, which in turn are shown on the cable network reaching millions of viewers simultaneously. It is alleged that, even single rental of a film by the Defendant is capable of causing irreparable injury and damage to the plaintiffs. The single film can act as a plate from which several thousands of other pirate prints can be prepared. If the print reaches the hands of a cable network, even a single telecast on a network is capable of reaching several million homes all over India. The potential for damage is immeasurable and irreparable. In these circumstances, the plaintiffs seek permanent injunction and damages.

12. The defendant, in the written statement, disputes that the plaintiffs can maintain the proceeding; it is alleged that being associates and affiliated companies of assignees or co-owners of copyright in films is insufficient to clothe the plaintiffs with authority to maintain the suit. Hence the Plaintiffs cannot raise claims in respect of works for which they are not themselves the owners of the copyright.

13. The defendant submits that in the absence of statutory exceptions to the infringement of copyright of cinematographic films, common law exceptions such as fair use apply to cinematographic films. Accordingly, the hire or circulation of a cinematographic film cannot per se be infringement without considering the circumstances in which the hire or circulation is made or its purposes.

14. The defendant further submits that this Court should also take into account the Constitutional imperative that providing entertainment is a part of the fundamental right of freedom of speech and expression. Therefore, when a business seeks to exercise its fundamental right to provide entertainment as part of its freedom of speech and expression limitations should be restricted to those based on societal needs and benefits. Video libraries such as Paradiso, quite clearly are more in the nature of a film club rather than a pure rental business. This is further evident from the fact that approximately 50% of the titles stocked at Cinema Paradiso are not English Language films, or are films that have won awards in various film festivals or are critically acclaimed, etc. As such, Cinema Paradiso encourages the discussion, critique and appreciation of films in general through the circulation of films, holding of screenings, seminars, and such other activities where the focus is on the value of films in society. It is claimed that several prominent film personalities are members of cinema Paradiso; even Governors of some States in which it has outlets are...