Madras High Court
M/S.Mavis Satcom Limited vs Netflix Inc on 18 August, 2022
Author: Senthilkumar Ramamoorthy
Bench: Senthilkumar Ramamoorthy
C.S.(Comm. Div.)No.423 of 2019
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Judgment reserved on 22.07.2022
Judgment pronounced on 18.08.2022
CORAM
The Hon'ble Mr. Justice SENTHILKUMAR RAMAMOORTHY
C.S. (Comm.Div.) No.423 of 2019
1.M/s.Mavis Satcom Limited,
Rep. by its Managing Director
Mr.M.Palanivelu,
No.48, NP, Jawaharlal Nehru Road,
Ekkattuthangal,
Chennai – 600 097.
2.M/s.Jazz Cinemas Private Limited,
Rep. by its Director,
Mr.K.Karthikeyan
Flat 12, 4th Floor, ''Gyan Apartments'',
New No.38, Old Nos.19 & 20,
Venkatraman Street, T. Nagar,
Chennai – 600 017. ... Plaintiffs
vs.
1.Netflix Inc.
Rep. by its Manager
Mr.Shaseen Sayani,
Manager, Content Acquisition,
NETFLIX INC.335, N. Maple Drive
Suit 353, Beverly Hills, CA 90210
U.S.A.
(Amended As per order dated 21.11.2019 in
Appl.No.8808 of 2019)
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C.S.(Comm. Div.)No.423 of 2019
2.Arka Media Works Private Limited
Rep. by its Director
Mr.Devineni Shrinivas Sai Prasad,
Having its Office at,
Plot No.89/90, 4th Floor, Ashoka Vishnu Capital,
Annapurna Studios Lane, Road No.2,
Banjara Hills, Hyderabad – 500 034.
(2nd defendant impleaded as per order
dated 23.11.2020 in A.No.1900/2020) ... Defendants
The suit is filed under Order IV Rule 1 of the Madras High Court
Original Side Rules R/W Section 51, 55 & 62(2) of the Copy Right
Act,1957 read with Order VII Rule 1 C.P.C. R/W Section 7 of the
Commercial Court, Commercial Division and Commercial Appellate
Division of High Courts Act, 2015(Act 4 of 2016), praying to direct the
Defendants herein to pay a sum of Rs.2,00,00,000/- (Rupees two crores
only) as liquidated damages for the infringement upon the copyright of the
plaintiff;(b) For a permanent injunction restraining the Defendants, their
men, agents, servants or anyone acting on their behalf, or anyone claiming
through, by or under it, from, in any manner hosting, streaming,
reproducing, distributing, making available to the public and/or
communicating to the public, or facilitating the same, on their websites,
through the internet in any manner whatsoever, any cinematograph work/
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C.S.(Comm. Div.)No.423 of 2019
contempt/programme/show in and in any other manner, directly or
indirectly, infringing upon the Copyright of the plaintiff over the movie
''BAAHUBALI'' and for the costs of the suit.
For Plaintiff : Mr.K.V.Babu
For Defendants : Mr.P.S.Raman, Senior Advocate
for Mr.R.Parthasarathy
Mr.Rahul Balaji and
Ms.Tanvi Sinha
for first defendant
Mr.Sashidhar Sivakumar
Ms.V. Pavitra
for second defendant
JUDGMENT
The suit was filed to recover a sum of Rs.2,00,00,000/- as damages for infringement of the plaintiffs' copyright in the movie ''BAAHUBALI'' and for a permanent injunction to restrain the defendants from directly or indirectly infringing the said copyright.
2. According to the plaintiffs, Mr. K.E.Gnanavelraja, the sole proprietor of M/s.Aadnah Arts, who is a well established producer in the Tamil film industry, had approached the second plaintiff in relation to the assignment of an exclusive copyright in respect of satellite TV rights, direct _____________ https://www.mhc.tn.gov.in/judis Page No.3 of 34 C.S.(Comm. Div.)No.423 of 2019 to home (DTH), Internet rights, Pay TV, etc. in respect of the movies enumerated in the table at paragraph 5 of the plaint. Pursuant thereto, the plaintiffs stated that a World Satellite Rights Agreement was executed on 31.10.2015 by and between the second plaintiff and M/s.Aadnah Arts. The assignment was for a period of 99 years for a consideration of Rs.10,00,00,000/-(Rupees Ten Crores only). After deducting 10% TDS thereon, the remainder of Rs.9,50,00,000/- was paid through bank channels. Thereafter, it is stated that the second plaintiff entered into an agreement with the first plaintiff on 01.11.2015 in respect of the movies ''BAAHUBALI'' and ''PASANGA-2'' for world satellite television rights, DTH, Internet rights, Pay TV, pay per view, IPTV, etc. The agreement was for a perpetual period of 99 years, which would run from three months after the theatrical release date.
3. Although the first plaintiff acquired the copyright, including Internet rights, in the manner set out above, according to the plaintiffs, the first defendant streamed the movie ''BAAHUBALI'' without any authority, right, title or interest over the movie. Therefore, it is alleged that the first defendant committed infringement of the plaintiff's copyright over the _____________ https://www.mhc.tn.gov.in/judis Page No.4 of 34 C.S.(Comm. Div.)No.423 of 2019 movie. In these circumstances, it is stated that a lawyer's notice dated 02.03.2019 was issued to the first defendant. Although the notice was received by the first defendant, no reply was received by the plaintiffs. The plaintiffs state that the action of the first defendant caused huge losses to the plaintiffs. By restricting the claim for damages to a sum of Rs.2,00,00,000/, the present suit was instituted.
4. Originally, the suit was instituted against Netflix India. Subsequently, by order dated 21.11.2019 in Application No.8808 of 2019, the plaintiffs were permitted to substitute Netflix India with Netflix Inc., California, USA (Netflix). Thereafter, the plaintiffs filed Application No.1900 of 2020 to implead Arka Media Works Private Limited (Arka Media) as the second defendant. The said application was allowed by order dated 23.11.2020 after recording that Arka Media originally held the copyright over the movie ''BAAHUBALI'' and that it had assigned rights in the movie to M/s.Aadnah Arts from whom the plaintiffs claimed title.
5. The first defendant denied the averments and allegations of the plaintiffs in its written statement. The first defendant stated that it acquired _____________ https://www.mhc.tn.gov.in/judis Page No.5 of 34 C.S.(Comm. Div.)No.423 of 2019 exclusive subscription video-on-demand rights (SVOD rights) for the movie ''BAAHUBALI'' from Film Karavan LLC (Film Karavan) on 30.07.2017. Therefore, the first defendant stated that it is a bona fide purchaser of SVOD rights in the movie ''BAAHUBALI'' and is entitled to exploit such rights. The first defendant also contended that Film Karavan is a necessary party for the adjudication of the dispute and that the suit is liable to be rejected for non-joinder of Film Karavan. The first defendant further stated that M/s.Aadnah Arts is also a necessary party because the second defendant assigned rights to M/s.Aadnah Arts and the plaintiffs' claim rights over the movie through M/s.Aadnah Arts. The first defendant denied that the plaintiffs suffered losses of Rs.2,00,00,000/- and stated that the claim is baseless.
6. The second defendant also denied the contentions of the plaintiffs by filing a written statement. In the said written statement, the second defendant stated the following. It was the producer of the movie ''BAAHUBALI - The Beginning'', which was released on 10.07.2015, and ''BAAHUBALI - The Conclusion'', which was released on 28.04.2017. The movie was made both in the Tamil and Telugu languages and later dubbed _____________ https://www.mhc.tn.gov.in/judis Page No.6 of 34 C.S.(Comm. Div.)No.423 of 2019 in various other languages. The application for impleading the second defendant was allowed but the plaintiffs were not permitted to amend the prayer to seek relief against the second defendant. The second defendant entered into an agreement dated 27.10.2015 with M/s.Aadnah Arts in relation to the movie, ''BAAHUBALI - The Beginning'', in the Tamil language. Therefore, M/s Aadnah Arts is a necessary party and the suit is liable to be dismissed for non-joinder of M/s.Aadnah Arts. The first plaintiff does not have a platform for exhibition of the movie through Internet and, in the absence of an OTT Platform, the plaintiffs are not in a position to exploit Internet rights in the movie. The rights granted to M/s.Aadnah Arts and those granted to Film Karavan are different rights. The second defendant did not part with the rights defined as “retained rights” in its agreement with M/s.Aadnah Arts. Therefore, the second defendant was entitled to assign any of the retained rights to Film Karavan. M/s.Aadnah Arts had committed breach of the terms of the agreement dated 27.10.2015 by assigning rights not assigned to them (by the second defendant) to the second plaintiff, which, in turn, assigned such rights to the first plaintiff. Therefore, the second defendant terminated the agreement dated 27.10.2015 between itself and M/s.Aadnah Arts. _____________ https://www.mhc.tn.gov.in/judis Page No.7 of 34 C.S.(Comm. Div.)No.423 of 2019
7. After completion of pleadings, the Court framed the following issues:
(i) Whether the suit is bad for non-joinder of necessary parties?
(ii) Whether the plaintiffs' right over the film ''Baahubali'' been ceased due to lapse of time and by operation of Section 19(4) of the Copyright Act?
(iii) Whether the right assigned to the plaintiff and the right assigned to the first defendant to exhibit the movie ''Baahubali'' overlaps on each other or distinct to each other in respect of mode of exhibition and territory of exhibition?
(iv) Whether the defendants have infringed the copyrights of the plaintiff over the film ''Baahubali''?
(v) Whether the plaintiffs are entitled to the relief of liquidated damages as prayed for?
(vi)Whether the plaintiffs are entitled to the relief of permanent injunction as prayed for?
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(vii) Whether the termination of assignment in favour of the plaintiff's predecessor-in-title would impair the plaintiff's right to exercise the Copyrights?
(viii) What other relief the plaintiff is entitled?
8. The plaintiff adduced evidence through Mr.A.Narayanan, the authorized representative of the first plaintiff, who was examined as P.W.1. In course of the examination-in-chief of P.W.1, 15 documents were exhibited as Exs.P1 to P15. Ex.P16 was marked in course of the cross examination of P.W.1. The first defendant adduced evidence by examining its authorized representative, Ms.Priyanka Chaudhari, as D.W.1. In course of the examination-in-chief of D.W.1, six documents were exhibited as Exs.D1 to D6. The second defendant adduced evidence by examining Mr.Kishore Kumar Kedari, its Head of Production, as D.W.2. In course of the examination-in-chief of D.W.2, one document was exhibited as Ex.D7. Each witness was cross examined by the counter party.
9. Oral arguments on behalf of the plaintiffs were addressed by Mr.K.V.Babu, learned counsel; on behalf of the first defendant by _____________ https://www.mhc.tn.gov.in/judis Page No.9 of 34 C.S.(Comm. Div.)No.423 of 2019 Mr.P.S.Raman, learned senior counsel, assisted by Mr.R.Parthasarathy, Mr.Rahul Balaji and Tanvi Sinha, learned counsel; and on behalf of the second defendant by Mr.Sashidhar Sivakumar, learned counsel. The parties also submitted written arguments.
10. The first submission of learned counsel for the plaintiffs was that neither M/s.Aadnah Arts nor Film Karavan are necessary parties. By referring to the written statement of the second defendant, learned counsel for the plaintiffs submitted that the agreement between the second plaintiff and M/s.Aadnah Arts is admitted. As such, M/s.Aadnah Arts is not a necessary party. As regards Film Karavan, learned counsel submitted that the first defendant did not produce the alleged agreement under which Film Karavan acquired rights over the movie ''BAAHUBALI''. By drawing reference to the cross examination of D.W.1 and, in particular, questions 21 and 25 and the answers thereto, learned counsel submitted that the admitted position is that no document by which Film Karavan allegedly acquired rights in the movie ''BAAHUBALI'' was exhibited by the first defendant. Therefore, it was submitted that Film Karavan was also not a necessary party. Since neither M/s.Aadnah Arts nor Film Karavan are necessary _____________ https://www.mhc.tn.gov.in/judis Page No.10 of 34 C.S.(Comm. Div.)No.423 of 2019 parties, learned counsel contended that the suit is not liable to be dismissed on the ground of non-joinder.
11. Learned counsel for the plaintiff next dealt with Issue No.2 which pertains to whether the plaintiffs' rights over the movie ''BAAHUBALI'' ceased to exist as a result of Section 19(4) of the Copyright Act, 1957 (the Copyright Act). In this regard, learned counsel stated that the materials relating to the movie were handed over to M/s.Aadnah Arts on 27.10.2015. By drawing reference to question No.25 and the answer thereto during cross examination of D.W.2, he pointed out that D.W.2 admitted that the materials were handed over to M/s.Aadnah Arts on 27.10.2015. By referring to Exs.P12 and P13, the notice issued by the second defendant to M/s.Aadnah Arts and the plaint in C.O.S.No.41 of 2019 before the City Civil Court at Hyderabad, respectively, learned counsel contended that the said documents disclose that materials were handed over to M/s.Aadnah Arts. In fact, in the above mentioned plaint, the second defendant prayed for the delivery of materials relating to the movie, ''BAAHUBALI - The Beginning'', by the defendants therein, including M/s.Aadnah Arts and the plaintiffs herein.
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12. With regard to Issue No.3, learned counsel for the plaintiffs contended that both D.W.1 and D.W.2 admitted that SVOD rights include streaming or Internet rights. With specific reference to Ex.P6, which is the Assignment Agreement executed by the second defendant in favour of M/s.Aadnah Arts, learned counsel for the plaintiff pointed out that clause 1.1.6 thereof refers to Internet rights and that such Internet rights include SVOD rights. On this issue, learned counsel referred to question 79 and the answer thereto of D.W.1, whereby D.W.1 admitted that clause 1.18 of Ex.D2 is similar to clause 1.1.6 of Ex.P6. Learned counsel also referred to questions 9 and 10 and the answers thereto of D.W.2. On such basis, learned counsel asserted that the witness admitted that SVOD rights are an integral part of the Internet rights that were assigned by the second defendant to M/s.Aadnah Arts under Ex.P6 as early as on 27.10.2015, and subsequently by M/s.Aadnah Arts to the second plaintiff under Ex.P7.
13. Learned counsel for the plaintiffs also submitted that the first defendant did not plead that the version streamed by it was the dubbed version of the Telugu original and not the Tamil original. Without pleading, _____________ https://www.mhc.tn.gov.in/judis Page No.12 of 34 C.S.(Comm. Div.)No.423 of 2019 it was stated that no evidence could be adduced on such lines. Indeed, he submitted that D.W.2 deposed in response to question 12 and 13 that the platform owned by the first defendant exploited the Tamil dubbed version of ''BAAHUBALI''. Therefore, learned counsel for the plaintiffs submitted that the first defendant infringed the copyright of the plaintiffs over the movie ''BAAHUBALI''. By referring to Section 55 of the Copyright Act, it was contended that the plaintiffs are entitled to the relief of permanent injunction.
14. By relying on Ex.P16, learned counsel pointed out that the said document evidences that the turnover from the exploitation of the movie on satellite TV between 10.11.2015 and 15.08.2016 is a sum of Rs.11,59,01,309/-. It also indicates the projected turnover from the exploitation of the movie between 22.07.2018 and 01.09.2019 in a sum of Rs.4,98,00,000/-, but the claim for damages was restricted to Rs.2,00,00,000/-. In support of the claim for damages, learned counsel for the plaintiffs relied on paragraph 28 of P.N.Krishna Murthy v. Co-operative for American Relief Everywhere (Krishna Murthy), 2000 SCC OnLine Del
825. He also relied on Super Cassettes Industries Ltd. v. Chanda Cassettes _____________ https://www.mhc.tn.gov.in/judis Page No.13 of 34 C.S.(Comm. Div.)No.423 of 2019 Pvt. Ltd., 2006 SCC OnLine Del 1674, Carter International AG v. Gaurav Bhatia, 2016 SCC OnLine Del 8 and Koninlijke Philips N.V. v. Amazestore, 2019 SCC OnLine Del 8198 in this regard.
15. Learned counsel for the second defendant submitted that the suit is liable to be dismissed for non-joinder of M/s.Aadnah Arts and Film Karavan. By referring to Section 19(4) of the Copyright Act, it was submitted that the condition prescribed by Section 19(4) also applies to a licence by virtue of Section 30A thereof. Learned counsel for the second defendant referred to questions 16, 17, 21, 36 to 38 and 76 to 77 and the answers thereto during the cross examination of P.W.1 so as to substantiate the submission that the plaintiffs do not own or operate an OTT Platform and therefore neither had the capacity to nor exploited the movie on the OTT Platform. By referring to Clause 2.1 of the agreement between the second defendant and M/s.Aadnah Arts, learned counsel contended that “Exploitation Rights” were granted to M/s.Aadnah Arts to the Film in the Agreed Language for the Territory, and that each capitalized term is defined in the agreement. Exploitation Rights were defined as exclusive theatrical exhibition and satellite rights in the agreed language in the territory during _____________ https://www.mhc.tn.gov.in/judis Page No.14 of 34 C.S.(Comm. Div.)No.423 of 2019 the term and exclusive Internet rights in India and non-exclusive Internet rights world wide in the agreed language. Therefore, he contended that multiple rights, including Internet rights, were assigned, and that Internet rights are deemed to have lapsed as per Section 19(4) of the Copyright Act on account of non-exploitation within the prescribed period of one year. By referring to Exs.P7 and P8, he contended that M/s.Aadnah Arts committed breach of the Assignment Agreement (Ex.P6) by assigning rights that were not assigned to it under Ex.P6. He concluded his submissions by referring to questions 87 to 90 and the answers thereto of P.W.1 in cross examination, whereby P.W.1 admitted that the data provided in Ex.P16 is limited to the exploitation of satellite rights and does not cover Internet rights.
16. Mr.P.S.Raman, learned senior counsel, made submissions on behalf of the first defendant. His first submission was that the movie ''BAAHUBALI'' was made both in Telugu and Tamil. He stated that Film Karavan is a content aggregator. In course of business, Film Karavan acquired rights in the movie ''BAAHUBALI''. Upon receipt of notice from the plaintiffs (Ex.P10), the first defendant suspended streaming of the Tamil movie on 24.04.2019. This was prior to the institution of the suit. His next _____________ https://www.mhc.tn.gov.in/judis Page No.15 of 34 C.S.(Comm. Div.)No.423 of 2019 submission was that Netflix obtained a licence from Film Karavan to stream the Tamil dubbed version of the Telugu movie, and that Film Karavan had earlier acquired such rights from the second defendant. After acquiring the licence, it was stated that the movie was streamed for about two years. Therefore, he contended that the plaintiffs are not entitled to relief on account of laches. Turning to the issue of damages, he submitted that Netflix cannot be held liable for damages even if it is concluded that there is an infringement of copyright. Since Exploitation Rights in the movie were assigned by the Arka Media to M/s.Aadnah Arts, who, in turn, assigned the same to the second plaintiff, which assigned it to the first plaintiff, he submitted that, at worst, Arka Media and not Netflix can be held liable for damages. By referring to Ex.P16, he pointed out that this document contains the actual turnover from exhibition on Jaya TV and a projection as regards the likely turnover but for the infringement. Since these details relate to exploitation of satellite TV rights and not Internet rights, he submitted that Ex.P16 cannot be relied upon for purposes of determining damages. He also submitted that no questions were put to D.W.1 in relation to the turnover and profits earned by Netflix by streaming the movie ''BAAHUBALI''. Thus, the plaintiffs failed to adduce the necessary _____________ https://www.mhc.tn.gov.in/judis Page No.16 of 34 C.S.(Comm. Div.)No.423 of 2019 evidence to support the claim for damages. In support of these contentions, he referred to and relied upon the judgment of the Bombay High Court in Ramesh Sippy v. Shaan Ranjeet Uttamsingh and others 2013 SCC Online Bom 523 and the judgment of the Division Bench of the Calcutta High Court in Saregama India Limited v. Puneet Prakash Mehra and others 2010 SCC Online Cal 2177.
17. By way of rejoinder, learned counsel for the plaintiffs referred to Ex.P9 and pointed out that the said document indicates clearly that the first defendant streamed the Tamil version of the movie and not a version dubbed from the Telugu version thereof. He also referred to question 40 and the answer thereto of D.W.1, whereby D.W.1 admitted that it had stopped streaming the movie from 24.04.2019. With regard to the plea of non-joinder, he submitted that the first defendant failed to produce the alleged assignment agreement between the second defendant and Film Karavan in relation to the movie ''BAAHUBALI''. With reference to the License Agreement between Netflix and Film Karavan, he pointed out that the said agreement does not refer to the movie ''BAAHUBALI''. He also pointed out that the alleged assignment in favour of Netflix is prior to the _____________ https://www.mhc.tn.gov.in/judis Page No.17 of 34 C.S.(Comm. Div.)No.423 of 2019 alleged assignment in favour of Film Karavan. With reference to Ex.P16, he pointed out that this document was marked during the cross examination of P.W.1 on the basis of a question by the first defendant. As regards the termination of the assignment in favour of M/s.Aadnah Arts, he stated that such termination was subsequent to the institution of the suit.
18. Upon taking the rival contentions into account, the issues framed by the Court should be determined. At the outset, a significant aspect should be noticed: the plaintiffs originally instituted the suit only against Netflix. Subsequently, by an order of this Court, the second defendant was joined as a party but no consequential amendment was made to the reliefs prayed for by the plaintiffs. Therefore, no relief can be claimed against the second defendant. A second aspect to be noticed is that the suit relates to only Baahubali-The Beginning and not Baahubali-The Conclusion. Since issue No.1 relates to the preliminary question of non- joinder of necessary parties, the said issue is dealt with first. _____________ https://www.mhc.tn.gov.in/judis Page No.18 of 34 C.S.(Comm. Div.)No.423 of 2019 Issue No.1
19. Both the defendants alleged that the suit is liable to be dismissed for non-joinder of M/s.Aadnah Arts and Film Karavan. As per the proviso to Order I Rule 9, a suit is liable to be dismissed if necessary parties are not joined but not otherwise. In order to decide whether a party is necessary, the question to be posed is whether a decree may be issued in the absence of the said party. The reliefs claimed in the suit are damages of Rs.2,00,00,000/- for copyright infringement and a permanent injunction to restrain the defendants from infringing the plaintiffs' copyright in the movie ''BAAHUBALI''. While the plaintiffs trace title from an Agreement dated 31.10.2015 between the second plaintiff and M/s Aadnah Arts and the subsequent agreement dated 01.11.2015 between the second plaintiff and the first plaintiff, the principal event from which the right to sue accrues is the streaming of the movie ''BAAHUBALI'' by Netflix. Therefore, the reliefs claimed may be granted even in the absence of M/s.Aadnah Arts and Film Karavan. Consequently, M/s.Aadnah Arts and Film Karavan are not necessary parties although they are parties who/which may have enabled the court to discover material facts for effective adjudication of all issues arising for consideration in the suit. Therefore, they do not qualify as _____________ https://www.mhc.tn.gov.in/judis Page No.19 of 34 C.S.(Comm. Div.)No.423 of 2019 necessary parties but may qualify as proper parties. Since the suit cannot be dismissed for non-joinder of proper parties, Issue No.1 is decided in favour of the plaintiffs and against the defendants.
Issue No.2
20. Issue No.2 relates to whether the plaintiffs' right over the movie ''BAAHUBALI'' ceased due to lapse of time. Section 19(4) of the Copyright Act deals with lapsing of rights unless exercised within a period of one year from the date of assignment. Section 19(4) is set out below:
''(4) Where the assignee does not exercise the rights assigned to him under any of the other sub- sections of this section within a period of one year from the date of assignment, the assignment in respect of such rights shall be deemed to have lapsed after the expiry of the said period unless otherwise specified in the assignment.'' On examining sub section 4, it is clear that it applies to the non-exercise of rights assigned to the assignee under any of the other sub-sections of Section 19. Sub-section 9 of Section 19 deals with assignment of copyright _____________ https://www.mhc.tn.gov.in/judis Page No.20 of 34 C.S.(Comm. Div.)No.423 of 2019 in respect of a cinematography film. However, the said sub-section is limited to the rights retained by the author of the work to claim an equal share of royalty if the work is utilized in any form other than for the communication to the public of the work. Therefore, the said sub-section is not relevant in the present context. Sub-section 2 is generic to all forms of copyright and deals with the requirement that the assignment should identify the work, specify the rights assigned and the duration and territorial extent of such assignment. In this case, the assignment in favour of M/s.Aadnah Arts specified that Exploitation Rights in the Film in the Agreed Language and Territory were being assigned. The expression Exploitation Rights is defined so as to include exclusive theatrical exhibition rights and satellite rights in the Tamil language in India and exclusive Internet rights in India and non-exclusive Internet rights worldwide in Tamil. The defendants contended that the assignment had lapsed on account of non-exploitation of Internet rights within one year from the date of assignment. On the contrary, the plaintiffs contended that materials were handed over on 27.10.2015 as evidenced by Ex.P6. The plaintiffs also pointed out that the movie was telecast in November 2015. Therefore, the plaintiffs contended that the rights assigned to M/s.Aadnah Arts were exploited within one year. _____________ https://www.mhc.tn.gov.in/judis Page No.21 of 34 C.S.(Comm. Div.)No.423 of 2019
21. In this case, the rights assigned to M/s.Aadnah Arts are Exploitation Rights in the movie ''BAAHUBALI'' in Tamil in India. The expression Exploitation Rights is a compendious term referring to a bundle of rights consisting of theatrical rights, satellite TV rights and Internet rights. There is sufficient evidence on record that both theatrical rights and satellite TV rights, which are included in the compendious term Exploitation Rights, were exercised within a period of one year. The judgment of this Court in G.R.Raju, Proprietor, Vijay Vision v. National Film Development Corporation 2014-5-L.W.707, which was relied upon by the plaintiffs, supports the conclusion that the transfer of negatives pursuant to the assignment is sufficient to defeat a defence based on sub-section (4) of Section 19. Sub-section 4 of Section 19 does not state that each right assigned to an assignee under a consolidated assignment for a consolidated consideration should be exercised within one year, failing which the unexercised rights would lapse. Especially in the contractual context of assignment of Exploitation Rights for a lump-sum consideration without bifurcation, in contrast to an assignment of Internet rights on a standalone basis, the contention of the defendants that the assignment lapsed on _____________ https://www.mhc.tn.gov.in/judis Page No.22 of 34 C.S.(Comm. Div.)No.423 of 2019 account of failure to exercise rights is untenable. Therefore, Issue No.2 is decided in favour of the plaintiffs and against the defendants.
Issue No.3
22. The third issue pertains to whether the rights assigned to the plaintiffs and the first defendant overlap or are distinct. As regards the rights of the plaintiffs, they are traceable to Ex.P6. As discussed earlier, the subject matter of assignment is Exploitation Rights in the movie ''BAAHUBALI'' in Tamil in India, and the expression Exploitation Rights covers Internet rights. The first defendant asserts that it acquired Internet rights from Film Karavan. As pointed by learned counsel for the plaintiffs, both D.W.1 and D.W.2 admitted that SVOD rights, which is the expression used in Ex.D2 (the License Agreement between the first defendant and Film Karavan), are encompassed by the expression Internet rights. Another argument was advanced by learned senior counsel for the first defendant to the effect that the Tamil dubbed version of the Telugu original was streamed and not the Tamil original. Because this assertion is made by the first defendant as a defence to the allegation of copyright infringement, the burden of proof is on the first defendant. The first defendant has failed to _____________ https://www.mhc.tn.gov.in/judis Page No.23 of 34 C.S.(Comm. Div.)No.423 of 2019 plead or adduce evidence to establish this assertion and the advertisement of the first defendant (Ex.P9) specifies that it is the Tamil version. Therefore, both on account of the inclusion of Internet rights within the scope of the expression Exploitation Rights and the failure of the first defendant to plead and prove that it streamed the Tamil dubbed version of the Telugu original, the logical inference that follows is that the rights assigned to the plaintiff and the rights claimed by the first defendant are overlapping rights. Issue No.3 is therefore decided in favour of the plaintiffs and against the defendants.
Issue No.7
23. This issue pertains to whether the termination of assignment in favour of the plaintiffs' predecessor in title would impair the plaintiffs' rights. The second defendant issued notice dated 21.08.2019 to M/s.Aadnah Arts(Ex.P11). By this notice, the second defendant threatened to institute proceedings against M/s.Aadnah Arts. Thereafter, notice dated 05.09.2019(Ex.P12) was issued by the second defendant to M/s.Aadnah Arts. Under Ex.P12, the second defendant terminated the Agreement dated 27.10.2015 between M/s.Aadnah Arts and the second defendant. The first _____________ https://www.mhc.tn.gov.in/judis Page No.24 of 34 C.S.(Comm. Div.)No.423 of 2019 aspect of importance is that Ex.P12 is a purported termination. Any termination takes effect from the date of termination specified therein, and does not have the effect of extinguishing or obliterating rights, liabilities and obligations that were exercised up to the date of termination. In this respect, a terminated contract is distinguishable from a void contract. The purported termination is with effect from 05.09.2019. As such, it does not impair or affect the rights exercised prior thereto under Exs.P6 to P8. The second aspect to be examined is whether Ex.P6 is, in substance, an assignment agreement or a license agreement although the labels licensor and licensee are used therein. The settled legal position is that the description or label used by the parties is not determinative of the nature of a contract and that the determination of the nature of the contract would be based on an analysis of the substance of the contract. On closely examining Ex.P6 and, in particular, the nature of assignment under clause 2 read with Schedule II thereof, it is clear that it is a permanent assignment of Exploitation Rights over the movie ''BAAHUBALI'' in Tamil. The subsequent assignments in favour of the second and first plaintiffs, respectively, are for a term of 99 years. The consideration specified in Ex.P6 is Rs.18,00,00,000/-. There are at least two reasons to conclude that Ex.P6 _____________ https://www.mhc.tn.gov.in/judis Page No.25 of 34 C.S.(Comm. Div.)No.423 of 2019 is an assignment and not a licence: first, the assignment of Exploitation Rights is permanent; secondly, there is no restriction on the right to transfer. This conclusion is reinforced by the subsequent agreements (Ex.P7 and 8), which are expressly irrevocable as per clause 17 thereof. Therefore, Issue No.7 is decided in favour of the plaintiffs and against the defendants.
Issue No.4 and 6.
24. Issue No.4 pertains to whether the defendants infringed the copyright of the plaintiffs over the movie 'BAAHUBALI''. Issue No.6 pertains to whether the plaintiffs are entitled to the relief of permanent injunction. Since these two issues are inter-related, they are dealt with and disposed of jointly. As discussed earlier, the plaintiffs established copyright over the movie ''BAAHUBALI'', including Internet rights, by exhibiting Exs.P6 to P8. Ex.D2 is the basis for the defendants' claim in respect of the movie ''BAAHUBALI''. On examining Ex.D2, there is no reference to the movie ''BAAHUBALI''. The said movie is referred to in the addendum to Ex.D2, which was executed on 30.07.2017. This is clearly subsequent to Exs.P6 to P8 under which the plaintiffs claim title. Since it was concluded earlier that the rights assigned under Exs.P6 to P8 overlap with those _____________ https://www.mhc.tn.gov.in/judis Page No.26 of 34 C.S.(Comm. Div.)No.423 of 2019 purportedly assigned under Exs.D2 and D3, the assignment under Exs.D2 and D3, which is evidently subsequent in time, is not valid. As a corollary, the streaming of the movie ''BAAHUBALI'' by Netflix constitutes infringement. Consequently, the plaintiffs are entitled to a permanent injunction restraining the defendants from exhibiting or in any manner exploiting the movie ''BAAHUBALI'' on the Internet. Hence, Issue Nos.4 and 6 are decided in favour of the plaintiff and against the defendants.
Issue No.5
25. The plaintiffs claimed damages of Rs.2,00,00,000/-. Although the claim is labelled as a claim for liquidated damages, the said expression is a misnomer inasmuch as a claim for liquidated damages is maintainable only on the basis of an agreement in which a specific sum is stipulated as being payable in case of breach or a formula is prescribed therein for computing the amount payable in case of breach. The present suit does not fall within the two situations described above. Consequently, it should be treated as a claim for unliquidated damages. In any non-contractual claim for unliquidated damages, the claimant should prove that its rights were infringed, that it suffered loss as a result thereof and prove the quantum of _____________ https://www.mhc.tn.gov.in/judis Page No.27 of 34 C.S.(Comm. Div.)No.423 of 2019 loss. In the present case, the plaintiffs have established that they own the copyright in the Tamil version of the movie ''BAAHUBALI'' and that such copyright was infringed when the movie was streamed on the OTT Platform of Netflix.
26. What remains to be considered is whether the plaintiffs incurred loss as a result thereof and, more importantly, whether the plaintiffs proved loss. Although the plaintiffs relied on various judgments, including Krishna Murthy, damages cannot be awarded in the absence of proof of loss. The only evidence adduced by the plaintiffs in relation to loss is Ex.P16. Curiously, Ex.P16 was not exhibited in course of the examination- in-chief of P.W.1. Instead, the said document was exhibited in course of the cross-examination of P.W.1. On close scrutiny, Ex.P16 is an abstract prepared by the plaintiffs and not a primary document. It specifies details of the alleged actual revenue earned from the telecast of the movie ''BAAHUBALI'' on Jaya TV on three dates in the financial year 2015-2016, which is said to be Rs.11,59,01,309/-. The profit and loss account or any other primary document was not exhibited to prove the details contained in Ex.P16. Ex.P16 also indicates the alleged actual revenue by the telecast of the movie ''BAAHUBALI'' on Jaya TV on nine subsequent dates between _____________ https://www.mhc.tn.gov.in/judis Page No.28 of 34 C.S.(Comm. Div.)No.423 of 2019 22.07.2018 and 01.09.2019. The said aggregate revenue is mentioned as Rs.5,07,433/-. By using the revenue generated by telecasting the movie on three dates between 10.11.2015 and 15.08.2016 as the bench mark, the plaintiffs have arrived at a projected value of Rs.4,98,00,000/- from the exercise of Internet rights.
27. The quantum of revenue generated by a movie is dependent on multiple factors such as the day and date of broadcast, the medium of broadcast, the reach of the channel or platform through which the movie is broadcast, the popularity of the movie on the date of broadcast, the economic condition of the companies which advertise their products or services at the relevant point of time, etc. Significantly, the plaintiffs have not cross-examined D.W.1 and elicited information on the actual revenue generated on the OTT platform. Indeed, in response to questions 37 to 41 and 76-77, P.W.1 admitted that the plaintiffs have not exploited Internet rights and have not taken any steps in that regard as on the date of cross- examination. P.W.1 also admitted that no evidence of the existence of an OTT platform was provided. P.W.1 further admitted, in response to questions 87 to 90, that other than Ex.P16, which is an unaudited statement, no proof of loss was adduced. Thus, the plaintiffs have also failed to _____________ https://www.mhc.tn.gov.in/judis Page No.29 of 34 C.S.(Comm. Div.)No.423 of 2019 provide any rational basis on which the projected revenues have been computed. In these circumstances, I conclude that the plaintiffs have completely failed to prove the quantum of loss incurred by them as a consequence of infringement. Therefore, the plaintiffs are not entitled to damages. As regards the second defendant, it was previously concluded that the plaintiffs were not permitted to claim reliefs against the second defendant when the said defendant was impleaded. Therefore, issue No.5 is decided in favour of the defendants and against the defendants.
28 Issue No.8 relates to whether the plaintiffs are entitled to any other relief. The plaintiffs have succeded in establishing that their copyright in the movie was infringed by the first defendant. Since the plaintiffs have succeeded partly, they are entitled to proportionate costs. Therefore, the first defendant is liable to pay costs of Rs.3,00,000/- towards court fees, reasonable lawyer's fees and other expenses.
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29. In the result, the suit is partly decreed in terms of prayer (B) of paragraph 22 of the plaint. Prayer (A) is rejected. As regards prayer (C), the first defendant is directed to pay costs of Rs.3,00,000/- to the plaintiffs which shall include court fees, reasonable lawyer's fees and other expenses.
18.08.2022 Index : Yes Internet : Yes rrg Plaintiffs' witness:
1.Mr.A.Narayanan : P.W.1 Defendants' witnesses:
1.Ms.Priyanka Chaudhari : D.W.1
2.Mr.Kishore Kumar Khedrai : D.W.2 Documents exhibited by the Plaintiff:
Sl.No Exhibits Date Particulars of Documents
1. Ex.P1 14.07.2019 Board Resolution passed by the first plaintiff
authorizing Mr.A.Narayanan.
2. Ex.P2 10.06.2019 Board Resolution passed by the first plaintiff
authorizing Mr.M.P.Palanivelu, Managing Director to _____________ https://www.mhc.tn.gov.in/judis Page No.31 of 34 C.S.(Comm. Div.)No.423 of 2019 Sl.No Exhibits Date Particulars of Documents institute the suit.
3. Ex.P3 10.06.2019 Board Resolution passed by the second plaintiff authorizing Mr.K.Karthikeyan, Director to institute the suit.
4. Ex.P4 03.07.2015 Certificate issued by the Central Board of Film Certification.
5. Ex.P5 01.06.2015 Proof of Exhibition of Trailer of the film by M/s.Aadnah Art in the internet Medium
6. Ex.P6 27.10.2015 Assignment Agreement executed by the second defendant to and in favour of M/s.Aadnah Arts.
7. Ex.P7 31.10.2015 World Satellite Rights Agreement executed by M/s.Aadnah Arts in favour of the 2nd plaintiff.
8. Ex.P8 01.11.2015 World Satellite Rights Agreement executed by the second plaintiff in favour of first plaintiff.
9. Ex.P9 - Proof of exhibition of the film Baahubali(Tamil) in first defendant's platform violating the copyright of the plaintiff.
10. Ex.P10 02.03.2019 Legal notice issued by the plaintiff to the first defendant.
11. Ex.P11 21.08.2019 Notice issued by the second defendant to M/s.Aadnah Arts
12. Ex.P12 05.09.2019 Notice issued by the second defendant to M/s.Aadnah Arts
13. Ex.P13 05.10.2019 Plaint in C.O.S.No.41 of 2019 on the file of the Commercial Court, Hyderabad instituted by the second defendant against M/s.Aadnah Arts and plaintiffs.
14. Ex.P14 January, Application filed by the plaintiffs herein in 2020 C.O.S.No.41 of 2019, to reject the plaint
15. Ex.P15 07.11.2015 Publication made by the first plaintiff on internet regarding the publication of the film in their platform
16. Ex.P16 - Revenue working in respect of the film _____________ https://www.mhc.tn.gov.in/judis Page No.32 of 34 C.S.(Comm. Div.)No.423 of 2019 Documents exhibited by the Defendants:
Sl.No. Exhibits Date Particular of Deocuments
1. Ex.D1 13.09.2021 Print out copy of power of attorney in favour of Miss.Priyanka Chaudhari
2. Ex.D2 19.01.2015 Print out copy of Licence Agreement between the first defendant and Film Karavan
3. Ex.D3 30.07.2007 Print out copy of Addendum #16 of License Agreement
4. Ex.D4 12.09.2009 Photo copy of the letter issued by counsel for the first Defendant to counsel for the plaintiffs and acknowledged by the plaintiffs.
5. Ex.D5 14.09.2019 Photo copy of letter issued by the first defendant to counsel for plaintiffs and acknowledged by the plaintiffs
6. Ex.D6 14.12.2019 Original letter issued by counsel for the first defendant to counsel for the plaintiff whereby e-mail address of D1 for the purpose of service was intimated.
7. Ex.D7 02.03.2022 Original Board Resolution authorizing Mr.Kishore Khedrai to depose evidence on behalf of the second defendant.
SKRJ _____________ https://www.mhc.tn.gov.in/judis Page No.33 of 34 C.S.(Comm. Div.)No.423 of 2019 SENTHILKUMAR RAMAMOORTHY, J.
rrg Pre-Delivery Judgment C.S.(Comm.Div)No.423 of 2019 18.08.2022 _____________ https://www.mhc.tn.gov.in/judis Page No.34 of 34