CASE ANALYSIS: Penguin Books Ltd. v India Book Distributors and Others

Profile of Author: Priya Mishra is a 3rd year law student pursuing B.B.A LL.B from MMDU, Ambala. Corporate Law, Company Law, and ADR hold her keen interests.

BRIEF :

The Penguin Books Ltd. is a British publishing house co-founded in 1935 by Sir Allen Lane with his brothers. The plaintiff ( Penguin Books Ltd. ) instituted a suit for perpetual injunction against the defendants, M/s. India Book Distributors, the largest book distributor in India, restraining them from infringing Penguins' territorial license[1].

As the India Book Distributors, Bombay was importing and publicizing the most well-known books published by Penguin Books for sale in India 13 out of 23 titles. The major assertion of the defendant was that those imported copies were not infringing copies as stated under Section 51 of the Copyright Act. Section 51 only prohibits the import of infringing copies.

The issue of parallel importation reached higher acknowledgment in this case. The issue arises here was whether import by a third party without the express authorization of the copyright owner constitutes infringement. The Delhi High Court decided that the copyrights of the plaintiffs, overthrown by admitting that it is essential for the foreign publishers to import them in India. After importation, it can be said to be issued to the public. The court of justice states that the exclusive right of Penguin to ' print, publish and sell ' these titles in India would expand to the exclusive right to import copies in India.

One of the modifications after the judgment was the addition in section 14. Before the amendment, the first two clauses of section 14 of the Copyright Act states

• To produce the work in any material form.
• To publish the work.

After the amendment in 1994, the clause extended from "right to publish the work" to "right of importation", but without strict jurisprudential ground.

ISSUES :

1. Argued that the consent decree is not a bar to asserting rights under the Copyright Act, 1956.
2. It was asserted by the plaintiff that the importation of American Editions for the purpose of resale is an infringement of copyright.
3. Whether the temporary injunction can be awarded?

FACTS AND JUDGEMENT

AN ANALYSIS :

(1) The Penguin Books Ltd of England ( original plaintiff ) brought a suit against the India Book Distributors of New Delhi, Bombay, Madras, Calcutta (original defendants) for a continual injunction, restricting them from violating Penguins territorial authorization in 23 books. The Books namely, Animal Farm by George Orwell, Far Pavilion, Shadow of the Moon, etc. Some are modern editions such as Celebrity by Thomas Thompson, Lac by Shirley Conran. In India, 13 out of 23 titles being imported, circulated, and proposed for the selling and dealing purpose.

(2) The appellant pleaded for a temporary injunction in the suit. The application was learned by a competent judge of the court where the suit was instituted. The Justice constructed an impression that by motive of the consent decree which was approved by the district court in the United States of America. The clauses V and Vi of the consent decree provide as follows:

• V. " Each defendant is enjoined and restrained, directly or indirectly, from preventing or restricting any purchaser of a lawfully published book from importing or exporting such book to or from the limited States or such purchaser from selling, distributing or providing for the resale of such Book to customers in United Slates interstate or foreign commerce."
• VI. "Nothing in this Final Judgment shall prevent any defendant, in and of itself, from acquiring, granting or otherwise transferring exclusive or non-exclusive copyright rights, or from exercising or authorizing the exercise of such rights under the copyright law of any country, including the United States, or from the assertion of such other statutory rights as such defendant may have, provided that no foreign copyright law or other foreign statutory rights may be used by any defendant to exclude or restrict the importation or resale in the United States of a lawfully published Book (5) The learned judge on the construction of these clauses concluded that Penguins cannot prevent any purchaser of lawfully published books in America from importing them into India. He said: "On a plain reading of the clauses, it is clear that liberty is given to any purchaser in any part of the world to purchase lawfully published books in America and to export them wherever he likes."[2]

In that case, The U.S. Government brought a suit against various publishers, British and American including Penguin on the criticism that their treaties and agreements were in breach of the Anti-Trust, suit ended in a consent judgment where Penguins were disentitled to plead the impartial relaxation of the injunction.

(3) There were several arguments raised in the plea. Penguins argued that the consent decree was not a bar to the assertion of their statutory rights under the Copyright Act, 1957 of India. The Penguins came across to be licensees of territorial rights in the copyright of the subject books as regards India. it is alleged that Penguins are entitled to restrain India Book Distributors from importing the parallel American editions of these 23 titles in India But the defendant gives a strict denial to this. Here, it is observed that the prima facie proof of their being licensees of the books is in question.

(4)From the consent decree of clause V which forbids the publishers from entering into agreements which are hit by the Anti-Trust- Laws of the United States is territorial according to my point of view. There is no extraterritorial outcome. (Gurdayal Singh v. Raja of Faridkot, (1895) 22 Cal. 222(1 ) can be referred).

(5) Clause VI is a saving clause, which tends to clarify that no court can pass a decree to affect the rights of persons outside their jurisdiction. The court of justice in India did not recognize the extraterritorial jurisdiction as of the United States adjudicating system.

(6) Copyright laws consolidate strict legal and territorial concepts. Every civilization has its copyright laws. Surely, the sale within the regional limits, where the import is done voluntarily may not revoke the law. But Constraints on the resale of books may not be possible in America. It may comprehend the law. According to my perspective, the importers can not ignore the laws of the countries. American books cannot be sold into India to defeat the rights of the exclusive licensee.

(7) The counsel for the plaintiffs contended that the importation of American editions for resale in India is an infringement of the copyright of Penguins. They have a territorially exclusive license for India. Therefore the defendant must be licensed to import the American books. "Importation is forbidden unless a license has been given".

For this application, it was admitted by the counsel for Penguins, that

a concession was undividedly for this consideration and that does not prejudice any dispute that Penguins may like to put forward upon the subject when the suit attains to trial.

(8) According to my opinion, On the construction of the consent decree, I am of opinion that copyright is a species of property, and an effective right to use the copyright can be asserted in India by Penguins although they were consenting parties to the U.S. judgment. I cannot accept the view of the learned judge that they had "cut off their hands" and bartered away their rights.

(9) It was stated that Penguins had not come with clean hands. ‘He who conies into equity must come with clean hands’.

Let’s say the plaintiff denied the existence of a consent decree but that doesn’t mean he could act to improve the wrongdoing by confirming the fact of the consent decree. The denial was born of ignorance.

(10) The counsel for India Distributors ( Defendant ), Messrs Sorabjee and Mukhi, contended that importation of lawfully published books from America into India is not an infringement under the Copyright Act, 1957.

As per section 2 (g) of the act, An exclusive licensee is the one having "any right encompassed in the copyright". Penguins are exclusive licensees and assignees of copyrights having an exclusive right to print, publish and market these twenty-three titles in India.

Also, section 51 states :

Copyright in a work shall be deemed to be infringing

• when any person, without a license granted by the owner of the Copyright or the Registrar at Copyrights under this Act or in contravention of the conditions of a license so granted or of any condition imposed by a competent authority under this Act.
• does anything the exclusive right to do which is by this Act conferred upon the owner of the copyright.
• permits for profit any place to be used for the performance of the work in public where such performance constitutes an infringement of the copyright in the work unless he was not aware and had no reasonable ground for believing that such performance would be an infringement of copyright.
• when any person makes for sale or hire, or sells or lets for hire, or by way of trade displays or offers for sale or hire.

"infringing copies ( section 2(m) of the act ) of the work" is an infringement and So is the sale thereof. So If any person imports in India for the trade without the license the copyright is infringed. Any importation of infringing copies is an infringement unless it is for the importer's individual usage. If a Book lawfully published in one country and copies of those publications import in another country illegally, so in respect of those copies an action for breach would lie in this country against the importer. The action would also lie against any person who sold such copies Because the books have been imported and sold without the owner's exclusive licensee. Handling unlicensed copy is an infringement thus, India Distributors are infringing this right. As defined in Section 53 (1) which states, "order that copies made out of India of the work which is made in India would infringe copyright shall not be imported."

(11) Lastly, the counsel for India Distributors argued that the suit was a misconceived remedy and wrongly planned remedy, if any, lay with the Registrar of Copyrights.

Section (53)[3] of the act holds the basis of this argument which states :

“(1)The Registrar of Copyrights, on application by the owner of the copyright in any work or by his duly authorized agent and on payment of the prescribed fee, may after making such inquiry as he deems fit, order that copies made out of India of the work which is made in India would infringe copyright shall not be imported.

(2)Subject to any rules made under this Act. the Registrar of Copyrights or any person authorized by him on this behalf may enter any ship, dock, or premises, where any such copies as arc referred to in subsection (1), maybe found and may examine such copies.

(3)All copies to which any order made under subsection (1) applies shall be deemed to be goods of which the import has been prohibited or restricted under section 19 of the Sea Customs Act, 1878 and all the provisions of that Act shall affect accordingly.

Provided that all such copies confiscated under the provisions of the said Act shall not vest in the Government but shall be delivered to the owner of the copyright in the work."

(12) Gramophone Co. of India v. Birendra Bahadur Pandey,[4] 1984 AIR 667, 1984 SCR (2) 664

The above case can be referred to for this.

(13) The reasoning is meritless I would say. As we can see Section (53) gives a distinct solution by entrusting the Registrar to enter any premises where the copies of which import is restricted are to be found. One can seize such copies. The copies so confiscated will be subjected to the holder, not to the government officials. Section (53) is no bar to the owner of the licensee from contending "civil remedies" for violation of copyright.

(14) The value of copyright depends upon the enforcement in-laws. If it holds legal values it could never amount to infringement.

Laws, in general, are implemented in the following ways :

(i) Publicly (using the police, customs officers, or similar agency, such as Registrar of Copyright )

(ii) Privately ( by legal action taken by the person who suffers from any breaches of the law )

Here, it Largely falls under the second category. It is the responsibility of the owner of the copyright to go to court to curb a wrong from taking place and seek a 'civil remedy' for any infringement.[5]

(15) As most breaches of copyrights consist of a series of successive infringing conducts such as the importation of 'infringing copies' as in this case, the most important remedy is the injunction.

This is always at the discretion of the court. The court has to examine reasonable damage to the plaintiff. Therefore once the infringement and its continuance are confirmed the plaintiff will be entitled to an injunction, but the injunction would not be granted if the damage caused to the defendant by granting the injunction would be out of all fraction to the gravity of the infringement along with the possibility of damages to the plaintiff.

(16) Here is these India Distributors are committing indirect infringement by importation and deal of titles of which the exclusive licensees are Penguins. They have prima facie shown to us that, even after notice (dated 3-4-1983 ) was confiscated on them by Penguins they did not stop sale and importation. Ignorance is not a defense before us. The burden of proof in copyright infringement cases is on the defendant. He has to show that he did not know or had no reasonable grounds for suspecting that the copies in his possession which he was importing, buying, or selling were infringing copies.

According to my opinion, this is a case in which the injunction is a reasonable remedy. I am of the conclusion that the proportion of convenience lies in permitting rather than denying the injunction.

(17) It was said that if an injunction is granted, India Distributors will lose their import licenses. Dealing with infringing copies is an act of violation and unlawful. We can say that the court can never be a party to infringements of rights so that the defendant's import entitlements do not curtail. I would rather restrict the commission and continuance of the unlawful omissions.

(18) I would permit the plea and issue an injunction restraining defendants by themselves, their servants, agents, dealers, stockists from infringing the plaintiffs' territorial copyrights by admitting, allocating, and assisting for sale in India the 13 titles which admittedly they are importing into India. I would allow the defendants to sell their existing stocks as of the date of this order. But later on, no further imports will be made. The defendants will keep accounts of the sale of the existing stocks and submit the same in court every three months. Submission of all the documents and details is a must every week.

(19) The plaintiffs are mandated to submit Rs. one lakh as a cross-undertaking in damages as a penalty for the loss which the defendants may sustain within one month. The authorized judge awarded heavy costs against the plaintiffs.

CASE COMMENT ;

The problem of parallel importation first attained the higher judiciary where the Delhi High Court was called upon to affirm a judgment on whether the import by a third party without the distinct authorization of the copyright owner constitutes a violation. The court jurisdiction states that it constitutes infringement because it constituted a violation of the owner’s right to publish.

Here, it can be pointed out that before the amendment in the Copyright Act, 1994,

the first two clauses of section 14 states :

(i) to reproduce the work in any material form

(ii) to publish the work

This judgment extends the right to “publish the work” ( print, publish and sell ) to include a right of importation out of thin air, simply by stating that it appears so.

Also, it was noted that “publication” under the Act of 1984 was specified as implying "the issue of copies of the work, either in whole or in part, to the public in an expression sufficient to satisfy the reasonable requirements of the public having regard to the nature of the work”, here, he does not clarify how importation is mentioned under that explanation contrary to an ordinary reading of the law.

Lastly, “It is true that India Distributors are not printing these books and are not guilty of what is called primary infringement”, but goes on to state, that “when they issue copies of these titles for public distribution they are guilty of secondary infringement”. This is the final observation by the judicial court. As per my point of view, these sectors were neither explained nor explored in the jurisdiction.

The ruling proves that the judge didn't look after section 16 of the act, which contends that ' there shall be no copyright except as provided by the Act, and how this should ' prohibit a judge from enlarging the liberties provided in the law to include a new judicially created right to prevent imports '.

[1] https://indiankanoon.org/doc/1899039/

[2] https://en.m.wikipedia.org/wiki/Penguin_Books_Ltd._v._India_Book_Distributors_and_Others

[3] https://en.m.wikipedia.org/wiki/Copyright_Act_of_1976

[4] https://indiankanoon.org/doc/383397/

[5] http://copyright.gov/title17/92appa.pdf

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