Rario's Cricket NFT Case Against MPL & Striker: A Comprehensive Review

The advancement of blockchain technology, Artificial Intelligence (AI), and virtual digital assets has led to growing apprehension about the multitude of legal and ethical dilemmas that could arise from their development and their potential impact on the legal rights of individuals.

The Delhi High Court recently deliberated on the relationship between generative AI and personality rights in Digital Collectibles Pte. Ltd. and Ors. vs Galactus Funware Technology Private Limited and Anr. [CS (COMM) 108/2023]. In this case, the court declined to issue a temporary injunction against the gaming platforms Mobile Premier League (MPL) & Striker for using the name and likeness of certain cricketers to create Non-Fungible Token (NFT) – enabled “Digital Player Cards”.  

Non-Fungible Tokens under Copyright Law

NFTs are distinct digital assets that leverage blockchain technology to validate ownership and are frequently utilised for trading digital art and collectables. Nevertheless, an ongoing discussion revolves around the intellectual property rights tied to NFTs and the question of whether acquiring an NFT bestows copyright ownership.

On the other hand, Online Fantasy Sports (OFS) involve participants creating virtual teams of real-life athletes and competing based on their performance in real sports events. The users pay an entry fee to join and use their skills to participate in online events or leagues. Under prevailing copyright laws, purchasing an NFT does not automatically convey the legal right to claim copyright in the artwork unless a separate commercial agreement is established to that effect. In the instant matter, an OFS platform created NFT-enabled “Digital Player Cards” (DPCs) featuring the names and likenesses of certain cricketers. These digital assets could be owned and traded by users on the blockchain.

Case Overview

Digital Collectibles Pte. Ltd. (Plaintiff No. 1 here) owns and operates ‘Rario’, a digital collectables platform based on NFTs. The platform facilitates selling, purchasing, and trading officially licensed DPCs featuring cricketers. As well-known cricketers, Plaintiff Nos. 2 to 6 granted Plaintiff No. 1 an exclusive license to utilise their names and photographs on the Rario platform.

These DPCs contain names, photographs, and other personality traits of cricketers which are bought, sold, and traded for actual currency on Rario, utilising Rario’s private blockchain. The price of each DPC is determined by the demand and supply for the specific DPC, which is, in turn, influenced by the popularity and renown of the respective cricketers.

Galactus Funware Technology Private Limited (Defendant No.1) is the proprietor and operator of the online fantasy sports platform called MPL, while Defendant No. 2 is the proprietor and operator of the mobile application ‘Striker’, listed on the MPL. Like Rario, Striker users can purchase, sell, and trade DPCs and Striker also utilises NFT technology to authenticate the DPCs on its platform.

In February 2023, a suit was filed before the Delhi High Court against the defendants for using players’ names, images and other attributes (including those of Plaintiff Nos. 2 to 6) on their platforms without obtaining the players’ authorisation or license.

Right to Publicity vis-à-vis Freedom of Speech and Expression

The plaintiffs asserted that the value of the DPCs, considered digital art collectables, is primarily derived from and dependent on the names, likenesses, and other elements associated with the cricketers whose DPCs are offered on the Striker platform. Moreover, they relied on precedents set forth by the Hon’ble High Court of Delhi in D.M. Entertainment Pvt Ltd v Baby Gift House & Ors [MANU/DE/2043/2010] and Titan Industries v M/s Ram Kumar Jewellers [(2012) 50 PTC 486], to contend that the Striker DPCs are an unauthorised endorsement and violated the plaintiffs’ publicity rights.

In reply to the plaintiffs’ contention, the court remarked that while Indian courts have acknowledged the existence of celebrity personality rights, these rights are not absolute and must be weighed within the context of the common law principle of “passing off” and in accordance with the right to freedom of expression enshrined in Article 19(1)(a) of the Indian Constitution.

The Single Judge Bench of Justice Amit Bansal opined that the right to publicity was subordinate to the freedom of speech and expression guaranteed under the Constitution and noted that the “Right to publicity”, i.e., the right to control the commercial use of one’s identity and personality, is not absolute or unrestricted.

The celebrity’s right to publicity is only violated when using their name or image is intended to mislead the public into believing that they are endorsing and associated with the product in question. In such instances, it can be said that the celebrity’s goodwill and reputation have been misused to promote a product or service.

Use of Artwork with Creative Elements

The court highlighted that the DPCs of the defendants include artwork of the players, not photographs, and this artwork was determined to have creative elements that set them apart from the actual images of the players since the defendants have shown their expression through these creations rather than utilising celebrities’ likenesses directly. These innovative features and creative caricatures were held to be protected under Article 19(1)(a) of the Constitution.

Players’ Information Available in Public Domain

The defendants expressed that the content used for DPCs on the Striker platform is in the public domain, which served the purpose of identifying the cricketers on the platform; thus, it is beyond the scope of those cricketers’ personality rights. It was further stated that the platform is categorised as an OFS game, which does not offer the ability to purchase and “own” cricket moments (a key feature of the plaintiffs’ licensed DPCs). The defendants asserted that their DPCs could not be traded or used outside the Striker platform as they are inherently linked to the user experience and format of the Striker platform and highlighted the usage of players’ names and other information in a similar manner is common in other OFS games, demonstrating an established industry practice.

The defendants also cited the decision of U.S. Courts in CBC Distrib. & Mktg. v Major League Baseball Advanced [505 F. 3d 959] and Daniels v Fan Duel Inc [109 N.E. 3d 390], to support their argument that if the information and facts regarding certain celebrities which the defendants use are already publicly available, there can be no valid claim for infringement of publicity rights.

The court noted that OFS operators use publicly available player names and images to identify players. Thus, the court ruled that no one can own information in the public domain and such information can’t be monopolised or licensed. Since public domain facts cannot be monopolised, a third party’s use or publication for commercial gain cannot afford the plaintiffs a cause of action. With respect to the remedies available for an aggrieved celebrity, the court only cited defamation as a resort. 

Accordingly, the Hon’ble Court held that the plaintiffs failed to make out a case for the grant of an interim injunction[1] and effectively gave the go-ahead to Striker as it is not a ‘trading platform’ like Rario per se and does not mislead customers regarding any affiliation with or endorsement and does not violate any right of Digital Collectibles. Based on this, the matter has been listed for completion of pleadings on July 10, 2023.

Order of Single Judge Bench Challenged

Indian cricketers, including Mohammed Siraj, Harshal Patel, and Rario, have challenged the above interim order of the Single Judge Bench through appeals filed before the Division Bench of the Delhi High Court. The appellants lay emphasis on the players’ absolute rights over their persona and argued that there is a misunderstanding as to when fair use ends and confidentiality begins. The Bench has instructed the parties to submit written statements within a week and scheduled the next hearing on July 10, 2023.

Analysis

In the abovementioned case, the Delhi High Court has recognised that the test for determining the infringement of the right to publicity aligns with the principles and standards of the tort of passing off. It is now clear that the right to publicity is violated when a third party employs a celebrity’s information, trait, or attribute in a manner that is likely to cause confusion.

The recent appeal against the order of the Single Judge Bench is a testament to the brunt faced by celebrities when Online Fantasy Sports platforms utilise their images to entice audiences. The position of the Hon’ble Court is yet to be determined; however, the mere incidental or transformative use of a celebrity’s name, image, etc. in connection with a product or service cannot be said to be an infringement of the right to publicity. This order has provided precision to Indian jurisprudence on the right to publicity while also emphasising the need to strike a balance between justly enforcing the right to publicity and upholding the constitutional right to freedom of speech and expression.

Additionally, the court’s decision has the potential to influence the approach of Indian courts in addressing the incorporation of emerging and advanced technologies in our everyday lives. As this field of law is still developing, it remains to be seen whether the Indian judiciary will embrace this trend of engaging with novel concepts.

References:

[1] I.A. 3960/2023

Image Credits:

Photo by Aksonov: https://www.canva.com/photos/MAEJTBLx3xI-cricket-on-laptop-live-broadcast/

The court noted that OFS operators use publicly available player names and images to identify players. Thus, the court ruled that no one can own information in the public domain and such information can’t be monopolised or licensed. Since public domain facts cannot be monopolised, a third party’s use or publication for commercial gain cannot afford the plaintiffs a cause of action. With respect to the remedies available for an aggrieved celebrity, the court only cited defamation as a resort. 

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Authors’ Right to Receive Royalty for Underlying Works Recognised at Last

  • May 29, 2023
  • Mathews V C
  • Muskaan Sawhney

The Bombay High Court recently issued a ruling stating that FM radio stations are required to compensate composers and lyricists for the copyrighted music they broadcast[1]. Through this judgment, the court clarified that after the Copyright Act, 1957 was amended in 2012, making a sound recording available to the public will mean using the musical and literary works that form its foundation.

The longstanding dispute between broadcasters and the authors of underlying works has reached a fair and equitable conclusion, with the latter celebrating the recognition of their rights. In this article, we look at the intricacies involved in the case and analyse the reasoning provided by the court in arriving at its decision.

Case Overview

The Indian Performing Rights Society (IPRS), a copyright society, and Music Broadcast Private Limited, a company which owns and operates the radio station “Radio City”, entered into a licence agreement in the year 2001 to employ IPRS’s library of literary and musical works for FM radio broadcast. Akin to this, Rajasthan Patrika Pvt. Ltd., which operates the radio station “Radio Tadka”, finalised a radio broadcasting deal with the IPRS in 2006. Subsequently, the Copyright Board of India set a mandatory licence price for radio broadcasting under Section 31(1)(b) of the Act. IPAB set the royalties rate while making decisions concerning applications submitted under Section 31D in 2010. The defendant companies and the IPRS were earlier involved in a legal battle over the rights of authors of original works in case the public becomes aware of sound recordings that consist of these original works. In Music Broadcast Pvt. Ltd. v. IPRS[2], it was held that authors of the original works or the underlying literary and musical works that were included in sound recordings did not have the authority to impede the rights of the owners of those sound recordings to share them with the public through radio broadcast, etc.

The issues raised in the matter include: –

  • Whether the defendant companies are required to provide royalties to IPRS for transmitting musical works to the general public through their FM radio broadcast channels.
  • Whether the modifications adopted in the Copyright Act, which took effect on June 21, 2012, have any bearing on the rights of the creators of original works when those original works are included in sound recordings that are shared with the public.

In Entertainment Network India Ltd. v. Phonographic Performance Limited India and Anr[3], and related matters, the Delhi High Court clarified that the IPAB order remains in effect even while an appeal is pending. The court held that no compensation for the underlying works had been provided since the IPAB order was issued and stated that the respondent is entitled to use any available remedies if the IPAB order is not followed. Afterwards, on October 6, 2021, the court released a notice in the public domain seeking feedback from parties interested in fixing royalty rates concerning the underlying works. In a request for an interim injunction, IPRS alleged that the defendants were broadcasting songs from its catalogue without permission. According to IPRS, the Copyright Act underwent significant revisions addressing the rights of the authors of underlying works after 2012.

Contentions of Parties

The IPRS made thorough arguments to convince the court that the 2012 amendment to the Copyright Act, which took effect on June 21, 2012, had fundamentally altered the Act’s structure and supported the claims made in the lawsuits and the requests for temporary relief. According to the argument, the IPRS, which is seeking interim relief in the current applications, cannot be hindered by the legal position established by the Supreme Court in its 1977 decision in the case of IPRS vs. Eastern Indian Motion Pictures Association and others[4], which the Supreme Court and several High Courts later upheld.

The IPRS drew the Court’s attention to the amendments to Sections 17, 18 and 19 of the Copyright Act. Furthermore, the revisions carried a by-product of overturning the legal precedent established by the unaltered Copyright Act, as determined by the Supreme Court in the case of IPRS vs. Eastern Indian Motion Pictures Association and others and subsequent decisions and that the provisions of the unamended Copyright Act had been incorrectly perused by the Supreme Court and erred against the rights of the authors of such underlying works.

On the other hand, the defendant companies asserted that while the Copyright Act has clearly undergone changes since 2012, most of the changes are merely clarifications. It was argued that even if it were true that the revisions were implemented to extend the rights of authors of original works, the objective that the IPRS professes to support had not been achieved. Moreover, the defendants contended that since the 2012 amendment was only clarifying in nature and that since Sections 13 and 14 had not been changed, the adjustment to the other provisions could not have conferred any new substantive rights.

The Verdict

Accepting the contentions of the IPRS, the court stated that the 2012 amendment does “have the effect of creating a substantive right in favour of authors of underlying literary and musical works”. It was pointed out that though Sections 13 and 14 weren’t amended when they were read in conjunction with the amended Sections 17, 18 and 19, it can be seen that there is a “change in position of law brought about in favour of such authors of works”.

In its joint order, the court also concurred with IPRS’s claims that, despite payments made by the broadcasters to the owners of the sound recordings, the broadcast of music by FM radio broadcasters necessitated the payment of royalties in respect of the utilisation of literary and musical works underpinning the sound recordings. In response to the defendants’ claim that sharing the sound recording with the public violates their exclusive right under Section 14(e)(iii) and cannot be interpreted as using the underlying works; the court ruled that sharing the sound recording with the public uses the underlying works because they are integral to the sound recording.

The court held that even though Section 14(e)(iii) does confer an exclusive right upon the defendants to communicate to the public, such exclusive rights are subject to the provisions of the Copyright Act, and on a joint reading of Sections 13(1)(a), Section 13(4), the proviso to Sections 17, third and fourth proviso to Sections 18, and Sections 19(9) and (10) it was interpreted that the exclusive right to communicate sound recordings to the public is dependent on the author’s right to collect royalties.

The court declined to agree that the right to earn royalties would be eliminated because the underlying works are included in the sound recordings because such an interpretation would eliminate the entitlement provided to the authors of the underlying work.

The Bombay High Court concluded that the amendments made to the Copyright Act, 1957 in 2012, which created a substantive right in favour of authors of the underlying literary and musical work, fundamentally altered the legal framework concerning ownership of authors and composers who create lyrics and musical compositions. The court ruled that IPRS is entitled to royalties for the use of literary and musical works included in sound recordings or motion pictures. The court has categorically determined that each time a sound recording is shared with the public through radio stations, it constitutes the utilisation of the underlying literary and musical works for which the authors are entitled to royalties. As a result, the authors of these literary and musical works are qualified to request royalties on each occasion that these sound recordings are shared with the public through radio stations.

Therefore, when a synchronised product (cinematographic film or sound recording) is made publicly available, the creators of those works are entitled to royalties, except for situations when a cinematograph film is shown in a theatre. The defendants have been granted six weeks to comply with the court’s directive and pay the royalties to IPRS in accordance with the order dated December 31, 2020, passed by the former Intellectual Property Appellate Board or else temporary injunctions prohibiting the broadcast of music would take effect.

Outcome

In the Indian copyright system, the problem of royalties faced by creators of the underlying work has been extensively discussed and is the subject of several litigations. There have, however, been undercurrents of a modern interpretation within these orders that held otherwise, disregarding the unanimous nature of these opinions of the law prior to the 2012 revision. The order, as originally intended by the amendment, expressly recognises the rights of the authors of the underlying works. The order underlines a huge incentive to the authors and has received a warm reception from the community. However, the order’s practical ramifications are yet to be determined. The order may be overturned if the appellate authority believes that the IPAB exceeded its power by setting the royalty rates for the underlying work while it is currently pending review.

References:

[1] Indian Performing Right Society Ltd. v. Rajasthan Patrika Pvt. Ltd. (IA No. 9452 of 2022) and Indian Performing Rights Society Ltd. v. Music Broadcast Ltd. (IA No. 1213 of 2022)

[2]Suit No.2401 of 2006

[3]C.O.(COMM.IPD-CR) 3/2021

[4]1977 AIR 1443

Image Credits:

Photo by dotshock: https://www.canva.com/photos/MAAXiQsGTn8-radio-station-microphone/

The Bombay High Court concluded that the amendments made to the Copyright Act, 1957 in 2012, which created a substantive right in favour of authors of the underlying literary and musical work, fundamentally altered the legal framework concerning ownership of authors and composers who create lyrics and musical compositions. The court ruled that IPRS is entitled to royalties for the use of literary and musical works included in sound recordings or motion pictures. The court has categorically determined that each time a sound recording is shared with the public through radio stations, it constitutes the utilisation of the underlying literary and musical works for which the authors are entitled to royalties. As a result, the authors of these literary and musical works are qualified to request royalties on each occasion that these sound recordings are shared with the public through radio stations.

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Arraying of the unknown party as the main Defendant disallowed

The Delhi High Court has come down heavily on the tactics of concealment of real defendants in Intellectual Property (IP) Infringement cases utilized by plaintiffs with the aim of obtaining ex-parte injunction.  In a recent trademark infringement and passing off dispute between Bata India Limited vs Chawla Boot House & Anr, the Delhi High Court ruled that Plaintiff’s approach of impleading an unknown party as ‘Defendant No. 1’ was impermissible in law and directed stringent actions from the High Court Registry to control such misuse in all IP disputes.  

The Court expressed its dismay over the non-compliance of the settled legal position and observed that this tactic has been adapted multiple times in IP infringement cases to obtain ex-parte injunctions in the initial hearing by making it very difficult for the main defendants to spot themselves in the cause list and appear in litigation concerning them.  

Regarding the merits of the case, the court observed that Red Chief’s mark ‘POWER FLEX’ was infringing upon Bata’s trademark ‘POWER.’ 

BACKGROUND 

Bata instituted a trademark infringement suit against Red Chief, a footwear brand owned by Leayan Global, for using ‘POWER FLEX’ and the tagline ‘THE POWER OF REAL LEATHER’. According to Bata, it had exclusive right over the mark “POWER” by virtue of long and continuous use as well as multiple trademark registrations. Before addressing the substantial part of the dispute i.e. trademark infringement, passing off, and unfair competition, the Court decided to address the way the Defendants were arrayed by the Plaintiff Company.  

ARRAYING OF UNKNOWN PARTY AS THE MAIN DEFENDANT 

Bata named Delhi-based retail outlet – Chawla Boot House, as the main defendant, whereas, the allegations were directed against the manufacturer company, Leayan Global. This hints at mala–fide intentions of the plaintiff to obtain ex-parte order against the main defendants by preventing them from detecting their names in the cause list by listing it as ‘Chawla Boot House & others’.  

This practice was declared impermissible in law in the case of Micolube India Ltd. v. Maggon Auto Centre & Anr in which the plaintiff had arrayed Maggon Auto Centre as the main defendant whereas the principal party i.e. Motor Industries was arrayed at Defendant no. 2. It was further noted that such practices disentitle a plaintiff of any equitable relief since the plaintiff did not approach the court with clean hands. It was held in that: 

“The very fact that the plaintiff has also indulged in this practice is an indicator that it did not want the counsel for the defendant No. 2 to appear on the first date on which the matter was taken up for consideration of the grant or non-grant of ad interim injunction.” 

 

CONCLUSION  

Despite the established legal position, plaintiffs continue to array parties unrelated to the dispute as to the main defendant. The Registry was therefore ordered by the High Court to ensure strict compliance with the ratio laid down in the Micolube India judgment. In addition, a circular has been issued directing plaintiffs in all IP cases where there are multiple defendants to furnish an affidavit to the Registry confirming the arraignment of the main contesting party in the suit as Defendant No. 1.

Image Credits: Photo by Tingey Injury Law Firm on Unsplash

Despite the established legal position, plaintiffs  continue to array parties unrelated to the dispute as to the main defendant. 

The Registry was therefore ordered by the High Court to ensure strict compliance with the ratio laid down in the Micolube India judgment.

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