Intermediary Liability in India

The Delhi High Court recently came out with a first-of-its-kind-judgment on the issue of Intermediary Liability in India.

Intermediary, what is?

Image via CrunchBase

For a quick recap; in the simplest terms, to be an intermediary is to be like a conduit for the passage of any information/communication. For e.g., your post-man is a sort of an intermediary between the sender and you. Of course, you know that your post-man does not change or alter the message, neither does he open it or modify in it in any way and delivers it to you as it is received by him, from the sender. Neither does he derive any benefit that is related to the delivery of such messages, apart from a fixed emolument. Similarly, an intermediary in the digital world is one which acts as a conduit through which information passes through and communication is enabled. A network service provider, Internet service provider, web hosting providers are all examples of intermediaries. Worldwide, the law on intermediary liability has evolved in a manner, which grants liability to intermediaries, if it plays the role of a “perfect conduit”, like that of the postman mentioned above, where an intermediary merely acts as a facilitator or transmitter of information/communication. To be able to gain exemption from liability for any violation caused because of the information transmitted, an intermediary must generally not:-

1) Originate a communication of an information by itself or,

2) Select by itself, the originator or the recipient of the communication or,

3) Alter or modify the content of the communication.

On the foundation of such broad principles largely, the liability of an intermediary is determined with its attendant differences (the devil in the details) as is the case with different municipal laws among nations.

Facts of the Case

Myspace as you all will-should-may-possibly know is an online music web-site where users can upload their music files, video songs, and other multimedia files onto Myspace’s website and thereby share it with their friends. Aah, Technology! Myspace, via its terms of use, instructed its users, at the time of uploading, to not upload those files over which they had no ownership of copyright. Myspace is primarily used by independent artists (including this author, ahem!) eager to get their music heard by web-surfing masses or by established artists who want to connect with their fans. However, few unscrupulous users uploaded music and video files onto Myspace; files over which they had no copyright ownership at all!! As most copyright titles for music and video songs in India are held by T-series, the latter company was alarmed to find its copyright works easily available on Myspace for FREE. All the copyright royalties were literally going down(loaded) the drain. T-series filed a suit against Myspace for a Court injunction to stop Myspace from displaying or publishing any of the titles over which T-series had copyright ownership. T-series, inter alia alleged infringement under s.51 of the Copyright Act, liability for Myspace owing to that infringement and prayed for appropriate remedy. Myspace, inter alia sought exemption from such liability under the protective umbrella of s. 79, under the I.T Act ; legislated especially for intermediaries against a deluge of such cases.

Issues

Infringement

The Court decided on several pertinent and so-far unclear issues. To begin with, the court explored infringement under s. 51 of the Copyright Act and managed a comprehensive analysis of the two kinds of infringements, viz., direct infringement under s. 51(a)(i) and secondary infringement under s.51(a)(ii).

The Court explained that for Myspace to be liable under s. 51(a)(i), for direct infringement, it must be shown that Myspace had:

1) Illegally authorized the infringement of T-series’ titles.

2) Had a clear and participative role in such infringement.

3) Exercised some degree of control over any such activity constituting infringement.

Myspace as an online website did not carry out any of those and hence was not held to be an infringer within the wordings of that sub-provision.

The real debate however was over whether Myspace had committed infringement as per the purposes of s. 51(a)(ii), where in lies the aspects of secondary infringement. The Court laid out that for Myspace to be liable under s. 51(a)(ii), for secondary infringement, it must be shown that Myspace had:

1) Permitted a place for the infringing communication of T-series’ titles.

2) That such infringing communication was for the purposes of profit.

3) That Myspace was aware and had reasonable grounds for believing that any such communication, over Myspace’s resources, to the public would be an infringement of copyright (in which case, even if Myspace did the first two, but had no awareness or had no reasonable ground to believe that the works available on its website were infringing copies of T-series, Myspace would not be considered liable, in any manner).

So T-series’ lawyers argued that Myspace had knowledge, by having a reasonable belief and awareness of such infringements. The Court held that Myspace had knowledge of such infringements, on these grounds:-

1) Because Myspace had anti-infringement mechanisms in place such as Hash Block Filter, Take-Down-Stay Down and Rights Management Tool, it was well aware that infringements took place on its website(place). That is to say, because Myspace had reasonable belief that its website is used for uploading infringing material, it developed such anti-infringement mechanisms, and hence The Court held that Myspace had a reasonable belief that its website is used for purposes of infringement.

2) Because T-series had approached Myspace with a list of its titles over which it had copyright ownership, back in 2008, showing that such titles were available on Myspace’s website. This was held by the Court to constitute Myspace’s awareness of such infringements and also its’s specific knowledge regarding the same.

Further, Myspace’s website, which was exhibiting such infringing works of copyright, benefited commercially from the pre-roll, mid-roll and end-roll advertisements that were added to such works after due modification. It must be remembered that a multimedia related website can earn from two types of advertisements viz., those that are automatically sent by ad servers such as google’s adsense, and those that are selected by the website owner and added with content to be exhibited along with.

Image via Wikipedia

The Court finally observed, that even after possessing general knowledge about such infringements, in addition to specific knowledge of the infringing titles, Myspace did not adopt any pre-infringement measures to stop the future infringement of T-series’ titles. Myspace only had post-infringement curative measures as is mentioned under the DMCA (§512 (c)(1)(C). The Court considered such post-curative measures to be insufficient as those were not mentioned u/s. 51(a)(ii), and as such could not exempt Myspace from liability or come in the way of proving an infringement under that section. The plea that Myspace had dispensed with its required obligation of carrying out necessary due-diligence by providing for the three tools for anti-infringement purposes, was turned down by the Court. The Court added, that if any due-diligence is required, then that has to be at the pre-infringement stage. It was held that Myspace should have had taken “preliminary measures at the time of modification of the works and prior to making them available to the public so as to ensure that the same does not infringe any one’s copyright.”

Intermediary Liability

This is from where the excitement starts! Under s. 79 of the I.T Act, notwithstanding anything contained in any law, an intermediary shall not be held liable for acts, which are done by third parties. In the present situation, as per s. 79 of the I.T Act, regardless of whatever other laws may say, Myspace will not be liable for the acts of users (third parties). But the liability shall be available to Myspace only if it adheres to the conditions mentioned u/s. 79(2) and s. 79(3).

Myspace argued that it was free from liability because as per s.79(3), after gaining knowledge of such infringing works on its website, it had expeditiously removed all those titles and thus must be in a good stead to assume exemption from liability as provided under s.79. The Court rejected the argument by stating that such exemption was not available because of s. 81. S. 81 states that the provisions of the I.T Act shall over-ride any other law (thus saving s. 79), provided that such an effect shall not in any manner restrict a person from exercising rights conferred under the Copyright Act and the Patent Act. Thus, s. 79 is found to be subject to any rights that have been conferred under the Copyright Act.

In a nutshell, with respect to the present case, following are the rights that are available to T-series under the Copyright Act.

1) Right to communicate or authorize the communication of its work to the public u/s. 14(1)(a)(iii), of the Copyright Act.

2) In case of infringement of any of its works, the right to be entitled to all such remedies by way of injunction, damages, accounts and otherwise as are or may be conferred by the law for the infringement of a right u/s. 55(1), of the Copyright Act.

Thus T-series had the exclusive right to communicate or authorize the communication of its work to the public; and in case of infringement of such a right, to approach a civil court to avail of remedies for such infringement. This right to be entitled to remedies as mentioned in s. 55(1), thus is not restricted by the operation of s. 79 read with s. 81 and its little-but-important proviso, in the IT Act.

This reasoning (though not mentioned in so many words) was arrived at by a plain reading of the legal provisions as they exist. Moreover, the Court also in a way stated, that in case Myspace was to avail of the exemption u/s. 79, of the IT Act, in the said facts and circumstances, then the presence of the proviso to s. 81 would be rendered otiose and in no way can an interpretation be adopted which renders any provision of a law as useless and of no consequence. Thus the provisions of the Copyright Act were considered to hold sway over the said provisions of I.T Act. However, in respect of other violations such as those that would be held as offences under the provisions of Indian Penal Code (hurting other’s sentiments, obscenity, harassment, defamation) and other Acts would allow exemption from liability to an intermediary in all circumstances, as long as the necessary conditions are met.

Regardless of the above, the Court found that Myspace indulged in modification (by resizing clips, or by adding advertisements to those clips via pre-roll, mid-roll, end-roll insertions) of the uploaded works, and by that action itself it was stripped of the protection u/s. 79 because that action was not in consonance with s. 79(2)(b(iii), which, as mentioned at the very earliest, requires an intermediary to not “select or modify any information contained in the transmission,” for an intermediary to avoid liability. The court also added that once infringement is proved u/s. 51(a)(ii) of the Copyright Act, the determination of knowledge would be such that it would any way prove knowledge of infringement as per the I.T Act, thus holding down the harmony of the standards of knowledge under the two Acts. And even, though the I.T Act, mentioned u/s. 79(3)(b), that upon obtaining such knowledge, an intermediary “must expeditiously remove or disable access to that material on that resource without vitiating the evidence in any manner,” to obtain immunity against liability; such immunity dies by the workings of the proviso to s. 81, of the I.T Act. Therefore, once infringement is proved under the Copyright Act, a copyright owner-victim of infringed works is entitled to remedies under the Copyright Act, regardless of the provisions under the I.T Act.

Jurisdiction

The Court also gave a reasoned judgment on its assumption of jurisdiction over the matter. Myspace had argued that in no way can the Delhi High Court assume jurisdiction because:

1) Myspace Inc. was a foreign national, being a company incorporated under US laws.

2) No part of the cause of action had occurred in the territorial jurisdiction of the Court, i.e, it occurred over webspace which is available all over the world and not specifically dedicated to India only.

3) That the exercise of jurisdiction by the Court would result in extra-territorial ramifications.

The Court rejected all of the arguments and justified its assumption of jurisdiction on the basis of the provisions of s. 62(2) of the Copyright Act which allows - that district court to have jurisdiction, within the local limits of whose jurisdiction, at the time of the institution of the suit, the person instituting the suit actually and voluntarily resides or carries on business or personally works for gain, notwithstanding whatever contained in the Civil Procedure Code or any other law for the time being in force. This was an additional ground added under the provisions of the Copyright Act to enable instituting a suit.

The Court further reasoned that this provision of Copyright Act, was meant to have an over-riding impact over rules on Court’s assumption of jurisdiction as given in the Civil Procedure Code (CPC), as is clear by the words above. Moreover, that provision granted the right to a person to institute a suit in that Court, under whose territorial jurisdiction, the person instituting the suit resides or carries out business or profession. This was in addition to the requirement of institution of suit in that Court, in whose territorial jurisdiction, the cause of action or a part of it arose, as is the case otherwise especially under CPC, among other requirements.

Moreover, the Court found that Myspace had dedicated its business energies to the Indian market and had intended to target the Indian Audience. This was buttressed by the fact that before entering the Indian online market, Myspace had sent out information to all music companies, and also started an India specific url viz., in.myspace.com, as has been mentioned above. Thus the court upheld its assumption of jurisdiction and ended the judgment after further deliberating on the applicability of international covenants (WIPO Copyright Treaty) and the provisions of DMCA on intermediary liability.

The Court granted quia timet remedies for injunction to guard against future instances of infringement because, “the plaintiff is entitled to relief on the basis of quia timet action as the defendant’s nature of activities [emphasis supplied] is such where the plaintiff’s works is (sic) liable to infringe [emphasis supplied] and more so when the defendants are notified about the plaintiff’s several works. The said danger of infringement is imminent risk of substantial damages with certainty as the defendants have already done several infringements and will continue to do so in the light of the continuous acts of the defendants.”

Thus, Myspace was told to guard against all future instances of infringement also. The Court had also specified ways by which Myspace could adopt pre-infringement measures to “nip-it-in-the-bud,” all such infringing activities, before it had the effect of imminently endangering prospect of T-series’ earnings from royalties.

More to come on this, as we eagerly wait for Myspace’s next move. Also expect few more posts related to this judgment very soon.