Delhi High Court Gives Internet ‘Intermediaries’ A ‘Safe Harbour’, Revolutionizing Internet Space In India

February 27, 2017

Copyright Law

Liability of Intermediaries for IP infringement

On December 23, 2016, the Division Bench of the Delhi High Court, passed its final order in the case of Myspace Inc. Vs. Super Cassettes Industries Ltd.arising out of an appeal filed by MySpace related to contentions made against it for having ‘knowledge’ of copyright infringement and the grant of permanent injunction to broadcast works of Super Cassettes Industries Ltd. (SCIL) by the Single Judge. The Court held that intermediaries cannot be held liable for infringement unless the ‘actual knowledge’ on part of intermediaries can be proved and the mere act of facilitating expression over internet does not amount to infringement. For this purpose the Court also differentiated between ‘actual knowledge’ and ‘general awareness’ in case of such intermediaries.

Brief Facts-

  • MySpace is an USA based Internet Service Provider (ISP) which is used for the purpose of social networking and sharing of multimedia files over the internet.
  • SCIL, on the other hand is a Company which owns popular music labels such as T-Series.
  • With the advent of technology the sharing of multimedia files is not limited to CDs, DVDs and Cassettes, and viewers now seek easy ways to have access to such files through the internet. In such a scenario copyright infringement over the internet was inevitable.
  • “Intermediary” has been defined in the Information Technology Act, 2000 (hereinafter “IT Act, 2000”) as any person who on behalf of another person receives, stores or transmits electronic record or provides any service thereof and includes inter alia telecom service providers, network service providers, internet service providers, web-hosting service providers.
  • A civil suit was filed before the Single Judge of the Delhi High Court in 2004 by SCIL against MySpace for allegedly infringing their copyright under Section 51 of the Indian Copyright Act, 1957. SCIL claimed that as MySpace permitted uploading and viewing of copyright content free of cost, the ease of access is discouraging the viewers to purchase CDs and DVDs available in the market leading to immeasurable loss of revenues. Further, SCIL alleged that MySpace is obtaining revenues in form of advertisement from such infringing works. The Single Judge, after hearing the pleadings held Myspace liable and restrained them from dealing with the SCIL’s works in future and held that the ‘safe harbor’ as laid down under Section 79 of The IT Act, 2000, is not available for intermediaries in case of copyright infringement. The Single Judge further held that “there is no reason to axiomatically make each and every work available to the public solely because the user has supplied them unless the defendants are so sure that it is not infringement.”
  • The Single Judge’s judgement would have the effect that intermediaries were attached with a liability whether or not any fault could be attributed to them. Even though a given intermediary did apply for all available means to prevent publication of potentially infringing content, it would be liable for any illegality in the content though it was impossible to detect.
  • Aggrieved by the Single Judge’s decision MySpace filed an appeal before the Division Bench of the Delhi High Court.

Contentions by SCIL (Respondents)

  • The Respondents argued that MySpace has both knowledge as well as control over the content shown on its website in the same manner like that of a mall owner.
  • Moreover, MySpace permanently stores data on its site to make it available for the audience, therefore excluding such storage from being ‘transient storage’.
  • The very moment the site (Myspace or any other ISP) takes licence from the uploader to modify the uploaded works, it becomes fully aware of the content being of infringing nature. The provision of notice and the ‘Take down System’ provided by the site would not mitigate the infringement caused.

Contentions by MySpace (Appellants)

  • MySpace, on the other hand, argued that it was simply a licensee of users who uploaded content and the licence so granted was limited in the sense that MySpace is only allowed to alter user-generated content so as to make it viewable.
  • If the intermediary is fulfilling all the conditions (due diligence, choosing of audience/receiver, etc.) set out in Section 79 of the IT Act, 2000 for exemption from the liability, such strict liability need not be attached with the intermediary on mere notion that they had ‘knowledge’ of infringement.

Observations of the Division Bench

  • The first issue raised was whether MySpace could be said to have actual knowledge of the infringement. Both under the Copyright Act and IT Act, 2000 actual knowledge and not mere apprehension is necessary to attract offence and prove mens rea (intention or motive). Also the provision for safeguard devices like notice and take down provision would not imply actual knowledge. The Court observed that MySpace neither had ‘actual knowledge’ nor had ‘reason to believe’ that the uploaded content infringed copyright of SCIL in any manner.
  • The second point of discussion was whether MySpace shall be given protection (safe harbour) as an intermediary under the IT Act, 2000, i.e. should it be given exemption from liability for any third party information, data or communication link made available or hosted by it. The Court observed that MySpace very well qualified the definition of intermediary as it acts as a portal for information. The intent of the IT Act, 2000 is to regulate the liability of intermediary in terms of globally accepted standards and in no way curtails the rights guaranteed under the Copyright Act. If the intermediary follows certain minimum standards and has post infringement safety measures on its site it shall act as an affirmative defense to claim such exemption under Section 79 of the IT Act, 2000.
  • Furthermore, the two sections of the IT Act, 2000 – Sections 79 and 81 must be read harmoniously to give effect to both. Section 79 has an overriding effect; it begins with the words “Notwithstanding anything contained in any law for the time being in force but subject to the provisions of sub-section (2) and (3),” which means that irrespective of any other law, an intermediary is guaranteed a ‘safe harbour’ if only conditions of Section 79 are fulfilled. Proviso to Section 81 on the other hand states that “nothing in this Act shall restrict any person from exercising any right under the Copyright Act or the Patent Act.” The intent of Section 79 regulates the liability in respect of intermediary while the Copyright Act grants and controls rights of a copyright owner. The object of proviso attached to Section 81 is only not to debar the copyright and patent holders to pursue legal remedies under the IT Act, 2000.
  • Both the Acts –Copyright Act and IT Act, 2000 should be read together to encourage investment, research and development in the telecommunications sector. The intermediary would be attached with liability only if they themselves post infringing content or upon actual knowledge or notification of appropriate government they fail to expeditiously remove or disable access to an unlawful content.

Decision of the Division Bench

The Court, while considering all factors, and in view of equity decided that Super Cassettes shall provide details of ‘specific work’ in which it holds copyright along with the URL/Links on MySpace site to MySpace as and when they detect any infringement so that the contents can be removed/blocked by MySpace within the statutory limit of 36 hours provided under Information Technology (intermediaries guidelines) Rules, 2011. 

Suggestions by the Division Bench 

The Court observed that the rapid growth of technology required a change in the legislative and judicial approaches. The Court suggested that for setting up a mutually acceptable information exchange between rights holders and intermediaries, a four step mechanism may be set up. The four step mechanism would include-

  • Notice and Take down- In this method an infringement notice is issued to the intermediary by the content owner, and the intermediary in furtherance of the notice takes down the content of the subscriber from the URL/link and restricts it from further display.
  • Notice and Notice- Once an intermediary receives notice from a content owner it passes on the notice to the infringing subscriber.
  • Notice and Disconnection- it is also called “Three Strikes Model” evolved by the French Government. According to this method, once an infringing subscriber is found to be uploading infringing content more than 3 times, the intermediary can go ahead and terminate the services of such intermediary.

  • Filtering- in this method, tools are used to identify and remove the infringing content automatically by the intermediary.

Concluding Remarks-

The internet is a virtual space of undefined boundaries. It is true that copyright owners have the right to modify, sale or distribute their work and protect their work from any infringement, but in the wake of technology it is essential that the provisions of IT Act, 2000 and Copyright Act are read harmoniously. To attribute strict liability to intermediary industry would most likely lead to its shutdown, especially where the content is of this magnitude and size. For instance, if WhatsApp and other social media portals were held liable for each infringement given the magnitude of information broadcasted on them, this would mean closure of the website and the businesses. Such strict liability attached to intermediaries would also mean restriction of free speech and expression to the content uploader. This judgment has clarified the position of claim of a copyright holder with respect to the intermediaries, while also giving some protection to the intermediaries to function smoothly.

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