Intermediaries v. Copyright Holders: The Delhi High Court Wants to Protect Both

In July 2011, a single judge bench of the Delhi High Court issued an interim order in the case of Super Cassettes Industries Ltd. v. Myspace Inc. & Anr. The bench effectively held Myspace (a social media website) liable for infringement of copyright by third party content posted on its platform. This decision was considered to put a dent in the protection of internet based businesses and intermediaries. Recognising the far-reaching implications of such an order, a division bench of the Delhi High Court has now reversed this decision.

This post focuses on the recent order of the Court, and some of the concepts discussed which may impact the liability of intermediaries and the safe harbours afforded to them.

Background

Myspace is a social media platform, which operates by allowing users to upload content, and view content posted by other users.  Super Cassettes, more popularly known as T-Series, is a music label, and production house which owns rights to a large repertoire of Indian music.

Issues before the court

T-Series alleged that Myspace was infringing its copyright by allowing infringing copies of T-Series’ work to be posted on the Myspace platform. T-Series approached the Delhi High Court and filed a suit seeking injunctive relief and damages.

The primary issue before the court was whether Myspace, should be held liable for third party content posted on its platform.

T-Series argued that (i) infringing copies of several of its works were available on the Myspace platform, (ii) that Myspace was aware of such infringing material, and (iii) that Myspace was guilty of primary infringement of T-Series’ rights.

Myspace on the other hand argued that the content was user generated, and it had no control over the content. The terms in its user agreement restricting users from posting infringing content could not be held to mean that Myspace was aware of specific instances of infringement. Further, although Myspace did take a limited license from its users to modify the content, such modification was limited to an automated process to insert advertisements. Myspace also stated that it had rights management and notice and takedown processes, which T-Series could use to protect its rights.

Important legal provisions

The arguments of the parties and the orders of the court largely focus on three provisions of law:

  • Section 51(a)(ii) of the Copyright Act, 1957 (Copyright Act), which provides that copyright is infringed when any person “permits for profit any place to be used for the communication of the work to the public where such communication constitutes an infringement of the copyright in the work”. However, an exception is provided, where the person was not aware and had no reasonable ground for believing that such communication would be an infringement;
  • Section 79 of the Information Technology Act, 2000 (IT Act), which provides that an intermediary will be provided with a safe harbour, and not held liable for third party content if
    • The intermediary does not initiate the transmission of content
    • The intermediary does not select the receiver of the transmission
    • The intermediary does not modify the content
    • The intermediary undertakes certain due diligence requirements as prescribed

It further states that to be exempted from liability the intermediary must remove or disable access to the content when it becomes aware that the content is unlawful

  • Section 81 of the IT Act, which states that nothing in the IT Act will restrict any person from exercising rights granted under the Copyright Act.

Decisions of the court:

Interim injunction awarded in 2011

In 2011, the court found that Myspace did ‘permit for profit’ a place i.e. the Myspace platform, to be used for the communication of infringing material. Further, the court also found that Myspace was aware of possible infringement, as evident by the rights management tools it used. In relation to the IT Act, the court reasoned that section 81 of the IT Act overrides the protection granted under section 79. The court also took cognizance of the license taken by Myspace to modify the posted content, and the modifications undertaken in terms of insertion of ads. It stated that as a result Myspace did not meet the criteria for protection under section 79.

An injunction was given requiring Myspace to, among other things:

  • Ensure that no works owned by T-Series would be uploaded on its platform without making enquiries as to ownership / rights to the work.
  • Ensure that as and when the T-Series informed Myspace of any of its works available on the Myspace platform, such work is removed within 1 week of receiving such notice.

Appeal and reversal

Myspace appealed the injunction arguing that it was too wide and impossible to comply with or monitor. It also argued that the subject matter of the injunction was now a matter of public interest, affecting the rights of all intermediaries, and could threaten the way the internet functions. The division bench of the Delhi High Court acknowledged this, and focused on three broad questions after admitting the appeal:

  • whether Myspace could be said to have knowledge of infringement and held liable under the Copyright Act
  • Whether section 81 overrides the “safe harbour” granted to intermediaries under section 79 of the IT Act in case of copyright infringement
  • Whether sections 79 and 81 of the IT Act and section 51 of the Copyright Act should be read harmoniously

Dealing with the first question, the court found that Myspace could not be found to have specific knowledge of infringing acts simply because it:

  • put in place rights management / safeguard tools (which could be used by rights owners to identify and ensure that infringing copies were not uploaded on / removed from the platform), or
  • inserted ads in the content, given that this was done through an automated system.

The court while answering this first question, also discussed at length the nuances of copyright law, and its applicability in the present case. However, the scope of this post is limited to the courts observations in relation to intermediaries and their liability under the IT Act.

In this regard, the court noted that various countries across the globe have safe harbour or similar regimes which protect intermediaries from liability for third party actions. The court noted that Myspace’s business model of providing a platform for the posting of user generated content, brought it within the definition of an ‘intermediary’.

The court then considered the question of whether section 81 of the IT Act, overrides the benefits provided under section 79. The court observed that the “true intent of Section 79 is to ensure that in terms of globally accepted standards of intermediary liabilities and to further digital trade and economy, an intermediary is granted certain protections”. It found however, that section 81 provided a mechanism for private copyright owners to act against intermediaries who posted infringing content themselves.

Next the court considered the distinctions between the mechanisms provided under the Copyright Act and the IT Act to identify whether someone had knowledge of infringing/ illegal content.  The court noted that the Copyright Act provides for liability where the person permits the sharing of infringing content even if they were aware of or have reasonable grounds to believe that the content was infringing. However, the IT Act requires an intermediary to have ‘actual knowledge’. ‘Actual knowledge’ has been held by the Supreme Court in the famous case Shreya Singhal v. Union of India to mean receipt of notifications by a government agency or a court.

The court observed that the provisions of the IT Act have been enacted keeping in mind a digital economy / new technologies. The Copyright Act on the other hand was enacted solely for the purpose of protecting specific rights. It was held that the only logical and harmonious manner to interpret the law would be to read them together.

The court considered two concepts in this context (a) the idea that Myspace should take down any allegedly ‘infringing’ content that matched the attributes of T-Series owned content, and (b) the idea that some of the user generated content may be rightfully uploaded by users even if not by T-Series itself. It also noted that if Myspace took down content in the second case, it risks breach of its contractual obligations to the user.

The court also looked at Myspace’s privacy policy, terms of use, and due diligence practices as required under the IT Act. It was found that Myspace was in compliance with section 79 of the IT Act, and the due diligence procedures prescribed under it. It was observed that “If copyright owners, such as SCIL inform MySpace specifically about infringing works and despite such notice it does not take down the content, then alone is safe harbor denied. However, it is for SCIL to show that despite giving specific information the appellant did not comply with its notice.”

In this regard, the court correctly observed that “To attribute knowledge to the intermediary industry would mostly likely lead to its shutdown, especially where content is of this magnitude and size…. The greater evil is where a private organization without authorization would by requirement be allowed to view and police content and remove that content which in its opinion would invite liability, resulting in a gross violation of the fundamental right to privacy.

Setting aside the 2011 order, this court directed T-Series to provide an updated catalogue of specific works in which it holds copyright along with the location/ URL of such work on Myspace’s website as and when T-Series detects infringement. Myspace was directed to remove/ block access to such content, within 36 hours of receiving notice in accordance with rules prescribed under the IT Act. Myspace was also directed to keep records of all advertisement revenue earned from content uploaded, and removed pursuant to such requests. It is interesting to note here that the court has worked out a balance between the knowledge requirements under the Copyright Act and IT Act (as elaborated in Shreya Singhal v. Union of India) – requiring Myspace to remove content upon receiving notice from T-Series, and not a government agency. This would imply that Myspace has to act on every notice / request for removal of content issued by T-Series in compliance with the court’s order, and remove the content available at the relevant webpage. T-Series does not have to obtain an order of a court / government agency prior to issuing such a notice. In the event Myspace wants to contest a notice issued by T-Series, the burden would be upon Myspace to take the issue up before the court. To some extent this reverses the burden, and doesn’t take into account the intended purpose of the Shreya Singhal order.

However, at a broader level, the court recognised that ‘rapid growth of technology calls for new legislative and judicial approaches’. It called for discussions between the stakeholders, to create a transparent framework for licensing, and exchange of rights information. It also suggested implementation of the 4-step mechanism identified by the OECD – (i) notice and take down (ii) notice and notice (iii) notice and disconnection and (iv) filtering.

The court looked at providing practical solutions for an industry that is outgrowing the law by leaps and bounds. This is a welcome outlook on issues affecting the internet, and one which we hope is adopted widely by the executive, legislature and judiciary.

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