GoDaddy to be Sued as an Intermediary for Copyright and Trademark Infringement

LiveMint reports that GoDaddy, a global domain name registrar, is to be sued by the National Stock Exchange (NSE) and one of its group firms, DotEx International Ltd., for alleged copyright and trademark infringement. It appears that the suit is based on the allegation that Manshi Systems, a Hyderabad based technology firm that was providing access to the NSE’s databases and real time trading platforms called NOW by its own software. GoDaddy was the webhosting company that hosted Manshi Systems’ website.

The plaint alleges that the suit was filed for “wrongful acts of infringement of copyright in computer database, wrongful use of primary data, and compilation of database and trademark infringement…” The report goes on to state that DotEx International “converts raw market data into various statistical formats for trade analysis and execution of trades on NOW.” It also has a database that offers its subscribers various services like calculators, security information etc. that are derived from the NSE. The site has hence been pulled down by GoDaddy which is the world’s largest domain name register in the world with about 57 million domain names.

The claim against Manshi Systems will succeed, at least in part to the extent where the infringement of a database is pleaded. Using one’s own software to communicate to the public would definitely amount to an infringement under S.51 of the Act. However, the claim for wrongful use of “primary data” appears weak. This to me seems like a claim to protect the real time information that the NSE provides, which is often extremely valuable. This would amount to a “hot news” like claim which is unlikely to succeed unless direct competition and passing off are proved (for an analysis of a similar fact situation, read here).

The claim against GoDaddy though, can go either way. GoDaddy is definitely an intermediary under S.2(1)(w) of the Information Technology Act of 2000 (as amended in 2008) which includes “web hosting services”. However, S.79 of the Act (again as amended in 2008) exempts liability only when the intermediary observes due diligence while discharging his duties under this Act. The Information Technology (Intermediaries Guidelines) Rules, 2011 attempts to clarify what these due diligence obligations are. In S.3, it lays down three requirements as to what this due diligence obligation constitutes. First, the intermediary must publish the rules and regulations, privacy policy and user agreement for access-or usage for its services, which GoDaddy has done on its “Legal” page here, although the placement of this link on GoDaddy’s home page (it’s hidden away in the bottom somewhere) might pose serious notice considerations. GoDaddy could probably argue that it is the industry practice to provide notice in the manner that it has, at a corner of its site.  Second, these agreements must contain a specific prohibition against including content which infringes upon another person’s intellectual property, again which GoDaddy has done in S.5(iii) of its Universal Terms of Service Agreement. Third and this is probably where the case would turn, requires that the intermediary shall not knowingly host or publish information that infringes upon another person’s intellectual property. The meaning of the phrase “knowingly” here is slightly ambiguous. The ability to monitor and take down content depends on the size of the website that is operating as an intermediary and the kind of services that it is hosting. The definition of an intermediary in S.2(1)(w) of the IT Act, 2000 upon amendment, groups together websites like online market places with other websites like search engines and web hosting services and holds them to the same standards. In the case of the former, it is far easier to control the content due to the comparatively limited amount of content that they contain and also due to the fact that for purposes like payments and quality assurance, it is often necessary and a part of the business model to monitor the content. However for websites like search engines and large web hosting operations like GoDaddy it is near impossible to follow such monitoring mechanisms due to the large amount of data and content involved and due to the subjective nature of the checking that has to be done. To determine whether or not an infringement of intellectual property has taken place by content on a website requires the judicial application of mind, with respect to each and every page that has been hosted (which runs into millions of pages). This is fairly impossible to achieve. There is also the added complication that this may amount to pre-censorship if carried out on the part of GoDaddy which is clearly not competent to make this judicial interpretation. It would therefore be interesting to observe what standard the court would hold GoDaddy to. Another factor that weighs in GoDaddy’s favour is that it took down the website as soon as it came to know of the alleged infringement.

This also seems like the perfect opportunity to challenge the constitutional validity of the intermediary guidelines. These guidelines, although are an impressive attempt to clarify the law regarding intermediary liability and due diligence, suffer from a significant number of deficiencies like vague definitions, harsh take down procedures and major conflicts with Art.19(1)(a) of the Constitution (read here and here).

This would be an interesting dispute to observe as it deals with crucial questions of the interfaces between IP and Technology Law and will probably be of precedent setting value.