The Death of Safe Harbour for Intermediaries in India for Copyright Infringement?

In this post, I will be covering the recent decision of the Delhi High Court in the case of Super Cassettes India Ltd. (SCIL) v. MySpace on the issue of intermediary liability for copyright infringement of works owned by SCIL (T-Series). For the discussion on the impact of this case on the liability of intermediaries in India for copyright infringement, you can go directly here.
This was a decision that I, personally, have been eagerly awaiting since news of the suit first broke out considering it, amongst other things, sought to clear up the pervasive ambiguity in the interpretation of the Information Technology (Amendment) Act in respect of safe harbour provisions for intermediaries (such as Google, Youtube and MySpace).  Since this is a subject close to heart, and is a landmark decision on the issue of intermediary liability for copyright infringement in India, please excuse the long post. I have split them up into two posts – the first dealing with the issue and the arguments of the parties and the second post covering the decision of the court and a brief analysis of the same.
I had initially written a series of posts about the interpretive difficulties and disharmony between S.79 (which provides immunity to intermediaries for hosting infringing content) and S.81 of the IT Act (which states that S.79 shall not restrict anyone from exercising rights granted under the India Copyright and Patents Act). To simplify the issue with an illustration – assume someone uploads a 10 minute video clip from the latest Bollywood movie to YouTube from his account. The issue essentially boils down to whether Youtube itself can be held liable for hosting this third party infringing content.  S.79 appears to be similar, in form and substance to the DMCA provision  of the U.S. which grants immunity to YouTube in such situations. The complexity arises in India because of S.81 which acts as a proviso to S.79 and states that nothing shall prevent  any  person  from exercising any right conferred under the Indian Copyright Act, 1957 or the Patents Act, 1970. So, in fact, S.81, if interpreted liberally, could render the immunity granted under S.79 ineffective and obsolete.
THE CASE OF MySpace v. Super Cassettes India Limited
We had blogged about the case initially in April of last year. The decision that came out last week is a massive one (132 pages long!) and delves deeply on each of the issues. SCIL, the plaintiff is the owner of a large collection of songs and films. MySpace is a social networking website that allows users to share  music, images and movie clips.SCIL sued MySpace for primary infringement ofworks owned by it. 

Counsel for SCIL included Mr. Sibal, Mr Harsh Kaushik, Mr Rahul Ajatshatru, Mr Siddharth Silwal and Mr Shravanth Shankar. Counsel for MySpace, the defendants, included Mr Rajender Kumar, Ms Latha R. Nair and  Mr Prashant Gupta.

  1. Primary Acts of Infringement
It was argued that MySpace was guilty of primary infringement under S.51(a)(i) of the Copyright Act for communicating copyrighted works of the plaintiff to the public without authority or license. 
  1. Permitting place for infringement
Reference was made to S.51(a)(ii) of the Act arguing that since the website provided webspace to the users to upload infringing content, and made money out of the same, it was permitting for profit, a place to be used to communicate infringing works to the public.
  1. Commercial Interest/Profit Making
Mr. Sibal argued that since advertisements were placed alongside the uploaded infringing tracks, there was a clear commercial gain on the part of MySpace, within the meaning of S.51(a)(ii).
  1. MySpace had Knowledge of infringement
H also claimed that MySpace’s will not benefit from the exception provided under Section 51 (a) (ii) of the Act since it had knowledge of the infringement. This was illustrated, it was argued, by the fact that the Terms of Use contained a clause that reminds users not to upload content and the fact that it has created three technological tools to specifically tackle infringement. 
  1. Authorising Infringement of Works
Mr. Sibal also made a separate argument on a combined reading of S.14 and S.51. Since S.14 grants copyright owners the right to authorise the doing of certain acts in relation to the copyrighted work, and MySpace permitted its users to do these acts, it was infringing copyright.
  1. Notice and Takedown System not sufficient
It was also contended that the notice and take down system did not safeguard the interests of the copyright owners since infringement has taken place much before the notice is sent and there is no remedy for the owners.
  1. DMCA provisions cannot be referred to
It was argued that the safe harbour provisions under the DMCA are inapplicable to this case and the case must be decided on the basis of Indian law.

  1. Lack of Jurisdiction
As a preliminary argument, Mr. Kumar argued that the court lacks jurisdiction since the defendant is  carrying on business, residing  and  personally  works  for  gain  in  the  United  States  of America. Further, it was contended that the website does not specifically target users in India and that  the  defendants   have not  entered   into   commercial transactions  with  the  users  of  its  web-site  anywhere in India.
  1. General Injunction claimed
It was also argued that the plaintiffs were seeking  an injunction that was non-specific and  general  in nature, which is  impermissible  in law. No specific act was referred to the court 
  1. Safe Harbour provisions in the IT Act
As expected, Mr. Kumar put forth the argument that MySpace was an ‘intermediary’ for the purposes of the IT Act, and hence could avail of the safe harbour provisions contained in S.79. As for the difficulty invoked by S.81, it was argued that the  IT Act must be read harmoniously and in a manner similar to the safe  harbour provisions of American DMCA. 
  1. No specific knowledge of infringement
They also argued on the basis of the absence of specific knowledge of infringement on their part, contending that as an intermediary, they were merely facilitating the sharing of content on their website, and that it cannot be decided that it was within their knowledge unless it was brought to their notice by the right holder.
  1. Impossibility of monitoring content
Since there were thousands of uploads taking place each day, the defendants put forth their inability to monitor each and every upload before the alleged infringement takes place.
  1. No direct commercial gain from infringing content
First, it was argued that the advertising model followed by the defendants is as regards only licensed content. Secondly, it claimed that advertisements may also appear automatically as the user types keywords and search for the same. These are in the form of ‘AdWords’ and are served by the by search engines and not MySpace when a certain search term corresponding to content on MySpace is entered by a user.
  1. License to use the content
The Terms of Use state that MySpace shall be taking a limited license from the users to facilitate uploading and hosting of the work. While SCIL argued this was not authorised, MySpace argued that this was merely a precautionary step to avoid any  objection  from  any  users  of  the  defendants and that such a license is not required  Learned for reformatting.
  1. Measures to Tackle infringement
The defendants also enumerated the specific steps it had taken to curb infringement, indicating that it did not actively promote, encourage or aid infringing activity. It had developed its own technology in the form of three tools :
(a)    ‘The Hash Block Filter’ which prevents reposting of infringing content based on the has of the file.
(b)   ‘Take Down stay Down’ which also prevents infringing content from being reporsted.
(c)   ‘Rights management tool’ available to all copyright holders and can be availed of free of cost by merely registering for use of the tool on MySpace’s website. The tool prevents all content flagged as belonging to the copyright holder from being uploaded if there is a match of more than 30 seconds.
Besides the above sophisticated, customised technological devices, it also followed the notice and takedown procedure as contemplated under the DMCA and the Copyright Act. It also referenced its Terms of Use wherein uploading of illegal and infringing content was explicity prohibited. 
In the next post, I will deal with the decision of the court, its reasoning and specifically focus on the court’s remarks as regards the interpretation of S.79 and S.81 of the IT Act.
Part II can be found here.
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