The Death of Safe Harbour for Intermediaries in India for Copyright Infringement? [Part II]

Continuing from my previous post, in this post, I will cover the decision of the court in the case of MySpace v. Super Cassettes and its reasoning for the same. I will devote a section specifically to the issue of the interpretation of S.79 and S.81 of the IT Act which has a significant bearing on the immunity available to intermediaries for hosting content that infringes copyright.
I.                    Authorising infringement of works
The court by making a reference to S. 14 and S.51(a)(i) of the Copyright Act,  noted that infringement is the doing of any act, which the owner of the work is permitted to do, by any person not authorised to do so by the owner. The court noted that ‘the  act  of  authorizing  is  something  more  than  merely  providing means  with  knowledge  and  require  further  active  participation  of  the person than that of the permitting the place for infringement.’ The court made an important distinction between the authorisation which would fall within S.51(a)(i) and (ii), the latter requiring actual knowledge and reasonable belief, and the former involving the participation of the defendant and exercise of control, besides knowledge. After going through several English precedents on this point, the court found that  the  question  of authorisation required further proof of participation, which could only be determined at the trial stage and hence, refused to deliberate further on the issue of violation of S.51(a)(i). 
II.                  Permitting for profit, a place for communication of infringing works to the public
The court made reference to S.51(a)(ii) and tried to define the scope of “any place” as required under the Indian Copyright Act. It juxtaposed this phrase with “place of public entertainment” as used in  the UK  Copyright  Act,  1956. The court inferred that this indicated that the India legislature intended to broaden the scope to not only include places of public entertainment,  but any other place as well. It also referenced the later UK  Copyright  Act, 1988 which repealed the 1956 Act, which provides for two kinds of infringements separately, namely “place  of   public   entertainment”   and   “infringement   caused   by   use   of   an  apparatus”. This shows knowledge of two distinct types, and although the Indian legislature has not included the latter, the court reasoned that this meant ‘any place’ was of wider amplitude and hence included places on the internet such as MySpace, and not just places of entertainment.
III.                Issue of Knowledge on the part of MySpace
The knowledge requirement is important in view of the exception provided for under S.51(a)(ii) of the Indian Copyright Act which states that there will be no liability where the defendant ‘was not aware and had no reasonable ground for believing’ that the works were infringing. The court however, completely dismissed the arguments advanced by MySpace on several grounds:
First, it stated that the very fact that MySpace had developed and installed remedial tools to deal with infringement showed that they at least had an apprehension of infringement. It also dismissed the claim that this was done, keeping in mind the requirements under the DMCA, by observing that the post-infringement curative measures provided for under the DMCA are sufficient in the American context, but not in the Indian legal sense. Now, I find this to be an incorrect reading of the Indian law since S.79(3)(b) of the IT Act makes it very clear that an intermediary shall not be held liable if it ‘upon  receiving  actual  knowledge,  or  on  being  notified’ of the unlawful material, it ’remove[s] or disable[s] access to that material on that resource without vitiating the evidence in any manner’. I don’t see anyone reasonably arguing that this is not in the form of a post-infringement remedial measure, much like the DMCA.  Second, the court goes into the question of ‘actual knowledge’ stating that the defendants had specific knowledge of the plaintiff’s works since they were provided a list of their titles and updated works from time to time.  Third, the fact that it obtained a license from users to modify content to insert ads and such indicated that they had knowledge of the content of the works. Fourth, the court found that its India-centric operations are also a clear indication of the knowledge of infringement. 
Again, there appear to be some infirmities. For one, I don’t see how merely having an Indian presence or focus shows knowledge of infringing activities. On the point about attributing knowledge to them since they insert ads, isn’t is possible that this is an automated system, where the ads are placed at the beginning of the video and there is no one actually going through the content to flag it as infringing? Neither does the court lay down any real standard in respect of the knowledge requirements, which is something I really hoped to emerge from this case. No reference was made to the ‘red flag’ test [Viacom v. Youtube] which is particularly worrisome since the Intermediary Guidelines under the IT Act provide no guidance in this regard either. More importantly, the court failed to lay out any standards in respect of the notice and take down requirements. In dismissing the post-infringement remedies, it failed to respect the very basis of dealing with copyright infringement claims in the age of the Internet. I find no merit in the contention that a post-infringement remedy does not make up for the harm caused to the rights holder, since we are well aware of frivolous takedown notices issued by such companies, and hence a notice and takedown system serves the purpose of maintaining the balance of rights holder and user interests.
IV.                Interpretation of S.79 and S.81 of the IT Act
The court agreed with the view that S.81 acted as a proviso to S.79 and the non-obstante clause  contained therein has an overriding effect. This implies that although one may satisfy the requirements under S.79 of the IT Act that grants immunity to intermediaries, an individual can still proceed against the intermediary using provisions of the Copyright Act or Patents Act.
As an arguendo, irrespective of this overriding effect, the court found that the act of modification of the works, by inserting ads etc. excluded the defendants from the purview of S.79(2)(b) of the Act and hence it failed to satisfy the requirements. It also remarked that MySpace failed to exercise due diligence and that it should have done a ‘preliminary check in all the cinematograph works relating Indian titles before communicating the works to the public rather  than  falling  back  on  post  infringement  measures’.
The most significant implication of such a ruling however is that it recognises that the IT Act does not protect intermediaries against copyright infringement claims. The court observed that  “Section  79  is,  thus,  meant  for  all  other  internet  wrongs wherein intermediaries may be involved including auctioning, networking  servicing, news dissemination, uploading of pornographic content but not certainly  relating  to  the  copyright  infringement  or  patent  infringement which  has  been  specifically  excluded  by  way  of  proviso  to  Section  81.” Of course, one cannot really blame the court in this respect since the language used in S.81 appears to be clear and a non-obstante clause to boot, leaves little by way of interpretive freedom to the judges. If they had ruled any differently, I fear they would be charged with judicial activism and accused of encroaching on the legislative domain. 
The court also noted that the Copyright Act itself grants certain exceptions and an intermediary could avail of the same to escape liability. While this is certainly true, this is also true of the American system wherein valid defences may be made against an infringement claim, and yet, the DMCA grants specific immunity to intermediaries for copyright infringement cases. The court found not only the DMCA, but the WCT and WPPT to be inapplicable to this case, even in terms of persuasive value, which, while understandable to some extent, eliminates even the slightest possibility of ensuring that immunities granted to intermediaries are uniform across the world. 
The court also relied on the argument that reading S.79 to include copyright infringement claims would create a ‘conflict between the acts of infringement by way of permitting the place for profit provided under Section 51 (a) (ii) and Section 79 which saves the intermediary from liability’. However, I would argue that S.51(a)(ii) covers more than just internet intermediaries and merely because they are granted additional protection, does not in itself render S.51(a)(ii) ineffective or create disharmony.
The court, in this case, found MySpace guilty of primary copyright infringement under S.51(a)(ii) and passed an order restraining the defendants from dealing with the plaintiff’s works, including modifying them, adding advertisements, or making profits from the same, without enquiring about the ownership of the works. As regards future works, it directed MySpace to delete the works of the plaintiff as and when they are notified by them.
I began this post with the title ‘Death of safe harbour for intermediaries for copyright infringement’, but now I wonder if there was any life to begin with. Perhaps ‘still-born’ would be more appropriate. For those of us who believe in the rights of the intermediaries and were hoping against hope for a favourable interpretation of the IT Act, this decisino comes as a crushing blow, and I fear at this stage, an amendment is the only remaining option.
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8 thoughts on “The Death of Safe Harbour for Intermediaries in India for Copyright Infringement? [Part II]”

  1. Thanks for this detailed post, Amlan. I’ll probably mull over the decision and might post some more comments later. Thought I’d quickly write one on one issue that caught my eye.

    I’d pondered about the possibility of a restrictive interpretation of s.79(2)(b) (to call insertion of ads a ‘modification’) in 2009, and had written this:

    ‘The intermediary loses protection of the act if (a) it initiates the transmission; (b) selects the receiver of the transmission; and (c) selects or modifies the information. While the first two are required to be classified as true “intermediaries”, the third requirement is a bit too widely worded. For instance, an intermediary might automatically inject advertisements in all transmissions, but that modification does not go to the heart of the transmission, or make it responsible for the transmission in any way. Similarly, the intermediary may have a code of conduct, and may regulate transmissions with regard to explicit language (which is easy to judge), but would not have the capability to make judgments regarding fair use of copyrighted materials. So that kind of “selection” should not render the intermediary liable, since misuse of copyright might well be against the intermediary’s terms and conditions of use.’

    The purpose of that three-pronged test is to establish control: to see whether the ‘intermediary’ has exercised control. If it has, then it is not a true ‘carrier’/’intermediary’, but has some measure of responsibility for the content. However, while on a literal reading adding of an advertisement is ‘modification’, it is not a ‘modification’ if one applies a purposive reading to s.79(2)(b).

  2. A few preliminary thoughts that come to my mind a:

    1. If I upload a video onto an intermediary’s servers (e.g. youtube), and I claim it to be fair use of another person’s copyrighted content, what right does the intermediary have to decide if such work is fair use or not? Fair use is my statutory right under S. 52. The power to decide this is vested in the Court, not in the intermediary who is a private person.

    2. Assuming the defence under S. 79 of the IT Act is available to intermediaries (notwithstanding S. 81), one can say that if I upload/distribute infringing work through an intermediary’s servers, there is a possibility that it may happen without the knowledge of the intermediary. Now, in the absence of such a defence, the logical argument that follows is that there is no possibility of such content being uploaded/distributed without it being in the knowledge of the intermediary. This, therefore, gives rise to the following two issues:

    a. Keeping in mind the fact that communication (dissemination) is essential for infringement to take place, if I upload an infringing picture/video onto an intermediary’s servers solely for private viewing (e.g. as is possible on Flickr), would that amount to ‘communication’ for the purposes of infringement considering that in the absence of such a defence as is aforementioned, uploading can never happen without it being in the knowledge of the intermediary?

    b. Is it just to impute ‘knowledge’ to an intermediary by way of legal fiction and therefore make this a strict liability situation? (Are we looking at a repeat?)

  3. Thanks Pranesh. Yes, it does seem like the term ‘modification’ requires some clarity in interpretation. In this judgement, I found three references to it (page 70, 96 and 114), each of which specifically refer to insertion of advertisements. The court also noted that modification of the user’s work was not a violation since they obtained a limited license from the user.

    So maybe there’s a technical step involved in the insertion of ads that has convinced the judge that there was modification of some sort. They don’t refer to anything, but it’s brushed off almost as a given. What do you think?

    And I’d like to see the other comments when you’ve had the change to go through the judgement. Thanks.

  4. Hi Ankit. Interesting points. Thanks.

    First, I think the entire purpose of a notice-counternotice-takedown system is to keep the courts out of it as much as possible, and I don’t really see a problem with that. If I am sent a takedown notice (often based purely on a keyword search and not a human assessment of my fair use rights) and with a counter notice I am able to get my video back up, I don’t consider myself having suffered too much. The copyright holder can always sue me. Whether they send a take down notice or not, is purely their prerogative, so I’d rather they send me a notice, which I can defend with a counter notice, rather than defend myself in court.

    Second, you raise a great point. The similarities to the decision is what is most scary. The worst part about it is that MySpace seems to have taken sufficient steps to prevent infringement, so I rfear the worst for the likes of Megaupload, Rapidshare and other file locker websites.

  5. Hi Amlan. Thanks a lot for taking out time to reply.
    The first point that I raised was not regarding the notice-counternotice-takedown mechanism, but rather with respect to the following excerpt from your post: “…[MySpace] should have done a ‘preliminary check in all the cinematograph works relating Indian titles before communicating the works to the public rather than falling back on post infringement measures’.”

    Now, in doing such a ‘preliminary check’, what is the intermediary reasonably expected to do in order to establish that it exercised all ‘due diligence’ ? Can MySpace be expected to evaluate whether the content is a prima facie infringement of another’s work or not? This way, MySpace will be disentitling me from using my statutory fair use rights which cannot be taken away unless I agree to a waiver of these rights. Modifying EULAs to make users agree to the same might be something intermediaries may have to resort to eventually, but as of now, to my knowledge, no such waiver of fair use rights exists in standard-form EULAs.

  6. Like you I was awaiting the decision in this matter since I first heard about this case. Personally I think the judgement is quite regressive in balancing the aspect of new and changing technology with the written word of the law. I believe there are enough foreign judgments on the point of intermediary liability for the judge to have come to a reasonable balanced stand point. The judge could have shown greater respect to DMCA and the foreign judgments in this case as US and other countries have already dealt with such issues in detail in the past, whereas we are still new to it. Hopefully MySpace and team would challenge this judgment which is going to have an immense negative impact on file-sharing websites in general.

  7. Thanks for explaining the judgment so systematically. It’s scary; giving enough legal leverage to disband file sharing websites. Grim signs after the consequent blocks on media sharing sites after the Reliance Singham copyright victory.

    Wrt the due diligence issue, the direction that the intermediary “preliminary check in all the cinematograph works relating Indian titles before communicating the works to the public” seems to be largely impractical considering the number of videos uploaded and taken down everyday. I guess there is a need to interpret due diligence in light of such technologies- though undefined, i think this standard for preliminary check is more or less fulfilled by the MySpace rights management tool, limiting uploading of content if theres a match of more than 30 s, for this gives the uploader scope to exercise the fair use defence if a case is filed against him. (Note that it is unlikely that in event of non-upload of content on myspace, the user is likely to sue even if he believes it to be fair use).

    Here I agree with Ankit that with the standard of discernment, the court seems to expecting from Youtube regarding whether particular content being uploaded is infringing or not PRIOR to its upload, practically removing opportunities to exercise fair use at all, as even the notice-counternotice takedown option is now taken away from the user.

    So essentially Myspace is supposed to make a preliminary assessment of whether the work is infringing or not, which (and this is important) is not fulfilled even by a 30s limit on likely infringing content.

    On another note, I’ve been wondering about the legislative logic for including intermediary liability for copyright/patent infringement under s. 81, while excluding other offences.

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