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

National_Stock_Exchange_of_India_2LiveMint 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.

Tags: , ,

About The Author

4 thoughts on “GoDaddy to be Sued as an Intermediary for Copyright and Trademark Infringement”

  1. The way Manshi would have used the NOW software has to be understood clearly. If manshi used the software to populate primary data in its own database, then NSE will not be able to get even the database infringement. The bigger issue from the outcome of this case will be on the ownership and use of primary data. This is similar to the cricket scores case between Star and Cricinfo.

    1. Thomas J. Vallianeth

      Yes Rythm, if the software was used to populate primary data then the protection will not be applicable. Probably an action under the torts of unfair competition or unjust enrichment would be a remedy that the NSE has. I had made the comparison to a STAR case regarding cricket scores in the post ( which I had hyperlinked in this post. However, I would like to bring your attention to the fact that the dispute is still under appeal at the SC, and with the Single Judge and the DB ruling different ways in the Delhi HC, the decision of the SC will hopefully provide much needed clarity to the law.
      The case (STAR v. Akuate) deals with ownership of time sensitive data or information. The question of ownership of primary data in itself, as well as the clarification regarding the law relating to intermediaries will indeed be interesting outcomes of this case.
      Thank you for your comment!

  2. Hi Thomas,
    One query after reading the article….
    Can I use the NSE live data feed(fetched using API) to create a s/w property which analyses the data and forecasts on stock derivatives.

    1. Thomas J. Vallianeth

      Dear Rajeev,
      Apologies for the delayed response.
      In my opinion, I think NSE might have no copyright claims against you, for using the live data feed, in the form available on the website. This is because, from what I could gather from their website, they add other information to the raw market data into this live feed, that they generate themselves. They would have copyright over this content. If however, you intend to utilise only the live market data (with no added information) and you attribute the NSE to be the source, you will have very limited or no exposure because they cannot claim a copyright or any other allied rights over this. (For a very similar factual scenario read,
      I cannot however comment on the method of fetching data, as sometimes depending on the terms of use of NSE’s website or their data stream or even some other external considerations, there can be some complications in the use of APIs to fetch information.

Leave a Comment

Scroll to Top