Breaking News: Delhi HC Division Bench Rules in Favour of Safe Harbour for Intermediaries in MySpace-T Series Copyright Dispute

Not anymore

In a path breaking judgment (“Judgment”), a Division Bench of the Delhi High Court has reversed the findings arrived at earlier by a Single Judge (Justice Manmohan Singh), on the question of intermediary liability and held that that intermediaries are immune from liability against copyright infringement for third party content unless “actual knowledge” on their part can be proved. The Bench, while arriving at the decision, has ruled that S.79 of the Information Technology Act, 2000 (“IT Act”) provides a “safe harbour” to intermediaries and the same is not struck by the proviso to S.81 of the same Act.

The instant Judgment came in an appeal filed by MySpace (“Defendants/ Appellants”), a social networking site, against the Single Judge’s decision (“Impugned Judgment”) in an interim application in the Suit filed by Super Cassettes Industries Limited (“T-Series/ Plaintiffs/ Respondents”). In his order, the learned Single Judge had found that “intermediaries” (a broad term encompassing almost all kinds of service providers on the internet, including ISPs, social networking sites, search engines etc.) cannot take recourse to the immunity provided by way of S.79 of the IT Act for infringing content uploaded by third party users. The Impugned Judgment had even placed the onus of conducting a preliminary check, on all content, on the intermediaries before such material was transmitted to the public.

I. Background

A civil suit, (“Suit”), was filed in 2008 by T- Series against MySpace in the Delhi High Court for alleged infringement of copyright in their works. T- Series had alleged that the social networking site hosted infringing material (over which T-Series had copyright) in the form of cinematographic films, sound recordings and literary works, without obtaining a valid licence from them. Plaintiff further averred that the Defendant was generating revenue out of these infringing materials by including advertisements at the beginning of these materials uploaded by MySpace’s users. In light of these, among others, Plaintiff sought for relief in the nature of damages and permanent injunction.

On an interim application in the Suit (“IA“), the learned Single Judge, by way of his Impugned Judgment in the IA, restrained the Defendants from allowing their website to carry any material that belonged to the Plaintiffs. In a rather longish-decision (see, the order here and our analysis of the same, here and here), the Single Judge found a prima facie case against the Defendants and restrained them from dealing in Plaintiff’s works. Furthermore, the Judge found that the protection of “safe harbour” provided by S.79 to online intermediaries was unavailable in the case of copyright infringement claims in light of the clear language of the proviso to S.81. Further, the Judge also ruled that, prima facie, MySpace’s actions constituted an infringement of Plaintiff’s work as provided in S.51 of the Copyright Act. The present appeal before the Division Bench was directed against the Impugned Judgment of the Single Judge in the IA.

II. Highlights of the Judgment

The Judgment, breaks down the dispute at hand into three broad issues (with second and third issues being inter-related and discussed under one head)- A) whether MySpace could be said to have knowledge of infringement as to attract Section 51(a)(ii) and consequent liability; B) does proviso to Section 81 override the “safe harbour” granted to intermediaries under Section 79 of the IT Act and the possibility of harmonious reading of Sections 79 and 81 of the IT Act with Section 51 of the Copyright Act? [at para 31 of page 24]

A. Section 51(a)(ii) of Copyright Act and knowledge: No liability without actual knowledge

S.51 of the Copyright Act, 1957 (“Copyright Act”) lays down the instances when copyright is said to be infringed. Specifically, S.51 (a) (ii) deals with the secondary liability of anyone who “permits for profit any place” to be used for communication of work to public when such communication is not authorised by the owner of copyright. Liability under the S.51 (a) (ii) is precluded if the person can prove that he had no knowledge or reason to believe that such communication was infringement of copyright.

T- Series argued that MySpace was liable for copyright infringement under S.51(a)(ii) because “place” as used in the provision includes virtual space and MySpace had sufficient knowledge or had reason to believe that it was hosting infringing content. It attempted to establish knowledge on the part of MySpace by pointing out, inter alia, that a) the Appellant’s website invites its users to the website to upload, like and share content, b) the user agreement entered with users of the site had clauses prohibiting the uploading of infringing content, c) Appellant had adopted a number of safeguard devices in the form of technological tools to weed out copyright infringement and d) Appellant had an India centric office which facilitated revenue generation by altering content through insertion of advertisement. Thus, the emphasis of T-Series’ arguments was to “imply knowledge” by listing instances, which indicated that the Appellant was aware of the possibility of infringing material being on its website.

The Judgment starts off by making it clear that its observations are confined to the issue of ‘secondary infringement’ as provided under S.51 (a) (ii), i.e., whether MySpace can be held liable for content uploaded by third party users. The question of ‘primary infringement’, i.e., whether MySpace has on its own and directly infringed copyright of the T-Series will have to be examined in the original suit after leading evidence, the Court said.

As to the question of secondary infringement, the Division Bench agreed with the Single Judge to the extent of his observation that MySpace does provide a space, albeit virtual, for the purpose of generating revenue. But, as to the second limb of S.51 (a) (ii), which absolves an intermediary of liability for want of knowledge, Division Bench disagreed with the test applied by the Single Judge. While the Single Judge ruled that a “general awareness”, as implied from the user agreement and safeguard devices, was sufficient to impute knowledge, Division Bench disagreed by saying that “knowledge” as used in the provision had a definite connotation. “Consciousness” or “awareness” in the form of “actual knowledge” of infringement was required and mere “general awareness” was insufficient to fasten liability under S.51 (a) (ii). Also, without specific information about the infringing content, Appellant could not be said to have any reason to believe that it was carrying infringing content.

A crucial disclaimer that the Judgment makes in this context is that it assumes at this stage that the insertion of advertisements is through an automated process and the level of actual control exerted by the Appellant will have to be determined once evidence is led at the stage of trial. As to Respondent’s argument that it had supplied the Appellant with a list of infringing material, Court observes that the same was voluminous and general in nature, with reference being even made to lawful content uploaded by licensees. Any removal of content without fact checking, it says, could have a collateral damage in the form of even lawful content being taken down. Thus, the Judgment places the onus of identifying the specific infringing material on the Respondent and communicating the same to Appellant before knowledge could be attributed for the purpose of S.51 (a) (ii).

B. Safe harbour under S.79 and S.81 proviso: Immunity to apply unless actual knowledge demonstrated

S.79 of the IT Act, by way of an Amendment in 2008 (“Amendment”), specifically provided a “safe harbour” to internet intermediaries. As the phrase itself indicates, by virtue of this provision, an internet intermediary will not be liable for third party content subject to other conditions of S.79 being fulfilled. Nevertheless, a proviso to S.81, introduced by the same Amendment, provided that nothing contained in the IT Act shall restrict the rights of any person under the Copyright Act. The introduction of the above proviso made it uncertain whether online intermediaries will be eligible for the immunity under S.79 even in cases of copyright infringement claims.

Single Judge had earlier given a literal interpretation to these provisions and ruled that the safe harbour of S.79 was unavailable in case of copyright infringement claims as the proviso to S.81  saves the rights under the Copyright Act.  Furthermore, S.79 specifically provides an additional condition that the intermediary should not initiate, select or modify the information contained in the transmission for being able to qualify for the safe harbour protection, which the Single Judge found that MySpace had failed to fulfill. So, how has the Division Bench tackled this rather tricky proposition?

The Court straight away observes that MySpace is merely a “neutral platform” for user generated content and functions “without adding or contributing any information on its own”. It notes that S.79 starts off with a non-obstante clause (“Notwithstanding anything contained in any law…”) and it precludes the applicability of all other laws, including copyright law. Thus, any restriction to the safe harbour provided in the provision had to be located within the provision itself, as per the Bench.

Nevertheless, the Court goes on to observe that the immunity granted by S.79 is a measured privilege, consistent with global standards for intermediary liability and can only be invoked subject to fulfilling the various conditions therein. Thus, S.79 is no way a blanket immunity, incapable of harmonious interpretation.

With the nature of S.79 established, Court then attempts to find out the intent behind having the proviso to S.81.The following words clearly lay down what the Court thought is the reason behind having a proviso to S.81- “To put it differently, but for the proviso (to Section 81), copyright owners would have been unable to pursue legal recourse against Internet intermediaries. Under the current regime, while private copyright owners can still demand action against intermediaries who may themselves post infringing content, intermediaries can seek safe harbour where the content is uploaded by third party users or is user generated” [para 48 at page 38].

Thus, to put it in other words, through S.79, Parliament has conferred on the online intermediaries a measured immunity (especially when it comes to claims of secondary infringement) while at the same time reserving the right of copyright holder through the proviso to S.81 to sue intermediaries in case of a) primary infringement and b) secondary infringement, if the conditions of S.79 and the associated Intermediaries Guidelines Rules, 2011 are not fulfilled.

The Court also makes it clear that given the complementary nature of these provisions, provisions of Copyright Act and IT Act need to be harmoniously construed. Another striking observation in the Judgment is that although the requirement of “actual knowledge” is deemed to be fulfilled only by way of a court order or a notification by the appropriate government in case it involves a question of Art. 19 (as per the dicta in Shreya Singhal v. Union of India), this requirement is met in case of copyright claims, even if the aggrieved party provides information to the intermediary in the format provided on its website. Thus, intermediary liability is set in motion when a “red flag” or notice, which provides the intermediary with actual knowledge of the infringing content, is given.

As to the question of other conditions under S.79 being fulfilled, specifically S.79 (2) (b), Court observes that any alteration that may have been done by MySpace is to the format of the information and not the content. Additionally, since the format alteration itself is through an automated process, the question of liability does not arise.

III. Conclusion

As to the question of relief to be granted, the Division Bench set aside the interim injunction order of the Single Judge and directed T-Series to provide MySpace with a “specific” list of its works, which are made available on the website without its authorisation. MySpace was directed to act upon this list within 36 hours of receiving the same. As to the other questions in the Suit, the Bench has directed the Single Judge to expeditiously hear the matter and dispose it off by the end of 2017.

In conclusion, there is no doubt that this Judgment brings about the much needed clarification on the question of intermediary liability. The interpretation given by the Single Judge on the interface between S.79 and 81 of the IT Act had resulted in an absurd end result. The present clarification brings in welcome respite for online intermediaries and puts the Indian jurisprudence on this issue in line with globally accepted practices. The Judgment should also be applauded for its unequivocal observation that if an intermediary is left to its own devices to identify infringing content from non-infringing ones, it could have a chilling effect on free speech. Moreover, its clear message that disputes related to digital media merit a treatment distinct from conventional disputes should serve as a guiding light while similar issues are dealt with in the future.

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2 thoughts on “Breaking News: Delhi HC Division Bench Rules in Favour of Safe Harbour for Intermediaries in MySpace-T Series Copyright Dispute”

  1. Section 79(3)(b) was read down in Shreya Singhal vs. UOI making a court order necessary for intermediaries to take action. By holding that in the case of copyright infringement a notice by the copyright owner to the intermediary was sufficient, was the DB not going against Shreya Singhal? Would it not have been a better idea to grant intermediaries immunity under section 52(1) (c) and (b) of the copyright Act by broadly defining “transient” and “incidental” storage?

  2. “With the nature of S.79 established, Court then attempts to find out the intent behind having the proviso to S.81.The following words clearly lay down what the Court thought is the reason behind having a proviso to S.81- “To put it differently, but for the proviso (to Section 81), copyright owners would have been unable to pursue legal recourse against Internet intermediaries. Under the current regime, while private copyright owners can still demand action against intermediaries who may themselves post infringing content, intermediaries can seek safe harbour where the content is uploaded by third party users or is user generated”

    I find it difficult to reconcile the judge’s ruling with the language of the IT act. Intermediaries who are responsible for primary infringement (“who themselves post infringing content”) would never have fallen within the safe harbour of Section 79, since they would presumably have not fulfilled the mandate of 79(2). Section 81, therefore, could not have been meant for primary infringement. While the outcome of the judgement is welcome, I do believe the HC has misinterpreted the scope of Section 81 by rendering it otiose.

    Secondly, In terms of secondary/contributory infringement, would it have been a ‘safer’ interpretation to read in ‘actual knowledge’ (which still remains undefined) into the requirement of ‘reasonable grounds to believe’ under Section 51(a)(ii)?

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