Draft E-Commerce Policy Extends India’s Intermediary Liability Woes

Image: Alex Norris, Dorris Mccomics

It’s been a rough time for online intermediaries operating in India, lately. Jumping on the techlash bandwagon in the wake of multiple social media fiascos concerning online disinformation, data breaches, and mass propagation of hate speech and abuse, governments across the world are taking this as an opportunity to tighten regulation for online ‘intermediaries’ – platforms which host third party content, such as social media or online marketplaces. Similarly, the hornet’s nest of intermediary liability for copyright and trademark infringement has also been stirred.

The recently released draft e-commerce policy by the DPIIT apparently stems from laudable objectives of achieving ‘data sovereignty’ for India, and ensuring a fair market for consumers and domestic entrepreneurs. Unfortunately, when it comes to the proposed solutions for achieving these aims, the policy recommends solutions which would be stifling for online trade, freedom of information and access to knowledge. This is particularly apparent in its sections related to “e-commerce platforms” and their responsibilities for trademark or copyright infringement.

Doubling Down on Private Censorship

The first concern is the section on ‘anti-counterfeiting measures’ to be undertaken by e-commerce platforms. Many of these suggestions are well-balanced and promote transparency of e-commerce platforms towards their sellers as well as towards trademark owners who choose to register on such marketplaces. Some of these, such as the notice-and-notice requirement to forward complaints between a seller and a TM owner, appear to be taken from the Delhi High Court’s judgment on online marketplaces and their responsibilities, which we covered previously. However, there are some other concerning obligations proposed in the mix:

  1. The policy proposes that, for a certain category of goods, including “high-value goods”, the marketplaces will be required to take the permission of the TM owners.
  2. Further, the policy proposes that online marketplaces be made directly liable to refund customers and delist ‘counterfeit goods’ upon receiving complaints from individuals.

These incongruous requirements can potentially disrupt the freedom of smaller marketplaces or vendors, as they impose significant monitoring requirements on platforms, particularly in being liable for delisting and refunding counterfeit goods in the absence of a legal determination, which could dissuade business models which platform lesser known vendors. Moreover, this policy also fails to deal with the issue of second-hand product sales or ‘domestic exhaustion’, where the permission of TM owners may not be required when re-selling a validly purchased product.

The ‘anti-piracy’ proposals in the draft policy are even more disturbing:

  1. Firstly, the policy proposes a return to the notice and takedown approach for copyrighted content, which is unfortunate, given that there is a severe need to transparency and accountability structures for platform behavior, before enforcing a restrictive requirement of this nature.
  2. Secondly, and perhaps most dangerous, is the proposal to allow an ‘industry body’ to identify so-called ‘rogue websites’ which host pirated content, and forward such a list to intermediaries including ISPs, search engines and payment gateways, which will have a legal obligation to block access to such websites. Creating such opaque and private mechanisms to control online information, with no public representation or judicial oversight is unlikely to be beneficial to consumers or entrepreneurs, and is detrimental to the policy’s own aims.

We face an inflection point in policy-making, where we should be seriously considering the legal implications of affording major online platforms legal immunities for content that they host without taking into account the nuances in their business models and the level of control or complicity in enabling illegal speech. The outcome should be focused on the necessity to counter a set of identified harms, in a manner which is proportionate and balanced against the restrictions to intermediaries’ activities.

Such nuance, unfortunately, has gone completely over the heads of policy-makers in India, who have responded to concerns regarding illegal speech on platforms with disproportionate and dangerous proposals that threaten freedom of speech online. One example of this, which we blogged about last month, was the suggestion by the Ministry of IT to reduce the scope of intermediary liability by making them responsible for implementing clunky upload filters for all ‘illegal content’, which presumably would cover copyright or trademark infringement.

The e-commerce policy fails on similar counts – critical definitions are vague or absent and there is a complete lack of nuance or discussion about the rationale for many of its proposals, particularly in the case of trademark and copyright related concerns. I wonder if it is too much to hope for comprehensive and constructive policy making when it comes to an issue as important as the future of the internet and the Indian digital economy.

The Draft E-Commerce Policy is open to public comments until March 29, 2019. Please send in your comments to the draft at [email protected]

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