Alliance Center for
Intellectual Property Rights
INTERMEDIARY LIABILITY UNDER COPYRIGHT REGIME
September 1, 2023
* Gautam Badlani
INTRODUCTION
The rise of internet intermediaries has influenced every aspect of our life. These intermediaries provide an opportunity for people to express their opinions by hosting user generated content. However, this user-generated content is often in violation of the copyright laws of the land. This gives rise to the issue of the liability of intermediaries for copyright violations by the content hosted on their platform. It is justified on the grounds that these intermediaries enjoy monetary gains by the traffic generated by such content.
LAWS CONCERNING INTERMEDIARY LIABILITY
Section 2(w) of the Information Technology Act 2008 defines an intermediary as any person who transmits, stores, or receives any record on behalf of a third person or renders any service with respect to that record. It is pertinent to note that every company running an e-commerce website does not automatically come within the definition of an “intermediary”. An e-commerce website is an intermediary only so long as it acts as “conduits or passive transmitter” of information and the moment it aids, participates, or induces the sale of infringing products on its platform, it ceases to benefit from the immunities provided to an intermediary.
Section 79 of the Act provides immunity the intermediaries with respect to any offense arising out of the third-party information hosted by them provided:
- The intermediary must merely provide a communication system over which third-party information is temporarily hosted or transmitted
- The intermediary must not initiate or modify the transmission and should not select the recipient of such transmission
- The intermediary must act with due diligence
The protected conferred on the intermediaries under Section 79 is termed as “safe harbour” immunity. In MySpace Inc. v. Super Cassettes Industries Ltd., the Court pointed that Section 79 provides an affirmative protection which can be availed by the intermediaries by complying with certain minimum standards.
The intermediaries can also be held liable for copyright infringement by third-party content by virtue of Section 51 of the Copyright Act. Section 51 prohibits secondary infringement by the display of the infringing content for trade purposes. Since the intermediaries generate profit while hosting the third-party content, they can be held liable for hosting the infringing content for trade purposes.
INFORMATION TECHNOLOGY (INTERMEDIARY GUIDELINES AND DIGITAL MEDIA ETHICS CODE) RULES, 2021
Rule 3(1)(b) of the Intermediary Guidelines and Digital Media Ethics Code Rules, 2021 imposes an obligation on the intermediaries to conduct due diligence while hosting content on their platform. It is pertinent to note that the obligation to conduct due diligence is not merely on social media intermediaries but also on online gaming intermediaries. The intermediaries are required to make “reasonable efforts” suo motu to ensure that their computer resources are not used to host, modify, display, transmit or share any information which infringes any copyright, patent, trademark, or any other Intellectual Property Rights (IPR).The Delhi High Court interpreted Rule 3(1)(b) of the 2021 Rules in the case of Samridhi Enterprises vs Flipkart Internet Private, where the plaintiff had filed a complaint with Flipkart alleging that its product designs and marks were being copied by other entities on the platform. However, Flipkart refused to take any action and the petitioner pleaded before the High Court that Flipkart was not fulfilling its due diligence obligations under Rule 3(1)(b). The Court held that Flipkart’s obligation under Rule 3(1)(b) was limited “to inform the user not to display or host infringing content”. The provision does not “require the intermediary, on a complaint of infringement being made to it, to take any action in that regard”.
COMPARITIVE ANALYSIS
An analysis of the obligations and liabilities of intermediaries as per Western Laws sheds some light on the ‘reasonable efforts’ that the intermediaries can be expected to take. The inactivity of the intermediaries towards copyright infringement can be interpreted to be secondary infringement and thus the 2021 guidelines impose a positive obligation on the intermediaries. In the Australian case of Moorhouse v. University of New South Wales, the Court had held that “inactivity or indifference, exhibited by acts of commission or omission, may reach a degree from which an authorization or permission may be inferred”. In the United States, Section 512(c) of the Online Copyright Infringement Liability Limitation Act provides that the intermediaries will not be liable for the content routed, transmitted, or stored by them if the intermediaries did not have the knowledge of the infringing content, expeditiously acted to remove such content upon becoming aware of its existence and did not gain any monetary benefit attributable to such infringing content.
Unlike the Chilean law, the Indian law fails to prescribe the standard of knowledge that the intermediaries must possess in order to be held liable. The Chilean law states that the intermediaries should refrain from modifying the content posted by third parties on their platform. Once the intermediaries are notified about any illegal content, the Chilean law requires them to take down such content and issue a notice to the source provider about the objectionable content.
CHALLENGES AHEAD
There have been various instances where the IPR holders have approached Courts to direct the intermediary platforms to remove and restrict the content which infringes their intellectual property. The Courts also provided necessary relief to the parties. However, the 2023 Amendment have opened a pandora’s box with respect to the extent the intermediaries can be held liable for any IPR infringement by the content hosted on their platform. It is now mandatory for the intermediaries to take pre-emptive “reasonable efforts” or else they may be liable for IPR infringement.
However, considering the magnitude at which content flows through the platform, it may not be possible for them to fulfill the statutory obligation. For example, most of the memes posted on social media platforms are based on ideas and expressions which are subject of copyright. The intermediaries cannot be reasonably expected to remove all such content pre-emptively.
Another problem that may arise due to the 2023 Amendment is arbitrary censorship by intermediaries. The intermediaries might start pre-emptively taking down content which they feel to be in violation of IPR laws. However, the exercise of such adjudicatory power by private entities may give rise to whimsical censorship.
CONCLUSION
The expression “reasonable efforts” as introduced by the 2023 Amendment is vague and does not clearly specify what the intermediaries are required to do to avoid liability arising out of third-party content. The expression should not be interpreted so as to introduce a strict regime as the same would be detrimental to economic interests. The Court had categorically warned in Myspace case that a strict regime would force the intermediaries to migrate to jurisdiction with flexible data laws. So far as secondary infringement is concerned, the law should prescribe the extent of knowledge and due diligence that the intermediaries are expected to have.
References:
- Christian Louboutin Sas v. Nakul Bajaj, 2018 SCC OnLine Del 12215.
- MySpace Inc. v. Super Cassettes Industries Ltd., 2016 SCC OnLine Del 6382.
- Samridhi Enterprises vs Flipkart Internet Private 2023 SCC OnLine Del 1933
- Moorhouse v. University of New South Wales [1982] Ch. 91.
- DIVIJ JOSHI, INDIAN INTERMEDIARY LIABILITY REGIME, 8 https://cis-india.org/internet-governance/files/indian-intermediary-liability-regime.
Author:
*Mr. Gautam Badlani
4th-year student, Chanakya National Law University, Bihar.
Disclaimer: The opinions expressed in the article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of the Alliance Centre for Intellectual Property Rights(ACIPR) and the Centre does not assume any responsibility or liability for the same.