India: Safe Harbour For Intermediaires

Last Updated: 6 April 2017
Article by N. Mahabir
  1. "There is only one boss. The customer. And he can fire everybody in the company from the chairman on down. Simply by spending his money somewhere else" – Sam Walton.
  2. World has moved from Brick and Mortar to online in all forms of assimilation right from mom and pop stores to electronics and medicines. From selling limited wares in a shop, an online store can sell unlimited wares. The business is scalable without limits. Online platforms or intermediaries like Flipkart, eBay, Amazon have given access to many vendors through their platforms. However, it may not be feasible to keep an electronic watchman to filter everything the vendor intends to sell on the site. The power of intermediary can be deciphered from the fact that on 29 March 2017, Amazon founder Jeff Bezos became the second richest person on earth, few billions short of Bill Gates.
  3. India has sought to regulate electronic transactions through Information Technology Act, 2000. Section 2(w) of the Information Technology Act, 2000 defines intermediary as "any person who on behalf of another person receives, stores or transmits that record or provides any service with respect to that record and includes telecom service providers, network service providers, internet service providers, web-hosting service providers, search engines, online payment sites, online-auction sites, online-market places and cyber cafes"
  4. Section 79 of the Information Technology Act, 2000, is a non-obstinate clause which provides immunity from liability under all laws provided the intermediary has not conspired or abetted or aided or induced in commission of the unlawful act or upon receiving actual knowledge through any notification about a computer resource in the control of intermediary being used for unlawful act fails to expeditiously remove or disable access to that material. Section 79 reads as below:

    79. INTERMEDIARIES NOT TO BE LIABLE IN CERTAIN CASES

    1. Notwithstanding anything contained in any law for the time being in force but subject to the provisions of sub-sections (2) and (3), an intermediary shall not be liable for any third party information, data, or communication link made available or hasted by him.
    2. The provisions of sub-section (1) shall apply if—

      1. the function of the intermediary is limited to providing access to a communication system over which information made available by third parties is transmitted or temporarily stored or hasted; or
      2. the intermediary does not—

        1. initiate the transmission,
        2. select the receiver of the transmission, and
        3. select or modify the information contained in the transmission;
      3. the intermediary observes due diligence while discharging his duties under this Act and also observes such other guidelines as the Central Government may prescribe in this behalf.
    3. The provisions of sub-section (1) shall not apply if—

      1. the intermediary has conspired or abetted or aided or induced, whether by threats or promise or othorise in the commission of the unlawful act;
      2. upon receiving actual knowledge, or on being notified by the appropriate Government or its agency that any information, data or communication link residing in or connected to a computer resource controlled by the intermediary is being used to commit the unlawful act, the intermediary fails to expeditiously remove or disable access to that material on that resource without vitiating the evidence in any manner.
    Explanation.—For the purposes of this section, the expression "third party information" means any information dealt with by an intermediary in his capacity as an intermediary.
  5. Section 81 again reiterates that the provisions of IT override all other acts except the rights under Copyright Act, 1957 and Patent Act, 1970. Could it be analogous to the Safe Harbour provision under the US Digital Millennium Act. Section 81 reads as below:

    81. Act to have Overriding effect: The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.

    Provided that nothing contained in this Act shall restrict any person from exercising any right conferred under the Copyright Act 1957 or the Patents Act 1970 (Inserted Vide ITAA 2008)
  6. However, intermediaries have been made parties to large number of law suits considering that many of the infringing products are easily sold in large numbers through these portals. There has been a push to enrol as many vendors as possible to provide diverse product and price options to the buyers.
  7. In a case titled Super Cassettes Industries Ltd. vs. MySpace Inc. & Anr., the Single Judge of the Delhi High Court had restrained Myspace from permitting any person to use its space for infringement of Plaintiffs copyright. In that case, the Plaintiff was the developer and producer of various musical and cinematographic work. Myspace was a subscriber based free social networking site enabling content sharing. Myspace added advertisements to the uploaded content. The Single Judge held that in view of Section 81 of the Information Technology Act, the liability of intermediary is not saved when there is violation of Copyright Act. The after the fact inquiry by the Defendant was not enough to overcome the rights granted to copyright owner under the Copyright Act.
  8. In a recent case Kent RO Systems Ltd. vs. Amit Kotak & eBay India Pvt. Ltd, the Delhi High Court reiterated the position that the intermediary is not required to make a self-determination of infringing products sold on its website but is required to take down the same only after recipt of complaint. The Court felt that an intermediary will not be possessed with prowess to detect each case of infringement unless their attention is drawn to a particular instance.
  9. In the case of Sabu Mathew George Vs. Union of India, before the Supreme Court of India three intermediaries viz. Google, Yahoo and Microsoft agreed to auto block advertisement with specific words which are in violation of The Preconception and Pre-natal Diagnostic Techniques (Prohibition of Sex Selection) Act, 1994 (PNDT Act) which prohibited detection of the gender of the child during the conception stage. This interpretation could arise on account of the great social problems for which this Act had been framed to address. The Court also directed the Government to form a nodal agency which will alert the intermediaries about any site so that the same could be blocked by the intermediary and not be accessible. Repelling the contention of Intermediaries that blocking of content which are not advertisement on pre-natal diagnosis would violate their freedom of speech, the Court reiterated that freedom of speech cannot be in violation of law.
  10. In the landmark decision of Shreya Singhal vs. Union of India, the Supreme Court of India while dealing with the case in the context of Article 19 (2) of the Constitution of India viz. situation in which the right to Freedom of Speech could be regulated, held that under Section 79 of the Information Technology Act, intermediaries are exempt from liability if they fulfil conditions of the section. The Court refrained from striking down Section 79 by reading down Section 79 (3) (b) and Rule 3 of the Information Technology (Intermediary Guidelines) Rules, 2011 to hold that the knowledge referred to in this section must be only through the medium of a court order or through an agency established by the Government. The Court observed that it would be otherwise very difficult for intermediaries to go through all the requests they receive and judge which requests are legitimate and which are not.
  11. In the appeal filed before the Division Bench of the Delhi High Court in Myspace Inc.vs. Super Cassettes Industries Ltd., the Court held that:

    1. It cannot be said that Myspace had knowledge of the infringement as it is technically not feasible to identify streaming content which infringes.
    2. When insertion of advertisements and modifications to any content is carried out by Myspace through automated systems, it cannot be said that Myspace had knowledge of infringement. It is not enough that there is suspicion of knowledge of infringement but should be actual knowledge.
    3. The take down notice by Plaintiff gave its entire repertoire without actually identifying the infringing works available on Myspace portal, which was not good enough notice.
    4. The argument of constructive knowledge and secondary infringement by Myspcace was rejected.
    5. The safe harbour provisions of the Indian Information Technology Act is similar to that under the European Copyright Directives.
    6. Section 79 of The Information Technology Act read along with the Information Technology (Intermediary Guidelines) Rules, 2011, provided an affirmative defense to the intermediary if the associated conditions of due diligence under Section 79 are followed.
    7. Section 79, Section 81 of Information Technology Act has to be read harmoniously with Section 51 (a) (ii) of Copyright Act, 1957.
    8. Plaintiff was directed to provide the URL of the infringing works to Myspace and Myspace was directed to remove it within 36 hours.

Conclusion:

The decision of the Division Bench in Myspace case is a welcome step. It recognizes that intermediary should be allowed to conduct business without any fetters but should act with diligence. The Court had done the delicate act of a harmonious construction between Section 79 and Section 81 of the Information Technology Act. However, an intermediary should block or remove access to an infringing material once it has been issued with the take down notice. This is a fine balance between growth of technology and protection of Intellectual property rights.

The intermediary should also place a gatekeeper before its enables any person to use its platform to disseminate information so that the person on its platform can be traced and be held accountable for its acts. This would reinforce the trust users place on intermediaries and their online platforms.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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