INTRODUCTION
Welcome to this month's edition of our Media & Entertainment and Gaming newsletter
Just as Spike Spiegel and his crew of bounty hunters attempted to navigate an intergalactic space fraught with unforeseen and ever-evolving threats in Shinichirō Watanabe's anime Cowboy Bebop (1998), Indian regulators today are trying to address the novel challenges posed by technology and innovation. Whether it is taking measures towards addressing the deceptive online gambling ads and infringement of personality rights or the Securities and Exchange Board of India's clampdown on the sharing of real time share prices with online fantasy stock trading platforms and other third-parties.
Artfully captured by Watanabe in his intergalactic voyage saga, the theme of the anime resonates with the underlying motif witnessed in the regulatory developments in the gaming and media & entertainment sector in the month of May. Even the judiciary's active role in granting injunctions against copyright infringements mirrors the Bebop crew's attempts to address illicit acts undertaken by miscreants in an otherwise sprawling interstellar society. Against this backdrop, we bring to you the twenty third edition of the Recap, outlining some insightful developments in the media & entertainment and gaming space from May 01, 2024, to May 31, 2024.
MEDIA AND ENTERTAINMENT UPDATES
Delhi HC Grants Injunction Against 26 Websites Disseminating Copyrighted works without any License
Members of the Motion Pictures Association including Warner Bros. Entertainment Inc, Universal City Studios Productions LLP, Amazon Content Services LLC, Columbia Pictures Industries, Inc., and Disney Enterprises, Inc., ("Plaintiffs") had filed a case before the Delhi High Court ("Delhi HC") against 26 (twenty six) domain names/websites for allegedly disseminating copyrighted works including cinematograph films such as Batman, Aqaman, the Jungle Book, Mulan, etc. without any license/authorization. The Delhi HC being satisfied with the prima facie case made by the Plaintiffs granted an ex-parte ad interim injunction and also a dynamic injunction (i.e., injunctions which allow the aggrieved party to approach the court for relief against mirror sites providing access to the same infringing content online) in favour of the Plaintiffs stating that irreparable loss would be caused to Plaintiffs if such measure is not taken by the court in view of the likely possibility of the copyrighted works being uploaded on infringing websites or their newer versions.
The order of the Delhi HC can be found here.
You may also read about the aforesaid orders as covered by media outlets here and here.
Allahabad High Court Seeks Clarifications from CBFC on Granting of Censor Certificates for Movies on OTT Platforms
In the backdrop of a Public Interest Litigation ("PIL") filed for cancellation of the censor certificate issued to a dubbed version of a Telegu movie that had allegedly insulted the people of Bihar, the Lucknow bench of the Allahabad High Court ("Allahabad HC") has asked the Union of India ("UOI") and the Central Board of Film Certification ("CBFC") to detail the process for granting censor certificates for Over the Top ("OTT") platform content. For this purpose, the Allahabad HC has directed the UOI and CBFC to file a counter-affidavit regarding the process for granting censor certificate to content on OTT platforms and on whether CBFC is authorised to give certificates to content on OTT platforms before the next hearing set for August, 2024. This development comes in the wake of the Ministry of Electronics and Information Technology ("MeitY") providing assurances to the Delhi HC in 2023 on formulating rules to regulate the usage of profanity on social media and OTT platforms (media reports on the same are available here and here).
You may access media reports on the aforesaid development here and here.
Prasar Bharati to Launch its Own OTT Platform
Media reports indicate that the state-owned broadcasting corporation – Prasar Bharati intends to launch its own OTT platform in August, 2024. The said platform will air content focusing on Indian society and culture which is family friendly and intends to compete with private OTT players. Reports also indicate that the said platform would be free to access for the first two years of becoming operational.
You can read more about this development here and here.
Delhi HC seeks the Central Government's Response to the PIL filed by Veteran Journalist Rajat Sharma
Veteran journalist and the Editor-in-Chief of India TV, Rajat Sharma has moved the Delhi HC seeking the blocking of public access to applications and software enabling creation of deepfakes, highlighting the menace such content has caused, including spreading disinformation and misinformation. This comes after deepfake videos of Mr. Sharma promoting questionable medical advice on diabetes and weight loss treatment went viral. While the Central Government in November, 2023 had issued an advisory to social media intermediaries to implement adequate due diligence measures to identify and prevent misinformation and deepfakes and to remove any reported content within 36 (thirty-six) hours, the Delhi HC noted that the problem of deepfakes has become rampant calling for urgent government intervention. The Delhi HC further observed that in the absence of adequate regulations providing safeguards against the misuse of deepfake technology, fundamental rights guaranteed under the Constitution are under threat. In this regard, the Delhi HC has sought the response of the Central Government within 4 (four) weeks and has scheduled the next hearing for July 19, 2024.
You can read more about the aforesaid case here, here and here.
The Delhi HC Grants Injunction in Favour of Jackie Shroff
Veteran bollywood actor Jackie Shroff had approached the Delhi HC seeking protection of his personality and publicity rights vis-à-vis the unauthorized usage of the actor's name, likeness, voice, persona and other attributes such as the usage of the term "Bhidu." Jackie Shroff has also registered 'Bhidu' and 'Bhidu ka Khopcha' as his trademarks. The Delhi HC noted that the interests of famous personalities are protectable under The Copyright Act, 1957 as an extension of the moral rights accorded to artists under the said legislation. Further the court observed that by their activities, the defendants prima facie seem to benefit commercially by using the actor's personality. Accordingly, the Delhi HC has granted ad-interim injunction against the defendants restraining them from undertaking activities which violate the personality rights of Jackie Shroff.
The order of the Delhi HC in this case is available here.
Media reports covering the aforesaid development are available here, here and here.
GAMING
SEBI restricts the sharing of data concerning real time share prices to online gaming platforms
Pursuant to its powers under inter alia, Section 11(1) of the Securities and Exchange Board of India (“SEBI”) Act 1992, SEBI has released a circular codifying the norms for sharing of real time share prices (“Price Data”) with third parties (“Norms”). The Norms are directed to all recognised stock exchanges, recognised clearing corporations, depositories (collectively, “Market Infrastructure Institutions” or “MIIs”), as well as registered market intermediaries (“RMIs”). The Norms were issued owing to the utilisation of Price Data by online gaming platforms, applications and websites (collectively, “Platforms”) while offering fantasy games or virtual trading services.
To address the concerns arising from the unauthorised use of Price Data by Platforms and other third-parties (“Third Parties”), SEBI has prohibited such sharing of Price Data subject to the qualifiers below, basis the recommendations of its Secondary Market Advisory Committee. The Norms are applicable from June 23, 2024.
- MIIs and RMIs are barred from sharing Price Data with Third Parties, unless such sharing is required for (a) complying with regulatory requirements; or (b) ensuring orderly functioning of the securities market.
- Price Data sharing with Third Parties can only be undertaken by MIIs and RMIs pursuant to an agreement to this effect, specifying the (a) purposes for which the Price Data would be used; (b) justification that such sharing is for the orderly functioning of the securities market; and (c) safeguards to prevent misuse of Price Data.
- MIIs and RMIs must ensure due diligence while sharing Price Data and take the requisite steps (on best effort basis) to avoid its misuse by Third Parties. The list of such Third Parties with whom Price Data has been shared is to be reviewed by the concerned MII or RMI's Board, at least once in a financial year.
- Price Data may be shared for investor education and awareness activities without any monetary incentive to participants, with a lag of 1 (one) day.
- All MIIs are additionally required to (a) make necessary revisions in their bye-laws, internal processes and regulations to enforce the Norms; (b) notify the Norms to market participants (including investors); and (c) publish the Norms on their website as well.
You can access SEBI's circular codifying the Norms here.
The government reportedly mulling over time and spending limits on online games
As per the statements of government officials reported in certain news reports, MeitY is reportedly intending to regulate the online gaming sector by imposing time and spending limits on online games, similar to the model adopted for the regulation of the sector in China. The government is mulling to introduce such limits particularly on real money games, to address gambling addiction among the youth. This decision comes pursuant to a consensus in the internal meetings of MeitY, wherein several aspects concerning the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 were discussed. A government official reportedly stated that a model imposing time limits on online games was preferred by MeitY over the current framework driven by the verification of permissible online real money games by self-regulatory bodies (SRBs).
If finalized, the proposed framework would warrant online gaming companies to install mechanisms to ensure that the limits prescribed by the government concerning inter alia, gameplay time and monetary deposits are adhered to.
You can read more about this development as reported by the Economic Times here.
GST Council does not deliberate on the 28% GST levy on online gaming in its 53rd Council Meeting
As per the statements issued by a government official privy to the matter, the Goods & Services Tax (“GST”) Council was reportedly unlikely to modify or reduce the 28% (twenty eight per cent) GST levy on the entire face value of the bets placed in online gaming. This development comes despite the concerns raised by industry participants regarding the imposition of this revised levy retrospectively via the issuance of show-cause notices. Earlier reports had also highlighted the measures that were being undertaken by online gaming companies to offset the implications of the increased taxation liability, such as subsidising the increased taxation liability on users via the issuance of dedicated offers and promotional discounts.
Earlier this month, another media report was published that pointed to the government's intention to grant at least some form of relief to online gaming companies visà-vis retrospective tax claims. These measures were to be discussed and finalised at the next meeting of the GST Council, scheduled to take place after the culmination of the Lok Sabha general elections. The government was mulling over providing some relief as the show-cause notices issued to online gaming companies demanded deficit tax payments for amounts that far exceeded even the annual revenues of such companies. Although the tenability of issuing retrospective tax claims from online gaming companies is going to be ascertained by the Supreme Court in July, even if the decision is in the government's favour, it would be difficult for them to realise the claims for previous years' transactions (as the funds were already disbursed to players).
However, the 53rd GST Council meeting was held on June 22, 2024, and the meeting's chairperson (i.e., the Union Minster of Finance) reportedly affirmed that there were no deliberations vis-à-vis the 28% (twenty eight per cent) GST levy on online gaming companies. In any case, the Council proposed the incorporation of a new Section 11A in the CGST Act to give powers to the government (on the recommendations of the GST Council) to allow regularization of non-levy or short levy of GST, where the requisite tax was either not being paid or a lower amount was paid pursuant to common trade practices. This is reportedly expected to provide some relief vis-à-vis retrospective GST claims against online gaming companies.
You can read more about the measures being undertaken by online gaming companies to retain players amidst the increased GST levy, as reported by the Economic Times here.
You can read more about the government's proposal to provide relief to online gaming companies and to refuse to change the rate of GST levy here and here.
You can read more about the implications of the insertion of Section11A in the CGST Act on online gaming companies as reported by CNBC here.
CCPA urges stringent actions against advertisements of illegal betting and gambling platforms
The Central Consumer Protection Authority (“CCPA”) has reportedly written to MeitY urging stringent actions against the advertisements of illegal betting and gambling platforms. A surge was witnessed in the advertisements of such platforms in light of tournaments such as the 2024 edition of the Indian Premier League (IPL). Betting and gambling have been outlawed under the Public Gambling Act, 1867 (PGA) as well as most state-wise gaming laws, and the CCPA's 2022 guidelines on misleading advertisements prohibits direct as well as surrogate advertisements of all goods/services that are legally prohibited. Since such platforms fall within the regulatory purview of MeitY, the CCPA wrote to the ministry to take immediate actions to curb such advertisements by inter alia, imposing requisite penalties and sanctions under applicable laws on such violators. This development also assumes significance in light of the adverse socio-economic ramifications of engaging with such platforms on the youth, such as financial losses, data breaches and cyberbullying.
You can read more on this development as reported by the Mint here.
Stringent measures against online gambling advertisements floated by the TN Online Gaming Authority
The Tamil Nadu Online Gaming Authority (“TNOGA”), set up under the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act 2022 (“TN Gaming Act”) has recently proposed that it will be undertaking strict measures to address advertisements promoting online gambling in the state. The details of this proposal were advanced by the TNOGA's Chairperson setting out stringent measures to restrict all such advertisements in the state in an attempt to address the implications of indulging in such activities on the citizens of the state. The TN Gaming Act proscribes any advertisement which promotes or induces any person to indulge in online gambling as well as identified games of chance with any stake (money or otherwise) across all media formats including the electronic media and imposes penalties by way of monetary fine of up to INR 5,00,000 (Indian Rupees Five Lakhs) (and minimum INR 5,00,000 (Indian Rupees Five Lakhs) upto INR 10,00,000 (Indian Rupees Ten Lakhs), for repeat offenders) or imprisonment term of 1 (one) year (and minimum 1 (one) year upto 3 (three) years for repeat offenders) or both.
The TN Gaming Act also specifically bars all financial institutions and payment gateways from enabling transactions associated with online gambling or online games of chance. Additionally, all stakeholders have been reportedly encouraged to report illicit activities and advertisements relating to online gaming in the state on the TNOGA's official website and its email address. In a related development, the TNOGA is reportedly also mulling to introduced time and spending limits on all online games, in its attempt to address the gaming addiction among the youth in the state of Tamil Nadu. This comes against the backdrop of similar measures reportedly sought to be undertaken by the central government to regulate online games.
You can read more on this development as reported by the Hindu here.
You can read more on TNOGA's proposal to introduce time and spending limits on online games as reported by the Economic Times here.
Karnataka HC refused to quash GST evasion proceedings against bookies operating from the Bangalore Turf Club
A single-judge bench of the Karnataka High Court (“Karnataka HC”) dismissed a petition seeking to quash the case against licensed and unlicensed bookies operating from the Bangalore Turf Club for alleged GST evasion and their failure to deposit the TDS collected from punters with the appropriate governmental authorities. The FIR for this matter was booked inter alia, under Section 78(1)(a)(i) of the Karnataka Police Act 1963 (“KPA”) and Section 420 of Indian Penal Code 1860. The matter initiated pursuant to a tip received by the Central Crime Branch unit concerning the conduct of certain bookies of the Bangalore Turf Club whereby they were allegedly accepting bets without maintaining proper registers of the amount collected by them.
Pursuant to the investigation, around 66 (sixty-six) persons were arrested. It was argued by the petitioners that they had the requisite licenses to collect the betting amount from punters and they also challenged the maintainability of the charges filed against them stating that only competent GST officers could initiate proceedings on the charges invoked in the FIR. These arguments were challenged by the prosecution and the fact that the betting cards issued by the punters did not contain the tax invoice or GST numbers, was also flagged. The bench noted that the offence under Section 78(1)(a)(i) of the KPA can be made out against all unlicensed bookies, and reliance was placed on Section 65(b) of the KPA to refute the petitioner's argument on the maintainability of the case which recognises the duty of police officers to obtain intelligence concerning commission of cognizable offences.
The Karnataka HC opined that once a prime facie case is made out vis-à-vis the commission of a cognizable offence, courts should exercise restraint in interfering with the investigation of the offence in the interests of justice. Accordingly, considerations such as invocation of the wrong penal provisions by an investigating officer in the FIR become immaterial as investigation agencies retain the right to file a final report with the relevant penal provisions. Based on the aforementioned, it was observed that the allegations listed in the FIR and material collected by the Karnataka police as part of the investigation were sufficient to make out a prima facie case concerning the commission of a cognizable offence.
In a related development, a division bench of the Karnataka HC stayed a single-judge interim order dated June 18, 2024 whereby the Bangalore Turf Club was permitted to undertake on-course and off-course horse racing and betting activities. The court observed that the single judge had relied on irrelevant considerations while allowing BTC to operate horse racing and betting activities, as BTC's management was precluded from claiming impunity for illicit acts undertaken during such activities.
You can access the order of the Karnataka HC here.
You can read more on this development as reported by the LiveLaw here.
You may read more on the court's prohibition of horseracing and betting activities at the Bangalore Turf Club as reported by the Hindu here.
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