A vast majority of the things we consume on the internet is freely available. The advent of internet has caused a cultural shift in consumers accessing most information and services for free. In the beginning, if some content or service was not freely available on one site, consumers could conveniently turn to the plethora of other sites that offered similar (or same) content and service for free. Thus, the Internet has made us constantly seek out free resources and services over paid counterparts. For example, why buy the DVD or digital access to a movie when one can just as easily pirate it over a torrent platform? Needless to say, such a paradigm shift in consumer mindset has been detrimental to the interests of those who create and own such intellectual property.
To control the illegal dissemination of copyright material over the internet, several laws have been laid down to deal with issues relating to intermediary liability for these platforms that make such infringing material available. Alongside such liability, however, are also safe harbour provisions for intermediaries whereby they can prevent liability by exercising due diligence and removing infringing content, wherever it has been brought to their notice or they have come to know that the infringing content exists. This general framework is incorporated in the Digital Millennium Copyright Act (DMCA) of the United States as well as Electronic Commerce Directive (ECD) of the European Union. In this article, the author will discuss the intermediary liability regime of various jurisdictions with reference to counterfeiting and piracy.
Safe Harbor and Intermediary Liability
The majority of the average user’s internet experience consists of accessing content hosted by or facilitated by Intermediaries, whether it is a search engine or a social network site. A Web 2.0 platform, a term used to describe the advent of websites that primarily host user-generated content, is more involved in facilitating the infringement of copyright materials or sale of counterfeit products than an Internet Service Provider, which is simply providing the service of hosting and caching. For example, eBay not only gives server space to a user, but also helps them advertise, better list their product, helps them reach the perfect customer and essentially provides intermediation.[i] Both ISPs and Web 2.0 Platforms are categorized as intermediaries. This intermediation, however, is characterized as the work of a distributor, or a messenger, rather than a creator. They have, thus, been described as akin to a postal service or a phone company, whereby, they cannot always investigate into the content for which their service is used, for reasons including impracticality and confidentiality. Intermediaries are essentially facilitators of content, created by the users themselves, which is neither authored nor modified by them.[ii]
Both the ECD and DMCA affixes liability upon Intermediaries by way of Safe Harbour provisions. This, encapsulated in articles 12-15 of the former and §512 of the latter, means that intermediaries are generally not liable for the illegal content posted online unless they had knowledge of the illegality of the content hosted or it was brought to their notice. Once it is brought to their notice, their immunity will depend upon how readily they take down the content. This is called the notice-and-take-down (NTD) regime.[iii]
Exploring the Indian Regime Through Landmark Case Laws
In India, a similar framework is laid down by the Information Technology Act, 2000 (IT Act) and the Copyright Act, 1957 read with the Rules framed under both. Specifically, §79 of the IT Act lays down the safe harbour regime of intermediary liability. This has to be read with the Information Technology (Intermediary Guidelines) Rules, 2011 which sets the NTD regime in place. Under the Copyright Act, §51, even while laying down liability for infringement of copyright, the Act requires that the knowledge of an infringement or potential infringement is important for establishing liability. This, when read with the exemptions laid down in §§52(1)(b), 52(1)(c) provides enough of a “safe harbour” for intermediaries to operate. This position was clarified in the Shreya Singhal case,[iv] where the apex court, diluting §79 of the IT Act, laid down that “knowledge” was to be interpreted as actual notice, which was constructed to mean a court order or government notice for takedown. The court noted that if not interpreted strictly, the provision could possibly have a “chilling effect” upon the practical operationality of intermediary platforms and providers. Thus, it refused to lay down primary liability for intermediaries, unless given actual notice.
In the case of MySpace Inc. v/s Super Cassettes Industries Ltd.[v], the Delhi High Court, while holding MySpace Inc. not liable under §51 of the Copyright Act, held that “actual knowledge” and not merely general information of a copyright infringement was grounds for establishing liability. The plainant had forwarded the idea that by virtue of the MySpace user agreement contemplating potential copyright infringement, as well as MySpace placing ads beside media containing infringing content with profit motive, evidence of MySpace’s culpability and constructive knowledge is established. This proposition was rejected by the High Court, which clarified that simply suspicion could not become ground for establishing constructive knowledge. It also said that appending ads to user-generated content did not amount to “modification” under the IT Act. It rejected the accusation of even actual knowledge, stating that the sheer volume of the content uploaded on such platforms precludes the intermediary from a duty to pre-screen such content. Thereby, the onus is on the rightsholder to give notice of infringement. Notably, the court diverged from the apex court’s judgment in Shreya Singhal by holding that “knowledge” here could be notice served by the infringed party themselves, rather than a court or government order. For that purpose, it alluded to the “red flag” jurisprudence evolved by American courts interpreting the DMCA, while it noted that even the Intermediary Guideline Rules (2011) lays down a notice-and-takedown regime and places a time-limit of 36hrs. While the case was decided in 2016, the cause of action arose in 2007-08 which was much before the notification of the 2011 Rules.
In a contrasting case, Christian Louboutin SAS v. Nakul Bajaj and Ors.,[vi] the Delhi HC held that the Darveys website, an e-commerce site selling luxury goods which made use of Christian Louboutin’s trademarks without its permission, was liable under §§101, 102 of the Trade Marks Act, 1999. Darveys tried to take the intermediary defense, stating that it simply hosted the foreign sellers who were the official sellers of the luxury goods. The defense failed because not only was Darveys hosting and facilitating the foreign sellers to sell their products, it was also advertising using the brand’s official images and logos, used meta-tags (which are tags stored in meta-data which are invisible to end-users and consumers, but enable the website containing them to show up in search results, whenever the keywords associated with that tag are searched; in this case, it was using Christian Louboutin’s logo and official images as meta-tags)[vii] as well as did not disclose the details about the foreign sellers. These factors differentiated it from the MySpace case. In that case, while MySpace also advertised using the copyright content, charged a membership fee and entered into contracts with users, it gave much more freedom for users to generate content as per their wishes, without informing MySpace about it. MySpace also used an automated process to advertise on the user-generated content. It did not hand-pick and thereby, knowingly advertise using copyright content.[viii]
Another case concerning e-commerce platforms is the case of Amway India and Ors. v. 1MG Technologies and Ors.[ix] In this case, the Single Judge Bench of the Delhi HC held a number of online intermediary platforms (including Amazon, Flipkart, 1mg, etc.) liable for hosting resellers of the plaintiff’s product. Amway only sold its products through the direct-sale channel, which is governed under the Direct Selling Guidelines, 2016 (DSG).[x] Clause 7(6) of the DSG requires any seller to obtain permission of the direct-selling enterprise prior to selling their products via an e-commerce channel. The Delhi HC held the intermediaries liable under the DSG, holding it to be forceful law, as opposed to merely advisory, by which the intermediaries were bound. The defendants appealed said decision. A Division Bench of the Delhi HC, in Amazon Seller Services Pvt. Ltd. v. Amway India Enterprises Pvt. Ltd. & Ors.,[xi] reversed the judgment of the single judge bench. While clarifying that the DSG is not a binding law, the division bench also held that the IT Act does not make a distinction between “active” and “passive” intermediaries. In this case, an “active” intermediary would be one that not just allows a seller to list their product on the intermediary’s platform, but also provides a number of services, in this case logistical services, which facilitate a smoother transaction between the seller and the buyer of a product. For example, Amazon offers services like delivery, advertising, warehousing, packaging, return and replacement, etc. in addition to listing. The division bench held that platforms providing value-added services are to be considered as intermediaries.[xii] The court also held that a mere change in the condition of warranty will not attract §30(4) of the Trade Marks Act. For this, it simply reaffirmed the position held in Kapil Wadhwa v. Samsung Industries[xiii] which affirmed the principle of exhaustion of trademark rights after first-sale, provided under §30(3) of the Trade Marks Act. However, the word on this case is not final. However, a lot of the issues with e-commerce entities, for example, the sale of counterfeit products, can now be addressed through the E-Commerce Rules, 2020. The E-Commerce Rules inter alia puts disclosure requirements and generally greater transparency requirements as well as an ombudsman system for dispute resolution in place. The ombudsman system may ensure that notice-and-takedown may happen more expeditiously, not necessarily requiring a court order.
Safe harbor against intermediary liability is a closely held dear by all those in favor of freedom of speech and expression on the internet.[xiv] Thus, decisions and statutes that seek to dilute this protection may find disfavor among internet freedom advocates. It is difficult to imagine liability for intermediaries beyond a notice-and-takedown regime. Pre-screening or pro-active takedown of content, as proposed in the draft amendment to the Intermediary Guidelines, will preclude intermediaries from taking a safe-harbor defense as lack of actual knowledge is pre-requisite in such a case. Where an intermediary is monitoring all content uploaded on its platform, the presumption will be that intermediaries will have knowledge of all content on their platform. Conversely, if they do not have actual knowledge, then they will be held to not have done their duty of pre-screening content. Thus, intermediaries will be stuck between a rock and a hard place. While algorithmic screening of content is possible, it is impossible to ensure that such a program will be one-hundred percent accurate. Thus, the imposition of such costs and responsibilities on intermediaries will make their business-model defunct.
This article can be cited as:
Anamika Dudvaani, Intermediary Liability vis-a-vis Protection of Intellectual Property and Anti-Counterfeiting, Metacept- InfoTech and IPR, accessible at, https://metacept.com/intermediary-liability-vis-a-vis-protection-of-intellectual-property-and-anti-counterfeiting/.
[i] Ignacio Garrote Fernández-Díez, Comparative Analysis on National Approaches to the Liability of Internet Intermediaries for Infringement of Copyright and Related Rights, WIPO Study (2010). Available at: https://www.wipo.int/export/sites/www/copyright/en/doc/liability_of_internet_intermediaries_garrote.pdf.
[ii] Lilian Edwards, Role and Responsibility of Internet Intermediaries in the Field of Copyright and Related Rights, WIPO Study (2010). Available at: https://www.wipo.int/publications/en/details.jsp?id=4142&plang=EN.
[iv] (2013) 12 SCC 73.
[v] 2011 (48) PTC 49 (Del).
[vi] CS(COMM) 344/2018.
[vii] Ibid, ¶80.
[viii] MySpace Inc. v/s Super Cassettes Ltd., ¶35.
[ix] CS (OS) 410/2018; CS(OS) 453/2018; CS(OS) 480/2018; CS(OS) 531/2018; CS(OS) 550/2018; CS(OS) 75/2019; CS(OS) 91/2019. [The judgment is a collation of seven separate lawsuits with similar contentions].
[x] F.no. 21/18/2014-IT (Vol. II). Available at: https://consumeraffairs.nic.in/sites/default/files/file-uploads/direct-selling/Direct%20Selling%20Guidelines%20Final%20_0.pdf.
[xi] Judgment dated January 31, 2020 in FAO(OS) 133/2019 and connected matters.
[xii] Ibid, ¶125.
[xiii] FAO(OS) 93/2012.