ZEE SUES MUSICAL.LY OVER COPYRIGHT INFRINGEMENT: THE SAGA OF INTERMEDIARY LIABILITY CONTINUES

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UPDATE: ZEE ENTERTAINMENT ENTERPRISES LIMITED V. MUSICAL.LY, INC. & ORS.

In a recent development, Zee Entertainment Enterprises Limited (“Zee”) has filed a suit in the High Court of Delhi against the popular Chinese video content and online sharing APP ‘Musical.ly, Inc.’ (“Musical.ly”). Zee has sought for a permanent injunction restraining Musical.ly from infringing the copyright in Zee’s repertoire of work by way of unauthorized communication of such works to the public through the Musical.ly mobile APP in any manner whatsoever.

Zee contended that Musical.ly despite stating that they had removed the copyrighted works in response to a legal notice from Zee to that effect, had in fact failed to do so. Musical.ly on the other hand stated that they had removed all the muted video content from their APP in which Zee claims copyright and shall continue to do so from time to time upon intimation from Zee to that effect, within 36 hours of receipt of such information. Further, Musical.ly stated that nonetheless if any such works still reflected on their APP, it would be on account of an unintentional aberration. The Single Judge Bench comprising of Justice Endlaw vide an order dated 14th May 2018 directed Musical.ly to remove all the works in which Zee claims copyright from their APP upon intimation by Zee on their email address from time to time, until further orders. The matter was supposed to be listed on 26th September 2018 for framing of issues and for consideration of application for interim relief.

However, on 1st June 2018, Zee filed an interlocutory application under Order XXXIX Rule 2A of Code of Civil Procedure, 1908 for Disobedience or Breach of Injunction. In its defence, Musical.ly argued that the impugned content might be user generated.

Justice Endlaw then drew the attention of the counsel appearing on behalf of Musical.ly, to the dicta of the Hon’ble Supreme Court of India in Sabu Mathew George v. Union of India (discussed below), which suggested that a direction to block even user-generated contents can be issued by a Court and asked the counsels for both the parties to address on the said aspect at the next hearing. In the meantime, the Court ordered Musical.ly to ensure that there is no further breach to the order dated 14th May 2018. The order can be accessed here.

INTRODUCTION:

In light of the advent of internet and social media as a primary platform for the creation and sharing of content and growth of OTT platforms such as online service providers, content aggregator websites and APPs, web-hosting services, network service providers, etc. the outcome of this suit becomes increasingly important to determine the liability of such intermediaries in the event of copyright infringement on such platforms. In this post, I shall be analysing the position of law in India with respect to the liability of intermediaries, well-accepted international practices and relevant case-laws and discussing the way forward in light of the recent developments.

RELEVANT REGULATIONS IN INDIA:

  1. THE INDIAN COPYRIGHT LAW AND INTERMEDIARIES:

In simple words, copyright is a legal right that grants to the creator of an original work certain exclusive rights to use and exploit the work. As a consequence, any use, copying or reproduction of a work without an appropriate license from the owner of the copyright in the work shall amount to copyright infringement.

On a bare reading of S. 51 of the Copyright Act 1957, it can be stated that the doing of any act by any person, which only the owner of the work is entitled to do, without the authorization of such owner or permitting any place for the communication of such work to the public for profit shall amount to infringement. Further, the term “any place” can be broadly interpreted to include web space and the internet platforms to effectively cater to the infringements occurring on the web. However, it is pertinent to note that a person can evade liability under the S. 51 (a) (ii) if he can prove that he had no knowledge or reason to believe that such communication was infringement of copyright.

Meanwhile, S. 52 of the Copyright Act, 1957 enlists certain acts, which, but for the exception carved out therein would have amounted to infringement of copyright. These constitute the defense of fair use.

Under S. 52(1)(c) of the Copyright Act, the transient or incidental storage of a work or performance for the purpose of providing electronic links, access or integration, where such links, access or integration has not been expressly prohibited by the right holder would not fall within the purview of S. 51, unless it is established that the person responsible is aware or has reasonable grounds for believing that such storage is of an infringing copy.

However, the proviso to this section clearly states if the person responsible for the storage of the copy has received a written complaint from the owner of copyright in the work, that the transient or incidental storage is an infringement, such person responsible for the storage shall refrain from facilitating such access for a period of twenty-one days or till he receives an order from the competent court refraining from facilitating access. In the event, no such order is received before the expiry of such period of twenty-one days; he may continue to provide the facility of such access.

The proviso provided under Section 52(1)(c) is an attempt to bring the Indian Copyright Act in harmony with the well-accepted international practices. It provides a provision similar to that under the USA Digital Millennium Copyright Act, 1998 commonly known as ‘notice and take down’ procedure, as a safe harbour to internet service providers, as they are merely carriers of information provided by users.

The case of Viacom International, Inc. v. YouTube, Inc. is a prime example of the extent of protection granted to intermediaries under US law. In this case, the U.S. District Court for the Southern District of New York held that in order to hold an intermediary liable for user-generated content hosted on its platform that infringes copyright, the owner of the copyright has to prove that the intermediary had specific knowledge of the infringement. In addition to this, the court also held that the intermediary may be held liable if it exerted “substantial influence” on the infringing activities of users. However, the burden of proof to establish such knowledge or influence lies on the owner of the copyright. In this instance, since Viacom was unable to prove YouTube had actual knowledge or awareness of specific instances of infringement on its platforms, the courts held that YouTube could not be held guilty of copyright infringement. The matter went on for appeal, but was eventually settled between the Parties.

2. THE INFORMATION TECHNOLOGY ACT AND INTERMEDIARY GUIDELINES:

The entities such as internet service providers, content aggregator websites and APPs, web-hosting services, etc. are commonly referred to as intermediaries. However, not surprisingly, the term “intermediary” has not been defined in the Copyright Act, 1957.

In India, intermediaries are governed under the Information Technology Act, 2000 (“IT Act”) which defines the term under Section 2(w) as “Intermediary with respect to any particular electronic records, means any person who on behalf of another person, receives, stores or transmits that record or provides any services with respect to that record and includes telecom service providers, network service providers, internet services providers, web-hosting service providers, search engines, online payment sites, online-auction sites, online-market places and cybercafés”.

This definition of intermediary under the IT Act is quite wide and for better or for worse, can be construed to include almost every category of internet service provider within its ambit. However, the Information Technology (Amendment) Act, 2008 brought a much-needed respite to the intermediaries under Chapter XII of the Act, by providing for a conditional safe harbour to the intermediaries like its USA counterpart.

Section 79 of the Information Technology Act, 2000 exempts intermediaries from liability in certain instances. It states that intermediaries will not be held liable for any third party information, data or communication link made available by them. However, the section restricts this “safe harbour protection” only to those instances where the intermediary merely acts a facilitator and does not play any active part in creation or modification of the content. The provision further imposes an obligation on the intermediary to remove any unlawful content on its portal on being notified by the appropriate Government or its agency or upon receiving actual knowledge.

It is pertinent to note that, to seek protection under Section 79 of the IT Act, it is mandatory for the intermediaries to follow the due diligence framework as provided by the Information Technology (Intermediaries Guidelines) Rules, 2011. S. 81 of the IT Act states that the provisions of the Act shall have an overriding effect. However, the proviso to the section states 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.

The introduction of the above proviso to Section 81 made it uncertain whether an intermediary can be sued for infringement of copyright in respect of the content hosted by it on its portal despite the immunity granted under Section 79 of the IT Act.

The effect and scope of the proviso has been discussed by the Division Bench of the Delhi High Court in Myspace Inc. v. Super Cassettes Industries Limited, where it was observed that section 79 of the IT Act is in no way a blanket immunity, but it is more in the nature of a measured privilege and can be invoked only upon fulfilling the various conditions stated therein.

The Court attempted to gather the legislative intent behind inserting the proviso to S. 81 vide the Amendment Act 2008, which itself introduced the safe harbour provisions under S. 79 of the Act and observed that “To put it differently, but for the proviso (to Section 81), copyright owners would have been unable to pursue legal recourse against internet intermediaries. Under the current regime, while private copyright owners can still demand action against intermediaries who may themselves post infringing content, intermediaries can seek safe harbour where the content is uploaded by third party users or is user generated”.

The Court makes it clear that given the complementary nature of these provisions, provisions of Copyright Act and IT Act need to be harmoniously construed. In other words, through S. 79 of the IT Act, Parliament has conferred on the online intermediaries a measured immunity (in relation to claims of secondary infringement) while at the same time reserving the right of the owner of the copyright to sue intermediaries through the proviso to S. 81 in case of (i) primary infringement (i.e.  the intermediary itself uploads infringing content) and (ii) secondary infringement (the intermediary hosts infringing content uploaded by third party users) in the event the conditions specified under S. 79 and the applicable Intermediaries Guidelines Rules, 2011 are not fulfilled.

CASE LAWS IN INDIA:

MYSPACE INC. V. SUPER CASSETTES INDUSTRIES LIMITED

This case is regarded a landmark judgment on the determination of liability of an intermediary for copyright infringement on its platform under Indian Law. In 2008, T- Series filed a suit against Myspace Inc. in the Delhi High Court for alleged infringement of copyright in their works. It was alleged by T-Series that the website hosted impugned material in the form of cinematographic films, sound recordings, etc. without obtaining an appropriate licence from them. T-Series sought for damages and permanent injunction, among other reliefs.

In 2011, a Single Judge Bench of the Delhi High Court via its interim order restrained Myspace from allowing their website to carry any material that belonged to the repertoire of T-Series. Moreover, it held that intermediaries were under an obligation to take down all infringing content from their websites as soon as they receive a complaint from any third party alleging infringement. It further went on to state that a preliminary check should be conducted on all content being uploaded on websites of the intermediaries before such material is communicated to the public.

It was this leg of the judgment that raised a debate whether intermediaries have an obligation to monitor all infringing activity carried by their users and hosted on their portals. Since, the intermediaries earn advertising revenue that is directly linked to the content shared or accessed on their portals; there is a strong argument to impose such an obligation on them. The rationale behind this view is if they profit from infringing content hosted on their portals, they should also be held liable for such content. However, there is an equally strong argument to accord immunity to intermediaries for the actions of their users, as they are merely carriers of information and not equipped with adequate resources to actively filter all content uploaded on the website.

To what can be called as a sigh of relief to the intermediaries, the above ruling of the Single Judge Bench was overruled on appeal by a Division Bench of the Delhi High Court in 2016. It held that intermediaries could be held liable only when it is established that they possessed actual or specific knowledge and not constructive knowledge of the existence of infringing content on their website and did not take any steps to take down such impugned content thereafter.

The Court observed that since advertisements were inserted on the website of Myspace and modifications, if any, were made to the format of the content, both via an automated process and without any manual intervention, it would not amount to Myspace having actual control, actual knowledge or a ‘reason to believe’ that the content uploaded on its website may be infringing. The Division Bench set aside the interim injunction order of the Single Judge and directed T-Series to provide Myspace with a ‘specific list of its works’, which are uploaded on their website without a valid license and Myspace was called upon to act on such a list within 36 hours of receipt.

This judgment is important as it places the onus of identifying the specific infringing content on the owner of such content and communicating the same to the intermediary before knowledge could be attributed for the purpose of S. 51 (a) (ii) of the Copyright Act 1957. Furthermore, the Court held that intermediaries were not obligated to continuously identify and remove each and every piece of content being uploaded on their websites.

SABU MATHEW GEORGE V. UNION OF INDIA

A writ petition was filed in the Supreme Court of India against search engine operators including Google, Yahoo and Microsoft, for displaying advertisements or searches in violation of the Pre-Conception and Pre-Natal Diagnostic Techniques (PCPNDT) Act, 1994. The Apex Court held search engines liable, as intermediaries, for hosting advertisements relating to pre-natal determination of sex of unborn babies and imposed obligations to monitor and respond to complaints relating to the Act upon the search engines. The Court also directed the search engines to develop an in-house system of ‘auto-block to pro-actively filter content’ and ensure that no one can access information prohibited under the Act.

KENT RO SYSTEMS LTD. & ANR. V. AMIT KOTAK & ORS.

In this matter, an interesting question arose before the Delhi High Court whether once a complaint alleging infringement by certain sellers on the e-commerce platform has been registered by the complainant, whether the e-commerce platform is under an obligation to monitor and screen all future infringements relating to the products of the said complainants by the same sellers.

In line with the view taken in Myspace Inc. v. Super Cassettes Industries Limited, the Court reaffirmed that under the IT Act, the obligation upon an intermediary to remove or disable information hosted or uploaded on its portal arises only upon receipt of a complaint. The intermediary is not required, to screen all content and information prior to posting by itself, as this would have the effect of making the intermediary a judicial body to determine if there has been infringement of any third party rights. Such a requirement would amount to be an unreasonable interference with the rights of the intermediary to carry on its business. Further, an intermediary is neither equipped to determine this, nor is possessed with the required prowess for such an evaluation under the IT Act.

The Delhi High Court further went on to clarify in the postscript of its decision that the recent decision of the Supreme Court of India in Sabu Mathew George v. Union of India (discussed above) is only restricted to violations of Section 22 of PCPNDT Act, 1994. Therefore, auto-block obligations were placed on intermediaries due to the extremely sensitive nature of the dispute and thereby cannot be interpreted as having a wider implication on the general functioning of intermediaries in India.

KAMLESH VASWANI V UNION OF INDIA

In a writ petition still pending before the Supreme Court, an order dated 31st March, 2015 finds mention wherein similar directions to disable specific content (as in the case of Sabu Mathew George v. Union of India) were issued by the Government to intermediaries to restrict websites displaying and glorifying child pornography.

The developments in this case highlight the worrying prospect of undermining intermediary liability exemptions and thereby increasing censorship without proper safeguards or guidelines. In my view, the doctrine of auto-block can easily lead to legitimate information being censored. Even if the website uses the keywords following legal guidelines, user access could be blocked because of the mere presence of the questionable terms, thereby diluting and curtailing the right of freedom of speech and expression.

CONCLUSION:

In my view, the Copyright Act, 1957 must be amended to clarify the scope of intermediary liability for primary infringement and secondary infringement. The term “intermediary” should be defined under the Copyright Act, as defined in the IT Act, to avoid any discrepancies. Further, a provision may be introduced under Section 51(a)(2) of the Copyright Act to include a reasonable penalty for the failure of an intermediary to take down content to a ‘notice and take-down’ requirement. Since, the IT Act and the Copyright Act incorporate similar notice and take-down regimes, the amended Copyright Act may specifically provide that the responsibilities for intermediaries shall be governed by the provisions of Section 79 of the IT Act.

In the wake of the new EU Copyright Directive legislation that requires online platforms to monitor and filter all content uploaded by users for potential copyright infringement in the EU on one hand and safe harbour provisions of USA restricting the liability of intermediaries on the other; it would be interesting to see which path India would follow eventually.

Image source: here and here

 

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