INTERNET INTERMEDIARIES AND COPYRIGHT INFRINGEMENT: THE MYSPACE VS SCIL CASE

A division bench of the Delhi High Court, comprising Justice Ravindra Bhat and Justice Deepa Sharma on 23-12-2016 pronounced a judgement in an appeal against an interim injunction granted against MySpace Inc. in a case filed by Super Cassettes Industries Limited (SCIL). This judgement discusses the privileges of Internet intermediaries. This article seeks to summarise the main points of the case and the rationale outlined by the bench for its judgement.

MySpace is an “internet intermediary“ that operates the social networking and entertainment website www.myspace.com. Its website has global reach and it has been operating in India from 2007. When a user accesses MySpace from India s/he is automatically redirected to the website’s India- centric version. MySpace provides a free of cost, interactive platform that offers a user-submitted network of friends, personal profiles, blogs, groups, entertainment. Essentially, MySpace users can access music works, entertainment videos, images, cinematograph works etc. without paying any fee.

Super Cassette Industries Limited [SCIL] also known as T-Series, is one of India’s largest music companies. It now owns and controls copyright in more than 100,000 songs in various languages.  SCIL’s business is exploitation of its copyrighted works either by sale of audio/ video records or by licensing their use on multiple delivery platforms such as DTH satellite television, Cable TV and radio.  SCIL also enters into licensing agreements with various Internet music and video sharing/streaming platforms and Internet service providers.

SCIL’s case is that MySpace knowingly allows infringement of copyright by permitting its users to upload infringing materials on its website. On its part, MySpace argues that users upload several million videos and audio files on its website and it is not possible for it (MySpace) to monitor all data hosted on its website. It further argues that it has no intent to participate in copyright infringement either directly or indirectly, and points to the various measures like the Rights Management Tool, Notice and Take Down provision, Take Down Stay Down tool and Hash Block Filter etc. that it has implemented to protect the interest of copyright owners.   As such, MySpace argues, that it should not be implicated merely on the basis of suspicion as both under the Copyright Act and the IT Act, “actual” knowledge of infringement by the intermediary is required to fasten liability.  MySpace is aggrieved by the observation of the single judge that it permitted use of its place for profit and had knowledge of copyright violations.

The arguments on both sides are quite elaborate and cover various aspects of uploading content on the internet and related legal issues. Both sides have quoted many foreign judgements on the issue. It is very difficult to cover all those points in a short write-up like this, so I am limiting myself to the most important aspects of the case.

The crux of the argument revolves around three sections of the law - Section 51 (a)(ii) of the Copyright Act 1957, Section 79 of the Information Technology Act, 2000, Section 81 of the Information Technology Act, 2000 and Rule 3 (due diligence to be observed by intermediary) of Information Technology Intermediary Guidelines Rules, 2011. For the convenience of readers the relevant portions of these sections are reproduced below:

Section 51 (a)(ii) of the Copyright Act 1957–

When copyright infringed. -Copyright in a work shall be deemed to be infringed-

(a)              when any person, without a licence granted by the owner of the copyright or the Registrar of Copyrights under this Act or in contravention of the conditions of a licence so granted or of any condition imposed by a competent authority under this Act-

(ii)  permits for profit any place to be used for the communication of the work to the public where such communication constitutes an infringement of the copyright in the work, unless he was not aware and had no reasonable ground for believing that such communication to the public would be an infringement of copyright; 

Section 79 of the Information Technology Act, 2000 - Exemption from liability of intermediary 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 hosted by him.

(2) ******

(c) 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-

(a) the intermediary has conspired or abetted or aided or induced, whether by threats or promise or authorise in the commission of the unlawful act;

(b) 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.

Section 81 of the Information Technology Act, 2000 -

“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 (14 of 1957) or the Patents Act, 1970 (39 of 1970)‖

Rule 3 of the Information Technology (Intermediaries Guidelines) Rules, 2011 -

3. Due diligence to be observed by intermediary — The intermediary shall observe following due diligence while discharging his duties, namely : —

(1) *****************

(2) …….

(3) The intermediary shall not knowingly host or publish any information or shall not initiate the transmission, select the receiver of transmission, and select or modify the information contained in the transmission as specified in sub-rule (2):

*****************

 (4) The intermediary, on whose computer system the information is stored or hosted or published, upon obtaining knowledge by itself or been brought to actual knowledge by an affected person in writing or through email signed with electronic signature about any such information as mentioned in sub-rule (2) above, shall act within thirty six hours and where applicable, work with user or owner of such information to disable such information that is in contravention of sub-rule (2). Further the intermediary shall preserve such information and associated records for at least ninety days for investigation purposes.

(5) The Intermediary shall inform its users that in case of non-compliance with rules and regulations, user agreement and privacy policy for access or usage of intermediary computer resource, the Intermediary has the right to immediately terminate the access or usage rights of the users to the computer resource of Intermediary and remove non-compliant information.

It may be seen from the above provisions that Section 51 (a)(ii) of the Copyright Act, 1957 begins with the word ‘permits for profit any place to be used for communication’. The question is whether a virtual space is also covered under the term “any place”. After detailed analysis, the court concluded that the term does cover even a virtual space like a web platform that allows uploading of content. The exclusion from this liability comes only when the web space provider (in this case  MySpace) can prove that it was not aware of the infringement.

SCIL made the argument that there is a general awareness that uploaded content (e.g. music files ripped from CDs etc.) are infringing and there is no need for actual specific knowledge.  In doing so, SCIL relied on the single judge’s view that general awareness is sufficient to impute infringement charge. However, the two-judge court refuted this argument of SCIL, concluding instead that general awareness or apprehension that a work may be violative of copyright would not pass the knowledge test. The MySpace system stores millions of music and video files without  MySpace’s intervention, and thus it cannot be attributed with specific knowledge of infringement by any of the content uploaded therein. The court concluded that there was no direct infringement by  MySpace and held the the finding of constructive knowledge and “secondary” infringement by the single judge to be incongruous and not tenable.

The second question was with regard to the applicability of exemption from liabilities for intermediaries provided in the Information Technology Act, 2000. Section 79 of the Information Technology Act, 2000 in general exempts an intermediary from liability if the intermediary observes due diligence and has followed guidelines and rules made by the government in this regard. The obligation of the intermediary is further explained in Rule 3(4) of the Intermediary Rules, which imposes on the intermediary the responsibility to remove and disable the infringing material once it comes to know of infringement or is notified about infringement. 

 MySpace states that the nature of its service renders it somewhat vulnerable, that despite the user agreement, infringing material could make its way into the website. Being a US based company it is in compliance with the US Digital Millennium Copyright Act (“DMCA”). It has installed a notice and take down procedure. Under this regime, a copyright owner can send a notice to MySpace that its content is being hosted on its website without any authorization. Based on such intimation, MySpace takes corrective action by removing (“taking down”) the specified content.

MySpace argued that it strictly follows the above procedure and that further, it has, at its own cost, taken three specific measures to prevent infringement of copyright through its website:

1.     The hash block filter which works by recording the “hash” and creating a “fingerprint” of the file which has been removed; both of these are unique identifiers for that file. By doing so it is ensured that content which has been removed is not posted again.

2.     “Take Down Stay Down tool”: The too ensures that once an infringing content is taken down, it is not uploaded again.

3.     A Rights Management Tool is available to all copyright owners for free. To use this tool the content owner has to register with  MySpace and create digital fingerprints of its content by using a software designed by Audible Magic. The content owner then provides the fingerprint to MySpace to block all content that has the same fingerprint. Also, if the first 30 seconds of any uploaded content matches the fingerprint provided by the copyright owner, it is blocked automatically.

 MySpace argued that the above are effective mechanisms to ensure that copyrighted material is not uploaded on its site or taken down as soon as infringement it detected and that therefore, it is in compliance with the above law and that therefore, its business is completely legal.  MySpace relied on many case laws from the US and other countries including the Religious Tech Centre case. In the said case, the court observed that “imputation of liability on countless service providers whose role is nothing more than setting up and operating systems which are necessary for the functioning of the Internet is illogical. Finding intermediaries responsible for the act of others who cannot be deterred would be impractical and virtually impossible, given that “Billions of bits of data flow through the Internet and are necessarily stored on servers throughout the network and it is thus practically impossible to screen out infringing bits from non-infringing bits”. This judgment lays down an objective test that in case of Internet intermediaries, if a notice is sent and no action is taken,  hen, the intermediary would be liable under secondary infringement. MySpace quoted the observation of the US court in A& M Records Inc v Napster, LLC 239 F.3d. 1004 (2001) “We agree that if a computer system operator learns of specific infringing material available on his system and fails to purge such material from the system, the operator knows of and contributes to direct infringement. … Conversely, absent any specific information which identifies infringing activity, a computer system operator cannot be liable for contributory infringement merely because the structure of the system allows for the exchange of copyrighted material.”

In response, SCIL argued that Section 81 of the Information Technology Act, 2000 has excluded intellectual property infringement and thus compliance with Section 79 of the Information Technology Act, 2000 has no relevance. Hence, alleged infringement by  MySpace should be looked at only under the provisions of the Copyright Act, 1957 and not as per intermediary liabilities discussed in the IT Act.

However, the court opined that while Section 79 grants a measured privilege to an intermediary, this does not mean that the rights guaranteed under the Copyright Act are in any manner curtailed. All Section 79 does is to regulate the liability in respect of intermediaries while the Copyright Act grants and controls rights of a copyright owner. The true intent of Section 79 is to ensure that in terms of globally accepted standards of intermediary liabilities and to further digital trade and economy, an intermediary is granted certain protections. It sets up a scheme where intermediaries have to follow certain minimum standards to avoid liability; it provides for an affirmative defence and not a blanket immunity from liability.

At the other end is the Copyright Act which does not specifically mention or define “internet intermediaries”; nor does it lay down any special protection except as provided for under Section 52. Even under Section 51, the infringement contemplated does not distinguish between virtual space and actual physical space.  By amending the IT Act, Parliament intended to create a separate provision and regime for internet intermediaries. To avoid the consequence of blanket immunity to intermediaries provided in Section 79, Parliament included a proviso to Section 81 that copyright owners could still pursue legal remedies against such intermediaries in specified circumstances. Thus, Section 81 enables copyright owners to pursue legal recourse against Internet intermediaries who may themselves post infringing content or knowingly allow infringement by third parties who actually post content

Here it is pertinent to mention that while Section 51 of the Copyright Act provides for a system of “notice”, Section 79(3) contemplates “receiving actual knowledge” or through notification by the government or its agency. In case of Section 51(a)(ii), the only exception is that  MySpace was not aware or had no reasonable grounds to believe that the content was infringing. Section 79(3) supplemented “knowledge” with the term “actual knowledge”. Interpreting both the provisions, the court held that the only logical and harmonious way to interpret the law would be to read them together. Not doing so would lead to an undesirable situation where intermediaries would be held liable irrespective of their due diligence. By acting as mere facilitators and despite complying with legal norms, intermediaries can attract great liability for no fault of theirs. In the long run, this would not only discourage investment, research and development in the Internet sector but also harm the digital economy.

After an elaborate discussion that cites many judgements from all over the world, the court concluded that Sections 79 and 81 of the IT Act and Section 51 (a) (ii) of the copyright Act have to be read harmoniously and it was held that Section 81 does not preclude the affirmative defence of safe harbour for an intermediary in case of copyright infringement actions. In case of internet intermediaries Section 51 (a) (ii) of the Copyright Act contemplates actual knowledge and not general awareness. Additionally, to impose liability on an intermediary, conditions under Section 79 of the IT act have to be fulfilled.

This judgement provides considerable freedom to internet intermediaries in their business and defines liabilities and responsibilities of companies those providing content sharing platforms.