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Judgement Analysis: Myspace Inc. v. Super Cassettes Industries Ltd.
Date of Judgement: 23/12/2016
Bench: S Ravindra Bhat, Deepa Sharma.
Background:
Myspace Inc. (appellants) is a User Generated Content (UGC) based website that provides a neutral platform for uploading, viewing and sharing music, entertainment, videos etc. Their chief source of revenue is advertisements that arise based on the string of keywords input by a user and not the content searched by the user. A user who wishes to upload content has to register and agree to comply with the Terms of Service that clearly specify that no content that infringes another’s intellectual property (IP) shall be uploaded. Being a US-based company, it complies with the Digital Millenium Copyright Act (DMCA) and follows the feature of “Notice and Take Down”.
The respondents, Super Cassettes Industries Ltd., commonly known as T-Series, is India’s largest music company with over 100,000 copyrighted songs. They conduct business through the sale and licensing of their copyrighted work either in the physical space or virtual realm through Internet Service providers (ISPs) and streaming platforms.
On the 20th of February, 2008, the respondents issued a notice to the appellant website to take down infringing content made available on www.myspace.com. Despite initial compliance, matters complicated as infringed content was still being broadcasted thus violating SCIL’s copyright. A suit for injunction was filed before a Single Judge Bench of the Delhi High Court as amicable settlements failed. It was contested that the appellants had strategically used advertisements and exploited the respondents’ work to generate revenue and thus had caused irreparable damage and loss in revenue to the latter. The present matter is an interlocutory appeal against the impugned order that barred the appellants (Myspace Inc.) from hosting the respondent’s (SCIL) present as well as future content in addition to damages.
Impugned Judgement under question:
The learned single judge held that the appellants had contravened section 51 of the Copyright Act. The Safe Harbour principle was read down to act only as a mitigating factor with regard to damages and not an exemption from liability per se. It was also held they had breached section 79 by modifying content through limited license that was obtained to automatically modify users’ content to make it compatible with the website along with the freedom to take down.
Issues:
- Whether the appellants had actual knowledge of infringing material and thus involved section 51(a)(ii) of the Copyright Act, 1957
- Whether the proviso to Section 81 in the Information Technology Act, 2000 overrides the “safe harbour” granted to intermediaries under Section 79.
- Whether sections 79 and 81 of the IT Act and Section 51 of the Copyright Act can be read harmoniously.
Laws Applicable:
- Information Technology Act, 2000. (IT Act)
- Copyright Act, 1957
Arguments Advanced:
Myspace, had the Hash Block Filter Tool, Take Down Stay Down Tool and the Rights Management Tool (RMT) in place to protect creators’ IP. The respondents were given the liberty of opting for RMT through which they could create digital fingerprints for their content. However, this was rejected by the respondents who primarily aimed at shifting the entire burden upon the website to monitor and sought to disclaim responsibility. Previous orders resulted in SCIL giving a blanket list of songs owned by them and asked the appellants to take them down without mentioning specific URLs. Such a task was technologically implausible due to the volume of data under concern.
The appellants also sought protection under Section 79 of the Information Technology Act, being a safe harbour protection for intermediaries, as they were an intermediary according to section 2(1)(w) of the IT Act. It was also reiterated that the nature of Ad revenue was such that the content bore no relation to the advertisements on the website. It was finally submitted that the previous order to take down content was vague and far-fetching, as it sought to restrict even future content.
The respondents claimed that the appellant’s business model was harmful as it would infringe upon another’s IP. It was alleged that features such as identifiers and tags only made it more accessible to the masses who were able to view the respondent’s works for free. It was submitted that Myspace was not an ISP but rather a resource centre. The appellants were also alleged to have failed the grounds under section 79 as they initiated transmission and failed to observe due diligence.
Judgement:
The verdict of the 2 judge bench was formed on progressive grounds with the court taking into account the difficulties and harshness faced by intermediaries. It held that the imposition of a vague order would subsequently result in Myspace shutting down its operations in India which would further exacerbate the matter. The latter half of the previous order that granted injunction against future works was held to be void as ‘work’ under section 51 of the Copyright Act was held to apply only to present and existing content and not those in the making.
With regard to issue 1, it was established that mere use of safeguard tools didn’t convey actual knowledge. The modification of content under limited license was automated and did not involve manual interference. Section 51(a)(ii) also holds that there shall be no liability for contravention unless the person was aware or had reasonable grounds to believe so. The act of giving a catalogue that ran into volumes but not specific URLs was held to be unreasonable. The flaw with such an expectation lies in the fact that this would result in the taking down of content even held by authorised persons such as distributors. A person’s post may even be pulled down to a small fraction of it containing copyrighted content and the same is a chilling effect on free speech. The word knowledge has to be read in light of the interpretation in Shreya Singhal v. Union of India (2015) whereby it refers to a court order. However, the lack of specificity and technical hardships in executing the order were sufficient grounds to maintain that Myspace had no knowledge.
India’s safe harbour principle is on similar lines to that of UK’s ECD rather than USA’s DMCA. Section 79 of the Information Technology Act was held to be subject only to the restrictions laid down under sections 79(2) & 79(3). The Court observed that it was an affirmative defence to those intermediaries that satisfied the conditions and not a blanket immunity from liability. The learned judges were also of the view that Section 81 of the IT Act did not take away the defence of an intermediary even in matters of copyrights. Myspace satisfied the tests under section 79(2) and 79(3) as it did not initiate the transmission (merely a facilitator) and observed due diligence by providing Terms of Service and a Privacy Policy. The appellants were thus entitled to the safe harbour principle.
The judges ruled the third issue in the affirmative as sections 79 and 81 of the IT Act as well as section 51 of the Copyright Act were to be read harmoniously in interests of equitable relief. SCIL was ordered to provide a specific list containing URLs of infringing content to the appellants who were to take it down within 36 hours of notice. Myspace was also ordered to effectuate mechanisms, if available, to track how much advertisement money was earned from infringing content to ascertain the sum of damages in the future.
Conclusion:
The Court through its verdict established that sections 79 & 81 of the IT Act had to be read along with section 51 of the Copyright Act. Moreover, knowledge under section 51 strictly meant actual knowledge and interim reliefs for intermediaries were ordered to be specific. The 2-judge bench of the Delhi Court had to balance various issues due to far-reaching implications. On one hand, an owner’s IP was being grossly infringed whereby on the other, the intermediary was made liable to difficult and burdensome tasks. Holding intermediaries liable for acts not within their control would significantly hamper India’s digital realm as companies will relocate to countries that offer them better protection. However, an intermediary should strive to enforce more safeguards to prohibit infringement and not seek shelter under the defence of a few checking mechanisms in place. The appellants' nature of revenue generation also added to their favour as the monetisation was not based on the content per se and thus could not be held to have directly profited off the infringed content.
The judgement goes ahead and suggests the use of the 4-step mechanism recommended by the OECD in 2010 to avoid further conflicts, namely: notice and takedown (ii) notice and notice (iii) notice and disconnection and (iv)filtering. Intermediaries are susceptible to the most amount of risk as the onus of liability automatically rests on them. Availing of the safe harbour principle in India has been crafted in a way to ensure there is no active participation or misfeasance on their part and this decision ensures clarity in that matter.
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