The past decade has witnessed rapid growth of e-commerce and social media platforms and everything in between, all connected to the ubiquitous world of the internet. In India, the approximate figure representative of the collective increase in use and dependency on internet, is 590 million. Due to such growth, the nature of the duties and liabilities of intermediaries (including, inter alia, access providers to social media platforms, online market places) have undergone a sea change. Briefly put, an intermediary is an entity that enables one to access information/services over the internet i.e. the intermediary ideally acts as a conduit and is not the owner of the information sought to be accessed or the services required. As per Organisation for Economic Co-operation and Development, internet intermediaries can be defined as organizations (primarily, for-profit companies) that "bring together or facilitate transactions between third parties on the Internet. They give access to, host, transmit and index content, products and services originating from third parties on the internet or provide internet-based services to third parties."
The term 'intermediary' is defined under the Information Technology Act, 2000 ("Act") to provide for an inclusive definition rather than an exhaustive definition. Accordingly, any person who receives, stores or transmits any electronic record on behalf of another could be tagged as an intermediary. Due to the over-expanding functions and purposes of an intermediary, it was deemed necessary to include a 'safe harbour' provision in the form of Section 79 of the Act, which provides for certain exceptions from liability for these intermediaries.
The case1 which changed the construct of Section 79 was the arrest and prosecution of Mr. Avnish Bajaj, CEO of Bazee.com (the erstwhile subsidiary of auction portal Bazee.com (the erstwhile subsidiary of auction portal eBay.com). Mr. Bajaj was arrested after a video clip containing objectionable matter was offered for sale on Bazee.com. He was made liable as his website was allegedly publishing the content. Mr. Bajaj cried foul for initiation of the action against himself and the intermediary when the hosting platform did not host the actual clip and had no control over the third party that posted the content. The outrage caused by his arrest was voiced by eBay to the then Secretary of State of USA and NASSCOM. This case brought forth issues and concerns relating to intermediaries and in particular discussed the onus of proof lying heavily with the intermediary. Thereafter, Section 79 of the Act was amended in 20082 and shifted the onus from the intermediary. The non-obstante clause with which the provision commences, lays an emphatic foundation to exonerate the intermediary from liability for third party information etc. albeit with riders provided under Section 79, sub-sections (2) and (3) of the Act.
The conditions under which such exemption could be claimed were limited. For instance, cases where the intermediary only provides access to third party content and does not initiate any transmission/does not select the receiver of the transmitted data/cannot select or modify the data being transmitted, would entitle the intermediary to the abovementioned exemption. The section also included the special condition that once an intermediary receives "actual knowledge" or is notified by the government or its agency that any information/data transmitted by the intermediary is being used for an unlawful act, it should remove or disable access to such material.
The obligation to remove access to such information/data which was often misused to commit any unlawful act was made stricter under the Information Technology (Intermediary Guidelines) Rules, 2011. Consequently, an intermediary was liable to remove the information/data that was being used to commit an unlawful act within 36 hours of receiving the complaint regarding the same, else the safe harbour exemption could not be claimed.
During this period, registered proprietors of trademarks that came across any product which in their opinion was infringing their mark on e-commerce websites could simply file a complaint regarding such infringement. Further, they were permitted to show their trade mark registration to the e-commerce platform hosting the alleged infringing product and pursuant to receiving such complaint, the alleged infringing product would be taken down from the e-commerce website. In essence, this practice was pro-complainant and contrary to the principles of natural justice since it did not provide the other party an opportunity to put forth its argument prior to its products/contents being taken down by the intermediary.
In 2012, the bill to amend the Copyright Act, 1957 was passed and the new copyright rules were drafted. Consequently, Section 52(1)(b) and 52(1)(c) were included whereby "transient or incidental storage of work for electronic transmission/providing electronic links/access" did not constitute copyright infringement. This was subject to the transmitter/communicator of such work not having grounds to believe that the work being transmitted was an infringing copy. Furthermore, if the transmitter of the work received any intimation/knowledge of infringement from the owner of copyright of the work being transmitted, then the transmitter should stop the transmission/access/communication of such work to public within 36 hours of receiving communication from the copyright owner. Moreover, if the copyright owner did not produce a restraining order from a competent court before the expiry of 21 days from the date of such intimation, the work could then be reinstated/ continued to be transmitted/communicated to public. These provisions are required to be read in conjunction with Rule 75 of the Copyright Rules, 2013 which lay down the details that ought to be included in a copyright infringement intimation filed with an intermediary. These include providing an undertaking of filing a copyright infringement suit against the person responsible for uploading the infringing copy and providing the intermediary with a copy of an order passed by a competent court in this regard. The intermediary, if satisfied with the case made out in the complaint, is obliged to take down such infringing content within 36 hours of receiving the complaint.
The Copyright Rules, 2013 allowed the intermediary to exercise its discretion in removing access/transmission of a work basis the complaint received from the copyright owner. However, under the Trade Marks Act, 1999 no such discretion was available. Therefore, as per Section 79 of the Act the intermediary was bound to remove any reference including products allegedly infringing a trade mark within 36 hours of receipt of the complaint. Concerns were raised regarding this unilateral exercise of rights and rampant misuse. These concerns were addressed in the landmark case of Shreya Singhal vs. Union of India,3 wherein the Supreme Court of India amongst other things also read down Section 79(3) of the Act and ruled that only when an intermediary receives actual knowledge that a court order has been passed to remove or disable access to certain material then it should act on such information and disable access/remove content. This was passed in light of the fact that intermediaries like Google, Facebook etc. receive large number of requests and it would be difficult for them to assess the merit of each such complaint and take down/block content within the limited period of time.
Soon after the Shreya Singhal decision, the division bench of the Delhi High Court in MySpace Inc vs. Super Cassettes Industries4 ("Myspace Decision"), ruled that an intermediary was liable to take down/remove access to infringing content within 36 hours only upon receiving actual notice which also meant that the complainant ought to have provided the specific details and locations of the works which were being infringed, so as to enable the intermediary to identify them. It was further opined that intermediaries can act on actual knowledge and not basis an apprehension. It was, however, also observed that if despite providing such notice the intermediary fails to act, then it could be prevented from claiming the safe harbour exemption. The Delhi High Court observed that intermediaries were mere facilitators of information and if they complied with legal measures they would not be held liable, as it would not only discourage investment, research and development in the internet sector but also in turn could harm the digital economy. With the availability of various online music streaming platforms, online marketplaces and Over the Top media services (both national and international) such as Netflix, ALTBalaji, Amazon Prime, Hotstar etc. (collectively referred to as "online platforms"), it has become considerably easier for consumers to access digital content. With this mushrooming of online platforms, the availability of infringing content has also increased exponentially. The access to infringing content online is not only counter-productive to the intellectual property right holders', but also to the economy. For example, online media platforms sector is projected to grow into a 52,683 million USD (3,432,044 million INR) industry by 2022 and therefore is a major boost to the Indian media and entertainment industry thereby making it imperative for the judiciary to adopt appropriate and creative measures to curb illegal content or infringing activities. While this division bench decision provided a breather for intermediaries hosting contents/providing access to content, there was an increase in digital piracy which was affecting the revenues earned by copyright owners, during this period. The MySpace Decision also provided a breather to intellectual property owners who now did not have to obtain court decisions in order to make intermediaries take down infringing content.
Even though actual knowledge is a pre-requisite for an intermediary to take-down infringing content, copyright owners, more particularly movie producers realised that they would suffer losses due to digital piracy if they waited till the content actually appeared on the intermediary websites. Thus, such copyright owners started filing quia-timet suits seeking injunctions against websites which they suspected were likely to host infringing content. Quia-timet actions are pre-emptive suits filed on the pretext of an anticipated infringement by demonstrating (i) imminent danger even if there is no actual damage; and (ii) that the apprehended damage, would be very substantial. Owing to anonymity on the internet, it was not always possible to locate the exact details of the owner of the websites that hosted infringing content or even that of the uploader of infringing content and therefore actions were filed against such unknown offenders, commonly referred to as "John Doe" or "Ashok Kumar" actions i.e. the fictitious name used to refer to defendants in the suit. Courts in India, appreciating the necessity to curb digital piracy started passing broad ex-parte injunction orders against such unknown defendants hosting infringing content on websites/online platforms, commonly referred to as "John Doe" orders.
The Bombay High Court was then faced with a situation in the case of Eros International Media Limited and Ors. vs. Bharat Sanchar Nigam Limited and Ors.,5 in which it held that to grant an order blocking an entire website on the ground of hosting infringing content, it was necessary for the complainant to demonstrate that a comprehensive audit had been conducted to establish the necessity of such a broad blocking order. The Bombay High Court observed caution against the wide nature and extent of the John Doe orders being passed and the necessity to safeguard the interest of honest intermediaries that may be affected by the wide nature of such orders.
Subsequently, the owners of intellectual property rights realised that obtaining a John Doe order against habitual hosts of infringing content is not sufficient to prevent illegal access/communication of work to public. In the event one infringing website is blocked, several mirror websites containing the same infringing content are being created/hosted and the registrant details of such websites are often masked. In such cases, it is cumbersome for the owner of an intellectual property to constantly approach the court for extending the injunction to each new mirror website. This resulted in owners of rights seeking the grant of a 'dynamic injunction' from the Indian courts. This meant that instead of approaching courts, each time a new act of infringement (of an identical nature for the same content) is detected on a mirror website, the existing order of injunction should also be extended to the new infringing site. The purpose of a 'dynamic injunction' order was to reduce the burden on the judiciary and grant the plaintiff immediate remedy.
In the case of Tata Sky Limited vs. National Internet Exchange of India & Ors6, Tata Sky Limited ("Tata Sky") had filed a suit seeking permanent injunction against an individual's unauthorised use of its trademark 'TATA SKY' as part of trade mark, trade name, corporate name, domain name etc. In addition to the above relief, Tata Sky also arraigned the National Internet exchange of India ("NIXI") and Go Daddy LLC as defendants seeking injunction against them from registering domain names which were identical/deceptively similar to its trademark 'TATA SKY'. The Delhi High Court directed NIXI to extinguish the domain name specified in the plaint. However, it was unable to direct NIXI to block or prevent the registration of any other domain name that maybe similar to Tata Sky's domain name i.e. issued a dynamic injunction order. It was further opined that NIXI being a government body, did not have the adjudicatory powers to suo motu determine if the domain name sought to be registered was identical/similar to Tata Sky's trademark registration and therefore such a relief could not be effectively granted.
However, in the case of UTV Software Communication Ltd. & Ors vs. 1337X To and Ors.7 the Delhi High Court proceeded to pass an order of dynamic injunction allowing UTV to extend the effect of an injunction order against mirror websites of the defendants, as and when UTV gained awareness of the same. Thereafter, the Delhi High Court also extended the applicability of dynamic injunctions to include live audio broadcasts/streaming in Channel 2 Group Corporation vs. http://live.mycricketlive.net & Ors.8 wherein an ex-parte interim order was passed restraining almost 100 entities from audio broadcasting the ICC Men's Cricket World Cup 2019. The Delhi High Court also directed the search engines to take down/delete from their search results pages/listings of websites that were infringing such broadcasting rights.
On another note, intermediaries such as e-commerce platforms have recently also been held liable if they are found to be aiding or inducing or involved in the commission of an unlawful act and have been denied the benefit of the safe harbour provisions. In the case of Christian Louboutin SAS vs Nakul Bajaj & Ors,9 ("Nakul Bajaj Case") the defendants – i.e. luxury goods e-commerce portal Darvey's.com which provides its users access to luxury products upon the payment of non-refundable membership fees was held liable for infringement. Christian Louboutin ("Louboutin") contended that the products sold on the e-commerce platform bearing Louboutin's trademarks, were not authorised for sale by Louboutin and were not genuine products. The fact that Louboutin's trade marks were used as ad-words and meta-tags for promoting the website was a significant factor and was also impugned as infringing use. The Delhi High Court ruled in favour of Louboutin and was of the view that the e-commerce portal was also providing an assurance regarding the genuineness of the products hosted therein. Thus, it was not merely acting as a conduit but was equally responsible for infringement in the present suit. The Court ruled that in the present facts and circumstances since the defendant was directly involved in and benefitting from the infringing activities it could not seek refuge under Section 79 of the Act. However, recently in the case of M/s Clues Network Private Limited vs. M/s L'oreal,10 the division bench of the Delhi High Court disagreed with the reasoning given in the Nakul Bajaj Case and set aside an order of a single judge which placed reliance on the ratio of the Nakul Bajaj Case. The division bench opined that the determination of whether or not an e-commerce website is beyond the purview of the definition of an intermediary is to be determined at the stage of trial after parties lead evidence and no conclusion ought to be arrived at merely on the basis of the pleadings in a plaint as to whether an e-commerce platform is an intermediary or not.
Similarly, in the recent case of Amway India Enterprises Pvt. Ltd. and Ors. vs. 1MG Technologies Pvt. Ltd. and Ors,11 the single judge of the Delhi High Court ("Single Judge") ruled on a group of suits filed by plaintiffs who were direct selling entities, who claimed their goods could not be sold without a direct selling contract with them. It was contended that various e-commerce platforms (arraigned as defendants in such suits) were selling products of such direct selling plaintiffs, without their authorisation. It was further alleged that the use of their trademark on the e-commerce platforms without authorisation amounted to trademark infringement and passing off. The plaintiffs further put forth that the sale of their products by e-commerce platforms is a breach of the direct selling guidelines of the Ministry of Consumer Affairs. The defendants argued that they were intermediaries and could not be held accountable for the alleged infringement and were entitled to safe harbour exemptions. In response, the plaintiffs contended that they had issued notices to the defendants yet the infringing products were not removed from the e-commerce platforms. The defendants responded to the said notices stating that they were merely intermediaries and did not play an active role in the sale transactions and that the sellers on their platforms were obligated to not infringe any intellectual property rights. In light of the same, the defendants had observed due diligence and could not be held liable for infringement claims. The Single Judge observed that that the use of the plaintiffs' trademarks and the sale of the plaintiffs' products by the defendants violated the plaintiffs' rights in their trademarks and amounted to passing off, misrepresentation and resulted in dilution. Furthermore, the Single Judge held that since the defendants were providing services such as packaging and entering into fresh warranty resulted in the defendants no longer being simply intermediaries since they were "actively" involved in the sale of the plaintiffs' products. The defendants were, accordingly, restrained from advertising, displaying, offering for sale products of the plaintiffs. The Division Bench of the Delhi High Court ("Bench") after hearing a series of appeals12 set aside the order of the Single Judge. The Bench held that the direct selling guidelines do not have the force of law as they were only a model framework and advisory in nature. The Bench explained that merely because the direct selling guidelines were notified in the official gazette, that did not make them law as per Article 13 of the Constitution of India. The Bench also noted that the power to frame the direct selling guidelines can only be traced to the Consumer Protection Act, 2019 which is yet to be notified and therefore the question of direct selling guidelines being treated as law does not arise. The Bench also held that no case for grant of interim injunction was made out as none of the three elements i.e. prima facie case, balance of convenience, irreparable loss and injury were fulfilled. With reference to intermediary liability, the Bench relied on Section 79 of the Act to establish that there is no distinction between active and passive intermediaries as far as the applicability of safe harbour provisions is concerned. It was held that any intermediary "shall not be liable for any third-party information, data or communication link made available or posted by it, as long as it complies with Section 79(2) and (3) of the Act." The Bench also observed that the intermediaries in the instant case (defendants) were providing services (such as sale of goods via third party sellers on their e-commerce platforms) in addition to providing access, in such case they have to show compliance with Section 79(2)(b) of the Act. In other words, they have to show that they (i) do not initiate the transmission; (ii) do not select the receiver of the transmission; and (iii) do not select or modify the information contained in the transmission. In the present case since the defendants do not initiate any transaction on their websites per se, neither do the defendants select the receiver of the information on their websites, it is in fact easily accessible for all and the defendants also cannot modify the information provided by the seller on its portal. It was thus held that they were qualified to avail of the exemption under Section 79(2) of the Act. The Bench concluded that in light of the given factual scenario, the defendants could claim the safe harbour exemption and the Single Judge had erred in ruling otherwise.
Whilst the above cases have ruled on the fate of online marketplaces, the position with regard to social media platforms has been slightly different. As regards social media platforms such as Facebook and Instagram, a stricter approach has been adopted while providing exemption for intermediaries. Very recently, in the case of Facebook Inc. vs. Surinder Malik13, an appeal was filed before the Delhi High Court against an order passed in a suit instituted against entities that were allegedly infringing a trade mark 'DA MILANO' by posting advertisements and offering to sell products under the trade mark 'DA MILANO' on various social media platforms such as Facebook and Instagram. The Delhi High Court in its order reiterated that an intermediary was liable to remove the infringing content as and when it was notified of the same by the plaintiff within the prescribed statutory time frame i.e. 36 hours and in the event of any doubt as to the violative nature of the posts sought to be removed, Facebook/Instagram will immediately inform the plaintiffs of the same.
In the recent case of Swami Ramdev & Anr. vs. Facebook, Inc. & Ors.14, the Delhi High Court has gone one step further and has passed an order directing geo-blocking of the defamatory content that was hosted/circulated on certain social media platforms. Ordinarily injunction orders require intermediaries to remove the infringing/defamatory content only for the territory of India i.e. such content may continue to be accessible outside India. However, "geo-blocking" means that the infringing/defamatory content will have to be blocked everywhere in the world provided, such content was uploaded from/in India. It was held that Section 75 of the Act has extra territorial application and extends to offences or contraventions outside India, so long as the computer system or network is located in India. It remains to be seen, if in the near future, courts proceed to grant similar geo-blocking orders to secure the interests of the right holders even in intellectual property disputes.
The aforementioned gamut of cases show case the journey of Indian courts in interpreting the safe harbour exemption usually applied to intermediaries when they are implicated in intellectual property suits. The Indian courts have become willing to take steps that consider the interests of the right holders and have even taken recourse to international judicial precedents when adjudicating matters. The draft Intermediary Guideline (Amendment) Rules, 2018 were published in 2018 but are yet to come into force. As the role of intermediaries continues to evolve and become intricately connected with our daily lives, it is necessary that a balance is maintained in granting exemptions and imposing liability on intermediaries. The Indian courts have focused on the degree of involvement of an intermediary in an infringing activity at the time of determining its liability or granting exemption in a suit for infringement of trademarks and/or copyright. Since there is a shift in the paradigm with several entities providing services as intermediaries, it is the need of the hour to strike a delicate balance between the rights of proprietors of trademarks and the exemptions that an intermediary is permitted to seek under the Act.
1. Avnish Bajaj v. NCT (2005) 3 Comp LJ 364 (Del).
2. IT (Amendment) Act, 2008 - with effect from 27 October 2009.
3. (2013) 12 SCC 73
4. FAO(OS) 540/2011, C.M. APPL.20174/2011, 13919 & 17996/2015
5. CS 620/2016.
6. CS(COMM) 1202/2016
7. CS(COMM) 724/2017
8. CS(COMM) 326/2019
9. CS (COMM) 344/2018
10. RFA (OS) (COMM) 1/2019
11. CS (OS) 410/2018, CS (OS) 453/2018, CS (OS) 480/2018, CS (OS) 531/2018, CS (OS) 550/2018, CS (OS) 75/2019 and CS (OS) 91/2019.
12. FAO (OS) - 133/2019, 134/2019, 135/2019, 141/2019, 142/2019 and 157/2019.
14. CS (OS) 27/2019.
The content of this document do not necessarily reflect the views/position of Khaitan & Co but remain solely those of the author(s). For any further queries or follow up please contact Khaitan & Co at email@example.com