Super Cassettes v. MySpace (Redux)

 

On 23rd December 2016, Justice Ravindra Bhat and Justice Deepa Sharma of the Delhi High Court delivered a decision overturning the 2012 order in the matter of Super Cassettes Industries Limited v. MySpace. The 2012 order was heavily criticized, for it was agnostic to the technological complexities of regulating speech on the Internet and cast unfathomable burdens on MySpace. In the following post I summarise the decision of the Division Bench. Click here to read the judgment.

Brief Facts

In 2007, Super Cassettes Industries Limited (SCIL) filed a suit against MySpace, a social networking platform, alleging copyright infringement against MySpace. The platform allowed users to upload and share media files, inter alia, and it was discovered that users were sharing SCIL’s copyrighted works sans authorisation. SCIL promptly proceeded to file a civil suit against MySpace for primary infringement under section 51(a)(i) of the Copyright Act as well as secondary infringement under section 51(a)(ii).

The 2012 order was extremely worrisome as it had turned the clock several decades back on concepts of internet intermediary liability. The court had held MySpace liable for copyright infringement despite it having shown no knowledge about specific instances of infringement; that it removed infringing content upon complaints; and that Super Cassettes had failed to submit songs to MySpace's song ID database. The most impractical burden of duty that the court pronounced was that MySpace was required to pre-screen content, rather than relying on post-infringement measures to remove infringing content. This was a result of interpreting due diligence to include pre-screening.

The court injuncted MySpace from permitting any uploads of SCIL's copyrighted content, and directed to expeditiously execute content removal requests. To read CIS' analysis of the Single Judge's interim order, click here.

In the instant judgment, the bench limited their examination to MySpace’s liability for secondary infringement, and left the direct infringement determination to the Single Judge at the subsequent trial stage. In doing so, the court answered the following three questions:

1) Whether MySpace could be said to have knowledge of infringement so as to attract liability for secondary infringement under Section 51(a)(ii)?

No. According to the Court, in the case of internet intermediaries, section 51(a)(ii) contemplates actual knowledge and not general awareness.

Elaborating re the circumstances of the case, the Court held that to attract liability for secondary infringement, MySpace should have had actual knowledge and not mere awareness of the infringement. Appreciating the difference between virtual and physical worlds, the judgment stated “the nature of internet media is such that the interpretation of knowledge cannot be the same as that is used for a physical premise.”

As per the court, the following facts only amounted to a general awareness, which was not sufficient to establish secondary liability:

1. Existence of user agreement terms which prohibited users from unauthorised uploading of content;
   
2. Operation of post-infringement mechanisms instituted by MySpace to identify and remove content;
   
3. SCIL sharing a voluminous catalogue of 100,000 copyrighted songs with MySpace, expecting the latter to monitor and quell any infringement;
   
4. Modifying videos to insert ads in them: SCIL contended that MySpace invited users to share and upload content which it would use to insert ads and make revenues – and this amounted to knowledge. The Court found that video modification for ad insertion only changed the format of the video and not the content; further, it was a pure automated process and there was no human intervention.

Additionally, no constructive knowledge could be attributed to MySpace to demonstrate reasonable ground for believing that infringement had occurred. A reasonable belief could emerge only after MySpace had perused all the content uploaded and shared on its platform – a task that was impossible to perform due to the voluminous catalogue handed to it and existing technological limitations.

The Court imposed a duty on SCIL to specify the works in which it owned copyright and being shared without authorisation on MySpace. It held that merely giving names of all content it owned without expressly pointing out the infringing works was contrary to the established principles of copyright law. Further, MySpace contended and the judge agreed, that in many instances the works were legally shared by distributors and performers – and often users created remixed works which only bore semblance to the title of the copyright work.

In such cases it becomes even more important for a plaintiff such as MySpace to provide specific titles, because while an intermediary may remove the content fearing liability and damages, an authorized individual’s license and right to fair use will suffer or stand negated. (Para 38 in decision)

Thus, where as MySpace undoubtedly permitted a place of profit for communication of infringing works uploaded by users, it did not have specific knowledge, nor reasonable belief of the infringement.

2) Does proviso to Section 81 override the "safe harbor" granted to intermediaries under Section 79 of the IT Act, 2000?

and

3) Whether it was possible to harmoniously read and interpret Sections 79 and 81 of the IT Act, and Section 51 of the Copyright Act?

No, the proviso does not override the safe harbor, i.e. the safe harbor defence cannot be denied to the intermediary in the case of copyright actions.The three sections have to be read harmoniously, indeed.

The judgment referred to the Parliamentary Standing Committee report as a relevant tool in interpreting the two provisions, declaring that the rights conferred under the IT Act, 2000 are supplementary and not in derogation of the Patents Act or the Copyright Act. The proviso was inserted only to permit copyright owners to demand action against intermediaries who may themselves post infringing content – the safe harbor only existed for circumstances when content was third party/user generated.

Given the supplementary nature of the provisions- one where infringement is defined and traditional copyrights are guaranteed and the other where digital economy and newer technologies have been kept in mind, the only logical and harmonious manner 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. (Para 49 in decision)

Regarding section 79, the court reiterated that the section only granted a limited immunity to intermediaries by granting a measured privilege to an intermediary, which was in the nature of an affirmative defence and not a blanket immunity to avoid liability. The very purpose of section 79 was to regulate and limit this liability; where as the Copyright Act granted and controlled rights of a copyright owner.

The Court found Judge Whyte’s decision in Religious Technology Centre v. Netcom Online Communication Services (1995), to be particularly relevant to the instant case, and agreed with its observations. To recall, Netcom was the landmark US ruling which established that when a subscriber was responsible for direct infringement, and the service providers did nothing more than setting up and operating tech systems which were necessary for the functioning of the Internet, it was illogical to impute liability on the service provider.

On MySpace Complying with Safe Harbor Requirements under Section 79 of the IT Act, 2000 (and Intermediary Rules, 2011)

The court held that MySpace's operations were in compliance with section 79(2)(b). The content transmission was initiated at the behest of the users, the recipients were not chosen by MySpace, neither was there modification of content. On the issue of modification, the court reasoned that since modification was an automated process (MySpace was inserting ads) which changed the format only, without MySpace's tacit or expressed control or knowledge, it was in compliance of the legislative requirement.

Despite several safeguard tools and notice and take down regimes, infringed videos find their way. The remedy here is not to target intermediaries but to ensure that infringing material is removed in an orderly and reasonable manner. A further balancing act is required which is that of freedom of speech and privatized censorship. If an intermediary is tasked with the responsibility of identifying infringing content from non-infringing one, it could have a chilling effect on free speech; an unspecified or incomplete list may do that. (Para 62 in decision)

On the second aspect of due-diligence, the court held that Mypace complied with the due diligence procedure specified in the Rules - it published rules, regulations, privacy policy and user agreement for access of usage. Reading Rule 3(4) with section 79(2)(c), the court held that it due diligence required MySpace to remove content within 36 hours of gaining actual knowledge or receiving knowledge by another person of the infringing content. If MySpace failed to take infringing content down accordingly, then only will safe harbour be denied to MySpace.

This liberal interpretation of due diligence is a big win for internet intermediaries in India.

Additional Issues Considered by the Court

MySpace also tried to defend its activities by claiming the shield of the fair dealing section of the Indian Copyright Act. However, the Court refused, stating that the fair dealing defence was inapplicable to the case as the provisions protected transient and incidental storage. Whereas, in the instant circumstances, the content in question was stored/hosted permanently.

MySpace also contended that the Single Judge's injunction order was vague and general and had foisted unimplementable duties on MySpace, disregarding the way the Internet functioned. If MySpace had to strictly comply with the order, it would have to shut its business in India. The Court said that the Single Judge's order, if enforced, would create a system of unwarranted private censorship, running contrary to the principles of a free speech regime, devoid of considerations of peculiarities of the internet intermediary industry. Private censorship would also invite upon the ISP the legal risk of wrongfully terminating a user account.

Finally, the Court urged MySpace to explore and innovate techniques to protect the interests of traditional copyright holders in a more efficient manner.

Relief Granted

Setting aside the Single Judge's order aside, the Court directed SCIL to provide a specific catalogue of infringing works which also pointed to the URL of the files. Upon receiving such specific knowledge, MySpace has been directed to remove the content within 36 hours of the issued notice. MySpace will also keep an account of the removals, and the revenues earned from ads placed for calculating damages at the trial stage.