User:Madhavshankar1993/sandbox/Super Cassettes Industries Limited v. MySpace Inc. and Ors.

Super Cassettes Industries Limited v. MySpace Inc. and Ors.

I.Background of the case: Super Cassettes Industries Limited is an Indian record company which carries out the business of producing cinematographic work, musical works, and sound recordings. The company generates its revenue through exploiting the copyrights it holds in the works it produces. MySpace, who is the defendant, is an internet intermediary invested in the business of facilitating social networking and entertainment. Notably, MySpace is an intermediary which sources its content from its users. It is a website where users can upload, share, and transmit music, pictures, and videos including cinematographic works. In December 2008 Super Cassettes Industries Limited (better known as ‘T-Series’) filed a suit in the High Court of Delhi seeking permanent injunction in order to restrain the defendants (MySpace and others) from indulging in copyright infringement by “reproducing, adapting, distributing, communicating, transmitting, disseminating or displaying on their website www.myspace.com, www.in.myspace.com or any subdomain thereof or otherwise infringing in any manner the cinematographic films, sound recordings and/or the underlying literary or musical works in which the Plaintiff owns exclusive, valid and subsisting copyright”. Conflict arose through a series of events the beginning of which can be traced to 2007 when pursuant to subscription of a non disclosure agreement T-Series entered into negotiations with MySpace to grant MySpace licenses to use its copyrighted material. Negotiations broke down. In January 2008 the defendants offered the plaintiff to go for its ‘registration of rights management tool program’. The plaintiff then sent the defendants a legal notice dated February 20, 2008 enumerating its copyrights in the material purportedly being used by the defendants on their website. A month later the defendants replied to the notice stating that such material shall not be used on their website in future. The plaintiff in December 2008 found out that the material was still being used on the website and brought a suit restraining copyright infringement seeking an injunction as relief and damages from the Delhi High Court. SCIL (the plaintiff) in its plaint stated that its copyright in was being violated pursuant to the provisions given under section 51(a)(i) and 51(a)(ii) of the Copyright Act,1957.

II. Issues discussed: The issues which were decided upon by the court have been listed in this section of the case analysis. A) Intermediary Liability The most relevant issue for the purpose of this case from a copyright and policy point of view was the issue of liability of an online intermediary in case of copyright infringement arising from user generated content.

B) Providing place for infringing activities for profit The second issue is related to section 51(a)(ii) of the Copyright Act, 1957 the plaintiff argued that MySpace was engaging in profit making activities by providing ‘space’ to users infringing SCIL’s copyrights.

C) Knowledge (or lack thereof) of infringement The third issue that was raised by the plaintiffs was that the defendants had knowledge of the infringing material on their website

D) Blanket injunction The next question addressed by the court was whether the injunction sought was non specific, general in nature, and impermissible in law.

E) Primary acts of infringement The issue of copyright infringement was raised by the plaintiff. The plaintiff claimed violation of its copyright as per section 51(a)(i).

F) Jurisdictional issue This issues purports to the question whether defendants are liable to be tried by the courts in the United States of America or India?

III. Key arguments raised by the parties: A) On intermediary liability The counsel for MySpace relied on section 79 of the Information Technology Act of 2000 to avail of the ‘safe harbour’ provision under Indian law.  In opposition to it, it was argued by the plaintiff that this provision shall not be applicable in light of the proviso to section 81 of the IT Act, 2000. To which the counsel replied by arguing that the IT Act must be construed harmoniously so as to not defeat the purpose of the safe harbour provision given under section 79.  The defendants also sought to rely on the safe harbour provision under the US Digital Millennium Copyright Act. The basis for the ‘safe harbour’ provision in many jurisdictions across the world is that the intermediary only provides the platform for sharing and communicating content and acts as a messenger between various users across the world. If the intermediary is only facilitating communication, infringement of copyright cannot be attributed to the intermediary as it is only acting as a message board. Furthermore, MySpace by showing safeguards and terms of use which it uses to prevent copyright infringement and practically curb infringement, and by presenting such practices and terms of use before the court sufficiently displayed that it did not intend to actively facilitate or encourage infringement. The defendant had used ‘The Hash Block Filter’, ‘Take Down Stay Down’ (both applications stop users from reposting infringing content), and the ‘Rights management tool’ which is available for all copyright holders to use for free after registration. MySpace also stated in its written statement that apart from the aforementioned technological measures, it followed the notice and takedown procedure and that procedure complying with US DMCA was in place. It was contended by SCIL that the notice and takedown procedures are an inefficient method to stop infringement at the first instance itself (when material is first uploaded on the website) and that following the US DMCA procedure is not relevant and that the case must be decided according to the Indian law. B) Providing place for infringing activities for profit Mr. Sibal, the counsel for plaintiff argued that as MySpace had put up advertisements on the website, defendant clearly engaged in profit making activity and the acts come within the ambit of section 51(a)(ii). The contention of the defendants regarding this issue was that the advertisements were put up only with regards to the licensed content. Additionally, advertisements were facilitated by search engines on the webpage. Search engines used the keywords typed in by the user and that MySpace did not actively control or choose the advertisements.

C) On knowledge or lack thereof In arguing that the defendants could not be shielded by the exception of lack of knowledge under section 51(a)(ii) of the Copyright Act, 1957 the plaintiff claimed that the defendants were aware of the infringement and had reasonable ground to believe that the communication facilitated by MySpace would lead to infringement of the plaintiff’s copyrights. The counsel for plaintiff, for this purpose, relied on the fact that the defendant had adopted safeguards in its terms of use and had installed applications to tackle infringement. (safeguards because of DMCA regulations) The defendants argued that it could not be held liable because it had no knowledge of specific infringement of plaintiff’s and could not be reasonably expected to have knowledge because firstly, it had no control over the material that was being uploaded, and secondly, because it was impossible to segregate lawful from potentially unlawful content because of the sheer magnitude of the content which was uploaded daily on the website. It was argued by the defendants that as they allowed users to post content and as it was practically impossible for them to monitor every piece of potentially infringing work before being posted on the website, the only manner in which they could have identified an infringing work was when it was bought to their notice by the party whose material was being infringed.

D) Arguments on jurisdiction The defendants argued that the court lacks jurisdiction since the defendant is liable to be tried by the courts in the United States of America as it works for gain and resides in the United States of America. It was also argued that MySpace has not entered into the Indian market via any commercial transactions and does not specifically target Indian users.

IV. Ruling of the court: The Court ruled that MySpace had infringed SCIL’s copyrights under section 51 (a) (ii) of the Copyright Act, 1957. The court concluded that a webpage on the internet is analogous to “place” as used in section 51(a)(ii) and advertisements on the webpage were sufficient to qualify as profit under section 51(a)(ii). As for the knowledge issue, the court agreed with Mr. Sibal’s contentions stating that existence of safeguards shows reason to believe in potential infringement. The court also took as evidence showing reason to believe that infringement would occur, the fact that MySpace modified the format of the content before posting it online. As regards section 79, the court decided that due to the proviso in section 81, preference will be given to copyright holders’ rights over the safe harbour given to websites. The court rejected the defendants’ contention that it is not possible to monitor data before uploading it on the website due to enormity of data. The court held, “there is no reason to axiomatically make each and every work available to the public solely because user has supplied them unless the defendants are so sure that it is not infringement.” Finally, the court ruled that Indian law is distinguished from the DMCA in the respect of post infringement measure. While such measures may satisfy the requirements of DMCA, Indian law requires intermediaries to prevent infringement at the threshold.

IV. Significance of the decision: Firstly, the court’s ruling is significant for it recognised that the concept of “place” under section 51 is applicable to virtual space as well. But in doing so it went only so far as to merely acknowledge the fact of existence of virtual space and grossly ignored the way intermediaries function online. Had it paid heed to the manner of operation of intermediaries, the court would have clearly seen fault in requiring intermediaries to bear with the burden of stopping infringement at the threshold. Secondly, provision of safe harbour under the IT Act has been rendered incapable of providing immunity to an intermediary, if that intermediary can be proceeded against under the Copyright law. Sections 51 (a) (ii) and 63 of the Copyright Act exist even if a person has fulfilled all requirements under section 79 and if the intermediary can be made liable under the Copyright Act. Thirdly, section 79(3)(b) of the IT Act states that websites shall not be held liable if “upon receiving  actual  knowledge,  or  on  being  notified” of the unlawful material, it “removes or disables access to that material on that resource without vitiating the evidence in any manner”. Court gave no reasons to arrive on the conclusion that this section doesn’t uphold post infringement takedown. The ruling has engaged in an exercise of misreading Indian law on intermediary protection. In effect, there is no substance in saying that Indian law truly follows the safe harbour rule. The way in which the Indian parliament had left this lacuna in the safe harbour law made it very difficult for websites based in India to operate without apprehensions of being held liable for not complying with unduly onerous requirements of checking for copyright infringement before uploading content on the internet. Copyright Amendment Act of 2012 has a significant bearing on this issue. Section 52(1)(b) of the amended Act states, “transient or incidental storage of a work or performance purely in the technical process of electronic transmission or communication to the public” will not violate copyright. Section 52(1)(c) provides, “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, unless the person responsible is aware or has reasonable grounds for believing that such storage is of an infringing copy” would not amount to copyright violation. Although some relief has been provided to intermediaries through the 2012 amendment Act, it is difficult to predict what shall be the outcome of the clauses. It depends rather on the interpretation given to these by courts in future cases. Primary concern here is that the terms “transient” and “incidental” may be construed too narrowly by the courts and may exclude social media platforms which store media in the users’ accounts for duration longer than thought fit by the courts. As for the interests of the right holders, it seems that 52(1)(c) provides a notice-takedown procedure which should keep prayers for blanket injunctions like we have seen here at bay.

V. Critical analysis of the decision from a comparative (US and EU) perspective: A) USA US law relies on the DMCA to handle copyright violations. The safe harbour rules under the DMCA provide safe harbour for (a) the provision of a network for transitory communications; (b) system caching; (c) storage of information on systems or networks at the direction of users and (d) information location tools.   Further, the requirement for availing safe harbour is fulfilled if the website complies with the copyright holder’s request by removing the infringing content on receiving notice from the right holder. Apart from the protection afforded under the DMCA, section 230 of the Communications Decency Act states, "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider".  This section provides an intermediary friendly legal environment for websites in the United States of America. A critical analysis of this decision in comparison to the US law warrants an explanation of the reasons behind the post infringement removal under the US law. It is only practical that websites are not supposed to monitor the entirety of user generated content before uploading. That would entail enormous and unsustainable costs for the website. Further comparison with US intermediary law will reveal that court overlooked the possibility of a test similar to the red flag test propounded in Viacom v. Youtube.

B) European Union The EU law in this regard is governed by the E-Commerce Directive provides immunity to websites so long as they have not started the transmission. This type of safe harbour does not recognise the “notice and take down” system.  The EU law under Article 12(3) of the E-Commerce Directive reserves as exception the power of the member countries to order the service provider to take action on the infringing activity, through their respective legal systems.  Article 15 of the EU safe harbour scheme provides that service providers are not under any “general obligation to monitor” illegal or potentially infringing material content. Article 14 states that services will not be liable for third party content where the internet intermediary had no actual knowledge of illegal activity or information knowledge and upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information. Unlike the US law, the EU law applies to other illegal activities as well, such as trademark infringement. Additionally EU law requires member states to grant right holders injunction against intermediaries used by third parties to engage in infringing activities. Comparing MySpace case with EU legal regime we come across two major cases of the Court of Justice of European Union providing guidance to national courts on issues of blocking infringing websites and filtering infringing material. In L’Oreal SA v. Ebay, CJEU held that pursuant to Directive 2004/48/EC national courts concerned with enforcement of IPRs must order operators to engage in behaviours which end infringement and at the same time do not create trade barriers to online services. In Scarlet v. SABAM, CJEU held that although national courts have the power to block infringing websites through injunctions when reasonably required and order websites to adopt filtering methods, such orders must not violate the provisions of EU e-commerce directive and must respect the balance between intellectual property and the freedom to conduct online businesses.