ABSTRACT: This article identifies that the trajectory of decisions from Sony to Grokster by the Supreme Court of the United States have resulted in three divergent outcomes on the imposition of secondary liability under copyright laws. This article seeks to distinguish between the landmark decisions made in the Sony, Napster, Aimster and Grokster cases in order to determine the test that is most relevant today under copyright laws. It also seeks to analyse the application of the principles developed in these cases in Indian Intellectual Property (IP) laws. While the Indian Copyright Act of 1957 has laid down the law applicable to direct and indirect infringers of copyright, the two path breaking decisions of the U.S. Supreme Court in Sony and Grokster have formed the basis of the argument that secondary infringement extends beyond what is enumerated under the Indian statute. In this context, this article explores the emerging trends in Internet service provider (ISP) liability in India and the safe harbour provisions under the Information Technology Act 2000. The article further explores the question of whether these laws would potentially destroy the business model of file sharing, and how this factor was a primary concern in the most recent amendment to the Indian Copyright Act in 2012.
Secondary liability refers to the provision of liability on the basis of acts committed by another. In the United States (U.S.), the Copyright Act of 1909 did not provide any statutory provision against secondary infringers.1 While a provision dealing with this issue was later added, it was largely diluted and was inapplicable to copyright works in general.2 Yet, in the field of patent law, Congress drafted statutory provisions that branded those who actively induced patent infringement or those who met the definition of contributory infringer, as a secondary infringer. This clearly shows a lacuna in the law relating to copyright, in relation to imposing liability for the acts of others. However, a long line of cases both under the 1909 Act and the current Act in the U.S. impose liability for acts of infringement committed by others in certain circumstances. Hence, as enumerated by the Supreme Court in the landmark Sony judgment3 ,
‘the absence of such express language in the copyright statute does not preclude the imposition of liability for copyright infringement on certain parties who have not themselves engaged in the infringing activity. For vicarious liability is imposed in virtually all areas of the law, and the concept of contributory infringement identifies when one can be held accountable for the actions of another.’
In India, the laws relating to secondary liability are codified under the Copyright Act of 1957 in section 51 (a) (ii) and (b). These two provisions hold liable those infringing acts done in assistance of primary infringement, and those which accentuate the effect of a primary infringement that has already occurred. Section 51 (a) (ii) covers acts done in assistance of primary infringement. If the infringer proves that he had no reasonable ground to believe that such communication to the public would be an infringement of copyright it would act as a defence to this section. Section 51 (b) on the other hand provides for four instances where secondary liability can be imposed when there is an existing infringing copy which is used for the purpose of trade by the secondary infringer as in the situations enumerated in the Section.
In this paper, the author proposes to analyse secondary liability under U.S. and Indian copyright laws. This has been done by conducting a critical appraisal of the extensive principles on secondary liability developed by the U.S. courts in the four landmark decisions of Sony, Napster, Aimster and Grokster, and the legislative provisions in the Copyright Act 1957 in India and its most recent amendment in 2012. The author further analyses the recent judgment of the Delhi High Court in the MySpace litigation in order to make the argument that not only are the principles in Sony and Grokster applicable in the Indian context but also that secondary infringement extends beyond what is enumerated under the Indian statute.
This has been done by first studying the U.S. position on secondary liability under copyright law. Secondly, the Indian position on secondary liability. Thirdly, the author analyses the recent changes in the Indian position and whether these changes have been drawn from the principles developed by the U.S. Courts.
From Vicarious Liability to Inducement: The U.S. Position on Secondary Liability under Copyright Law
Before examining how liability based on the acts committed by another can be imposed, it is important to establish who is culpable as the direct infringer of a copyright. The Copyright Act states that direct liability is imposed on the human being who engages in reproduction, distribution, or other acts of ‘copying”’.4 It is interesting that in almost all copyright cases, the direct infringer is simply a part of a much larger web. Therefore, there are numerous instances where a person has been held liable even if he had not personally duplicated a particular design.5 Liability based on the acts committed by another can be imposed through three methods, namely, vicarious liability, contributory infringement or inducement.
The elements of vicarious liability
Vicarious liability under copyright can be established by satisfying two independent elements. The first is that the defendant must have the right and ability to supervise the infringing conduct, and secondly, the defendant must have an obvious and direct financial interest in the exploitation of copyrighted materials. Notably, the lack of knowledge that the direct infringer is engaged in infringing conduct is not a defence when imputing secondary liability.6
The House Report states that the current Copyright Act in the United States draws from the jurisprudence of the 1909 Act and intends to codify the previous law that a person who violates any of the exclusive rights of the copyright owner is an infringer including persons who can be considered related or vicarious infringers.7 In order to establish that one is a vicarious infringer in relation to performing rights, he must actively operate or supervise the operation of the place where the performance took place, or have control over the infringing performances content, or anticipate commercial gain and benefit either directly or indirectly from the said infringing performance. An example of this is where the proprietors of a ballroom or a night club are held liable for copyright infringement committed by an independent contractor such as an orchestra leader performing at their establishment.8
In the copyright laws codified under 1909 Act, it was held that the lessor of a theatre is not liable for infringing performances merely on the basis of the position held by him.9 In the same manner, it was held that the landlord of a premise where infringing works are sold will not be liable as well.10 In contrast, the owner of a place of entertainment who plays an active role in operating and supervising the operation of the establishment will be liable for infringements occurring on the premises.11
Apart from the cases cited above on the violation of performance rights, when looking at liability for violation of reproduction and distribution rights, the 1963 case of Shapiro Bernstein & Co. v. H.L. Green Co.12 held that the landlord of premises where infringing works are sold will be liable for sales where he has the ability and right to supervise the activities of the tenant and is further paid a rent on the basis of a share of the proceeds from the tenant’s sales. Based on this authority, the famous judgment in Fonovisa Inc. v. Cherry Auction Inc.13 where 38,000 counterfeit recordings were seized, held that the landlord of a swap meet was vicariously liable for the sale of infringing works on his premises. Regardless of the low daily rental fee paid by each vendor there, it was held that the defendants reap substantial financial benefits from admission fees, concession stand sales and parking fees, all of which come directly from the customers who want to buy the counterfeit recordings at bargain prices. In contrast, the existence of 100 unauthorised computer programmes at a trade show was held to not impute ability to supervise and direct on the part of the landlord in the case of Adobe Sys. Inc.v. Canus.14 The recent judgment in Perfect 10 Inc v. Cybernet Ventures Inc.15 rejected the application of the decision in Adobe v. Canus to a case where a service afforded access to 10,000 infringing images. However, since there were over 20 million images on the participating websites, it is unclear as to why the court concluded that the comparatively smaller proportion of alleged infringements amounted to a significant draw attracting customers. A better ruling was given in Ellison v. Robertson16 in the same year, where the unauthorised uploading of a Harlan Ellison Novel to alt.binaries.e-book was held to not provide a direct financial benefit to AOL. The reasoning behind this was that there was no evidence to indicate that AOL customers either subscribed because the infringing material was available, or that they cancelled subscriptions because it was no longer available, therefore vicarious liability was absent as a matter of law.
Even though many of these cases have attached liability under these circumstances as an application of the principle that a master is civilly liable for the wrongful acts of his servant, vicarious liability vis-à-vis secondary liability exceeds the traditional scope of the master/servant theory. For instance, even when an orchestra that is hired exclusively plays its own music and is an independent contractor, the proprietor of the dance hall can be held liable for an infringing performance. Therefore, it is important to note that as long as the two elements of vicarious liability mentioned in the beginning of this chapter are present, even in the absence of an employer employee relationship, parties can be held liable as related defendants.17
The relaxation of the requirement of a ‘direct benefit’ from copyright infringement
Earlier case law required the benefit from the copyright infringement to be direct; the courts have relaxed this standard over time. A long list of cases now require a ‘direct or indirect benefit from the infringing performance’ to establish vicarious liability. In the Fonovisa judgment analysed above, the actual receipts to the defendant were generalised, rather than traceable directly to the infringement. This was further relaxed in the landmark judgment of A & M Records Inc. v. Napster Inc.,18 where in the absence of any revenue receipts, the hope for future financial gain was held to be sufficient for this test. Therefore, it can be said that an obvious and direct financial interest is now understood to mean even a possible indirect benefit.
In addition to this, when examining the other element of vicarious liability, the District Court held that Napster had the ability to supervise because of its advanced methods of blocking users about whom rights holders complain.19 Judge Patel on the basis of this stated that the defendants did have the ability to police its service. The Ninth Circuit20 agreed that Napster’s failure to police the system coupled with showing that it deprived financial benefits from the continued availability of infringing files on its system, leads to the imposition of vicarious liability.21 In the later case of MGM Studios v. Grokster,22 the Ninth Circuit denied vicarious liability in the absence of a registration and log in process. Even after this, the Ninth Circuit in the Perfect 10 case,23 denied that Google was vicariously liable for the infringement of third parties in uploading unauthorised copies of Perfect 10’s copyrighted photographs to their websites; Google was distinguished from Napster and Fonovisa by holding that Google cannot stop any of the third party websites from reproducing, displaying and distributing unauthorised copies of Perfect 10’s images because the infringing conduct takes place on the third part websites.
An analysis of the trajectory of cases from Sony to Groksterin order to understand contributory infringement
There are two types of contributory infringement, namely, personal conduct that forms part of or furthers the infringement, and the contribution of machinery or goods that provide the means to infringe. Participation in infringement occurs when a party who with the knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another. Therefore, if there is knowledge that a particular work constitutes an infringement, then the person who causes another to infringe will be liable as an infringer. A contributory infringer in this context can be described as one who was in a position to control the use of the copyrighted works by others and authorised the use of said work without permission from the copyright owner.24 Providing means to infringe can be described as a situation where, when a person furnishes a copyrighted work to another, and that other person wrongfully copies the work, then the person who furnished the copyrighted work may be liable as a contributory infringer, but not if he had no knowledge of the other parties intention to use the work in an illegitimate manner, or if he imposes a condition on his consent to use the work upon the other person obtaining the consent of the copyright owner.25
The imposition of contributory liability was first explained in the landmark judgment of Sony Corp. v. Universal City Studios Inc.26 Sony manufactured home video recording devices called Betamax used by its users to reproduce various television programmes. A case was filed against Sony on the basis that these were unauthorised reproductions of copyrighted works. The case sought to determine whether off the air videotaping for private use constituted copyright infringement. The District Court held that even if off the air copying did constitute an infringement, the suppliers of the recording equipment were not liable as contributory infringers. This decision was based on the fact that the supplier’s knowledge that the recording equipment might be used by purchasers for infringing purposes was not sufficient to render the sellers liable. The District Court imported the law that was applied to a line of patent cases that held that manufacturers, distributors, retailers and advertisers of staple articles of commerce ‘suitable for substantial non-infringing use’ (SNIU) cannot be held liable as contributory infringers to the present copyright case.27 The Court of Appeal reversed this decision, it did not agree with the District Court’s conclusion that tape recorders, and in particular videotape recorders,(VTR) are suitable for SNIU. It stated that videotape recorders were not suitable for SNIU because virtually all television programming was copyrighted material. The Ninth Circuit, further noting that videotape recorders are manufactured, advertised, and sold mainly for reproducing television programming, concluded that the manufacturers and sellers were therefore, contributory infringers vis-à-vis off the air home taping infringements. The Supreme Court however reversed the decision of the Court of Appeal on the issue of contributory infringement. It revolutionised the concept of contributory infringement with its decision to apply the patent law doctrine relating to staple articles of commerce to the copyright sphere, thereby holding that the manufacture of the VTR and of the tapes was not a contributory infringer.28 The Supreme Court also departed from the reasoning of the District Court on the issue of whether a VTR was capable of commercially SNIU. This was because no serious claim was made that any substantial number of works broadcast by television are unprotected by copyright. It concluded that there are commercially SNIU’s of VTR in time shifting uses, both those authorised, and those unauthorised by the owners of the copyrighted works reproduced. As it was the view of the Supreme Court that unauthorised time shifting29 constituted fair use, and was non-infringing, the issue of contributory liability was overshadowed by the issue of primary liability of those engaging in time shifting. This basis for finding the absence of contributory liability must stand or fall on the court’s underlying determination that time shifting constitutes fair use. The findings of the District Court further led to the Supreme Court to conclude that there was no contributory liability in this case because many producers are willing to allow private time shifting to continue, at least for an experimental time period.
The next landmark judgment on contributory infringement is, A & M Records Inc. v. Napster Inc.30 It involved a technological device where files could be uploaded and downloaded on the service provided by Napster. When Napster in this case argued that their service was a staple article of commerce capable of SNIU, the District Court did not agree, and distinguished it from the Sony case. This was because in the Sony case, the only contact between Sony and the users of Betamax was at the point of sale. And in Napster’s case, not only does Napster Inc. maintain the system, but it also supervises an integrated system that is accessed by its users to upload and download files. Napster’s primary role therefore is clearly the facilitating of unauthorised copying and distribution of established artists’ songs, and this renders Sony inapplicable. On the basis of the above arguments, Judge Patel rejected the contention that Napster had the potential to be used for SNIU at the level of the District Court.
Even the Ninth Circuit rejected the protection claimed by Napster under this doctrine. However, they parted ways with the District Court with some of the reasoning. Judge Breezer rejected the District Court’s ignorance of the system’s capabilities and its focus on current issues. Therefore, regardless of how it was being utilised currently, it was held that the Napster service was capable of SNIU. The Ninth Circuit took the example of its new artists programme, that was vaulting young talent to popularity similar to that of established artists like Britney Spears and Eminem.
However, the Ninth Circuit distinguished between Napster’s architecture and its conduct in relation to actually operating the system where users exchanged songs. It held that the former was similar to manufacturing a VTR and declined to impute the requisite level of knowledge to Napster merely because ‘peer to peer file sharing technology’ may be used to infringe copyrights held by the plaintiff. On the other hand, it finally held that the latter was outside the staple article of commerce doctrine (operating a system where users exchanged songs).This success against Napster resulted in a large number of cases where the recording industry turned its attention to other such peer-to-peer services offering similar functions such as Aimster, Morpheus (StreamCast), KaZaA and Grokster.
In the re Aimster Copyright Litigation,31 the technology in question was a service that piggybacked an AOL-Instant-Messaging service, allowing simultaneous users of an AOL chat room to swap files. Once again, the Seventh Circuit in this case rejected Aimster’s construction of Sony, where they stated that Sony can be constructed to give the seller immunity for a product used solely to facilitate copyright infringement if the product was capable in principle of non-infringing uses. Notwithstanding the possibility of SNIU of the Aimster system, the defendant’s case was based on their inability to offer any evidence that its services were ever used for non-infringing use, let alone evidence of the frequency of such uses.
Judge Posner resolved these issues regarding contributory infringement by using a model similar to that in tort called the least cost avoider. When an internet file sharing service has non-infringing uses, and there are substantial infringing uses as well, in order to avoid liability as a contributory infringer the service provider must show that it would have been disproportionately costly to him to either eliminate or even reduce the infringing uses. In this case, Aimster failed to show the above, by failing to present evidence that the provision of an encryption capability effective against the service provider itself added important value to the service or saved significant cost. Aimster blinded itself in the hope that by doing so it might just come within the parameters of the Sony case.
This decision condemned Aimster’s wilful blindness and equated it to knowledge of guilt. The decision further refused to accord any relief based on Aimster’s refusal to discover the extent to which its system was being used to infringe copyright. This decision also created a circuit conflict because it rejected the Ninth Circuit’s Napster judgment that actual knowledge of specific infringing uses is a sufficient condition for deeming a facilitator a contributory infringer. However, before this conflict could reach the Supreme Court, another case was filed and the problem was once again debated in the Ninth Circuit in the landmark case of Metro Goldwyn Mayer Studios v. Grokster.32
The Grokster case affirmed partial summary judgment in favour of two peer to peer file sharing services that marketed themselves as the next Napster.33 Judge Thomas in this case upheld the finding that peer to peer software was capable of SNIU. The Ninth Circuit held the defendants not liable for contributory infringement, due to the architecture of their decentralised system which was different to Napster’s centralised set of servers. It further rejected Aimster’s rejection of Ninth Circuit authority by allowing for the application of a separate blind eye theory of liability.34
Because of this obvious conflict on determining contributory infringement, the Supreme Court reviewed the matter. The Grokster ruling was vacated on the basis that it had introduced a new theory of attempting to induce infringement wherein the Court opined that Sony’s staple article rule will not preclude liability when there are statements or actions directed to promote infringement. This new theory of intent to induce infringement introduced by Grokster will be dealt with in the next portion. In reaching the conclusion to vacate Grokster, the Supreme Court focused exclusively on how to understand the staple article of commerce doctrine. Between the two extreme concurrences by the Justices of the Supreme Court, a question arose as to where the ruling would fall? The standard of an article that is good for nothing else but infringement exceeds the invocation of articles used almost exclusively to infringe copyright. The application of the court’s language could validate a variety of articles, even when their preponderant usage is infringing and even when they are designed for that purpose.35
Intent to induce infringement
In the Grokster judgment, the motion picture industry joined forces with the music industry (recording companies, songwriters’ and music publishers’) as plaintiffs, against the defendants who offered not only access to songs but also the ability for users to swap movies. While the suit was dismissed by the District Court on the strength of Sony, the Ninth Circuit affirmed. Further, the Supreme Court’s grant of a writ of certiorari36 was the first time in two decades that a US Court looked into the issue of copyright liability without being bound by stare decisis i.e. the Sony decision.37
While both sides feared what such freedom could bring, the copyright owners argued that while Sony was still applicable, the Ninth Circuit misapprehended its application, and the peer to peer companies as respondents argued that Sony mandated affirmance. The decision that flowed from the Supreme Court thereafter reaffirmed Sony’s applicability, but it vacated the Ninth Circuit’s decision by creating a new basis for indirect liability.38
The Supreme Court identified two competing issues in the case – on the one hand, copyright’s goal of supporting creative pursuits, and on the other, limiting infringement liability in order to promote innovation in new communication technologies. The Court in the end seemed to side with the first point due to their concern that the digital distribution of copyrighted material threatens copyrighted holders like never before, as every copy is identical to the origin, it is easy to do and many people download these copyrighted files through file sharing sites.39 Considering the vast number of people who engaged in this type of infringement, and all of them are using this product to commit infringement, it is impossible to enforce rights in the protected works effectively against all direct infringers. Therefore, the only meaningful alternative is to go against the distributor of the copying device for secondary liability on the basis of a theory of contributory or vicarious infringement.40
Grokster held Sony’s safe harbour inapplicable, even to a product capable of substantial lawful use, when an actual purpose to cause infringing use is shown by evidence independent of design and distribution of the product. Thereby Grokster vacated the Ninth Circuit ruling where liability was found only if the distributors had specific knowledge of the infringement at a time at which they contributed to the infringement and failed to act on that knowledge. It also held that Sony did not displace the other theories of secondary liability and did not require the court to ignore evidence of intent. Therefore, where evidence goes beyond a product’s characteristics or the knowledge that it may be put to infringing uses, and shows statements or actions directed to promoting infringement, Sony’s staple article rule will not preclude liability.41
Grokster introduced intent to induce infringement, for example where an unlawful purpose is advertised. Instructing how to engage in infringing conduct, or encouraging infringing conduct would equally amount to intent sufficient to hold the party liable. Like the patent law staple article doctrine that was adopted by Sony, Grokster adopted the inducement standard under patent law.42 The question therefore in the present case was whether MGM had adduced evidence that StreamCast and Grokster communicated an inducing message to the users of their software. It came to the decision that those defendants were liable for inducement by advertisement or solicitation that broadcasts a message designed for the purpose of stimulating someone else to violate or infringe someone’s copyright. Unlike Sony Corporation the defendant’s in Grokster acted with a purpose to cause copyright violations by use of software suitable for illegal use. The defendant’s unlawful object was held to be unmistakable. Therefore, inducement liability is neither based on knowledge of infringement nor on design that facilitates infringement. It basically depends on the defendant’s active steps to encourage infringement leading to actual infringement taking place.43
Contributory infringement versus Inducement
The main question to answer when distinguishing inducement from contributory infringement is – whether intent to induce should be a subset of contributory infringement. It could be argued that Grokster simply elaborates an existing category of contributory infringement. However, many including Nimmer have submitted that the better way to read Grokster is to the contrary. As clarified by the Court,
‘Sony’s rule limits imputing culpable intent as a matter of law from the characteristics or uses of a distributed product. But nothing in Sony requires courts to ignore evidence of intent if there is such evidence, and the case was never meant to foreclose rules of fault based liability derived from the common law.’44
Therefore, Sony looks into the design of a given system, whereas Grokster looks at the party’s intent. The distinction between a product’s engineering design and its purveyor’s intent about how it will be used means that individual products may escape liability or incur it under one ruling but not another.45
The difference between the two theories is even more accentuated by the fact that Grokster emphasises that intent to induce may be inferred from the defendant’s preparation of advertisements, regardless of whether they were even distributed. For the theory of inducement seeks to prove by the defendant’s own statements that his unlawful purpose negates or disqualifies him from claiming protection. Hence, insofar as inducement plays a role in contributory infringement, a plaintiff who holds a defendant liable must show that the latter’s conduct actually included infringement. In contrast, for a plaintiff relying on Grokster, he must demonstrate through objective evidence that the defendant harboured a subjective intent to induce infringement, even if no such inducement actually occurred – notwithstanding that there still must be direct infringement for liability to arise.46
Secondary Liability under Indian Copyright Law
Who can be sued for copyright infringement under Section 51 of the Copyright Act, 1957
Under Indian copyright law a plaintiff can only institute proceedings against those who are actually committing infringement. This is defined under Section 51 of the Copyright Act of 1957. Even though section 51 does not state which of the prohibited acts amount to primary and secondary infringement, infringing conduct can be categorised as primary and secondary. Primary infringement as per section 51 (a) (i) of the Copyright Act 1957 means: any person who without a license granted by the owner of the copyright or the Registrar of Copyrights or in contravention of the conditions of any license so granted or of any condition imposed by a competent authority under the Act, does anything, the exclusive right to do which is conferred upon the owner of the copyright under section 14 of the Copyright Act 1957 would be committing copyright infringement.47
Secondary infringement under Section 51 (a) (ii) and (b) of the Copyright Act 1957
Secondary infringement is of two types – those done in assistance of primary infringement, and those which accentuate the effect of a primary infringement that has already occurred.48 Section 51 (a) (ii) of the Copyright Act 1957 covers those done in assistance of primary infringement. For instance, permitting for profit any place to be used for communication of the work to the public, where such communication itself would violate the copyright in the work. The defence available to the infringer in such a situation is that he was not aware and had no reasonable ground for believing that such communication to the public would be an infringement of copyright.49 It must be further clarified that section 52 (1) (k) of the Copyright Act 1957 is not an exception to the liability for secondary infringement provided under section 51 (a) (ii) of the Copyright Act 1957. It is an exception to the unauthorised communication of a sound recording to the public, which is an act of primary infringement. Section 51 (a) (ii) is applicable to a different scenario where the act sought to be penalised is providing the place to be used for such communication. Therefore, unless the defence available under section 51 (a) (ii) is satisfied, a person who rents out a venue to a live band, which in turn does not seek permission from the owner of the sound recording or musical work that is used or performed by it, is liable for secondary infringement. The live band is the primary infringer here, and the defence available to them is to contend that though they caused the sound recording used by them to be heard by the public, it was within the four corners of the exception provided in section 52 (1) (k).50
The second category of secondary infringement is enumerated under section 51 (b). As per this provision, if there is an already existing infringing copy, there are four different acts pertaining to that infringing copy that cannot be committed, and which if committed would result in copyright infringement. There are: (a) selling or letting for hire, or by way of trade, displaying or offering for sale or hire, the infringing copies, (b) distributing either for the purpose of trade or to such an extent as to affect prejudicially the owner of the copyright, such infringing copies, (c) exhibiting in public, by way of trade, such infringing copies, and (d) importing into India such infringing copies. Hence, a person who does any of the acts mentioned in section 51 (a) (ii) or (b) can be sued as a secondary infringer.51
Applying Sony and Grokster in India
In the contemporary world, technology used to further rampant piracy has questioned the specific enumeration of infringing circumstances given under section 51. For instance, bittorrent and similar software is used to copy shared content. The dominant use of these softwares is to obtain reproductions of copyrighted works, despite them being used for authorised copying as well. Considering the magnitude of the issue, the question is whether the developer of the software can be held liable in such a situation as a secondary infringer? While questions of this kind have not arisen in Indian courts yet, the two path breaking decisions of the U.S. Supreme Court in Sony and Grokster analysed in the previous section with two divergent outcomes forms the basis of the argument that secondary infringement extends beyond what is enumerated under section 51 (a) (ii) and (b). Secondary infringement can also extend to any technology or website that has been promoted with the intent to infringe copyright or encourage such infringement by third parties. Further, the principles laid down in Grokster are particularly of relevance for technologies that enable file sharing or removal of digital locks or technological protection measures. In such a case the promoters of such technology will be culpable.52
Emerging trends on ISP Liability in India
The 2011 decision of Super Cassette Industries Ltd v. Myspace Inc.53 before the High Court of Delhi, is an indication of the emerging trends on copyright law relating to content sharing and streaming sites in India. The technology involved in this case was a website where users could upload and download media content including video and audio clips. By providing a search and indexing function that allowed users to search for the video or sound recordings and playing this content on their computer, promoted unbridled and unchecked copyright infringement by making infringed copies freely available for download over the internet. The plaintiff alleged both primary and secondary infringement, and to support the plea of secondary infringement, the plaintiff relied on section 51 (a) (ii) where permitting any space to be used for infringing communication to the public, with profit motive, would amount to secondary infringement unless the defendant was not aware, and had no reasonable ground for believing that such communication to the public would amount to infringement. While the primary infringement claim was rejected by the High Court, the MySpace decision had a great impact on secondary infringement.
The arguments advanced on the establishment of secondary infringement completely revolved around the scope and exceptions to section 51 (a) (ii). The plaintiff contended that the advertisements that were displayed on the webpages showed a deeper involvement and knowledge on the part of the defendant as to the infringing nature of the data uploaded on its servers.
Safe harbour provisions under the Information Technology Act, 2000
The defendants in the Myspace case claimed that they were an intermediary as per section 2 (w) of the Information Technology Act and therefore had immunity from infringement under section 79. The plaintiffs on the other hand argued on the basis of the proviso to section 81, and stated that the Act could not aid a copyright infringer. The Court sided with the plaintiffs and held that a combined reading of section 81 and its proviso would override other laws for the time being in force but that they cannot restrict the rights of the owners under the Copyright and Patent Acts. The Court further stated that the immunity is inapplicable when the due diligence requirement under section 79 (2) (c) of the Information Technology Act is not mandatorily satisfied along with sub clauses (a) and (b).57 Therefore, on the basis of these provisions it was stated that if the defendant was put to notice about the rights of the plaintiffs with regard to the copyrights held by them, the defendants had to conduct a preliminary check on all related Indian works before communicating the same to the public. Not only did the defendants upload the content but they also modified it later. In the course of such uploading and modifying they did not give any regard to the rights of the plaintiff and therefore the requisite due diligence was not observed. This meant that while the defendant had a chance to keep track of the works, they simply avoided doing so.
The Copyright (Amendment) Act, 2012
The Court in the Myspace judgment passed an injunction as an interim relief against the defendant. Ananth Padmanabhan, an Indian legal expert on copyright laws and author, opined that this decision could have many ramifications. On the one hand while it could potentially destroy the business model of file sharing sites, at the same time, such sites have been considered the reason for the dwindling in sales of audio and video content. Therefore, even though the decision in this case focused on the dispute between the parties, a question arises as to whether or not a judicial order could be made that has this kind of impact so as to annihilate a business model.58
These concerns have been answered to a certain extent by Parliament through the Copyright (Amendment) Act which introduced sections 52 (1) (b) and (c), bringing in changes to the fair use exceptions. Under this section the fair use exception is only attracted when the peer to peer technology inventor was not aware or had no reasonable grounds for believing that such storage is of an infringing copy. However, as seen above in the reasoning given in the Myspace case, the modifications and advertisements attached to the uploaded videos was sufficient to assume that the infringer had reasonable grounds for believing that the communication of such videos to the public was infringing. The same reasoning can be applied to conclude that the incidental storage is that of an infringing copy and disentitles the file sharing site from getting protection under section 52 (1) (c).59
Hence, if a stringent view of this section is adopted, file sharing sites still may be at a loss when it comes to defending their business model that is largely dependent on the advertisements. A way out of this difficulty would be to provide for advertisements in the case of content that is legally uploaded by the owner after verification by the website,60 and not in the case of anything else. In such a case they would be able to avail the fair use exception.61
For the imposition of secondary liability, a number of conditions must be satisfied under both U.S. and Indian law. Over the years, the U.S. Courts have developed three different principles on the basis of which secondary liability can be imposed. The first is that of vicarious liability. It is interesting to note that vicarious liability vis-à-vis secondary liability exceeds the traditional scope of the master servant theory. While earlier case law required the benefit from the infringement to be direct, the courts have relaxed this standard over time. For instance, in the Fonovisa case the actual receipts to defendant were generalised, rather than traceable directly to the infringement. The standard was further relaxed in Napster where it was held that even the hope for future financial gain was sufficient. Furthermore, the decisions in Napster, Grokster and Perfect 10 v. Google, show that even if the service provider had the ability to supervise its service, a failure to police the system coupled with the fact that it derived financial benefits from the continued availability of infringing files on its system leads to the imposition of vicarious liability. Therefore, obvious and direct financial interest is now understood to mean any possible indirect benefit. The second type of secondary infringement is that of contributory infringement wherein personal conduct that forms part of or furthers the infringement, and contribution of machinery or goods that provide the means to infringe are penalised. The concept of contributory infringement as discussed in the Sony meant that if a technology was capable of SNIU, then its manufacturers will not be culpable for secondary infringement. The Court further held that vicarious liability could not be imposed on the mere fact that the manufacturers had knowledge that the customers may use their product to make unauthorised copies. However, the Sony decision became problematic with regard to its applicability in cases involving P2P services. This lacuna was soon dealt with by the cases of Napster and Aimster wherein it was held that P2P services facilitate unauthorised copying; unlike Sony, where the only contact between the manufacturer and buyer is at the point of sale, P2P services supervise all that happens on their systems. Further, in Aimster, their refusal to discover the extent to which its system was being used to infringe copyright was said to amount to wilful blindness.62 The Grokster decision departs from both of the above, where it was held that peer to peer software was capable of SNIU and therefore there was no contributory infringement. The Supreme Court reformulated the test of copyright infringement and introduced the concept of inducement stating that: ‘one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.’ The inducement rule bases liability on purposeful, culpable expression and conduct and did nothing to compromise legitimate commerce or discourage innovation having lawful promise.
From a legislative standpoint, the Indian position on secondary liability under the Copyright Act 1957 remains underdeveloped especially in terms of ISP liability. Two types of secondary infringement have been provided for in Section 51 (a) (ii) and (b) of the Copyright Act 1957. Section 51 (a) (ii) covers those done in assistance of primary infringement. The defence available to an infringer in such a case is to prove that he had no reasonable ground to believe that such communication to the public would be an infringement of copyright. This provision has mainly been used in instances where there has been an unauthorised communication of a sound recording to the public and the secondary infringer had provided the place used for such an infringing communication. Section 51 (b) on the other hand provides for four instances wherein secondary liability can be imposed when there is an existing infringing copy which is used for the purpose of trade by the secondary infringer as enumerated in the Section. These two sections under the Indian Copyright Act 1957 make it exceedingly difficult to extend secondary liability to any form of technology or website unlike U.S. law. Due to this reason the author argues that secondary liability cannot be restricted to Section 51 (a) (ii) and (b). The recent MySpace litigation must be considered as a step by the Indian judiciary to further improve and extend the imposition of secondary liability in India. The Delhi High Court held that, since the defendant infringer was earning revenue from advertisements that they had attached to the content through modifications, they had knowledge of the infringing works. The Court further rejected their claim to be an intermediary as per section 79 of the Information Technology Act 2000 as the defendant was in aid of a copyright infringer. They were not only modifying the content, but were knowingly communicating these infringed works to the public. Therefore, they failed the mandatory requirement of due diligence. The reasoning of the Delhi High Court in this judgment is along the lines of Grokster and stays true to holding those who intend to induce infringement liable as secondary infringers of copyright. Furthermore, the Copyright (Amendment) Act 2012 which introduced sections 52 (1) (b) and (c) have brought changes to the fair use exceptions. Now the fair use exception is only attracted when the peer to peer technology inventor was not aware or had no reasonable grounds for believing that such storage is of an infringing copy.
However, the Delhi High Court in MySpace held that the modifications and advertisements attached to the uploaded videos was sufficient to assume that the infringer had reasonable grounds for believing that the communication of such videos to the public was infringing. The incidental storage becomes an infringing copy and disentitles the file sharing site from getting protection under section 52 (1) (c).The author concludes that the MySpace litigation makes it abundantly clear that the ground breaking principles on secondary liability laid down by the U.S. Supreme Court in Sony and Grokster carry with them an authoritative precedent even in India. Therefore, it can be argued that litigation on secondary infringement in relation to ISP liability in the future will extend beyond what is enumerated under the Indian statute and would line with Sony and Grokster.
1. Ananth Padmanabhan, Intellectual property rights – Infringement and remedies, (1st edn, 2012)
2. B.L. Wadehra, Law relating to patents, trademarks, copyright designs and geographical indications, (3rd edn, 2004)
3. Catherine Colston, Modern Intellectual Property Law, (2nd edn, 2005)
4. Justice P.S. Narayana, Intellectual Property Law in India, (2nd edn, 2003)
5. Melville B. Nimmer, David Nimmer, Nimmer on Copyright, (Indian Reprint, 2010)
6. V.J. Taraporevala, Law of intellectual property, (2nd edn, 2013)
1. Alfred C. Yen, ‘Third party copyright liability after Grokster’  16 (3) Information and Communications Technology Law
2. Cheryl J. Eisner, ‘Myspace in a post Grokster world: Digital finger pointing for offenses perpetuated through use of social networking sites after MGM v. Grokster’  6 (467) Cardozo Public Law, Policy and Ethics Journal
3. David Nimmer, Peter S. Menell, ‘Unwinding Sony’  95 (4) California Law Review
4. David Harrison, ‘The P2P file sharing war after grokster: It feels like Belgium over here’  32 (3) Journal of College and University Law
5. Ernest Miller, ‘First amendment scrutiny of expanded secondary liability in Copyright’  32 (3) Northern Kentucky Law Review
6. Lisa Dunner, J. Michael Monahan, ‘Court’s holding in Grokster’  23 (4) IPL Newsletter
7. Louis C. Bechtle, Geoffrey L. Beauchamp, ‘The courts and internet piracy after Grokster’  24 (2) IPL Newsletter
8. Sumit R. Shah, ‘Modding the Wed: Secondary Liability under Copyright and Web Modification Software in a post Grokster world’ [2006-07] 85 Texas Law Review
9. Mark Bartholomew, ‘Copyright, trademark and secondary liability after Grokster’ [2008-09] 32 (4) Columbia Journal of Law and the Arts
10. Raymond Shih Ray Ku, ‘Grokking Grokster’ Wisconsin Law Review
11. Robert I. Reis, ‘The Sony Legacy: Secondary Liability Perspective’  3 (2) Akron Intellectual Property Journal
*Nayomi Goonesekere, a final year undergraduate student from the National Law School of India University, Bangalore. I will be graduating with a B.A., LL.B. (Honours) in August 2016.
1 Sony Corp. v. Universal City Studios Inc., 464 U.S. 417 (1984).
2 A statutory provision applicable to secondary infringers was added in the context of the Semiconductor Chip Protection Act of 1984. However, this provision was limited to the sui generis protection added in that year for semiconductor mask works and was not applicable to copyrightable works in general. See Chapter 8A, Copyright Act, 1909.
3 Sony Corp. v. Universal City Studios Inc., 464 U.S. 417 (1984).
4 Title 17 of the United States Code, s 106.
5 Melville B. Nimmer, David Nimmer, Nimmer on Copyright, vol 3(Indian Reprint, 2010) 72.
7 House of Representatives Report No. 94-1476, Copyright Law Revision,(1976) 159-60.
8 Mark Bartholomew, ‘Copyright, trademark and secondary liability after Grokster’ [2008-09] 32 (4) Columbia Journal of Law and the Arts445, 447.
9 Robert Stigwood Group Ltd. v. Hurwitz, 462 F.2d 910 (2d Cir. 1972).
10 Deutsch v. Arnold, 98 F. 2d 686 (2d Cir. 1938).
11 Nimmer(n 5)78.
12 Shapiro Bernstein & Co. v. H.L. Green Co., 316 F.2d 304 (2d Cir. 1963).
13 Fonovisa Inc. v. Cherry Auction Inc., 76 F.3d 259 (9th Cir. 1996).
14 Adobe Sys. Inc. v. Canus Prods. Inc., 173 F. Supp. 2d 1044 (C.D. Cal. 2001).
15 Perfect 10 Inc v. Cybernet Ventures Inc., 213 F. Supp. 2d 1146 (C.D. Cal. 2002).
16 Ellison v. Robertson, 189 F. Supp. 2d 1051 (C.D. Cal. 2002).
17 Nimmer(n 5) 81.
18 A & M Records Inc. v. Napster Inc., 114 F. Supp. 2d 896 (N.D. Cal. 2000).
19 The Napster case case involved a technological device where files could be uploaded and downloaded on the service provided by Napster. When a case was filed against them for secondary liability for unauthorised use of copyrighted works, they claimed that their service was a staple article of commerce capable of SNIU. However, the Court held against Napster by distinguishing their case from the Sony decision as they had the ability to block those who were infringing a copyright held by another.
20 The Ninth Circuit refers to the Ninth Circuit U.S. Court of Appealshaving jurisdiction to hear appeals from District Court decisions and federal administrative agencies within the Circuit, and further nationwide jurisdiction to hear appeals from specialised cases.
21 However, the scope of the injunction – Napster has the ability to locate infringing material listed on its search indices, and the right to terminate users’ access to the system. The file name indices, therefore, are within the premises that Napster has the ability to police. Given the District Court’s failure to recognise that the boundaries of the premises that Napster controls and patrols are limited.
22 MGM Studios v. Grokster, 380 F.3d 1154 (9th Cir. 2004).
23 Perfect 10 Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007).
24 Nimmer(n 5) 85.
25 ibid 88.
26 Sony Corp. v. Universal City Studios Inc., 464 U.S. 417 (1984).
27 Ernest Miller, ‘First amendment scrutiny of expanded secondary liability in Copyright’  32 (3) Northern Kentucky Law Review 507, 513.
28 David Nimmer, Peter S. Menell, ‘Unwinding Sony’  95 (4) California Law Review 941.
29 ‘Time shifting’ in broadcasting refers to the recording of a programme to a medium of storage for the purpose of viewing or listening to the programme after the live broadcast.
30 A & M Records Inc. v. Napster Inc., 114 F. Supp. 2d 896 (N.D. Cal. 2000).
31 Re Aimster Copyright Litigation, 334 F.3d 643 (7th Cir. 2003).
32 Metro Goldwyn Mayer Studios v. Grokster, 380 F.3d 1154 (9th Cir. 2004).
33 Sumit R. Shah, ‘Modding the Wed: Secondary Liability under Copyright and Web Modification Software in a post Grokster world’ [2006-07] 85 Texas Law Review 703, 705.
34 Metro Goldwyn Mayer Studios v. Grokster, 380 F.3d 1154 (9th Cir. 2004).
35 Louis C. Bechtle, Geoffrey L. Beauchamp, ‘The courts and internet piracy after Grokster’  24 (2) IPL Newsletter 13.
36 A writ seeking judicial review wherein an appellate court decides to review a case at its discretion.
37 Raymond Shih Ray Ku, ‘Grokking Grokster’  Wisconsin Law Review 1217, 1218.
38 Nimmer (n 5) 105.
39 David Harrison, ‘The P2P file sharing war after grokster: It feels like Belgium over here’  32 (3) Journal of College and University Law 681, 687.
40 Alfred C. Yen, ‘Third party copyright liability after Grokster’  16 (3) Information and Communications Technology Law 233, 235.
41 Miller (n 27) 517.
42 Menell(n 28) 944.
43 Nimmer (n5) 106.
44 Metro Goldwyn Mayer Studios v. Grokster, 380 F.3d 1154 (9th Cir. 2004).
45 Nimmer (n 5) 116.
46 Bartholomew (n 8) 458.
47 Ananth Padmanabhan, Intellectual property rights – Infringement and remedies (1st edn, 2012) 401.
48 Justice P.S. Narayana, Intellectual Property Law in India (2nd edn, 2003) 773.
49 First name ? B.L. Wadehra, Law relating to patents, trademarks, copyright designs and geographical indications(3rd edn, 2004) 374.
50 Padmanabhan (n 47).
51 First name ? V.J. Taraporevala, Law of intellectual property(2nd edn, 2013) 278.
52 Padmanabhan(n 47) 410.
53 Super Cassette Industries Ltd v. Myspace Inc., 2011 (48) PTC 49 (Delhi High Court).
54 The defendant’s themselves were providing for safeguards against infringing acts on their website, indicating that they had reasonable apprehension that a copyright held by someone could get infringed. Further, the defendants were aware of the plaintiff’s activities and had been dealing with them prior to the institution of the suit, hence they could not have been oblivious to the fact that the Bollywood songs uploaded may belong to the plaintiff. And finally, the content went into the servers of the defendant and would be modified there by them, such modification also included the adding of advertisements etc., and the defendants were running an entire office dedicated to Indian works and catering to Indian users.
55 Garware Plastics and Polyester v. Telelink, AIR 1989 Bom 331 (Bombay High Court).
56 Padmanabhan (n 47) 413.
57 Information Technology Act 2000, s 79 (2): Intermediaries not to be liable when – ‘(a) the function of the intermediary is limited to providing access to a communication system over which information made available by third parties is transmitted or temporarily stored or hasted; or (b) the intermediary does not - (i) initiate the transmission, (ii) select the receiver of the transmission, and (iii) select or modify the information contained in the transmission.’
58 Padmanabhan (n 47) 415.
60 Example – official channels on youtube.
61 Padmanabhan (n 47) 415.
62 Re Aimster Copyright Litigation, 334 F.3d 643 (7th Cir. 2003).
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