CHAPTER – V

INTERNET SERVICE PROVIDERS’

LIABILITIES FOR DIGITAL PIRACY OF
MUSIC AND FILM INDUSTRY
 CHAPTER – V

INTERNET SERVICE PROVIDERS’ LIABILITIES FOR

DIGITAL PIRACY OF MUSIC AND FILM INDUSTRY

“Copyright law has a history of development that can partly be

explained by reference to technological challenges1. The Internet is
undoubtedly the best source for transmitting and reproducing
information in the present information era. The information available
in the internet comprises of copyrighted and infringed works. In the
world of cyberspace, Internet Service providers work as intermediaries
for the subscribers of the internet by facilitating various services in
the web like webpage uploading, email services and internet access.
Internet service provider’s face various issues when the subscribers
misuse the inevitable services which are rendered to them generally at
affordable cost. The copyright holders of the infringed copyright work
prefer to place the allegation on the respective Internet Service
Provider rather than the actual infringer due to various reasons like
possibility of monetary remedy, easy identification of ISP, non-
litigating attitude of ISP, institutional framework etc. The online
service providers on the other hand have their own reasons to
advocate the somewhat acceptable fact that they becoming liable for
the infringement of end users should be avoided in the interest of the
ISP industry. The issue raised in this paper centers between the world
of possibility and impossibility. On one hand there is a lot of scope for
the people to infringe others copyrighted work due to the browsing
freedom, convenience and on the other it is impossible for the ISP’s to
track the voluminous data entering and exiting their database every
second. It is in this scenario the liability of the ISP’s have been
deliberated and all copyright legislations were forced to leave some
space for pinning down the ISP for other’s infringement of someone’s
copyright. The liability of the ISP’s has been settled in some places in

1
David I, Bainbridge, ‘Intellectual Property,’ London, Pitman Publishing, 1999, P. 1988.

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the world by safeguarding them if they have acted with due diligence
and compelling them to accept the infringers liability if they had not
done so. This principle is generally described as the “doctrine of safe
harbour” or “Safe harbour theories”.

5.1 Internet Service Provider - Meaning

On-line intermediaries should be understood as being those

actors who do not take part in the creation or selection of information
to be disseminated. Instead, on-line intermediaries play various roles
in the on-line dissemination of information provided by so-called
‘content providers’. Without these on-line intermediaries, the Internet
could not have provided the same ‘any-to-any channel of
communication’ as it does today2. Internet service Providers are
generally not given a close ended statutory definition for various
reasons like giving an expanded notion to the concept so as to enable
various stakeholders to fit in the term whenever required. The term
“Internet Service Provider” generally denotes an entity that provides
customers basic access to the Internet. Such service generally
consists of email, hosting of a web page, and the ability to “surf” the
Internet. In some cases, ISPs may provide subscribers with additional
services such as web page authoring or assistance with business
conducted over the Internet. Other service providers may provide
customers with more limited services, like the simple uploading and
downloading of files. The observations made about the potential
copyright liability of ISP’s may in many cases are applicable to those
not offering basic service, but that is neither always nor necessarily
the case. Much depends on the relationship between provider and
subscriber and what the provider knows about its subscribers.

2
Rosa Julia-Barcelo, ‘Liability for On-Line Intermediaries: A European Perspective’. [1998] 12
E.I.P.R.453.

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5.2 Functions of Internet Service Provider

It is pertinent to understand the functions of ISP in the global

information infrastructure development. The different functional roles
that can be carried out by on-line intermediaries are basically the
following3.Network operator-provides the physical infrastructure for
the transmission of digital data for example, cables routers and
switches. Transmission hosts-internet communication will only be
successful if its constituent packets are passed from one host
computer to another until they reach their destination. Transmission
hosts refer to a host, which receives and passes on a ‘packet’. In most
cases there will be no direct relationship between the end user and
the transmission hosts involved in the communication. However
because transmission hosts transmit packets by copying them and re-
sending copies, the question of their liability for the information
content of the packets has received substantial legal attention. Access
provider-provide access to the Internet. Users connect to the Internet
through their access provider’s server. Usually an access provider also
provides a number of additional services. For instance, e-mail
account. Host service provider-provides a server on which the provider
rents space to users to host content, for instance a web page, which
the provider then make available via its web server.

Bulletin board operators, newsgroups and chat room operators

also providers provide space, not to particular customers, but to users
in general. A bulletin board service provider provides a central
computer that serves as an electronic message center. A caller reaches
a bulletin board server by dialing in directly to the host computer
where the bulletin board is located. A chat room allows users around
the world to send written messages to each other in real time. In so far
as chat rooms are linked together into networks, connection to a
single server allows simultaneous communications with the
thousands of users connected to anonymous access to all visitors. A

3
Christopher Reed, ‘Internet Law: Text and Materials’, London, Butterworths, 2000, at P.24.

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Usenet is a one-to-many messaging system providing a worldwide
public forum where users can read and post messages. A message
posted on one Usenet server is therefore automatically propagated to
every other news server.

5.3 Internet Service Provider - Legal Trends

Most of the treaties which are related to Intellectual Property

and specifically to Copyright do not have any relevant references to
ISP liability. The commonly spoken piece of legislation that has best
references to ISP liability is the Digital Millennium copyright Act4
(DMCA), which was signed into law on October 28, 1998, is the most
important copyright legislation since the accession of the United
States to the Berne Convention in 1988. The DMCA implement the
terms of the WIPO Treaties signed by the U.S. in Geneva in December
19965. As part of the DMCA, Congress enacted the Online Copyright
Infringement Liability Limitation Act, embodied in Section 512 of their
Copyright Act. This section establishes a regulatory framework for on-
line intermediaries, which creates limitations to liability for copyright
infringement by on-line intermediaries. This regime is the result of a
compromise between industries, in particular the copyright and
telecommunication industries, and establishes a balance between two
sets of interests: the protection of copyright on one hand, and the
legitimate operations of on-line intermediaries on the other. The EU
directives on ISP liability establish a liability regime for on-line
intermediary activities. Another important initiative by E.U. in
connection with the harmonization of law relating to on-line
intermediaries was the adoption of ‘Directive on Copyright in the
Information Society6.The directives also help the member countries to
enact legislations in order to adopt the provisions of WIPO treaties in
the field of copyright.

4
The Digital Millennium Copyright Act of 1998,Pub.L.105-304, 112 Stat. 2860 (Oct.28,1998)
5
On October 21,1998 the United States Senate formally ratified the WIPO Treaties.
6
RosaJulia-Barcelo, ‘On-line Intermediary Liability Issues: Comparing E.U. and U.S. Legal
Frameworks’, [2000] 3 E.I.P.R.105 at P.106

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5.4 Internet service Provider liability Music and Film Piracy

ISPs are companies that provide their customers with access to

the Internet and other Internet related services such as e-mail and
hosting (including collocation and virtual servers). For most services,
the very nature of ISPs is seen as that of being merely intermediaries
that pass data from one Internet user to another, or that of creating
opportunities for users to search and exchange data, for instance by
operating message boards and forums. Nowadays, a typical access
provider is a commercial organization making profits out of selling
Internet access to home and commercial users. These commercial
access providers are commonly known as ISPs. In order to connect to
the Internet, a user requires an ISP and a medium for communication
to allow passage of information to and from the computer. ISP,
provides the user with services like World Wide Web, e-mail, list
serves, newsgroups and other additional services like web site hosting
and design, rendering its role even more prominent for the working of
the technical web. Quite often, the ISPs provide their clients with
facilities to create client literature or other articles and make them
available over the Internet to the general public - a function ISPs
proudly term as a "value-added service." Typically, an ISP provides its
clients with more than just an email account and access to the web; it
offers facilitation to upload files including web pages to the ISP's
publicly accessible servers, enabling users to access these files. Since
there are users who utilize Internet access to illegally download music
and films or spread discrediting or prohibited information, the issue of

ISP liability for users‟ actions involving intellectual property rights

infringement, unfair competition, defamation, and violation of privacy
takes the lead as copyright infringement. Though the ISPs play a
crucial role in happening of infringement, there is no positive or
affirmative infringing act on their part. Courts, for this reason
endeavour to find the ISPs liable under the indirect infringement
principles, wherein, a person is held accountable for the action of

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another. In such a situation, ISPs could be held under the rubric of
contributory liability or vicarious liability. Although the copyright law
does not expressly provide for vicarious or contributory liability,
courts have consistently imposed the indirect liability. doctrine.
Exception to the codification of indirect liability is found in the Indian
copyright Act,1957. Section-63 of the Act, provides for the
imprisonment and payment of fine to any person who knowingly
infringes or abets the infringement. Two factors need to exist to
impose vicarious liability.

• The right and ability to supervise.

• Direct financial interest from the exploitation of the

copyrighted work.

5.4.1 Advantages of Making ISP Liability

Most of the time in every set of action that a copyright owner

takes against infringements on the Internet, by and large the action is
simultaneously taken against the ISP as well, apart from the person
who actually commits the infringement7. The Internet service
providers usually conduct their operations through the use of software
that processes information automatically. Very often, the information
is transferred without knowledge, on the part of the network service
provider, of the content of the information or the nature of the
transaction involved. This lack of knowledge does not necessarily
absolve the network service provider of legal liability in situations
where the content of the information disseminated or the
dissemination of the information itself infringes on the rights of a third
party8. There are several reasons why aggrieved parties may decide to
pursue action against the network service provider rather than the

7
Matthew Schruers, The History and Economics of ISP Liability for Third Party Content, VA. L.
REV. 205 (2002).
8
R. Anthony Reese, The Relationship Between the ISP Safe Harbors and the Ordinary Rules of
Copyright Liability, 32 COLUM. J. L. & ARTS 2012 (2009).

182
party responsible for developing the information or initiating the
dissemination of the information.

• Internet service providers are generally perceived to have

deep pockets and are, thus, better targets for litigation
than the originators of the offending information content.
Furthermore, it is sometimes felt that network service
providers may be more amenable to pay the claimants to
settle the case rather than be embroiled in a long drawn
court battle.9

• It is very easy to trace an ISP. For example a software

product is found loaded on a Web site which anyone is
free to download. Let’s presume the Web site actually
operates some kind of bulletin board, i.e. a site where
people just upload and download files and where anyone
can contribute as well as can take. In such situations,
often you can trace out the Web site owner but you can’t
trace out the actual contributor. But you definitely can
find out the ISP who’s facilities have been used to upload
the software. In digital environment products are priced
high and much damage can occur in less time. So, apart
from suing the actual offender people would always like to
sue the ISP as well.

• It is difficult to find the real culprit as the Internet allows

users to remain anonymous making it impossible to trace
the actual perpetrators. The ISP is identifiable and
locatable and most often situated in the same jurisdiction,
and thus it is easier to hold them liable in terms of
locating the culprits.

9
Pablo AsboBaistrocchi, Liability of Intermediary Service Providers in the EU Directive on
Electronic Commerce, 2002.

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 • The location of the network service provider may play a
critical role in a claimant’s decision to pursue a claim
against it rather than the originator of the offending
information. In a situation where the network service
provider is located in the claimant’s home jurisdiction
whilst the intermediary is located in a foreign jurisdiction,
the tendency would be for a claimant to first exhaust all of
his potential remedies against the network service
provider before initiating suit against the originator of the
offending information.

• The ISPs are more lucrative targets for litigation than the
originator of the offending information content. The
offender may not have adequate resources to pay heavy
damages whereas the ISP can pay with his share of
profits. Hence it is economically more viable to hold ISP
liable10.

• ISPs who are suitably positioned for policing the Internet

can better supervise the activities over the net. ISPs can
close down the home page or remove an e-mail and can
stop further infringement by closing the site11 Thus, to
prevent further access to the offending information by
complete or partial blocking of all potential originators
and to create a deterrent effect on further infringement,
action needs to be taken against the ISPs12

If the offender and the copyright holder are in different

jurisdictions, it is easier to hold the claim against ISP in the

10
Thilini Kahandawaarachchi, Liability of Internet Service Providers for Third Party Online
Copyright Infringement: A Study of the US and Indian Laws, 12 JOURNAL OF INTELLECTUAL
PROPERTY RIGHTS 553 (2007).
11
Osborne D, Copyright and trademark infringement on the net-looking to the Internet service
provider first, http://www.iprights.com/cms/templates/articles.aspx?articlei d=146&zonecid=2
accessed on 17.04.2014.
12
Apar Gupta, Liability of Intermediaries in India–From Troubled Waters to Safe Harbours, 13
COMPUTER & TELECOMMUNICATIONS LAW REVIEW 60 (2007)

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claimant’s home jurisdiction or in a jurisdiction that has given
favourable decisions in similar claims. However, in reality success of a
cross- border claim by and large depends on how effectively and
coherently the claim has been articulated before proper forum. For

example, DMCA „notice and take down‟ notwithstanding, there is very

little chance of relief to a cross-border claimant unless the notice itself
carries the information that it can be enforced in US.13

• If the internet service provider is located in a jurisdiction

that habitually renders favorable decisions in similar suits
brought against internet service providers, this may
persuade the claimant to bring suit against the internet
service provider.

• Another reason is that it deters infringement by other

subscribers. If on a Web site there are 15 subscribers, all
of whom can upload and download content to and from
that Web site, if you sue one of them, the next day
someone else might upload the same content. But if you
sue the ISP directly it would have to shut off and make it
very clear to his subscribers that the infringing content
will not be uploaded on this Web site ever again. So with
the intent of deterring infringement again, suing an ISP is
quite practical. It is far easier to try and stop the
copyright infringement by suing the ISP directly because
he controls that network.

Therefore, the sort of remedies desired by the claimant would

play a critical role in the decision to bring suit against the internet
service provider or the offending information or both. If the claimant
wishes to block access to the information, taking action against one

13
Aakanksha Kumar, Internet Intermediary (ISP) Liability for Contributory Copyright Infringement
in USA and India: Lack of Uniformity as a Trade Barrier, 19 JOURNAL OF INTELLECTUAL
PROPERTY RIGHTS 272 (2014).

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originator may not have the desired outcome. On the other hand,
taking action against the network service provider may have the
desired effect of blocking access to some or all of the originators or
potential originators14. An action against one network service provider
may also have the effect of stifling any attempt by other network
service providers or intermediaries from carrying the same or similar
information.

5.4.2 Reasons for Limiting the Liability of Internet Service

Providers:

ISPs argue that they are only “passive carriers” and “mere
conduits of information” and they play the role of a messenger and not
a publisher. In the case of Fonovisa v. Cherry Auctions15 the Court
said that supplying the “site and facilities” for direct infringement is,
“materially contributing” to the infringing conduct of another and
must attract liability. However in Sony v. Universal Studios, the Court
rejected the proposition and held that merely providing the means to
accomplish an infringing activity was not sufficient without
constructive knowledge of the infringing activity. Further, in the case
of Costar v. Loopnet, the majority held that an ISP should not be held
liable for direct infringement when its facilities are used to infringe a
copyright with no intervention made by the ISP.16

It is highly impracticable to expect ISPs to screen all the content

passing through their systems given the large number of transactions
taking place. Even after constant screening, 100% accuracy cannot be
achieved so as to prevent every single instance of copyright
infringement. In Religious Technology Service Centre v Netcom, the
Court held that information providers only offer an opportunity to

14
Deep Ray, Protection of Copyright Under IT Act, 2000, AVAILABLE AT SSRN 2417907 (2014).
15
http://www.eff.org/Legal/ISP_liability/OPG_v_Diebold/ (10th June 2010)
16
Rajendra Kumar & Latha R. Nair, Information Technology Act, 2000 and the Copyright Act, 1957:
Searching for the Safest Harbor, 5 NUJS L. REV. 555 (2012).

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publish and are unable to exercise any influence on, or what people
say on Internet.17

Moreover holding ISPs liable would hinder the growth of Internet

in a nascent stage particularly in India. With the backdrop of above
arguments the issue that arises is with regard to the extent of liability
that has to be ascribed to ISPs and also the legal framework required
to deal with the complex issue of ISP liability so as to develop an IPR
regime paying heed to the interest of both, ISPs and copyright owners.
In the light of these issues an analysis of the existing Indian
legislations is indispensable.

5.4.3 Internet Service Provider Qualification for Copyright

Infringement Exemption.

To qualify for exemption, ISPs may neither initiate the

transmission, select the receiver nor have any editorial control by
selecting or modifying the material. Section 79 of the IT Act also
provides two circumstances under which an ISP can qualify for
exemption from liability:

Lack of Knowledge

Knowledge of the illegal contents on part of the ISP is a

prerequisite for holding him liable under section 79 of the IT Act,
2000. The ISP can escape liability if it could be proved that he was
unaware of all that was stored and passing through his servers. But if
he is put under a notice that some infringing material is either stored
or passing through his servers, he has to take proper action for
removing or disabling that material otherwise he could be said to have
knowledge of the infringing material and held liable.

17
Chinmayi Arun & Sarvjeet Singh, Online Intermediaries in India, NOC ONLINE INTERMEDIARIES
CASE STUDIES SERIES (2015).

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 Due diligence

For an ISP to escape liability, section 79 prescribes “due

diligence” to be exercised by him. The provision requires actual
knowledge or breach of the duty of care. What should be the extent of
the “due diligence” requirement? Should the ISPs be required to
monitor and judge legality of millions of files that are present or
passing through their servers? Considering the gigabytes that are
stored or passing through their servers this seems to be an impossible
task. But, if we say that the ISPs should not be under an obligation
for “due diligence”, it might encourage them to consciously “look
away” and evade all liability. It can be safely concluded that ISPs are
not liable for the (infringing) gigabytes that are stored and passing
through their servers unless they are put on notice. If an ISP
encounters particularly suspicious circumstances, he may be subject
to “due diligence” i.e. a duty of care to investigate further whether
material he hosts or refers to is unlawful and, where found to be so, to
block access.

In US, the Digital Millennium Copyright Act, 1998 (DMCA)

defines service provider as:

(i) Section 512(k)(1)(a) an entity offering transmission, routing or

providing of connections for digital online communications, between
or among points specified by a user, of the material of user’s choice,
without modification to the content of material as sent or received”

(ii) Section 512(k)(1)(b) a service provider is a “provider of online

services or network access or the operator of facilities therefore‟. The

DMCA defines a service provider in a broad sense so as to include
universities and other institutions providing Internet access to their
students, professionals, researchers, etc. Further, definition under
Section 512(k)(1)(a) and Section 512(k)(1)(b) is broad enough not only

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to include all current ISPs but also to encompass technically new
providers in the future.18

The UK law defines a service provider as “any person providing

an information society service‟. Information society service means

„any service normally provided for remuneration, at a distance, by
means of electronic equipment for the processing and storage of data,

and at the individual request of a recipient of a service‟. For the

purpose of this definition, service must be provided without parties
being simultaneously present and it must be sent and received by
means of electronic equipment only on individual request

In India, the copyright law does not deal with online service
providers in express terms. However, provisions relating to ISPs are
specifically legislated in the Information Technology Act, 2000 (IT Act)
where an ISP is referred to as a network service provider meaning an
intermediary. 180 Further, it defines the term intermediary as “any
person who on behalf of another person receives, stores or transmits
that message or provides any service with respect to that message.”
The definition of intermediary is intended to include both professional
and non- professional intermediaries and the words „or provides any
service with respect to that message further enlarges the scope of the
word intermediary. The IT Act refrains from creating any classification
of ISPs while subsuming all existing categories of ISPs under Section
79 irrespective of their functions as an intermediary.

5.4.4 ISP LIABILITY UNDER THE COPYRIGHT ACT, 1957

The Copyright Act, 1957 was obviously drafted in complete

oblivion of the phenomenon called the Internet. Even after its
amendments in 1994 and 1999 it does not contain any express
provision for determining or limiting ISP liability. However, some

18
The Digital Millennium Copyright Act (DMCA) was signed into law by President Clinton on 28
October 1998.

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provisions in the Act could be interpreted to have some bearing on the
liability of ISPs. As per section 51 (a)(ii) of the Copyright Act:

Copyright in a work shall be deemed to be infringed, when any

person, without a licence granted by the owner of the Copyright or the
Registrar of Copyrights under this Act or in contravention of the
conditions of a licence so granted or of any condition imposed by a
competent authority under this Act permits for profit any place to be
used for the communication of the work to the public where such
communication constitutes an infringement of the copyright in the
work, unless he was not aware and had no reasonable ground for
believing that such communication to the public would be an
infringement of copyright.

ISPs allow their servers and other telecommunication facilities

for storing user’s material and for transmitting that material. The
computer servers and other telecommunication facilities are actually
located at their business premises and hence they would verily come
under the expression “any place” and could be held liable for the
infringing activities of third parties whose material they store or
transmit if other requirements are fulfilled. Further, the expression
“permits for profit” means that to be held liable the activities of ISP
should be for profit meaning thereby that he should be financially
benefiting out of the infringing activities. ISPs normally charge for
their services and even if they offer some services for free, they could
indirectly be making profit out of it, e.g., from advertisements that
they bundle together with the transmitted material. So, the above two
requirements are fulfilled by ISPs for most of their activities in case
they transmit or store infringing material. The expression “unless he
was not aware and had no reasonable ground for believing that such
communication to the public would be an infringement of copyright” is
significant in the sense that ISPs are liable only if they have
knowledge of the infringing material stored or passing through their
servers.

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 Section 2 (ff) of the Act lays down the meaning of
communication to the public as “making any work available for being
seen or heard or otherwise enjoyed by the public directly or by any
means of display or diffusion other than by issuing copies of such
work regardless of whether any member of the public actually sees,
hears or otherwise enjoys the work so made available.” Further, “any
person who knowingly infringes or abets the infringement of
copyright” is made criminally liable u/s section 63 punishable with
imprisonment for a term which shall not be less than six months but
which may extend to three years.

Further, “any person who knowingly infringes or abets the

infringement of copyright is made criminally liable under S. 63 of
Copyright Act, 1957. “Can an ISP be said to have abetted the
infringement of copyright” is a question to be decided by the courts in
the light of actual facts.

5.4.5 Internet Service Provider Liability – Indian position

In India the provisions relating to the ISPs are specifically

legislated in the IT Act, 2000 where an Internet Service Provider is
referred to as Network service provider and Explanation (a) to s. 79
defines it as:

“Network service provider” means an intermediary.

Intermediary again has been defined under section 2(w) as:

“Intermediary” with respect to any particular electronic message

means any person who on behalf of another person receives, stores or
transmits that message or provides any service with respect to that
message.

Further the Act contains in section 79 a clause which limits the

liability of ISPs under certain circumstances:

Network service providers not to be liable in certain cases:

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 For the removal of doubts, it is hereby declared that no person
providing any service as a network service provider shall be liable
under this Act, rules or regulations made there under for any third
party information or data made available by him if he proves that the
offence or contravention was committed without his knowledge or that
he had exercised all due diligence to prevent the commission of such
offence or contravention.

The title of section 79 of the IT Act “Network service providers

not to be liable in certain cases” makes apparent the object behind the
section, which is to limit the liability of ISPs. The liability of ISPs could
arise in a number of ways under different statutes. The liability be
criminal or civil in nature depending on various factors. It is
impractical to define the liability of ISPs which could arise in various
forms at one place. Equally impractical could be to amend all our
laws, which could hold ISPs liable, in order to limit their liability. The
latter has not been attempted in any of the Indian legislations
including the Copyright Act, 1957 till now. The IT Act, 2000 does not
attempt the former but just seeks to create a filtering mechanism for
determining the liability of ISPs. The idea is that the liability of an ISP
for his action or omission be first determined in accordance with the
statute under which it arises and then if at all the ISP is held liable,
his liability again be filtered through section 79 of the IT Act. For
example, if an ISP is accused of illegally distributing pirated copies of
music, then his liability be first determined under section 51(a)(ii) and
section 63 of the Copyright Act, 1957. If the ISP is found liable then
his liability again be tested on the touchstone of section 79 of the IT
Act, 2000.

Issues arise in respect of the potential liability of Internet

service providers (ISPs) for copyright infringement on a number of
levels. ISPs may, for example, be liable for any infringement that
might arise as a result of their services being used by others to
infringe copyright (including unauthorised copying and distribution of

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copyright works). Copyright owners may wish to seek redress from
ISPs, given that there can be difficulties in taking action directly
against infringers. Potential ISP liability also arises in relation to
transient copying. ISPs may, however, not be in a position to
determine whether material infringes copyright. Concerns over
potential liability could affect the availability of Internet services and
could lead to other undesirable outcomes, such as ISPs acting as de
facto censors of material. The issue therefore arises as to the degree (if
any) that liability in respect of copyright infringement should attach to
the operations of ISPs. The Copyright act ,1957 was obviously drafted
in complete oblivion of the phenomenon called the internet. Even after
its amendments in 1994 and 1999 it does not contain any express
provision for determining or limiting ISP liability. However, some
provisions in the act could be interpreted to have some bearing on the
liability of ISPs. The Indian Information technology Act 2000 has
certain clarity overt the liability of a service provider for copyright
infringement. On reading Sec 79 of the IT act 2000 one would come to
a conclusion that the Network service provider will not be liable if he
proves that the offence of digital copying or contravention was
committed without his knowledge or that he had exercised all due
diligence to prevent the commission of such offence or contravention.

5.4.6 LIMITATIONS OF THE LIABILITY OF ISP’s IN INDIAN LAW:

(i) The vague provisions of Section 79 limiting the liability of

ISPs leave enough scope for the authorities to use the Section as a tool
for harassing ISPs.

(ii) The Section exempts ISPs from liability for copyright

infringement if the ISP has exercised all due diligence. Ironically, the
term “due diligence” which plays a pivotal role in determining the
liability of ISPs has not been defined anywhere in the Act. Therefore,
this creates ambiguity allowing different ISPs to interpret meaning of
the term differently.

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 (iii) The explanation to Section 79 is also open to broad
interpretation bringing almost all intermediary in the ambit of network
service provider.

(iv)While Section 79 limits the liability of ISPs, it does not

specify who bears the liability.

(v) Neither the IT Act nor the Copyright Act classifies ISPs.

Currently, in India, The liability of service providers for

copyright infringement is not expressly covered by the Indian
Copyright Act. The Information Technology Act, 2000 exempts ISPs
from liability if they can prove that they had no knowledge of the
occurrence of the alleged act, and that they had taken sufficient steps
to prevent a violation. In order to be exempt from liability, the Indian
Act requires the service provider to exercise due diligence to prevent
the commission of copyright infringement. The Act does not provide
the meaning of the term due diligence. If due diligence means policing
each and every aspect of the Internet, it can lead to loss of privacy and
can ultimately have a disastrous effect. There is a need for a
consensus on the meaning of the term due diligence because the
primary function of ISPs is to build the Internet, not to play the role of
a policeman. If the behaviour of an ISP is reasonable, then that ISP
should not be held liable for each and every activity on the Internet as
has been held by the US Courts.

ISPs have not been drawn into any major IPR violations. The
new Internet policy announced by the Central Government in July
2000 has brought service providers, in addition to existing ISPs such
as Satyam, Dishnet, and Wipro Net cracker. Therefore, in the future,
the probability of these ISPs being dragged into unnecessary
courtroom battles is high. The law addressing the ISP liability issue is
ambiguous. The Information Technology Act exempts ISPs from
liability if they can prove that they had no knowledge of the
occurrence of the alleged act, and that they had taken sufficient steps

194
to prevent a violation. However, it is not surprising to find that the
legislation in this field lacks clarity. The Digital Millennium Copyright
Act of the United States, has defined the standard of knowledge an
ISP is required to possess for it to be held liable for illegal third party
activities. Additionally, the US legislation allows ISPs to terminate the
accounts of individuals who infringe copyrights on a regular basis.
Furthermore, in the United States, ISPs have to register an agent with
the appropriate office so they can receive information of copyright
infringements. This eliminates the possibility of an ISP being caught
unaware of third party infringements. The Indian position in the
"cyberspace" legislation must be made more explicit. It must clearly
require an ISP to have actual knowledge of any infringing act to be
held liable. To make it convenient for ISPs, they could be asked to
designate an agent with the requisite authority to receive complaints
regarding offences committed on the Internet. This will ensure that
the ISP has sufficient knowledge of the abuses on the Internet. The
Australian Act gives due importance to the financial gain made by
ISPs along with the nature of the relationship between an ISP and a
third party infringer. Similarly, the Indian Act must include sections
that address the financial aspect of the transaction, and the
relationship between an ISP and a third party, because this is vital to
determining the identity of the violator. The American concept of
contributory infringement can also be incorporated into the Indian Act
so that if any person "with knowledge of the infringing activity,
induces, causes, or materially contributes to the infringing conduct of
another," the person can be made liable. And as in the Australian Act,
an ISP must not be held liable unless it determines the content of the
material.

In order to be exempt from liability, the Indian Act requires the

service provider to exercise "due diligence" to prevent the commission
of copyright infringement. The Act does not provide the meaning of the
term "due diligence." If "due diligence" means policing each and every

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aspect of the Internet, it can lead to loss of privacy and can ultimately
have a disastrous effect. There is a need for a consensus on the
meaning of the term due diligence because the primary function of
ISPs is to build the Internet, not to play the role of a policeman.
Consequently, "due diligence" should be interpreted narrowly. If the
behaviour of an ISP is reasonable, then that ISP should not be held
liable for each and every activity on the Internet. The laws should be
pragmatic because an ISP cannot be expected to monitor all the
activities on the Internet.

Although the Information Technology Act 2000 has been

enacted with much fanfare, it has failed to clarify some basic issues.
This Act requires considerable fine-tuning and issues concerning ISPs
should be taken seriously, because any hesitation over implementing
policies or regulation of ISPs can prove detrimental to the institution
of the Internet as a whole.

5.5 JUDICIAL TRENDS

The judiciary has consistently given various judgements with

regard to the liability of internet service provider and these
judgements have been analysed in order to understand the interface
between Internet service provider and stake holders in music and film
piracy. It is very significant to understand that the higher judiciary in
India has given various orders both temporary and permanent to
regulate ISP’s role in digital piracy of music and film.

5.5.1 Sony Corp. v. Universal Studios Inc19

The question of whether the supplier or developer of dual use

technology can be held liable for the copyright infringement committed
by the consumer of that technology was initially confronted by the
courts in Sony corp. v. Universal city studios Inc. This decision
imposed an important limit on secondary liability in the context of the
developers and manufacturers of dual use devices. Universal studios
19
Sony Corp. v. Universal City Studios, 464 U.S. 417, 429 (1984) (U.S.)

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and Disney, which held copyrights on a substantial number of motion
pictures and audio-visual recordings, sued Sony over its
manufacturer and sale of Video Tape Recorders, Betamax, primary
use of the machine for most of the owners was “time-shifting” the
practice of recording a program to view it at a later time. Survey
commissioned by both the parties showed that most of the customers
had made libraries of tapes. The primary allegation was that
consumers who bought Betamax use them at home to tape broadcasts
engaged in copyright infringement and that Sony was liable for
contributing to that infringement. The court, by a 5-4 vote, declined to
impose secondary liability on Sony, announcing a test borrowed from
patent law for holding liable those manufacture and market devices
that buyers might use to infringe copyright. “The sale of copyright
equipment, like the sale of other articles of commerce does not
constitute copyright infringement if the product is widely used for
legitimate, non-infringing purposes. Indeed it merely be capable of
substantial non-infringing uses.” The courts concern, easily
discernable in its analogy to the “staple articles of commerce” doctrine
is contributory patent infringement cases, was that the copyright
owners should not be allowed to control the development of new
technologies used in connection with the copyrighted works. Although
the issue directly before the court in Sony was a claim of contributory
infringement, the opinion strongly suggest that its analysis apply to
secondary liability for copyright infringement generally, and that the
principles in its decision would bar using copyright vicarious liability
doctrine to hold Sony liable for infringement committed by VCR users.

5.5.2 RIAA v. Diamond Multimedia Sys, Inc20

The Sony decision came to be seen as safe harbour for the

distributors of dual use technology. When the first portable MP3
player came into market, the recording industry filed a suit to stop it.
The RIAA used its infringement law suit against Rio Portable MP3

20
RIAA v. Diamond Multimedia Sys Inc. 180 F.3d 1072, 51 U.S.P.Q.2d

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player as a threat against all consumer electronics manufacturers and
demanded that no business market portable device capable of playing
MP3 files21. Instead the RIAA insisted that portable digital players
should be compatible with secure, encrypted recording format. In
1988, Diamond multimedia introduced Rio portable digital audio
technology, a portable hard drive capable of storing an hour of music
compressed using MP3 format. This device dramatically increased the
consumers’ interest in downloading MP3 files over the internet and
ripping sound recordings from CDs to computer hardware and
compressing them. Rio device rendered these files portable. The RIAA
brought the suit to enjoin the manufacturer of Rio device, alleging that
the Rio violated the requirements at the Audio Home Recording Act,
1992 and the respondents failed to pay royalty on sales of digital
audio recording devices. Echoing the Supreme Court’s decision in
Sony case that the, “time shifting and space shifting” was
paradigmatic non-commercial personal use and the suit against the
Rio portable device was meritless. This decision reiterated that,
copyright law entitled consumers to make MP3 record of their CDs
and it entitled the manufacturers to make devices intended to help
consumers play these recordings

5.5.3 UMG Recordings, Inc v. Mp3.Com Inc.

The internet emerged as a communication and a commercial

medium, which exacerbated the free Mp3 file sharing movement.
Private, non-commercial use of the copyrighted works through dual
use devices were held permissible in Rio case and Sony case was held
to be infringing the copyright, if it was made available in the internet
to be copied by anyone. The web based services evolved in the late
1990s in such a way that it facilitated free sharing of sound
recordings in Mp3 format. One of the initial cases to analyse this issue
was that of Mp3.com. This Mp3.com service allowed subscribers to
listen to music cuts copied from any CD in their procession, from any

21
This view was expanded by an American court way back in 1869 in Lawrence v. Dana.

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remote location. Mp3.com made the process of assembling a private
online library, quick and convenient. Defendant figured that the
service was legal: after all, consumers were legally entitled to make
non-commercial recording of music, and he had licenses from ASCAP
and BMI for the right to transmit music over the internet. The
defendant had not obtained licenses from the recording companies,
composers or music publishers to copy recording of their music, since
he was relying on consumers’ legal privilege to make copies for their
own personal use. The service was premised on the idea that the fair
use doctrine authorizes consumers to space shift music that they
have lawfully acquired, and it required users to load their CDs into a
machine so the computers of users connected to it. The court refused
to permit Mp3.com to stand on its subscri5.12 Files Stored at the
Direction of the Third Party:

Veoh utilized a process that converted video files uploaded by

third parties into a commonly used “Flash” format to ensure
accessibility to the contents of the site. Io group contended that this
shift in the format means that the storage of the contents is no longer
“at the direction of the user”. Rather storage was dependent on the
defendant’s decision. The court looked into the matter the intent of
the service provider and found that the user initiated the automated
process to facilitate a third party’s request to upload content without
losing safe harbour.

5.5.4 (Veoh case) Files Stored at the Direction of the Third

Party22:

Veoh utilized a process that converted video files uploaded by

third parties into a commonly used “Flash” format to ensure
accessibility to the contents of the site. Io group contended that this
shift in the format means that the storage of the contents is no longer
“at the direction of the user”. Rather storage was dependent on the

22
UMG Recordings Inc. v. Veoh Networks Inc. (Case Nos. 09-56777, 10-55732) (9th Cir. Dec. 20,
2011).

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defendant’s decision. The court looked into the matter the intent of
the service provider and found that the user initiated the automated
process to facilitate a third party’s request to upload content without
losing safe harbour.

5.5.5 (Veoh case) Apparent Knowledge Of the Infringing

Activity23

The court answered in negative to the question as to whether

Veoh had actual knowledge of infringement as the plaintiffs never gave
a notice that its copyrighted works were available on its site. By this
court had demonstrated that, unlike p2p networks, for regular online
services with demonstrable non infringing uses, the court will look for
actual knowledge only upon the complainant’s take down notice. The
court found no red flags to show an apparent knowledge of the
copyright infringement by the OSP. Court noted that, with the video
equipment available to public today, there might be a little or no
difference between the professional and amateur productions.
Secondly, plaintiff never informed Veoh of the infringement, there was
no evidence to show that the Veoh was even aware of the clips, much
less professional quality of the production.

5.5.6 Right and Ability to Control Infringement (VEOH case)

The court directly addressed the concern that a strict reading of

vicarious liability will always implicate an OSP who meet the threshold
requirements. The court clarified that the right and ability to control
the infringing activity by the service provider to block or remove
access to the materials posted on its website or stored in its system
requires more than the ability to remove the illegal content and
terminate the user’s account. According to the court’s opinion,
vicarious liability requires “right and ability to control the
infringement” and not the “right and ability to control the system”.
The court justified its opinion by reasoning that Veoh lacked the

23
UMG Recordings Inc. v. Veoh Networks Inc. (Case Nos. 09-56777, 10-55732) (9th Cir. Dec. 20,
2011).

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control over infringement as they police the system “to the fullest
extent permitted by its architecture”. Veoh had departed from its
predecessors by tolerating a more active role by an OSP under DMCA
section 512 safe harbors. The court appeared to have taken a
subjective approach to evaluating the safe harbour defense. This
opinion mixes vicarious and contributory liability in an overlapping
combination. The court had read some degree of knowledge
requirement into the “right and ability to control” clause of DMCA. It
framed the issue of vicarious liability as whether the OSP takes
appropriate steps to deal with copyright infringement that took place24

5.5.7 Viacom v. YouTube25

YouTube, owned by Google provides an online repository of

videos, with a mix of a major content providers and third parties
providing video clips. It utilizes an automatic system for converting
files uploaded by third parties. The plaintiff, Viacom alleged that
150,000 of its copyrighted clips were available on you tube and they
have been viewed for more than 1.5 billion times. Major component of
this litigation centers on the posting of duplicate videos following a
successful takedown procedure. Court did not even question whether
you tube is an online service provider who store content at the
direction of its users. The process used by the OSP is similar to that of
Veoh. The court interpreted “storage” of user provided content to
encompass a wide range of services performed by online service
providers on such content, including the processing, duplication and
uploading of audio visual content for public viewing. Main issue before
the court was whether and to what extent you tube may avail itself of
the DMCA safe harbours and fair use.

The U.S district court for the southern district of New York held
that generalized knowledge of copyright infringement is insufficient to
24
See jansengreg, whose burden is it anyway? Addressing the needs of content owners in DMCA
safe harbours, federal communication law journal, vol. 62 at pp153-182.
25
Vaicom International Inc v. YoutubeInc No. 07 Civ. 2103 (U.S)

201
deny safe harbour protection to online service providers under the
DMCA with respect to those providers storage of user provided
content. This safe harbour is critical, because it generally shields
service providers from monetary liability for hosting infringing content.
The court granted summary judgement in favour of you tube on copy
right infringement claims and held that generalized knowledge was
not enough to deprive a service provider of safe harbour. It concluded
that section. 512 (c) safe harbour was available to the OSP unless the
OSP had the actual knowledge of specific and identifiable infringement
and did not act expeditiously to remove or disable access to the
infringing content. This knowledge would arise from “red flag” which
commonly takes the form of takedown notice sent by copyright owner.
If the service provider were aware of specific and obviously infringing
content, that too would indicate actual knowledge and would create
takedown obligation under 512 (c). The court concluded that, in order
to refuse an OSP safe harbour, the service provider must have
“knowledge of specific and identifiable infringement of particular
individual items. Mere knowledge of prevalence of such activity in
general is not enough”. The court’s analysis of policies and legislative
historical underpinning the DMCA, played a strong role in its decision.
Its opinion emphasized, “By limiting the liability of the service
providers, DMCA ensures that efficiency of the internet will continue
to improve and that the variety of quality of the services on the
internet will continue to expand. Further, this decision seems to
reiterate the earlier ruling in Veoh’s case that the service providers
have no monitoring or removal requirement and explained that it is
the copyright owner and the OSPs who have the obligation to police
for infringement. Interestingly, court went on to differentiate online
services such as you tube and P2P networks and held that the latter
exists for the exclusive purpose of violating copyright.

On the other hand, an OSP has various other non-infringing

uses. As far as the issue of vicarious liability is concerned, court

202
interpreted “right and ability to control” in relation to the knowledge
requirement, holding that the right and ability to control the activity
requires knowledge which must be item specific. The implementation
of this and the Veoh’s decision for the takedown notices is that only
knowledge of specific instances of infringement will impose a duty on
the service providers to remove infringing content from its sites.
Another decision by the American courts to give a ruling how passive
the ISPs conduct must be and extent knowledge they must possess to
escape liability is Costar v. Loopnet.

5.5.8 Telecino YouTube26:

In this case, the plaintiff filed a petition for preliminary

measures of protection against YouTube under article-141 of the
Spanish copyright law. They asked the court to grant those measures
against the defendant before they are given the opportunity to present
their argument. The court granted the order for the plaintiff to adopt
the requested measures. The court ordered YouTube to stop using the
plaintiff’s clips and remove them from their site. The ruling prohibited
You Tube to use these works in the future without the plaintiff’s
authorization. At the same time, the order directed the Telecino to
provide enough identification on the infringing content so that their
use on YouTube could be stopped and prevented in the future. You
Tube in response, filed an opposition arguing that execution of these
measures is technically unfeasible, because the information given by
the plaintiff is not sufficient to identify the illegal clips, In rendering its
ruling, the court looked into three issues:1) nature of the service
provided by the You Tube; 2) If You Tube is deemed to an OSP,
whether or not it qualified for “Hosting” safe harbour provided in the
Spanish transportation of E-commerce Directive; 3) In case they
qualify as an OSP can they claim immunity from liability.

26
Spanish Court Judgment

203
 The court noted that there are different kinds of intermediary
services available today. One of them is hosting as opposed to the
traditional concept of hosting. This pointed to a debate whether
“hosting” under article 14 refers even to the storage of user’s materials
on a website like in a video sharing site. Court rejected the plaintiff’s
argument that it is a content provider by asserting that its editorial
function is an automatic process. It would be impossible for YouTube
to control all the videos that users upload. The fact that You Tube
exploits its site for gain is not a sign that it is not an ISP. Just like in
Viacom, the court found the notice and takedown procedure worked
effectively as every time plaintiff requested the taking down of a video,
You Tube had complied with it. Citing article-15 of ECD, court
stressed that You Tube being an OSP it cannot be subjected to a
general obligation of monitoring its site nor to actively seek for facts
and circumstances revealing infringement

5.5.9 European Communities v. United States, 199927

The case was with respect to Section 110(5) of US Copyright Act:

Section 110(5) of the US Copyright Act permits, under certain
conditions, the playing of radio and television music in public places
(bars, shops, restaurants, etc.) without the payment of a royalty fee.
Panel found in favour of the EC. On 24July 2001, DSB accepted US
request to modify the reasonable period of time which has expired on
20 Dec. 2001. EC and US agreed to resort to arbitration pursuant to
Art. 25 to establish the level of nullification and impairment. The level
has been set at 1.219.000 year. Pending talks on a mutually agreed
solution the EC made an Art. 22 request in order to safeguard its WTO
rights. US objects to the level of suspension proposed by the EC and
referred the matter to arbitration. This arbitration has been
suspended but any party may reactivate it at any time. In July 2002
US Congress decided the creation of a fund to pay settlement of WTO
disputes. On that basis a mutually satisfactory temporary

27
https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds165_e.htm

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arrangement for a period of 3 years between the US and the EC was
notified to the DSB on 23 June 2003. The EU further expects the US
administration to engage the US Congress with a view to bringing the
US copyright act into compliance with the TRIPS agreement.

5.5.10 Harper and Row v. National Enterprises28

In this case, the Former President Gerald Ford had written a

memoir, A Time to Heal (memoir), including an account of his decision
to pardon Richard Nixon. Ford had licensed his publication rights to
Harper & Row, which had contracted for excerpts of the memoir to be
printed in Time. Instead, The Nation magazine published 300 to 400
words of verbatim quotes from the 500-page book without the
permission of Ford, Harper & Row, or Time magazine. Based on this
prior publication, Time withdrew from the contract because it was
permitted to by a clause therein, and Harper & Row filed a lawsuit
against The Nation for copyright infringement. The Nation asserted as
a defense that Ford was a public figure, and his reasons for pardoning
Nixon were of vital interest, and that appropriation in such
circumstances should qualify as a fair use. A Federal trial judge ruled
in favor of Harper & Row and awarded damages. The Second Circuit
Court of Appeals reversed. The ruling, find that the nation's actions in
quoting the memoirs were protected by fair use privilege. Harper &
Row appealed this ruling to the Supreme Court. The issue before the
Court was whether a fair use existed where the purported infringer
published a public figure’s unpublished work on an important public
event.

The Court, in an opinion by Justice O'Connor noted that the

right of first publication is a particularly strong right, and held that
there was no 'public figure' exception to copyright protection,
asserting that "the promise of copyright would be an empty one if it
could be avoided merely by dubbing the infringement a fair use 'news

28
471 U.S. 539 (1985)

205
report' of the book." The court applied the traditional four factor test
to determine if the use was fair, and made the following findings:

The purpose or character of the use was commercial (to scoop a

competitor), meaning that The Nation's use was not a good faith use of
Fair Use in simply reporting news. The nature of the copyrighted work
was informative. The amount and substantiality of the portion used in
relation to the copyrighted work as a whole was great -- although the
"amount" was small, it constituted a "substantial" portion of the
infringer's work because the excerpt was the "heart of the work". The
Court noted that the infringer could not defend plagiarism by pointing
to how much else they could have plagiarized, but did not. The effect
of the use on the potential market for the value of the copyrighted
work was also great, because there was an actual harm the cancelled
contract. Justice Brennan dissented, joined by Justices White and
Marshall. They felt that the importance of "the robust debate of public
issues" outweighed the limited power of copyright ownership. The
opinion was cited by the District court hearing the case of Salinger v.
Random House, which concluded that the Supreme Court had
"stressed the tailoring of fair use analysis to the particular case... It
neither stated nor implied a categorical rule barring fair use of
unpublished works." On appeal in the same case, the United States
Court of Appeals for the Second Circuit also cited the opinion. It noted
that this 1985 Supreme Court ruling had observed "the scope of fair
use is narrower with respect to unpublished works." The circuit court
noted that this is somewhat ambiguous, meaning either there are
fewer cases in which fair use may be found or that less material may
be copied, but decided the meaning was that unpublished works
normally had complete protection against any copying of protected
expression.

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5.5.11 Sony BMG Music Entertainment, et al. v. Tenenbaum29

First Circuit holds district court committed reversible error by

reducing jury award in favor of recording companies and against
individual copyright infringer on constitutional grounds without first
considering issue of remittitur. Plaintiff recording companies Sony
BMG Music Entertainment, Warner Brothers Records, Inc., Arista
Records, LLC, Atlantic Recording Corp. and UMG Recordings, Inc.,
brought an action for copyright infringement against defendant Joel

Tenenbaum, alleging that Tenenbaum illegally downloaded

thousands of copyrighted music recordings and other copyrighted
works using file-sharing software. Plaintiffs sought injunctive relief
and statutory damages relating to 30 of those music recordings. After
a five-day jury trial, the court found that, as a matter of law, the
recording companies owned the copyrights to the 30 music recordings
and that defendant infringed those copyrights by downloading and
distributing the copyrighted works. The court left to the jury the
issues of whether Tenenbaum’s violation was willful and the amount
of damages. Under Section 504(c) of the Copyright Act, the jury was
permitted to award between $750 and $30,000 for each non-willful
infringement, and up to $150,000 for each willful infringement.
Because the defendant continued file sharing after being warned
several times – by his parents, his school and the recording companies
that it was illegal, the jury found Tenenbaum liable for a willful
infringement for each of the 30 copyrighted works and awarded the
recording companies $22,500 per infringement, for a total award of
$675,000.

Defendant moved for remittitur and a reduction of the judgment

to the statutory minimum due to the excessiveness of the award. In
the case of remittitur, the recording companies would have the option
of accepting a reduced award or seeking a new trial. Instead of

29
USCA First Circuit, September 16, 2011

207
reaching a decision on remittitur, however, the district court found
that the $675,000 award was unconstitutionally excessive and that it
violated due process. The court reduced the award to $67,500, and
did not give plaintiffs an opportunity to seek a new trial in lieu of
accepting the reduced award. On appeal, the recording companies
argued that the district court impermissibly reduced the jury’s
damages award, since the award was within the range of damages
allowed by the Copyright Act. The United States, intervening to defend
the constitutionality of the Copyright Act, argued that the court
impermissibly bypassed the issue of remittitur to reach the
constitutional question. The First Circuit agreed, finding that the
lower court was obligated to consider the issue of remittitur before
reaching any constitutional question. The court reinstated the jury
award of $675,000 and remanded the case to the lower court for
consideration of the remittitur issue.

Tenenbaum also appealed, arguing that the Copyright Act is

unconstitutional because the Supreme Court has allowed juries to
determine statutory damages, whereas Congress intended for judges
only to impose those damages. He also argued that Congress did not
intend for the act to apply to “consumer copying” and that statutory
damages were unavailable absent a showing of actual harm to the
recording companies. The court of appeals rejected all of these
arguments, finding that the defendant had waived his constitutional
challenge, that he was not a mere “consumer copier” of the
copyrighted works.

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5.7.12 The Apple – iTunes Issue30

On April 2, 2007, Apple Inc. and EMI Music held a joint press
conference in London, considered being the harbinger of significant
changes in the digital music arena31. The conference relieved the
user’s by assuring them that their Apple Inc. It will not disappoint
them further by continuing the enforcement of DRM. However the
situation was not the same before 2007. The iTunes Music Store, a
service of Apple Inc., enforces its standard contract terms by means of
a DRM system called ‘Fair Play’ and according to the terms of service,
the provider reserves the right, at its sole discretion, to modify, replace
or revise the terms of use of the downloaded files142. In the E.C.
market this behaviour is prohibited by law and considered unfair,
particularly when applied in a standard form contract not subject to
negotiation. On January 25, 2006, based on the EC laws, the
Norwegian Consumer Council presented a complaint with the
Consumer Ombudsman against iTunes Music Store for breach of
fundamental consumer rights. Although Norway is just an European
Economic Area member, its copyright and consumer protection law
fully complies with the EC Copyright and Consumer acquis. On
January 2007, Norway declared Apple‘s DRM illegal and ordered them
to remove the restrictions of FairPlay within October 2007. In the
meantime, France and Germany also raised their voices against the
unfair activities of the iPod giant. The tussle came however ended in
2009 when after the Apple Inc. withdrew its unfair ‘FairPlay’
restrictions.

30
Pamela Samuelson & Jason Schultz, “Regulating Digital Rights Management Technologies:
Should Copyright Owners Have to Give Notice About DRM Restrictions?”, March 2012,
available at http://people.ischool.berkeley.edu/~pam/papers/notice%20of%20DRM-701.pdf., last
Visited on June 10th, 2014.
31
Nicola F. Sharpe and Olufunmilayo, B. Arewa, “Is Apple playing Fair?” Navigating the i-Pod Fair
Play DRM Controversy”, 5 Nw. J. Tech. & Intell. Prop. 332-350 (2006-2007)

209
5.5.13 SONY-BMG Rootkit Copy Protection32

In 2005 Sony BMG Music distributed thousands of musical

Compact Disks (CD) that contained TPM software designed to embed
itself in the Windows Operating System where it could monitor and
restrict use of the musical files from the CD147. Because of the
statement given by Thomas Hessee, Ex-President of Sony BMG‘s
Global Digital Business that, “Most people don‘t even know what a
rootkit is, so why should they care about it”148, it is pertinent explain
the concept of ‘Rootkit’. Sony BMG secretly included Extended Copy
Protection (XCP) and Media Max CD-3 software on millions of music
CD, of various artists like Celine Dion, Neal Diamond and Santana in
the mid-2000. The software designed to keep Users at bay from
making too many copies of the CD‘s149. It was in the form of root kit
undetectable by the anti-virus and anti-spyware programs that
opened the door for other malware to infiltrate computers. Even if
Sony BMG disclosed the existence of this software in the End User‘s
License Agreement (‘EULA’). The agreement did not disclose the real
nature of the software being installed, the security and privacy risks it
created, the practical impossibility of uninstalling and many other
potential problems for the User‘s computer. When users and
consumer organizations were informed of this matter, they filed more
than twenty lawsuits against Sony BMG in Canada, United States and
Europe. The main motive was to restrict the content on the copy-
protected CD‘s so that the data can only be transferred to certain
media players and portable devices (i.e., those using Sony or Micro-
soft products) and could not be transferred to an iPoddevice or iTunes
media player. Though the iPod is the dominant portable device and
that iTunes is one of the most popular media players, many
purchasers of Sony‘s copy-protected CDs were denied the right to
‘space-shift’33 their music. Following the discovery of the use of this
surreptitious copy protection technology, in November 2005, the
32
http://www.zdnet.com/article/sony-settles-with-ftc-in-rootkit-case
33
Shift space ―allows media, such as music or films, which is stored on one device to be
accessed from another place through another device. Space-shifting legally purchased music to a
portable MP3 player is permitted under the fair use doctrine. Recording Industry Association of
America v. Diamond Multimedia Systems, Inc., 180 F.3d at 1079

210
Attorney General of Texas filed a class action lawsuit against Sony
BMG under Texas Consumer Protection Against Computer Spyware
Act of 2005 followed by a number of class action law-suit. Those cases
were the first cases in the US, based on consumer law as an
instrument of defence against DRM technologies.

5.5.14 The DeCSS Case34

With DMCA in place movie and music companies and even book
publishers are increasingly bringing out works that are “copy
protected” or otherwise restricted by technological means. In 1996,
the industry developed an encryption scheme that employs an
algorithm configured by a set of keys to encrypt a DVD’s content
called the Content Scrambling System (CSS). This technology is
protected as a trade secret. The industry then developed a licensing
scheme for distributing the technology to manufacturers of DVD
players. The manufacturers were obliged to keep the CSS algorithm
confidential. They were also required to prevent the transmission of
the CSS data (e.g., the movie) from a DVD drive to any internal
recording device, including presumably a computer and the hard
drive. In September 1999, Jon Johansson, a Norwegian teenager,
collaborates with two unidentified teenagers whom he met on the
Internet, reverse engineered a licensed DVD player designed to operate
on the Microsoft operating system, and culled out from it the
information necessary to decrypt the CSS. Johansson was trying to
develop a DVD player operable on Linux, an alternative operating
system that did not support any licensed DVD players at that time, for
use in his own computer. Johansson’s programme was appropriately
called DeCSS and he posted this on the Internet. Eric Corley, the
publisher of the magazine ‘2600: The Hacker Quarterly’ and the
website known as ‘2600.com’, published an Article in his website
about how the content descrambling system of Johansson worked. If a
user runs a DeCSS program with a DVD on the hard disk, the DeCSS

34
Universal city Studios Inc v Eric Corley and others 273 F.3d 429 (2001)

211
will decrypt DVD’s CSS protection allowing the user to copy the DVD’s
file. Corley’s Article about the DeCSS described how CSS was cracked
and explained how it could be used to copy DVDs. The Article had
links to where DeCSS could be found. Eight major motion picture
companies brought DMCA suit against 2600 magazine seeking to
block it from publishing the DeCSS Software program, which defeats
the encryption used on DVD movies. Relying on the provisions of
DMCA, which prohibited circumvention of technological measures
such as the CSS and trafficking in such circumvention technology the
court granted injunction to Corley from providing hyperlinks to DeCSS
sites. The magazine was not involved in the development of Software,
nor was it accused of having used the Software for any Copyright
infringement. It was served this injunction as it did what a magazine
was supposed to - report current events. The story does not end here.
The powerful Motion Picture Association of America (MPAA) contacted
the Norwegian Economic Crime Unit and charged Jon Johansson for
unscrambling DVDs using DeCSS in 1999 (when he was 15 years old)
in a Norway court. Johansson was charged with violating the
Norwegian Criminal Code section 145(2), which out Laws’ breaking
into another person’s locked property to gain access to data that no
one is entitled to access. Johansson’s prosecution marks the first time
the Norwegian government had attempted to punish individuals for
accessing their own property. Previously, the government used this
Law to prosecute only individuals who violated someone else’s secure
system, like a bank or telephone company system, in order to obtain
another person’s records. The powerful industry groups protecting
their IP rights do have wide reach and their economic interests to
protect. Even his father, Per Johansson who owned the equipment
was charged though the charge was later dropped. However, on 7
January 2003, the Norwegian Criminal Court consisting of three
judges, of whom two were computer experts, acquitted Johansson
recognizing that he had the right to take the steps necessary to view

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his own DVDs on his own computers. The court observed that no one
could be punished for breaking into his own property.

35
5.5.15 Shreya Singhal v. Union of India

The Hon’ble Supreme Court of India has recently given a

judgement on a PIL filed by law student challenging the constitutional
validity of the amendment made to the Indian Information Technology
Act 2000.The PIL was filed on the strengths of the freedom of speech
and expression but the Hon’ble Supreme Court of India got the
opportunity to also elaborately address the issue of Internet service
provider liability. The Hon’ble Supreme Court of India has upheld the
section 79 of IT Act and gave clear analysis of when and where the
ISP’S could be made liable or not liable.United States (US)
jurisprudence has been imported by the Indian Supreme Court in an
inconsistent manner. Some judgments hold that the American first
amendment harbours no exception and hence is incompatible with
Indian jurisprudence, while other judgments have used American
precedent when convenient. Indian courts have on occasion imported
an additional restriction beyond the eight available in 19(2)—the
ground of public interest, best exemplified by the cases of K A Abbas
and Ranjit Udeshi36. The bench in its judgment— which has been
characterised by Pranesh Prakash as a master class in free speech
jurisprudence12—clarifies that while the American first amendment
jurisprudence is applicable in India, the only area where a difference
is made is in the “sub serving of general public interest” made under
the US law. This eloquent judgment will hopefully instruct judges in
the future on how they should import precedent from American free
speech jurisprudence37.

35
Judgement given by Hon’ble Supreme Court of India in WP 112/2012
36
Ranjit Udeshi vs State of Maharashtra,1965 SCR (1) 65.
37
Sunil Abraham, EPW, April 11,2015 Vol. No 15, p.13.

213
5.5.16 Indian Performing Right Society v. Eastern India Motion
Pictures Association38

The Indian Performing Right Society Ltd. (‘IPRS’), upon its

incorporation in1969, had published its tariffs, claiming royalties from
cinema halls for exhibiting films that embodied lyrics and music
created by its members. The producers (acting through Eastern India
Motion Pictures Association (‘EIMPA’) and other associations) asserted
their ownership over the literary and musical works on the grounds of
commissioning of the work, while challenging the tariff before the
Copyright Board. The producers’ claim was backed by the cinema hall
owners (acting through their association, namely, the Cinematograph
Exhibitors Association of India). In 1973, the Copyright Board, in a
well-reasoned judgment upheld the validity of the tariffs. The Board
observed that literary and musical works were not covered under §
17(b). Furthermore, in the absence of evidence indicating assignment
of the authors’ copyright in favour of the producers, the authors
would retain their copyrights. However, while allowing EIMPA’s appeal
against the Copyright Board decision, the High Court of Calcutta in
1974 observed that the authors were precluded from assigning to
IPRS what did not belong to them in the first place39

5.5.17 Super Cassettes Industries Ltd. v. Myspace Inc. &

Another40

This case is helpful in defining the contours of liability for

intermediaries in the online space and fostering greater cooperation
among ISPs and other intermediaries. In that case, the plaintiff was
granted an interim injunction against the defendant whose social
network was found to be secondarily infringing through allowing its
“webspace” or “place” to be used for sharing infringing materials. Also
this case was probably the first Indian judgment dealing with the
38
AIR 1977 SC 1443
39
Eastern India Motion Pictures Association v. Indian Performing Right Society, AIR 1974 Cal 257
40
High Court of Delhi, July 29, 2011, IA No.15781/2008 & IA No. 3085/2009 in CS (OS) No.
2682/2008.

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subject of intermediary liability in the Indian context. Justice
Vazifdar's judgement dated July25, 2011 of the Bombay High Court
declared that IPRS administrating the rights of lyricists and
composers was not entitled to collect royalty or license fee from FM
radio stations for broadcasting songs. The plaintiff had entered into a
licence agreement with the Defendant under which it had been paying
royalties to the Defendant in respect of broadcast of sound recordings
at its FM radio stations. Although the Defendant initially granted the
Plaintiff an infancy discount on its royalty/ licence fees, a dispute
arose when the same was withdrawn and breach of the terms of the
agreement was alleged against the Plaintiff. It was decided by the
court that the Defendant is not entitled to interfere with the Plaintiff's
broadcast of sound recordings at its FM radio stations in India for
non-payment of royalty or licence fees or otherwise, as the works of
the lyricists and music composers are incorporated in a sound
recording made by music companies, and such music companies
exclusively own the copyright in such sound recordings.

Once such lyrics and music are incorporated in the sound

recordings, a new copyrightable work comes into existence i.e. the
sound recordings. The producer or sound recorder is the author and
owner of the entire copyright in the sound recording with an exclusive
right under Section 14(1) (e) of the Copyright Act, 1957 to
communicate the sound recording to the public. Phonographic
Performance Ltd. (PPL) members are owners of such sound recordings
and thus entitled under the provisions of the Act to grant a license to
do the things mentioned in Section 14(1)(e). The Plaintiff had obtained
a license from PPL and there were no dispute in this regard. Indeed
musical and literary works are original works and a sound recording
is a derivative work, however the question of giving particular work
precedence over other works does not arise. Section 14 does not
indicate any order of priority between the different classes of works.
The right of a copyright holder in a sound recording includes the right

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to make the work available to the public by other modes of
communication as also by broadcast. The Defendant's right is
restricted only in respect of public performance of any musical work
or literary work. Thus, the Defendant was not entitled to receive the
said royalty/ licence fees as there was no consideration for the same
to the Plaintiff.

Prevention is better than cure” is very ideal and right approach

for the legislation relating to the Internet service providers. The
legislation has to balance the interest of the internet service provider
and the copyright owners. The judicial orders pertaining to internet
service provider should also take care of the interest of the internet
service providers and the practical as well as possible implementation
of such orders have to be assessed. The internet service provider has
to also make necessary arrangements to create copyright policies and
notify the same to the internet users at the very inception of the
contractual relationship between the internet service provider and the
browsing community. Indian copyright legislations will have to adopt
the necessary changes so as to adapt to the present day scenario of
multiple infringements committed by browsing world. The Indian
scenario should also strike a balance between the rights of copyright
holder’s without affecting the rights of internet service providers.

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