Liability of Internet Service Provider for Third Party infringement of Trademark and Copyright By: Saloni Saini.

The Author, Saloni Saini is a 4th year student of University School of Law and Legal Studies. She is currently interning with LatestLaws.com.

Abstract

During the precedent years, there have been numerous efforts to carry an applicable legal framework which can behave towards dealing with the protection of intellectual property on the Internet. This paper explores the accountability of ISPs for copyright and trademark violation by the third party.

Since India is flourishing promptly and enhancing moreover the Internet, the Indian law and the Information Technology Act, 2000 with implication to ISPs has also been dealt with.

The United States of America have gained the uttermost absolute law on the matter as of now, implementation of traditional intellectual property law to cases of copyright and trademark infringements on the Internet is also inspected.  Afterward, the USA composed a new law, The Digital Millennium Copyright Act (DMCA), 1998, which approaches towards Internet-related crimes and provides specific 'safe harbors to curb the liability of the ISPs in cases of copyright and trademark infringement by their subscribers.

The paper concludes with the angle of betterment of the law depicting ISP liability in India.

Keywords:  Internet Service Provider, Internet, copyright, trademark, infringement, Information Technology Act.

Introduction

With the emergence of technology, it is elementary to access information from any crossing of the world by directly clicking over the internet. Nevertheless, this easy access to information appears along with its drawbacks. In addition to distinct forms of violations of intellectual property in the evident world, now the intellectual property owners gamble their intellectual property rights (IPR) being violated in the constructive world as well. The internet has widened the portal to grant people to comfortably copy and reproduce the material without acknowledgment. Social media sites also are an element for concern because it is very accessible for people to post and share which originally did not correspond to them.

Patents, trademarks, and copyrights are all in jeopardy on the internet. However, governance is being achieved by governments, individual websites and other forces to ensure that the intellectual property is being preserved to the sufficient limit.

Copyright Infringement:

Copyright is dealt with preserving the efforts and performance of the intellect. The concern of copyright is the protection of literary and artistic works. These consist of music, writings, the efforts of the fine arts music, such as sculptures and paintings, technology-based works such as computer programs and electronic databases.

The Berne Convention (1886) is administering copyright which is a primeval international convention, states its Article 2^[1] as:

 1. “Literary and artistic works”;

 2. Possible requirement of fixation;

 3. Derivative works;

4. Official texts;

 5. Collections;

6. Obligation to protect; beneficiaries of protection;

7. Works of applied art and industrial designs;

8. News

(1)The expression "literary and artistic works" shall include every production in the literary, scientific and artistic domain, whatever may be the mode or form of its expressions, such as books, pamphlets, and other writings; lectures, addresses, sermons and other works of the same nature; dramatic or dramatic musical works; choreographic works and entertainments in dumb show; musical compositions with or without words; cinematographic works to which are assimilated works expressed by a process analogous to cinematography; works of drawing, painting, architecture, sculpture, engraving, and lithography; photographic works to which are assimilated works expressed by a process analogous to photography; works of applied art; illustrations, maps, plans, sketches and three-dimensional works relative to geography, topography, architecture or science.

(2) It shall, however, be a matter for legislation in the countries of the Union to prescribe that works in general or any specified categories of work shall not be protected unless they have been fixed in some material form.

(3) Translations, adaptations, arrangements of music and other alterations of a literary or artistic work shall be protected as original works without prejudice to the copyright in the original work.

(4) It shall be a matter for legislation in the countries of the Union to determine the protection to be granted to official texts of a legislative, administrative and legal nature, and official translations of such texts.

(5) Collections of literary or artistic works such as encyclopedias and anthologies which, because of the selection and arrangement of their contents, constitute intellectual creations shall be protected as such, without prejudice to the copyright in each of the works forming part of such collections.

(6) The works mentioned in this Article shall enjoy protection in all countries of the Union. This protection shall operate for the benefit of the author and his successors in title.

(7) Subject to the provisions of Article 7(4) of this Convention, it shall be a matter for legislation in the countries of the Union to determine the extent of the application of their laws to works of applied art and industrial designs and models, as well as the conditions under which such works, designs, and models shall be protected. Works protected in the country of origin solely as designs and models shall be entitled in another country of the Union only to such special protection as is granted in that country to designs and models; however, if no such special protection is granted in that country, such works shall be protected as artistic works.

(8) The protection of this Convention shall not apply to news of the day or miscellaneous facts having the character of mere items of press information.

The works that are instigated of being secured under the Berne Convention are not limited to some of the examples. Such a list is not comprehensive. The Convention states that "the phrase 'literary and artistic works' shall build every bearing in the classical, experimental and creatice domain, whatever may be the approach or form of its expression, such as....” The expression “such as” opens the door to establishment other than the ones set out in the list. For illustration court decisions, in different countries, have preserved material such as a haircut, a floral decoration of a bridge, examination paper, private letters, a divorce guide.

The minimal continuity of protection of copyright under the Berne Convention is 50 years from the date of the producer's death. This has been protracted by some nations like the United States of America and the European Union countries to 70 years from the creator's death. However, in some cases, the preservation, under the Berne Convention is less than 50 years after the death of the composer.

Provisions of Copyright Act 1957

Under section 14 of the act, copyright assigns a wrap of exclusive rights vested in the owner of copyright. The particular rights can be operated only by the proprietor of copyright or by any person who is suitably licensed by the holder of the copyright. Rights under copyright incorporate the right of adaptation, right of reproduction, right of publication, right to make translations, communication to public, etc.

The Copyright Act, 1957 implements copyright protection in India. It negotiates copyright protection in two forms:

(A) Economic rights of the owner, and

(B) Moral Rights of the creator.

The Copyright Act, 1957 does not arrange any liability of the Internet service provider at all. Nonetheless, the obligation of ISPs finds recognition under Section 79 of the Information Technology Act, 2000 (IT Act) which is as follows:

 79. INTERMEDIARIES NOT TO BE LIABLE IN CERTAIN CASES

  (1) Notwithstanding anything contained in any law for the time being in force but subject to the provisions of subsections (2) and (3), an intermediary shall not be liable for any third party information, data, or communication link made available or hastened by him.

(2) The provisions of sub-section (1) shall apply if—

 (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 hastened, 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;

 (c) the intermediary observes due diligence while discharging his duties under this Act and also observes such other guidelines as the Central Government may prescribe in this behalf.

 (3) The provisions of sub-section (1) shall not apply if—

 (a) the intermediary has conspired or abetted or aided or induced, whether by threats or promise or authorized in the commission of the unlawful act;

 (b) upon receiving actual knowledge, or on being notified by the appropriate Government or its agency that any information, data or communication link residing in or connected to a computer resource controlled by the intermediary is being used to commit the unlawful act, the intermediary fails to expeditiously remove or disable access to that material on that resource without vitiating the evidence in any manner.

        Explanation. —For this section, the expression "third party information" means any information dealt with by an intermediary in his capacity as an intermediary.

For this section third party information route any information handled by a network service provider in his quantity as an intermediary, and "network service provider" means an intermediary.

Due Diligence

For India, the decree for due diligence has been arbitrary in the Information Technology Guidelines (Intermediaries Rules) 2011. Under the particular rules, the intermediaries abide to take the following steps:

1. Appointment of Grievance Officers- the ISPs must designate a grievance officer, and it must be made known to the public.
2. They must announce a) a privacy policy, b) a user agreement for access to usage of their assets and c) a set of rules and regulations.
3. Announcement of the consequences of non- compliance by users: The Intermediary is also required to caution clients that in the case of non-compliance they can abolish the approach.

Section 79 of the Information Technology Act immune ISPs from liability of third party infringement or data made accessible by him if the ISP had no insight of the offense pledged or if the ISP had applied 'all due diligence' to avoid any of the infringement. This mechanism unless the case in hand reduces under these two exemptions

ISPs are amenable for copyright infringements as well as either of the abuse that takes place on their websites and even acknowledged, if the move is done by the subscribers. Section 79 is extremely roughly worded and there is an incident that these exceptions cited in the IT Act can be worn more as a tool of harassment of companies by the authorities.

The Section excludes ISPs from liability if the ISP has applied 'all due diligence'. The information to Section 79 also has the circumstances to be predominantly interpreted and thereby making essentially an intermediary a 'network service provider'. One can conceivably argue that this expansive definition grants various types of service providers to be admitted, but at the same time, there is also the risk of it being interpreted in ways broader than what was intended by the framers.

According to some legal experts on Indian law, an accumulated approach to reproduction and such unauthorized reproduction would be identical to infringement. Since caching is done by ISPs themselves, ISPs may asset it difficult to plead ignorance. ISPs would certainly be liable if the owner of the copyright apprises ISP about that infringement and no action is seized by the ISP. As in any other jurisdiction, the accuracy of the copyright owner's claim is an issue in India. Since Section 79 of the IT Act, 2000 exempts ISPs of its liability if it proves its ignorance and due diligence, it does not cite who would be held accountable for such contravention in any event.

Therefore, this provision will root the problems when an offense as regards the third-party information or provision of data is pledged. ^[2]Thus, it can be observed that the current legal provisions do not determine the extent of the ISP's liability in the study of copyright infringement by the donor.^[3]

In Nirmaljit Singh Narula vs Indijobs At Hubpages.Com & Ors^[4] , defendant has registered himself under the name "Indijobs" in another defendant‟s website hubpages.com. When the plaintiff served a cease and desist notice on defendant calling upon it to remove the defamatory pages from its website and provide details of defendant, defendant vide e-mail dated 01.12.2011 declined to disclose the identity of the defendant. As per Section 79 of the Information Technology Act, 2000 read with Section 2 (1) (w) of the Information Technology Act, 2000, being an intermediary, defendant No.2 is under an obligation to disclose the identity of the defendant No.1 to law enforcement agencies.

This obligation is also expressly provided in Rule 3(7) of the IT (Intermediaries guidelines) Rules 2011. Also, under Section 79 of IT Act, 2000, an intermediary is liable for the third party if, despite actual knowledge, it fails to remove such illegal information, then the court can ask the party to disclose the identity of the person who is involved therein.^[5]

Demand for improved measures on ISP liability

India has a far-reaching legislation on the liability of ISPs in cases of copyright infringement in the digital world. It is of sheer importance for a country such as India with an expanding number of Internet customers and thereby rapidly increasing the threat to breach of the rights of copyright holders. At the same time, India is rapidly enhancing digitalization and if advanced laws are not carried in to protect ISPs from copyright infringement by subscribers and the related aspects, it would negatively affect the ISP corporation as a whole though cases respecting the same are yet to appear before any court of law in India. Furthermore, it is also essential for the country to update their laws about this aspect to continue in the clash with other Asian countries such as Singapore which have come up with all-inclusive laws to curb the liability of ISPs.

Some contend that taking an indication of the borderless description of the Internet, all nations should advance a set of conduct for ISPs which are universally relevant. Different countries will appear up with different approaches to the liability of ISPs and therefore, ISPs operating in multiple countries will face contracting liabilities in distinct countries. Another facet is that there will be a conflict of discrete domestic laws on ISPs where an ISP is performing a web hosting site in one nation and where it has allegedly committed copyright invasion in another nation where the site has been implemented.^[6]Thus, a universal set of conduct to be made relevant in the context of the Internet is being recommended.

 The Delhi High Court has conducted that Internet Service Providers (ISPs) to chunk the approach to websites like EZTV, Katmovies, Tamilrockers, and Limetorrents which are allegedly hooked on illegal distribution and streaming of television series and movies of production houses like Netflix, Warner Bros, Universal, and Netflix.^[7]

The Court stated in the order to reticent the websites against "streaming, reproducing, distributing, hosting, making available to the public and advertising to the public, or aiding the same, in any way, through their websites, on the internet any work/content/programme/ show concerning which plaintiff has copyright."

 In Google India Private Ltd vs M/S. Visakha Industries on 10 December 2019^[8] the court held that Section 79 of The Information Technology Act, 2000 (hereinafter referred to as 'the Act', for short), which appears to have been relied on by the appellant was found to not exempt a network service provider from liability much less criminal liability for the offenses under other laws or, more particularly, under the IPC.

It was further found that the above provision exempted Network Service Provider from liability only on proving that the offense or contravention was committed without its knowledge or that he had exercised all due diligence to prevent the commission of such offense or contravention. It is contended by the petitioner that actions of intermediaries such as Google Inc., which is a service provider providing platform for end-users to upload content, does not amount to publication in law and consequently, the question of holding such intermediaries liable for defamation does not arise. The petitioner placed reliance on Section 79 of the Information Technology Act, 2000 (in short, the Act) in support of this contention.”^[9]

Laws on copyright infringement in Japan

The Karaoke Principle

A biographer appreciates the privileged rights of copyright implemented in the Japanese Copyright Act,^[10] and the right holder (or the author of the copyright as transferee)^[11]may empower an additional individual to exploit the production which is the material of his copyright.^[12]

Notwithstanding, until the Club Cat’s Eye/Singing at a Karaoke Lounge case in 1988,^[13]it was ambiguous as to whether there could be any liability for infringement against a secondary defendant where it is the primary defendant who has pledged an action of copyright infringement.

In the Club Cat’s Eye/Singing at a Karaoke Lounge case, the concern before the Supreme Court was whether the offender, a snack bar, was liable for the musical act by its clients who had sung some music on karaoke equipment and licensed tapes arranged by the defendant and had to compensate additional license fees to Japanese Society for Rights of Authors, Composers, and Publishers (JASRAC). While dealing with this issue, the famous judgment by the Japanese Supreme Court highlighted that the snack bar's hostesses and members had aided their customers to sing to the music and the customers' singing to singing by the snack bar management as a component of their business strategy.

Afterward, in the Video Mates case,^[14]the Supreme Court enforced the Karaoke principle to dominantly liable a karaoke equipment lessor who had chartered karaoke equipment to a lessee without first acknowledging that the lessee had achieved a licensing agreement of copyright with JASRAC. It held, among others, that as most all played by karaoke equipment were case of copyright, that it was fair to such apparatus would be used in the infringement of copyright unless there was approval from the copyright owner.

 It also held that the lessor gained the profit from such leasing arrangements and that it was simple for the lessor to authenticate that the lessee had achieved a licensing agreement with JASRAC. Thus, by simply advising the lessee to conclude such an agreement without actually authenticating it, the lessor had contravened its justifiable duty of care owed to JASRAC, and that it was due to this infringement, that took place and losses were deteriorated by JASRAC.

In extension to founding accountability on the duty of responsibility that the secondary defendant owed to the rights holder, Japanese courts have also adhered to the secondary defendant liable to the right holder as a collective tortfeasor with the primary infringer. In the Miruku case,^[15] on an experience situation identical to that in Video Mates, the Osaka High Court found in favor of JASRAC in its allegation against the defendant karaoke equipment lessor.

It was on these assumptions that Japanese courts have found liable the Internet service provider MMO Japan Ltd, for contributing the File Rogue file sharing service which empowers its users to examine for and share unlicensed music files. In the File Rogue case,^[16] the court adhered that the defendant's service facilitated a high degree of illicit use and that no documentation licensed MP3 files were distributed.

Also, the defendants were attentive of the description of the files exchanged based on the names and song titles, and that they had applied control or administration over their users' conduct because they were in a situation to take the crucial steps to prevent copyright infringement, even if it was impossible to disclose all infringements. Furthermore, even though the service is presently free, the provider designed to charge fees for its use and that its assistance was profit-oriented. On this support, the court stated that the provider had contributory infringed the music rights holders' rights. 

 The degree of authority and administration which the intermediary has over the action of the user arrives to be the key factor to regulate if there has been contributory infringement. In Rokuga Net,^[17] the Japanese Intellectual Property High Court believed a service provider liable for providing a for-profit service that tangled the retransmission of free-to-air broadcasts accepted in Japan to abroad users via the Internet.

 In contradiction, in Maneki TV, ^[18]the service provider was held not accountable for providing a for-profit service that also elaborated a re-transmission of free-to-air Japanese broadcasts to users via the Internet.

The contrast between these two cases involves to turn on the technical setup of the defendant service providers and the degree of authority exercised by the providers: the provider in Rokuga Net handled the entirety of his setup and equipment for recounting and addressing the right holders' broadcasts, whereas the provider in Maneki TV enforced the user to asset a piece of equipment (a Location-Free TV "base station") which was absolutely owned and casually regulated by the users, and that the provider was only allocated with them.^[19]

Whether or not it is correct to downplay the aspect of the service provider in Maneki TV would curve on factual considerations such as the direction that Maneki “operated” each of the user’s “base station” by broadly giving connectivity services, and that each “base station” was a stand-alone example of equipment for documenting and transmitting TV programming over the Internet.

 But the particular factual distinctions upon which to conclude that the requisite degree of control and management had been entrenched to found contributory infringement may be tough to discern.^[20]

However, if the decision by the Osaka High Court in the Winny II decision^[21](a criminal prosecution case) is any explanation, Japanese courts may be accepting a more discriminatory thereat towards accessory liability and joint tortfeasors. Although the defendant in Winny II developed P2P software for file sharing, the court treated this "value-neutral technology" in that it could be worn for both infringing and non-infringing determination.

To be liable for allotting"value-neutral technology," it had to be shown that the defendant distributor had to admit that the software was used for banned activities and had to advocate its use only or mainly for illegal activities. Invalidate the conviction of the defendant, the court expounds that simply being aware of such an action that the software could be corrupt and did not create assisting or abetting in contravention of the law.

Operation on the limitation of liability for damages of stated telecommunications service providers.

In November 2001, the Japanese Diet developed a new law to regulate the online invasion of third party rights, including privacy violations, copyright infringement, and defamation. Executed as the Act on the Limitation of Liability for Damages of Specified Telecommunications Service Providers 2001, it is also accepted as the Provider Liability Law. The law covers "specified telecommunications service," which is described in Article 2(i) of the Provider Liability Law as follows:

 "Specified telecommunications service" instruments transmission (except telecommunications (referring to "telecommunications" as defined in Article 2 item i) of the Telecommunications Business Law(Law No. 86 of December 25, 1984)) with the ambition of unequivocal reception thereof by the public) of telecommunications with the aim of reception thereof by unspecified people.

Article 3(1) of the Provider Liability Law compensates a “specified telecommunications service provider” for any infringement that appears where the service provider assigned as third party’s communications (that is, the provider is not the operator of the infringing communications). However, this indemnity does not cover where

 (a) it is technically advantageous to take parts to avert the transmission of the infringing communications,^[22]and

 (b) the provider either

  (i) appreciate the infringement by distributing the communications,^[23] or

(ii) experience of the information in the communications and could fairly know of the infringement by distributing the communications.^[24] 

Article 3(2) of the Provider Liability Law compensates the provider from any loss acquired by the sender of the communications by exhausting such communications. The provider may do so where there were fairgrounds for the provider to accept that the rights of others were infringed without due element by the circulation of the communications.^[25] Willingly the provider may do so where it accepts a petition filed by a person who charges his right is infringed, and upon carrying the petition to the communication sender, the provider does not, within 7 days, collect any notice from the sender announces that he disagrees with the accusation of infringement and with the blocking part to be implemented by the provider.^[26]

Several considerations can be made about the Provider Liability Law. First, the repayment administers not just to secondary liability for copyright infringement, but achieves in an identical to the "horizontal exceptions" in the EC's E-Commerce Directive to excuse the provider "for any loss arose from such infringement". Secondly, only a "specified telecommunications service provider" enable for the indemnity.

As defined, this excludes a telecommunications service provider providing "direct reception" of telecommunications. This would arrive to preclude from its ambit ISPs who achieve as conduits for "direct reception" of communications from sender to recipient. On the other hand, this would build hosting service providers and referral service providers, who distribute communications "with the aim of reception by unspecified persons". This could be condensed on the basis that ISPs as conduits would not be liable in any affair for transmitting communications, and would not be obliged to take measures to penetrate communications. Neither are they compelled to disable their senders' communications.

Finally, the advantage regime set out in the Provider Liability Law does not bind the telecommunications service provider to proactively audit and filter the communications, it transmits. Where it becomes achievable to take technical actions to filter such communications, the provider has little accountability or enforcement to implement them because to do so will be to captivate the knowledge of infringing communications, which will not qualify it from Article 3(1) indemnity, and possibly require it to take steps, presumably expeditiously, to damage the communications to certify for the Article 3(2) indemnity. The Provider Liability Law is silent as to whether disabling the communications restores to the provider the Article 3(1) indemnity from an act by the party aggrieved by the infringing communications, although from a circumstantial standpoint, the amount of the damage caused by exhausting the infringing communications will be decreased.

On the other hand, a provider faces expanded liability if it deliberately avoids complaints and risks provoking its exposure to damages if it declines to take corrective action.^[27]This puts a provider in a demanding catch-22 situation, not unlike that faced by Internet intermediaries in the United States and the DMCA safe harbors.^[28]

Trademark infringement:

Two types of secondary liability are as follows:

Facts are as follows

In the trademark context, the question today is one of enforcement in combating organized crime, but beneath the surface lies the fundamental question of exclusive or open use of trademarks on the internet. So far, extending trademark rights to all users of a protected trademark on the internet has been squarely rejected. However, attempts at preventing offering or advertising using a protected trademark comes very close to permanently blurring the line between protecting the distinguishing function of a trademark to allowing absolute protection of the investment and advertising function of a trademark.

Therefore, it is imperative to tread carefully in this domain and to refrain from allowing actions of direct or indirect infringement against ISPs, absent clear evidence of fault.

As long as the internet service provider supplies an infrastructure that primarily benefits society and reasonably cooperates with right holders that present justified and proportionate claims, it should presumptively enjoy immunity from individual right holder lawsuits, and expanded statutory or case law-based duties of care. We should be careful to tailor liability rules based on the acts of a few strong ISPs and pit them against the interests of trademark holders. Instead, in fashioning liability rules, we should look to what rules enabled us to have a thriving market place, and thus, would allow continued growth of technologically savvy, and primarily infringement neutral, technologies.

All potentially infringing uses of trademarks in ISP domains are not known to us today. Neither is the impact of the start-up businesses of today and tomorrow. Rather than focusing solely on the old generation of ISPs, policy-making should take account of the marketplace as a whole.

The standards for duty of care should also be tailored with small and medium-sized businesses in mind. Developing a culture of sharing and cooperation between right holders and ISPs (e.g., filtering software, best practices, etc.) would likely improve the overall effectiveness in combating the sale of counterfeit merchandise and optimize the use of allocated resources.

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