LIABILITYOF NETWORK SERVICE PROVIDERS (NSPs)

A. LIABILITY OF NSPs UNDER THE INFORMATION TECHNOLOGY ACT, 20001.
Chapter XII, Section 79 of the Information Technology Act, 2000 (21 of 2000) (hereinafter for short “the Act”) specifically refers to Network Service Providers (NSPs). NSPs may be Internet Service Providers (ISPs). Section 79 of the IT Act, exempts Network Service Providers from liability in certain cases. For removal of doubts, it is declared that no person providing any service as a network service provider shall be liable under the 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. Clause (a) to the Explanation of Sec. 79 defines "Network Service Provider" as an “intermediary”. The term “intermediary” is defined in sub-clause (w) of clause (1) of Sec. 2 of the Act with reference to any particular electronic message as any person who on behalf of another person receives, stores, or transmits that message or provides any service with respect to that message. This definition of the term “intermediary” is specifically excluded from the definitions of terms “originator” and “addressee” which are separately defined in the Act. The term “originator” is defined in Sec. 2(1)(za) of the Act, as a person who sends, generates, stores or transmits any electronic message, or causes any electronic message to be sent, generated, stored or transmitted to any other person but does not include an intermediary. In Sec. 2(1)(b) of the Act, the term “addressee” is defined as a person who is intended by the originator to receive the electronic record but does not include an intermediary. Clause (b) to the Explanation of Section 79 of the Act, defines “third party information” as any information dealt with by a network service provider in his capacity as an intermediary.
2. In the light of the above definitions, it is clear that an originator generates, stores, sends or transmits any electronic message, or causes any electronic message to be sent, generated, stored or transmitted through NSPs to any other person. An addressee may also store the electronic record so received by him through NSPs. An addressee may or may not thereafter re-transmit the same electronic record so received by him from the originator of the record through NSPs to another person of his choice. NSPs will firstly receive the electronic records, messages, information or data meant for the addressee, store the same with their servers and will thereafter transmit the same to the ultimate subscribers who requisitioned for the electronic records, messages, information or data. Though the actions of “originator”, “addressee” “subscriber” and “intermediary” overlap with the actions of each other in the technological point of view, law has made an attempt to distinguish meanings of the terms of “originator”, “addressee” from the definition of the term “intermediary” and has specifically excluded them from liability under the Act. Further, all network service providers are intermediaries but all intermediaries such as Content Providers, Blogs, Distributors, Publishers, Internet Service Providers, subscribers, etc. are not network service providers.
3. A number of intermediaries is involved in various stages of the transmission of an electronic message. As an illustration, various organizations, such as, (i) Internet Service Provider (TATA), (ii) Email Service Provider (Asian Laws), (iii) Server Host Co. (IT Nation ) and National Internet Gateway (VSNL) provide some services or other that are used for creation, transmission, storage, etc. of an electronic record or message. At some point of time or other, the NSPs provide a ‘link in the chain’ through which the message finally reaches the intended recipient and he is able to view it. Internet is a large network that comprises of millions of computers accessing resources and receiving messages from all over the world. There is no one owner of the Internet but many people provide services on which the Internet traffic travels. It is therefore difficult to fasten liability for transmitting/publishing any obscene (lascivious material) or copyrighted material over the Internet on all persons who were involved in transmitting/publishing the prohibited or illegal material viewable over the internet or world wide web. Sec. 79 of the IT Act, therefore, provides protection to NSPs who may include Server Hosts, Internet Service Providers, Email Service Providers, etc. who are accessing information, provided and published by third parties over the Internet.
4. However, if NSPs themselves cause to transmit or publish lascivious material or copyrighted material, then they can be held liable under Sec. 67 of the Act apart from owners of websites and web servers for publishing or transmission of the offending material or third party information.
5. Finding that the liability of putting illegal material over the World Wide Web (WWW) finally rests with the person with whom the ownership of the material lies and who is directly responsible for having published or transmitted over the Internet, the Parliament has absolved from liability all ‘NSPs’ whose services are used to publish/access any information over the Internet provided that they prove that offence or contravention was committed without their knowledge or that they had exercised all due diligence to prevent the commission of such offence or contravention.
6. CLASSIFICATION OF NSPs UNDER THE ACT.
Under the Act, no classification of NSPs has been attempted. The expression 'Network service providers' used in section 79 subsumes within it all kinds of Internet service providers irrespective of what function they perform in the long chain of intermediaries that transport Internet content to the desired destinations. The ISPs perform different functions in the task of transporting content and their liability cannot be uniform. It has to be based precisely on what function they perform. It is therefore necessary to categorize the NSPs into functional categories otherwise different NSPs could be held liable under the Act, for something which they have played no role in or for the contents over which they have little control. To give a meaningful disposition to the limitation of liability of NSPs, for which section 79 has been drafted, it becomes essential to categorize the NSPs.
7. FILTERING NSP LIABILITY THROUGH THE ACT.
The title of Section 79 of the 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 NSPs. The liability of NSPs could arise in a number of ways under different statutes. The liability could be criminal or civil in nature depending on various factors. It is impractical to define the liability of NSPs which could arise in various forms at one place. Equally impractical could be to amend all our laws, which could hold NSPs 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 Act does not attempt the former but just seeks to create a filtering mechanism for determining the liability of NSPs. The idea is that the liability of an NSPs for their action or omission be first determined in accordance with the statute under which it arises and then if at all the NSPs are held liable, their liability again be filtered through Section 79 of the Act. For example, if an NSP 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 NSP is found liable then his liability again be tested on the touchstone of Section 79 of the Act.
8. In this context, the expression "under this Act" which has been used in Section 79 has created some confusion. Apparently, this limitation of liability would be applicable only when the liability has arisen under the Act alone. This could not be the motive behind drafting Section 79 especially when the Act does not attempt to define the liability of NSPs in any of its provisions; it only talks about limiting their liability. For the removal of doubts it is desirable that the expression "under this Act" be removed from Section 79 to resolve the dilemma of NSP liability for subscriber infringements. While relatively few cases addressed the issue, the same did often reach different conclusions.
B LIABILITY OF NSP UNDER THE INDIAN COPYRIGHT ACT, 19571. 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 NSP liability. However, some provisions in the Copyright Act could be interpreted to have some bearing on the liability of NSPs. 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 license granted by the owner of the Copyright or the Registrar of Copyrights under this Act or in contravention of the conditions of a license 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.
2. NSPs 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 NSP should be for profit meaning thereby that he should be financially benefiting out of the infringing activities. NSPs 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 NSPs 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 NSPs are liable only if they have knowledge of the infringing material stored or passing through their servers.
3. 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 NSP be said to have abetted the infringement of copyright' is a question to be decided by the courts in the light of actual facts.
4.1 Director liability
Two requirements must be satisfied in order to present a case for direct liability: The plaintiff must show ownership of the allegedly infringing material; and (2) the plaintiff must demonstrate that the alleged infringers violated an exclusive right granted to the copyright holder.
A small number of courts have held that the act of providing Internet service attaches liability to an ISP for copyright infringement. These seemingly harsh decisions are due to the fact that in response to subscriber requests, NSPs reproduce and distribute copyrighted material, as every download causes the NSPs computer to copy the material and forward it to the subscriber.
Copyright law aims to balance the competing policy goals of encouraging creativity and allowing public access to information. This balance is particularly important and difficult when it concerns the Internet, where meaningful copyright protection must exist in order to promote further intellectual development in the Internet and failing to provide protection would lead to a reduction in the incentive to create and less material available for public use. Therefore, it is important that copyright owners are protected and compensated for infringements occurring over the Internet.
The rapid expansion of the Internet, however, greatly expanded the context in which copyright infringement can occur. The Internet, with its inexpensive access, quick downloads and forwarding capabilities allow users to effortlessly bypass copyright laws at a substantial cost to legitimate users. As the Internet expanded, laws remained static and increasingly became incapable of handling such situations. Traditional protections such as cease and desist orders and court action prove ineffective, as letters are ignored and the litigation costs outweigh recovery in most cases. Moreover, as users can easily post information anonymously, even locating the alleged offender proves difficult in many cases. No longer protected, copyright holders attempted to hold Internet service providers (ISPs) liable for subscriber infringements.
4.2 Vicarious liability.
Although the Copyright Act does not explicitly recognize vicarious liability, American courts generally impose vicarious liability when the defendant has "the right and ability to supervise" the offender and a "direct financial interest in the exploitation of copyrighted materials. Therefore, NSPs could potentially be vicariously liable since the NSP has a close relationship to the subscriber, owns the equipment that transmits the material, and could financially benefit from the infringement. Courts hesitate to find ISPs vicariously liable, however, due to the fact that NSPs have little control over subscribers and the fact that subscriber actions do not directly affect NSP profitability (provided the NSP gets a flat fee for service).
The above does not provide absolute protection for NSPs, however, as the majority of district courts, in America, have not ruled on the issue and some may be inclined to find the NSP vicariously liable if it could be construed that they receive benefit from the infringing activity.
The likelihood of a court today finding an NSP vicariously liable for subscriber infringements of copyright is minimal. Instead, most courts are likely to find that the NSP does not possess the needed level of finances or resources to have the "ability" to supervise and control subscriber activity and that, when paid a flat-fee for service, does not have the direct financial interest needed for liability to attach.
In addition to granting exclusive rights over creative works, the Copyright Act grants copyright owners with the exclusive right to "authorize" the exercise of those rights. The authorization right is explicitly mentioned in the Act to avoid any question of contributory infringement for those who do not infringe the copyright themselves, but authorize others to do so Although the Act does not mention "contributory infringement," courts have read the provision similarly and considered whether an ISP can be liable for providing services and equipment to the infringer.
4.3 Contributory liability
Contributory liability is the most likely way in which courts will continue to find NSPs liable for subscriber infringement. Contributory liability requires the NSP to have actual knowledge or strong evidence of, or materially contribute to, the infringing conduct of another. For contributory negligence to attach, courts have held the NSP must have substantially participated in the infringement, therefore simply selling a service or good that will be used to infringe is insufficient for contributory liability. Courts differ on when an NSP must remove material or face liability, sometimes resulting in cases where NSPs permit actual infringement. For instance, Netcom holds that NSPs are not liable for contributory negligence unless the subscriber has no plausible claim of non-infringement and the NSP "substantially" participates in the infringement.
5. HOW CAN AN NSP QUALIFY FOR EXEMPTION FROM LIABILITY FOR
COPYRIGHT INFRINGEMENT?
To qualify for exemption, NSPs 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 NSP can qualify for exemption from liability: (i) Lack of knowledge and (ii) Exercise of due diligence.
5.1 Lack of Knowledge
Knowledge of the illegal contents on part of the NSP is a prerequisite for holding him liable under Section 79 of the IT Act, 2000. The NSP 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.
5.2 Due diligence
For an NSP 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 NSPs be required to monitor and judge legality of millions of files that are present or passing through their servers? Considering the gigabyte that are stored or passing through their servers this seems to be an impossible task. But, if we say that the NSPs 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 NSPs are not liable for the (infringing) gigabytes that are stored and passing through their servers unless they are put on Notice. If an NSP 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.
T. M. NADAR