LIABILITY OF INTERMEDIARIES AND SAFE HARBOUR  PROVISIONS

ABSTRACT

With the development of technology and the COVID-19 epidemic, online platforms that enable the delivery of a variety of goods to customers’ doorsteps have experienced rapid expansion. These “intermediaries,” or platforms, link buyers and sellers of a variety of goods and services. To ensure a balance between user interests and the liabilities, responsibilities, and obligations of intermediaries, laws and regulations have been created in response to this rapid expansion. This article analyses the  legal frameworks relating to intermediary liability and safe harbor clauses balancing the interest of both users and Intermediaries.

KEYWORDS

Intermediary, Liability, Illegal Content, Interference, Protection, Safe Harbour

RESEARCH METHODOLOGY

This research article is of descriptive nature and is based on secondary sources for analysing the laws and recent development regarding Intermediaries. Secondary sources include journals, websites, blogs, court judgements and are used for research in this paper.

INTRODUCTION

With the advent of technology and especially the covid hit lockdown, door- step delivery of various items, be it be clothes, food, or anything we need, has increased exponentially. For this we use various online platforms that connect customers to sellers. Various platforms such as Amazon, Flipkart, Zomato etc. have emerged as a major market player due to increased demand – for door- step delivery of things.

These online platforms providing plethora of sellers to buyers on a single screen are known as intermediaries. These platforms act as a facilitator for customers to purchase products directly from seller. Thus, the role of these intermediaries is not that of a seller but rather a facilitator, with almost negligible interference.

Ever since the advent of these platforms, there arose a need to make laws in order to balance the need of users to get best products by making laws determining the liabilities, responsibilities and obligations of these intermediaries and at the same time providing Safe Harbour to the intermediaries to operate hassle-free, without being held liable for the fault of seller. Thus, laws were to be framed in a way to protect the interest of both the parties. Therefore, these laws and regulation would be crucial both for the e-commerce intermediaries and the customer who relies on them.

REVIEW OF LITERATURE

Prior to the establishment of Safe Harbor provisions, intermediaries had to deal with problems like the possibility of being held responsible for content created by third parties, accusations of copyright infringement, privacy concerns, defamation lawsuits, uneven legal systems, financial obligations, and a suppression of innovation. The safe harbor provisions sought to solve these issues by establishing a legal framework that protected intermediaries from certain liabilities, promoted the expansion of online platforms, and encouraged innovation while balancing the rights of content creators and users.

In Google India Private Ltd v. M/s. Visakha Industries, 2020 SCC ONLine SC 1587, the case arouse in 2008 when two user articles on a Google Group with false accusations against M/s Visakha Industries, a well-known asbestos manufacturer, were published. In addition to filing criminal accusations against Google for criminal defamation, Visakha also sent a takedown notice to Google India.

The level of intermediary liability had to be established in accordance with the unamended Section 79 that was in force at the time the case was filed in mid-2008 because the complaint was filed prior to the current version of Section 79, which provides extended safe harbor protection. To Comply with Section 499 of the Penal Code, the Court had to determine whether Google had “published” the items. The Court decided that if a third party who has the authority to erase content decides against doing so, publishing may nonetheless take place. As a result, the Court ruled that Google was not required to remove the information and that the lawsuit was therefore not subject to being dismissed. It stipulated that the lower Court should conduct the trial.

Although the verdict has no immediate repercussions because Section 79 of the Act now expressly exempts intermediaries, it is important for internet service providers because they may now be regarded as “publishers” for purposes of India’s criminal defamation law.

SAFE HARBOUR PROTECTION

The laws regarding intermediaries were introduced in 2008 by amending the information technology Act, 2002 and the definition of intermediaries was added in clause w of section 2 which defined Intermediaries “as any person who receives, stores or transmits an electronic record on behalf of another person, or provides any service with respect to that record.” In more simple terms an intermediary act as a middle man between buyer and seller in order to bring agreement between the two.

Issues pertaining to intermediary.

• To prevent sale of counterfeit products
• To address issue of IP Infringement by counterfeit products seller
• To provide safe harbour to the intermediaries as they does not play an  active role in sales of products.
• Holding intermediaries liable for not exercising due diligence.
• To make intermediaries accountable and bound by legal limits in order to protect  the rights and interests of the individual.
• Need for guidelines to protect data of users as this involves a vast amount of user data.
• To upkeep market fairness and prevent monopoly of the intermediaries.
• To regulate content like hate speech, obscenity etc.

The Section 79 of Information Technology Act, 2000 provides for Safe Harbour provisions for Intermediaries. The main goal of safe harbor protection is to provide a legal framework that restricts an intermediary’s liability for the activities of its users. As a result, there is less concern about potential legal repercussions, which promotes the growth of online services and platforms.

 It states that an intermediary cannot be made liable for “any third party information, data or communication link made available or hosted by him”. Further it provides conditions for this protection to  apply. Firstly, the intermediary must be providing only access to communication system where information is hosted by third party. Secondly, it does not function as initiator of transmission or select the receiver of transmission or modify information contained in it. And lastly, it keep tab on due diligence being observed and follow guidelines as prescribed by central government.

In Flipkart Internet Private Limited v. State of U.P. , 2022 SCC OnLine Del 2439, a case was brought before the Hon’ble Delhi High Court, where the a laptop was ordered with the processor of brand ‘Intel’ but was delivered with processor of brand ‘A.M.D’, thus the delivery was not as per the specifications as described when the order was placed. Regarding this a case was filed against the intermediary Flipkart.

The court held that intermediaries like Amazon, Myntra, AJIO provides platforms do not take title of the goods being sold. The court further applied the safe harbour provisions as per section 79 and held that the intermediary is not the seller and the seller of product and service on its platforms has to take sole responsibility for the product being sold. Further, the directors or officers of the intermediary are exempted from any liability under section 79 of the Act.

INFORMATION TECHNOLOGY (INTERMEDIARY GUIDELINES AND DIGITAL MEDIA ETHICS CODE) RULES, 2021

The main purpose of bringing the rules can be to impose new responsibilities on Intermediaries who were enjoying signification protection under section 79 of the Information Technology Act, 2002, which provided for extensive and unprecedented legal immunity to these intermediaries in order for them to survive, so that their growth won’t sabotage due to the fault of users. But with growing use of intermediaries there arouse a need to balance the interest of users along with intermediaries and hold them liable. For example, a blog published In a newspaper was under the threat of defamation but intermediaries can easily escape this liability as per Section 79 of IT Act, 2002.

But with time this immunity was in some cases proving to be a privilege. The aim was to provide for an open, safe and trusted internet. Therefore, the Intermediaries has to comply with the proposed rules in order to continue enjoying the legal immunity granted to them.

The Rules categorised Intermediaries into

• Social media intermediaries.
• Significant social media intermediaries.
• Publishers of news and current affair content.
• Publisher of online curated content.
• Publishers.

It stated the due diligence to be observed by intermediaries while performing its duties. It is now a legal obligation to publish rules and regulations on its website, which shall also inform users to not to publish anything  that belongs to another person, is contrary to law, that infringes any Intellectual Property rights, against the national integrity, or is patently false or untrue. Further, the intermediaries were required to inform its users at least once a year to abide by rules and regulations or face termination to access the resource.

Due to its ambiguity and the wide latitude granted to judges who must determine whether particular activities taken by internet intermediaries meet the requirements of “due diligence,” the word “due diligence” has never been a favourite in the business world.

Further, the intermediary can be restrained from publishing any data by an notification of appropriate government or order of the court that can be against the sovereignty and integrity of India. The intermediary has to remove the content at earliest and in no case more than thirty-six hours after receipt of the notification or order of court. The intermediaries are required to preserve information and associated records for 180 days, which can be further extended by government agencies or court. The intermediaries are required to take all reasonable steps to secure the resource and information contained in its system. The information is to be provided in no more than 72 hours to government investigating agencies.

GRIEVANCE REDRESSAL MECHANISMS

Under the rules the Intermediaries has to publish the Name and Contact Details of Grievance officer where users can make complaints against violation of any rule. The Grievance Officer has to acknowledge the complaint within twenty-four hours and dispose it within fifteen days from date of its receipt. IF the complaint is about any content exposing private areas of an individual, such content is to be removed within twenty-four hours. They are also required to have a physical contact address in India.

Further for Significant social media intermediaries, additional due diligence is to be observed.

• A Chief Compliance Officer is to be appointed who shall be responsible for any third party information hosted by Intermediaries.
• A Nodal Officer for 24 by 7 coordination with law enforcement agencies.
• A Resident Grievance Officer for Grievance redressal.

Further, they are required to submit a periodic report containing details of complaints and action taken. In accordance with Section 69 of the Information Technology (Procedure and Safeguards for interception, monitoring, and decryption of information) Rules, 2009, they are also required to identify the first originator of information on their resource if requested to do so by a court of competent jurisdiction or by a competent authority. The Significant Social Media Intermediaries must use automated technologies to find content that is exactly the same as content that has already been deleted.

Direct Selling Guidelines(DSG) 2016

In September 2016, the Department of Consumer Affairs released the 2016 Guidelines in response to the observations and suggestions stated above. The 2016 Guidelines provide State Governments a framework for monitoring the operations of direct selling businesses and ensuring compliance with them. The 2016 Guidelines’ precise definition of an objective test to distinguish between legal direct selling companies and pyramid/ponzi schemes is one of their standout aspects. the prohibition of unfair practices like fraudulent hiring and misrepresentations made by such entities and sellers, among other things; the obligations of direct selling entities and direct sellers; the rights of customers against such entities and sellers; and the duties of direct selling entities and direct sellers.

It is important to remember that the 2016 Guidelines were only intended to be advisory, thus the State Governments and Union Territories’ implementation was crucial to their success. Only 12 states (Chhattisgarh, Telangana, Sikkim, Andhra Pradesh, West Bengal, Odisha, Goa, Rajasthan, Tamil Nadu, Kerala, and Mizoram) implemented the 2016 Guidelines due to its advisory nature, which led to their non-uniform application. Due to the failure of several States and Union Territories to implement, consumers began to distrust one another.

In Amazon Seller Services Pvt Ltd vs Modicare Ltd, 2020 SCC OnLine Del 454,  the issue arose as Amway discovered that customers were purchasing its goods through online retailers. Amway claimed that because of their products’ internet accessibility, as though direct selling organizations (DSEs) were selling them to consumers directly. It said that any purchases made through these e-commerce platforms interfered with its regular business operations by harming its reputation and future sales.

The court held that these Guidelines are only advisory in nature. The DSGs, which forbid online goods resale by buyers, cannot be enforced against third parties because there is no contractual relationship between the DSE and the appellants/defendants. Since there is no contractual relationship between the DSE and the online platforms, such post-sale restrictions cannot be enforced against them once the title to a goods has been transferred through sale. According to the Hon’ble court the DSE can only pursue legal action against the seller and not the e-commerce platforms because those were “outside the purview and scope of the pleadings in the suits.”

LIABILITY TO TAKE DOWN CONTENT ON NOTICE OF ILLEGAL ACTIVITY

There is legal obligation placed on the intermediaries to promptly remove or take down any unlawful content upon receiving a legitimate notice or notification of such activity. A method for right holders or other affected parties to report infringing or illegal content and ask for its removal is provided by this liability, which ensures that intermediaries take the proper action to address it and stop its future dissemination. If the intermediary doesn’t reply to these notices within a fair amount of time, the intermediary could face legal repercussions. But what does notice of such activity refers to?

In Shreya Singhal v. Union of India’ AIR 2015 SC 1523, the Supreme Court ruled, among other things, that an intermediary is only required to delete content pursuant to Section 79(3)(b) of the IT Act if there is a notification from a government body or order by an court on the grounds listed in Article 19(2) of the Constitution.

In Flipkart Internet Private Ltd v State Of Nct Of Delhi & Anr, 2022 SCC OnLine Del 2439, the issue was that An international brand (Czech Brand) produced DC DERMACOL, which has established a strong reputation as a name in skin care throughout the world. Sanash Impex Pvt. Ltd. had been authorized by DC DERMACOL and given complete rights to market DC DERMACOL’s cosmetic products in India, both online and offline. However, Flipkart and Amazon India were selling phony goods. The lawsuit claimed this to be done with the fake or unauthorized re-sellers’ knowledge.

Further it was contented that a court order was not required before the offending material can be taken down once “actual information” has been received. The court held that Only upon receiving a court order, which is certainly lacking in the present case, would they be required to remove the offensive content/sites, etc., off their platform.

In Kent RO Systems Ltd. v. Amit Kotak & Ebay India Pvt. Ltd, CS(COMM) 1655/2016, the high court held that an intermediary is not obligated to determine for itself which products it sells on its website violate IP rights, but must remove them after receiving a complaint from the original IP right owner.

DUTY TO DISCLOSE DETAILS OF SELLER

The Delhi High Court in Luxottica Group SPA v Mify Solutions pvt Ltd, 2018 SCC OnLine Del 12307, ordered the intermediaries to reveal all of its sellers full names, addresses, and contact information on its platform and to get a certification that the goods are authentic from each of them.

Additionally, pursuant to the Information Technology (Intermediaries Guidelines) Rules, 2011, upon receiving notice  that a product is being sold on its platform illegally, it must immediately inform the seller, who must then remove the item and inform the plaintiff if the seller is unable to show that the goods is authentic.

WHEN INTERMEDIARIES BECOMES ACTIVE PARTICIPANT

In Christian Louboutinsas v. Nakul Bajaj, Civil (COMM) 344/2018, it was held that “E-commerce websites cross the line from being an intermediary to being an active participant when they actively encourage or assist in the conduct of illegal crimes. The alleged behavior would cause the trademark holder to lose customers. The brand equity of the owner of the trademark would be damaged if the goods were out to be fake. The vendor would not endure any harm. Such immunity goes beyond what the IT Act intends for intermediaries. They are only still intermediaries as long as they are passive record transmitters.”.

FOREIGN REGULATIONS

United States of America – Section 230(c)(1) of Communications Decency Act Of 1996, according to which “no user of an interactive computer service shall be regarded as the publisher or speaker of any information provided by another information content provider.” The Section serves as a barrier to shield the intermediary from the risk of being held accountable for being the speaker or publisher of illegal content posted by a third party.

The safe harbour principle, which is included in Section 512 of The Digital Millennium Copyright Act Of 1998 , compels the intermediaries to remove the infringing material as soon as the copyright owner makes them aware of its existence on their platform.

In United Kingdoms the legal proposition can be ascertained from Tiffany (NJ) Inc. v. eBay, 2010 SCC OnLine US CA 2C 1.

 Tiffany filed a lawsuit suing eBay after discovering that hundreds of fake pieces of silver jewelry bearing the “Tiffany” name had been sold on eBay. The Hon’ble court inquired on whether eBay is providing its services to sellers when it knew or had knowledge that they were participating in infringement of trade mark  in order to evaluate the platform’s liability for supporting third parties’ infringing transactions.

It was found by the court that since the plaintiff was unable to show that eBay had explicit knowledge of any specific items violating its rights, eBay was not under any affirmative obligation to fix the issue.

SUGGESTIONS AND CONCLUSION

The current legal framework is efficient and works well to protect the interest of the users and at the same time providing protection to intermediaries from legal repercussions if they continue to follow the guidelines. However,with the growing online market these intermediaries are creating monopoly in the market, with sellers not listed on these platforms are unable to grow. Furthermore, this results into unfair market practices for which specific rules needs to be framed directed towards these intermediaries.

REFERENCES

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NAME – Piyush Raj Jain

College – Gujarat National Law University (2021-26)