MODULE 1

Cyberspace and its Components

Cyberspace is the total interconnectedness of human beings through computers and

telecommunication without regard to physical geography. Cyberspace is a realm in which
communication and interaction between two individuals or between an individual and a
computer is facilitated by digital data exchanged over computer networks.
Cyberspace is a global and dynamic domain (subject to constant change) characterized by the
combined use of electrons and the electromagnetic spectrum, whose purpose is to create,
store, modify, exchange, share, and extract, use, eliminate information and disrupt physical
resources.
Cyberspace includes:
a) physical infrastructures and telecommunications devices that allow for the connection of
technological and communication system networks, understood in the broadest sense
(SCADA devices, smartphones/tablets, computers, servers, etc.);
b) computer systems and the related (sometimes embedded) software that guarantee the
domain's basic operational functioning and connectivity;
c) networks between computer systems;
d) networks of networks that connect computer systems (the distinction between networks
and networks of networks is mainly organizational);
e) the access nodes of users and intermediaries routing nodes;
f) constituent data (or resident data).
Often, in common parlance (and sometimes in commercial language), networks of networks
are called the Internet which can be considered a part of the system. A distinctive and
constitutive feature of cyberspace is that no central entity exercises control over all the
networks that make up this new domain. Just as in the real world there is no world
government, cyberspace lacks an institutionally predefined hierarchical center.
Cyberspace can be divided into a multi-layer model comprised of:
1. Physical foundations: such as land and submarine cables, and satellites that provide
communication pathways, along with routers that direct information to its destination.
2. Logical building blocks: including software such as smartphone apps, operating
systems, or web browsers, which allow the physical foundations to function and
communicate.
3. Information: that transits cyberspace, such as social media posts, texts, financial
transfers or video downloads. Before and after transit, this information is often stored on (and
modified by) computers and mobile devices, or public or private cloud storage services.
4. People: that manipulate information, communicate, and design the physical and logical
components of cyberspace

Need for regulation of cyberspace

1) The most visible and readily sensational concern is about the use of internet particularly
for the distribution of obscene, indecent and pornographic content. The use of internet
for child pornography and child sexual abuse and the relative ease with which the same
may be accessed calls for strict regulation.
2) The challenge that Cyberspace is posing to traditional notions of jurisdiction and
regulation is another factor. The increasing business transaction from tangible assets to
intangible assets like Intellectual Property has converted Cyberspace from being a mere info
space into important commercial space. The attempt to extend and then protect intellectual
property rights online will drive much of the regulatory agenda and produce many technical
methods of enforcement.
3) With the inventions of new technologies, the media has enhanced the possibility of
invasion of the privacy of individual and bringing it into the public domain. The major
area of concern where some sort of regulation is desirable is data protection and data privacy
so that industry, public administrators, netizens, and academics can have confidence as on-
line user.
4) Encryption is the process of converting a message or document into a form that hides the
content of the communication from the eyes of an eavesdropping third party and needs to be
decrypted if its content is to be read. New cryptographic techniques (cryptography is the
process used to encode/encrypt electronic information) are commonly cracked in a relatively
short time by computational force or by other analytical means. Therefore, another area in
which regulation has assumed importance is in the debate over whether the public
should be permitted to use ‘cryptography’ or not.
5) Internet has emerged as the ‘media of the people’ as the internet spreads fast there were
changes in the press environment that was centered on mass media. Unlike as in the
established press, there is no editor in the Internet. In the press and publication environment,
editors check the truthfulness of facts and circulate them once the artistic values are
confirmed. On the internet however, people themselves produce and circulate what they want
to say and this direct way of communication on internet has caused many social debates.
Therefore, the future of Cyberspace content demands the reconciliation of the two views of
freedom of expression and concern for community standard.

Personal Data and Right to be Forgotten

History of right to be forgotten

The ‘Right to be Forgotten’ has been originated in the western countries. Its history can be
traced back to the year 1995 when European Union (“EU”) enacted its first legislation on
personal data protection i.e. Directive 95/46/EC (“Directives”). Though the said right was not
expressly codified in the Directives but a combined reading of Article 6(1)(e) and Article
12(b) gave an inference of ‘Right to be Forgotten’. Article 6(1)(e) mandated member states
that personal data shall be “kept in a form which permits identification of data subjects for
no longer than is necessary for the purposes for which the data were collected or for which
they are further processed” while Article 12(b) gave data subject the right to rectify, erase or
block the processing of personal data if the same is not in line with the Directives. The bare
language of Article 12(b) is read as “Member States shall guarantee every data subject the
right to obtain from the controller as appropriate the rectification, erasure or blocking of
data the processing of which does not comply with the provisions of this Directive, in
particular because of the incomplete or inaccurate nature of the data”.
The foundation of the ‘Right to be Forgotten’ was laid down by the European Court of
Justice in the case of Google Spain SL v/s Agencia Española de Protección de Datos &
Mario Costeja Gonzalez3 (“Google Spain Case”). The dispute in the said case arose in the
year 2010 when Mr. Costeja Gonzalez lodged a complaint against a newspaper publisher and
Google with Spanish data protection agency. The case of Mr. Costeja Gonzalez was that
whenever an internet user enters his name on the Google search page, link of two pages of La
Vanguardia newspaper dated Jan. 19 and March 09, 1998 appears on the result page. These
pages contained personal information of Mr. Costeja Gonzalez relating to an attachment
proceeding for recovery of social security debt which was later resolved. In the complaint
made to the data protection agency, Mr. Gonzalez requested that La Vanguardia and Google
shall remove or take measures to conceal the personal data concerning him. In response, the
data protection agency rejected his compliant relating to La Vanguardia newspaper as the
information published was legally justified but upheld the complaint against Google as the
operators of search engines were subjected to the Directives. In an appeal by Google, the
European courts and the European Court of Justice held that the operators of search engines
fall under the definition of ‘controller’ as envisaged under Article 2(d) of the Directives.
Further, the courts also confirmed the individual’s ‘Right to be Forgotten’ if the
personal data concerning him/ her is no longer needed for which it was collected.
On May 25, 2018, the EU Commission’s new legislation on data protection i.e. GDPR came
into force which repealed the Directives. As per Article 3(2), the GDPR has an extra
territorial application which binds some companies not being established in EU but to comply
with its regulations. As opposed to the Directives, the GDPR expressly included a provision
relating to the ‘Right to be Forgotten’ under Article 17 which grants ‘data subject’ a right
against the ‘controller’ to get erased his personal data on grounds like personal data is no
longer necessary to store, unlawful processing of personal data, withdrawal of consent by
‘data subject’ etc.

Judicial precedents in India

Though the ‘Right to be Forgotten’ is not found under SPDI Rules but there are some judicial
precedents on same in India. The Gujarat High Court and the Karnataka High Court have
taken a different view on ‘Right to be Forgotten’. In Dharamraj Bhanushankar Dave v/s
State of Gujarat & Ors, the Gujarat High Court denied any such right. In this case, the
petitioner through a writ petition under Article 226 of the Constitution prayed before the
court for restricting the disclosure of a hon‘ble court’s judgment dated 30.10.2007 published
by the respondent on the internet. The case of the petitioner was that initially he was an
accused of offences like criminal conspiracy, murder etc. in a complaint filed before the
Jamnagar Police Station. Later on, the Sessions Court acquitted the petitioner and the same
was upheld by the Division Bench of Gujarat High Court vide judgment dated 30.10.2007.
Though the said judgment was non-reportable, the respondent published it on the internet
which is hampering the petitioner’s personal and professional life. Referring to its rules, the
Gujarat High Court held that copies of the judgment of High Court can be given to any party
by the order of Assistant Registrar. Further, the court also held that the petitioner has failed to
prove any violation of Article 21 of the Constitution8 and in such way the Gujarat High Court
did not recognize the ‘Right to be Forgotten’.
On contrary, the Karnataka High Court on Jan. 23, 2017 in the matter of Sri Vasunathan
v/s The Registrar General & Ors.,9 recognized the ‘Right to be Forgotten’. The prayer of
the petitioner was to direct respondent for removal of his daughter’s name from an order
dated 15.06.2015 in the digital records maintained by the respondent. The said order was in
line with an FIR filed by the petitioner’s daughter against a man for offences relating to
compelling her for marriage, forgery etc. and a civil suit for annulling the marriage certificate
as there was no legal marriage between them. Subsequently, the parties entered into a
settlement on a condition that the criminal case against the man shall be withdrawn by the
petitioner’s daughter. Pursuant to that, the man filed an application under Section 482 of
Code of Criminal Procedure, 1973 for quashing the said FIR and the Hon’ble High Court
vide order dated 15.06.2015 allowed the application. The said order recorded the petitioner’s
daughter as respondent no. 2 with her name and identity details. The petitioner contended
before the court that the name wise search on search engines like google, yahoo etc. may
reflect the order dated 15.06.2015 on the result page. Further, there is a high chance that the
said order may affect his daughter’s relationship with her husband as well as her reputation in
public domain. Considering the arguments of the petitioner and recognizing the principle of
‘Right to be Forgotten’, the Karnataka High Court directed respondent to take necessary steps
to mask the name of the petitioner’s daughter in the order dated 15.06.2015. However, such
request of the petitioner cannot be undertaken in case of a certified copy of the said order is
applied for. Justice Anand Byrareddy disposed of the petition by concluding that:
“This would be in line with the trend in the Western countries where they follow this as a
matter of rule “Right to be Forgotten” in sensitive cases involving women in general and
highly sensitive cases involving rape or affecting the modesty and reputation of the person
concerned.”
In a pending suit in the matter of Zulfiqar Ahman Khan v/s Quintillion Business Media Pvt.
Ltd. and Ors.,10 the Delhi High Court in an order dated 09.05.2019 recognized the plaintiff’s
‘Right to be Forgotten’. The issue arose when two articles dated 12.10.2018 and 31.10.2018,
containing harassment allegations against the plaintiff during the #MeToo campaign, were
published by the respondent. The court vide order dated 19.12.2018 directed respondent to
take down these articles from the internet as they might cause massive injury to the plaintiff.
The court also ordered that these articles would not be republished by any other person.
However, it was pointed out by the plaintiff that the content of the said articles have been
republished by another platform. Based on this grievance, the court ordered to restrain the re-
publication of the said articles during the pendency of the suit. The court also said that the
‘Right to be Forgotten’ and the ‘Right to be Left Alone’ are the inherent facets of ‘Right to
Privacy’.
‘Right to be forgotten’ under PDP bill
Though the ‘Right to be Forgotten’ is not a settled law in India but it has been
incorporated under the PDP Bill. Section 27 of the PDP Bill deals with ‘Right to be
Forgotten’ which gives ‘data principal’ a right to restrict the disclosure of his/ her
personal data by ‘data fiduciary’. The ‘data principal’ can exercise the ‘Right to be
Forgotten’ on the grounds if (a) his personal data has served the purpose for which it was
collected; or (b) he withdraws his consent for collecting his personal data; or (c) the
disclosure of his personal data is in violation of any existing legislation. For exercising the
said right the ‘data principal’ shall have to file an application form before the Adjudicating
Officer appointed under Section 68. The power to make rules, regarding the manner in which
the application is to be filed, vests with the Central Government. 11
The ‘Right to be Forgotten’ under PDP Bill can only be exercised if the Adjudicating Officer
satisfies that the said right overrides the Right to Freedom of Speech & Expression and the
Right to Information of other citizens of India. The factors to be taken into account by the
Adjudicating Officer before making any such order are sensitivity of personal data, data
principal’s role in public sphere, relevance of personal data to general public etc. Further,
sub-section 5 of Section 27 gives right to any person to apply for review of order of the
Adjudicating Officer if it is no longer satisfying the grounds for exercising the ‘Right to be
Forgotten’.

Analysis of ‘Right to be Forgotten’ under PDP bill

The ‘Right to be Forgotten’ has been a debated topic since the MeitY issued the PDP Bill.
There are several issues that have been highlighted by the legal scholars and industrial
experts with the said right. The PDP Bill has been drafted on the verge of GDPR but the
meaning assigned to the ‘Right to be Forgotten’ under PDP Bill is different from that
contains under GDPR. Under GDPR a ‘data subject’ can ask for erasure of his/ her
personal data from the ‘controller’ on the grounds mentioned therein while such right is
restricted only to prevent the continuing disclosure of personal data under PDP Bill.
The ‘data principal’ under PDP Bill cannot enjoy the full removal of his/ her personal data
from the database of the ‘data fiduciary’ which seems to be in contrary to the jurisprudence of
the ‘Right to be Forgotten’ and Google Spain Case.
However, there is a mixed kind of opinion over deletion of personal data under ‘Right to be
Forgotten’. Justice Sanjay Kishan Kaul in the case of Justice K.S. Puttaswamy (Retd.) &
Anr. v/s Union of India & Ors., which is also known as ‘Right to Privacy Judgment’ said
that if India is to recognize ‘Right to be Forgotten’ on the verge of GDPR, it cannot be
an absolute right. Such right cannot be exercised if the personal data is needed for the
purpose of public interest, compliance with any legal obligation, national security,
scientific and historical research etc. These conditions are exceptions to the right to
privacy, including data privacy. Even the Data Protection Committee Report states that
removing the information available to the public at large would infringe the individual’s right
to know as well as freedom of press. Granting such absolute right may affect the public realm
of information if the information is totally removed. Such right may also involve the deletion
of information from private storage which might create a hurdle in publishing the information
later on. Therefore, there must be a distinction between the deletion of information and
restriction over disclosure of information and only the later one is possible to grant to an
individual.
Though the ‘Right to be Forgotten’ does not envisage the right to erasure of personal data but
Section 10 of PDP Bill puts an obligation on ‘data fiduciary’ to delete the personal data if
such data is no longer required to be stored. Section 10 talks about data storage limitation and
envisages that ‘data fiduciary’ shall only retain the personal data as long as it is necessary to
store or for such longer period as mandatory under any law. When the purpose of processing
such data is achieved then the ‘data fiduciary’ must delete the data. This provision clears the
stand of PDP Bill that the deletion of personal data is not a matter of right for ‘data principal’
but it’s an obligation on ‘data fiduciaries’.
Further, ‘controller’ governing under GDPR has an obligation to inform other ‘controllers’
about exercising of ‘Right to be Forgotten’ by ‘data subject’. Such obligation comes into
picture when the principal ‘controller’ makes the personal data public and other ‘controllers’
process the same. In that case, if the ‘data subject’ exercises the ‘Right to be Forgotten’ then
the principal ‘controller’ shall inform the other ‘controllers’, who are processing the personal
data of ‘data subject’, about deletion of any link, copy etc. of personal data. 13 The same
obligation is not provided under the PDP Bill. Therefore, if one of the ‘controllers’ in the
above situation happens to be an Indian party, who is governed under both the GDPR and
PDP Bill, then such ‘controller’ may not be able to act upon the request of the other
‘controller’. This may affect the principle of cross border transfer of personal data under
GDPR and India may not be seen as a country having an adequate level of data protection by
European Commission under Article 45 of GDPR.
Another issue that has come up under the PDP Bill is that for exercising the ‘Right to be
Forgotten’ a ‘data principal’ has to file an application form before the Adjudicating Officer
which is not the same with the other rights available to ‘data principal’. This provision has
made the process of exercising the ‘Right to be Forgotten’ as lengthy and time consuming.
Even in the GDPR, the ‘data subject’ can exercise the said right by simply asking the
‘controller’ to erase or remove his/ her personal data and when the ‘controller’ refuses then
the ‘data subject’ can approach the ‘supervisory authority’14. Further, this provision has also
created confusion over the ownership of personal data as the final decision with respect to
exercising of ‘Right to be Forgotten’ remains with Adjudicating Officer.
Talking about the ownership over personal data, Section 27 under PDP Bill also gives right to
a third party to apply before the Adjudicating Officer for reviewing his order granting ‘Right
to be Forgotten’. Any person, who thinks that such order is not satisfying with the conditions
mentioned under Section 27(1), may ask the Adjudicating Officer to review his order. This
provision has also created a buzz among the individuals and the industry over the unanswered
question i.e. who owns the personal data? On July 16, 2018, the Telecom Regulatory
Authority of India released a recommendation paper on “Privacy, Security and Ownership of
the Data in the Telecom Sector” whereby it recommended that the ownership of the data or
personal information shall vest with its user and the entities controlling or processing such
information are merely guardians. 15 Despite these recommendations, the PDP Bill does not
talk about the ownership over personal data.
Further, Section 28(2) of PDP Bill empowers ‘data fiduciary’ to charge a reasonable fee
when any ‘data principal’ exercises the rights granted to him under the PDP Bill. However,
the PDP Bill does not talk about the criteria for determining such fee. Such an exclusive
authority to the ‘data fiduciary’ may end up in misusing the provision of this section and
charging the high fee from the ‘data principal’. Therefore, there is a need to specify the
criteria for determining fee under this sub-section and hopefully the final draft of Personal
Data Protection Bill may address this issue.
 The UNICITRAL Model Law on Electronic Commerce

The Model Law was prepared in response to a major change in the means by which
communications are made between parties using computerized or other modem
techniques in doing business (sometimes referred to as trading partners). India moved
swiftly and promptly in this direction and the Indian Parliament passed the Information
Technology Act, 2000 on the pattern of the Model Law on Electronic Commerce
(UNCITRAL) adopted by the UN committee on International Trade Law and it came in
force on October 17, 2000.
The Model Law is aim to facilitate Electronic Commerce by providing internationally
acceptable rules and legal principles that may be used by the States in enacting legislation to
remove legal uncertainties arising from the application of paper-based rules and regulations
in the electronic environment.
The term ‘Electronic Commerce' itself has not been defined anywhere in the modal law.
Instead, the term 'Electronic Data Interchange’ (hereinafter referred to as EDI) has been
defined in art 2(b) as follows:(b) 'Electronic Data Interchange (EDI)' means electronic
transfer from the computer to computer of information using an agreed standard to
Structure the formation.
UNCITRAL Model Law on Electronic Commerce defines electronic data interchange (EDI)
as the electronic transfer from the computer to computer of information using an agreed
standard to structure the information. Businesses accept that EDI facilitates trade and offers
enormous commercial benefits. Among other things, EDI saves time and money by reducing
or eliminating expenditure on costs, postage and storage requirement.

1. The Principles of Non-Discrimination

Article 5 of the UNCITRAL Modal Law on Electronic Commerce indicates that
information would not be denied validity on the sole ground that such
information is presented or retained in an electronic form. Article 5 of the
UNCITRAL Modal Law on Electronic Commerce contains the fundamental principle
that the data messages should not be discriminated against, i.e., that there should be
no disparity of treatment between data messages and paper documents.

2. The Principles of The Functional Equivalence

The Model Law relies on the ‘functional equivalent approach’ which is based on the
analysis of purposes and functions of the traditional paper-based requirement with a
view to determine how those purposes or functions could have fulfilled through
Electronic Commerce Techniques. For example, the paper document served main
function as the following: to provide that the document would be legible by all; to
provide that the document would remain unaltered over time; to allow for
reproduction of a document so that each party would hold a copy of the same data; to
permit authentication of data by means of a signature; and to provide that the
document would be in a form acceptable to public authorities and courts. It is be noted
that in respect of all of the above mentioned functions of paper, electronic records
may provide the same level of security as paper and in some cases, a much
higher degree of reliability and speed, especially in the respect to the
 identification of source and content of the data, provided that a number of the
technical and legal requirements should be met.

3. The Principles of The Technological Neutrality

The Model Law provides essential procedures and principles to facilitate the use
of modern techniques for recording and communicating information in several
types of circumstances. The Model Law covers every aspect of the use of Electronic
Commerce. Accordingly, an enacting State can wish to issue regulations to fill in the
procedural details for procedures authorized by the Model Law and to take account of
the specific, possibly changing, circumstances at play in enacting State, without
compromising objectives of the Model Law

Net Neutrality
Net neutrality is the principle that all internet traffic should be treated equally, without
discrimination or preference given to any particular website, service, or application. Net
neutrality ensures that everyone has equal access to information and services on the
internet, regardless of their financial resources or the size and power of the websites
they use. It is an important principle that helps to ensure a level playing field on the internet,
and to protect the free flow of information and ideas. Without net neutrality, Internet Service
Providers could potentially use their market power to steer users towards certain websites and
services, or to limit access to others.

Originality of Data Message

The word 'original' is commonly thought of as referring to the medium on which information
was fixed for the first time. Article 8 is regarded as stating the minimum acceptable form
requirement to be met by the data message for it to be considered the functional
equivalent of an original. The provisions of Article 8 should be considered as mandatory, to
the same extent that existing provisions concerning the use of paper-based original
documents would be regarded as mandatory. The indication that the form requirements stated
in Article 8 are to be considered as the ‘minimum acceptable’ should not, however, be
construed as inviting States to establish requirements stricter than those contained in the
Model Law.
Article 8
(1) Where the law requires information to be presented or retained in its original form, that
requirement is met by a data message if:
(a) There exists a reliable assurance as to the integrity of the information from the time
when it was first generated in its final form, as a data message or otherwise;
Article 8(3)(a), by making referring to additions to the original data message refers to
computer-generated text automatically appended to text messages, digital signatures and
other forms of certification that may not be part of the message as originally drafted. This
clause makes it clear that so long as the additions do not alter the original text, the fact that
additions have been made, would not affect the originality of the message.
Formation and Validity of Electronic Contracts
(l) In the context of contract formation, unless otherwise agreed by the parties, an offer and
the acceptance of an offer may be expressed by means of data messages. Where a data
message is used in the formation of a contract, that contract shall not be denied validity or
enforceability on the sole ground that a data message was used for that purpose.
This clause allows the parties to the contract to choose whether or not they want to conclude
contracts electronically.

Attribution of Data Messages

In the context of contract formation, the appropriate and accurate attribution of the data
message is important for both parties.
Article 13. Attribution of data messages.
(1) A data message is that of the originator if it was sent by the originator itself.
(2) As between the originator and the addressee, a data message is deemed to be that of the
originator if it was sent:
a) By a person who had the authority to act on behalf of the originator in respect of
that data message; or
b) By an information system programmed by, or on behalf of, the originator to operate
automatically.
(3) As between the originator and the addressee, an addressee is entitled to regard a data
message as being that of the originator, and to act on that assumption, if:
(a) In order to ascertain whether the data message was that of the originator, the
addressee properly applied a procedure previously agreed to by the originator for
that purpose; or
(b) The data message as received by the addressee resulted from the actions of a person
whose relationship with the originator or with any agent of the originator enabled
that person to gain access to a method used by the originator to identify data
messages as its own.
(4) Paragraph (3) does not apply:
(a) as of the time when the addressee has both received notice from the originator
that the data message is not that of the originator, and had reasonable time to
act accordingly; or
(b) in a case within paragraph (3)(b), at any time when the addressee knew or should
have known, had it exercised reasonable care or used any agreed procedure, that
the data message was not that of the originator.
(5) Where a data message is that of the originator or is deemed to be that of the originator,
or the addressee is entitled to act on that assumption, then, as between the originator and
the addressee, the addressee is entitled to regard the data message as received as being
what the originator intended to send, and to act on that assumption. The addressee is not so
entitled when it knew or should have known, had it exercised reasonable care or used any
agreed procedure, that the transmission resulted in any error in the data message as
received.
(6) The addressee is entitled to regard each data message received as a separate data
message and to act on that assumption, except to the extent that it duplicates another data
message and the addressee knew or should have known, had it exercised reasonable care or
used any agreed procedure that the data message was a duplicate.
Clause 3 of this Article relates to circumstances under which the addressee may deem the
message to have been sent by the originator. Under the model law, so long as the originator
of the message agreed to authenticate a message using a given authentication method, the
message will be deemed to have been sent by the originator, if the receiver can verify that it
has been sent, by using that authentication method. The authentication method referred to in
this clause may be the use of digital signatures, dual key encryption or even a simple
password authentication system that is known only to the two parties. The addressee would
be entitled to act on the assumption that the data message was sent by the person who
purports to have sent it, unless the sender issues the receiver a notice to the contrary.

Time and Place of Dispatch and Receipt of the Data Messages

The internet knows no geographical boundaries, it is important that the question of how one
would determine 'place' in the context of electronic transactions, has added significance.
Article 15. Time and place of dispatch and receipt of data messages.
(1) Unless otherwise agreed between the originator and the addressee, the dispatch of a data
message occurs when it enters an information system outside the control of the originator
or of the person who sent the data message on behalf of the originator.
(2) Unless otherwise agreed between the originator and the addressee, the time of receipt of
a data message is determined as follows:
(a) If the addressee has designated an information system for the purpose of receiving
data messages receipt occurs:
i. At the time when the data message enters the designated information
system; or
ii. If the data message is sent to an information system of the addressee that is
not the designated information system, at the time when the data message is
retrieved by the addressee;
(b) If the addressee has not designated an information system, receipt occurs when the
data-message enters an information system of the addressee.
(3) Paragraph (2) applies notwithstanding that the place where the information system is
located may be different from the place where the data message is deemed to be received
under paragraph (4).
(4) Unless otherwise agreed between the originator and the addressee, a data message is
deemed to be dispatched at the place where the originator has its place of business, and is
deemed to be received at the place where the addressee has its place of business. For the
purposes of this paragraph:
(a) If the originator or the addressee has more than one place of business, the place of
business is that which has the closest relationship to the underlying transaction or
where there is no underlying transaction, the principal place of business;
(b) If the originator or the addressee does not have a place of business, reference is to be
made to its habitual residence.
Sub-clause 1 of Article 15 states that the time of dispatch of a data message is the time when
the data message enters in the information system outside the control of the person sending
the message. This could be interpreted to mean the message would be deemed to have been
dispatched once it enters either the information system of an intermediary (or several
intermediaries), or the information system of the addressee.
The concept of ‘dispatch’ refers to the commencement of the electronic transmission of the
data message. Where ‘dispatch’ already has an established meaning. If dispatch causes when
the data message reaches an information system of the addressee, dispatch under paragraph
(1) and receipt under paragraph (2) are simultaneous, except where the data message is sent
to an information system of the addressee that is not the information system designated by the
addressee under paragraph (2)(a).

Computer, Computer system:- Definition

Section 2 (i) "computer" means any electronic magnetic, optical or other high-speed data
processing device or system which performs logical, arithmetic, and memory functions by
manipulations of electronic, magnetic or optical impulses, and includes all input, output,
processing, storage, computer software, or communication facilities which are connected or
related to the computer in a computer system or computer network;
Section 2(j) "computer network" means the interconnection of one or more computers
through— (i) the use of satellite, microwave, terrestrial line or other communication media;
and (ii) terminals or a complex consisting of two or more interconnected computers or
communication device whether or not the interconnection is continuously maintained;
Section 2(l) "computer system" means a device or collection of devices, including input and
output support devices and excluding calculators which are not programmable and capable
of being used in conjunction with external files, which contain computer programmes,
electronic instructions, input data and output data, that performs logic, arithmetic, data
storage and retrieval, communication control and other functions
Section 2(k) "computer resource" means computer, computer system, computer network,
data, computer data base or software;

Diebold Assistance vs CIT

 Background
An important question as to whether an Automated Teller Machines (ATM) can be termed as
a computer came up before the courts in this case. In the state of Karnataka under state tax
law, electronic goods were taxed at rate of 12% while computer terminals were taxed at 4%.
The question was at what rate an ATM will be taxed and under what schedule of the
state tax law will it fall. Whether an ATM is an electronic good or a computer terminal
was needed to be clarified by the court so as to decide what will be the tax that Diebold
Systems will be liable to pay?
  Facts
This case came up before the Karnataka High Court as an appeal. The appellants in this case,
which is Diebold Pvt Ltd is a company engaged in the manufacture and supply of Automated
teller machines (ATM). The Company in order to clarify the rate of tax that is applicable on
the sale of ATM approached the Advance Ruling Authority which was constituted under the
Karnataka Sales Tax Act, 1957. Diebold Systems filed an application in Form 54 as provided
under Rule 27-E (1) of the Karnataka Sales Tax Rules, 1957. As a result, the company had
appeared before the authority and made had their submissions as to the facts, literature, and
description of the ATM. Appearing for the company was Sri Mohan Mudkavi the learned
Chartered Accountant along with the Vice-President of the Company.
The judgment of the Advance Ruling Authority
The majority view of the ARA was to classify ATMs as "computer terminals" liable for 4%
basic tax as they would fall under Entry 20(ii)(b) of Part 'C' of Second Schedule to the
Karnataka Sales Tax Act. However, The Chairman of the ARA dissented from the majority
view. In his opinion, ATMs would fit into the description of electronic goods, parts, and
accessories thereof. They would thus attract the basic rate of tax of 12% and would fall under
Entry 4 of Part 'E' of the Second Schedule to the KST Act.
 Order by Commissioner of Commercial Tax
The Commissioner of Commercial Taxes being of the view, that the authority for clarification
and Advance Ruling has erroneously classified ATM's as "computer terminals" and thereby
has caused prejudice to the interest of the revenue, therefore it initiated suo-moto revisional
proceedings under Section 22-A(1) of the Act by issuing a show-cause notice directing the
appellant company Diebold Systems to show cause, why the order passed by the Authority
for clarification and Advance Ruling should not be set aside and the 'goods' in question
should not be treated as "electronic goods". The Commissioner of Commercial Taxes, after
considering the reply filed by the appellant company passed an order that ATMs cannot be
classified as computer terminals. Aggrieved by the aforesaid order passed by
the Commissioner of Commercial Taxes, the appellant company is before the High Court in
this appeal filed under Section 24(1) of the KST Act.
 Issue before the court
Is ATM a computer and whether it would fall under Entry 20(i) of Part 'C of Second
Schedule to the Act?
 Submissions before the High Court
The main submission before the authority by Diebold systems was that ATM is a
combination of a computer and it runs on a processor and the purpose for which it is put to
use is to dispense with cash to people and therefore, had requested the Authority to classify
ATM's as goods falling under Entry 20 of Part 'C' of the Second Schedule to the Act which
consists of a list of entries with main head Computers of all kinds and peripherals and not
Electronic goods falling under Entry 4 of Part 'E' of Second Schedule to the Act.
While the contention of Commissioner of Commercial Tax was that an ATM is not a
computer by itself. It is connected to a computer that performs the tasks requested by the
person using the ATM. The computer is connected electronically to many ATM's that may be
located some distance from the computer.
  Judgement
ATM is the acronym for Automated Teller Machine. this machine has a data terminal with
two inputs and four output devices. The ATM connects to and communicates with a host
processor that is analogous to an Internet Service provider. Then as a way of supporting the
Machine to the host processor, dial-up or leased lines are used. With the dial-up, the Machine
would dial into the host processor, using a standard telephone line and modem. With the
leased line. The machine is connected through the host processor through what is called a
four-wire, point to point, dedicated telephone line. The ATM does not have many parts; there
is a card reader, which is what captures a person's account information that is stored on the
magnetic strip located on the back of the ATM/debit card. This information is actually used
by the host processor in routing the transaction to the appropriate bank. Then it has a
'Keypad', which is used by the cardholder to tell the machine what type of transaction is
needed. It has an 'electric eye' that is used for the cash dispensing mechanism. In addition to
the eye, the ATM has a 'sensor that is capable of evaluating the thickness of each of the bills
being dispensed.
Coming to the Karnataka Sales Tax Act, it is clear that the Act is a taxing statute and the
Schedule to an Act is very much part of fiscal enactment. It is enacted by the hand of the
Legislature. The Schedule in an Act sets down things and objects and contains their names
and descriptions. The expressions in the Schedule have no evocative function. They can
neither enlarge nor cut down the meanings or articles or things specifically named in the
list. Therefore, the enlarged definition of "computers" in the Information Technology Act
cannot be made use of interpreting an Entry under fiscal legislation.
An Automatic Teller Machine is an electronic device, which allows a bank's customer to
make cash withdrawals, and check their account balances at any time without the need
of human teller. ATM is not a computer by itself and it is connected to a computer that
performs the tasks requested by the person using ATMs. The computer is connected
electronically to many ATM's that may be located from some distance from the computer. As
a result, the appeal fails, and accordingly, it is rejected.

Legal Perspective of E-Governance

There is no dedicated legislation, particularly and solely, to the field of electronic governance
in our country. Although, some of the existing laws in India do apply to electronic
governance which have been talked about briefly below.

RIGHT TO INFORMATION ACT, 2005

Indian RTI Act is similar to the Canadian Law. In India, unlike UK and US laws, RTI Act
provides citizens with the direct access to the Central Information Commission in case the
information is denied to the citizens by any department of the government. Such access
avoids delays in the procedures to grant the citizens their basic right to information and to go
through the hardships of the courts to enforce their basic rights.
RTI Act ensures transparency in the functioning of the government by placing an obligation
on the government at all the levels and it’s department to provide the common man with the
information about the policies, rules and regulations passed by them. The act also provides
for the penalties, in case, the government fails to provide the citizens with the appropriate
information, timely and in a proper manner.
To help the government provide the citizens with the information, Department of
Information Technology is spreading the use of technology through the system of
electronic governance and website to display all the information for easy access of the
citizens.
For the Act to be more effective, there need to be better information flow among people at the
village level who are unaware of their rights because that’s where the grassroot issue lies and
efforts are lacking. Government needs to set up NGO to create awareness at the level where
it’s needed the most. But still the RTI Act doesn’t totally take up the responsibility of its
proper implementation due to lack of enforceability procedures which needs to be taken care
of by the government of the country.

INFORMATION TECHNOLOGY ACT, 2000

India is a country to have legal framework for all the ‘e’ (electronic) promulgated as the IT
Act, 2000. The Act, also, effected the consequential amendments in the Indian Penal Code,
The Evidence Act, 1872, and The RBI Act, 1934, bringing all of them in line as per the
requirements of the digital transactions.
Ever gave a thought, what if all the data that is being provided by the citizens to the
government gets leak or is used for some other purpose? Such issues are dealt by the IT Act
so as to not shaken the trust and confidentiality that a common person places in the
government.
1) Legal Recognition of Electronic Records
Under Section 4, electronic records are treated at par with the written, typewritten, or
printed records and the only necessary condition is that such electronic records must be
available for subsequent or future reference. The term “electronic form” used in this
section has been defined under Section 2 (1) (r) of the IT Act as “any information generated,
sent, received or stored in media, magnetic, optical, computer memory, microfilm, computer
generated micro fiche or similar device.”
2) Legal Recognition of Electronic Signatures
Section 5 legalizes and makes electronic/digital signatures equivalent to handwritten or
manual signatures for authentication of any required record. How the affixation of such
electronic or digital signature is to be prescribed by the Central Government. What is to be
considered as an electronic signature has been dealt with under Section 3A. According to
Section 3(2), the authentication of electronic records can take place with the help of an
“asymmetric cryptosystem and hash system which envelope and transform the initial
electronic record into another electronic record.”
3) Use of Electronic Records and Electronic Signatures in Government and its Agencies
Section 6 of this Act calls for the decentralization of e-governance as it grants legal mandate
to the appropriate government. It recognizes the application of electronic or digital
signature in the filing of any form, application, or document under appropriate
government, for issuance, approval, or sanction of license and payment and receipt of
money ( if the given action is done through electronic means ). The appropriate
government is assigned with the authority to frame rules in order to decide the manner in
which such electronic records will be filed and the method of the payment of fee or fee
charges for filing of any electronic record. The basic aim of this section is to prevent red-
tapism and promote the use of electronic records and digital signatures in government and its
agencies.
Some of the e-governance applications using digital signatures are:
 Income tax e-filing.
 Indian Railway Catering and Tourism Corporation (IRCTC)
 Director-General of Foreign Trade (DGFT).
 RBI Applications (SFMS: Structured Financial Messaging System).
4) Delivery of Services by Service Provider
Section 6A of the IT Act is a distinctive section of this chapter as it allows private
participation in the delivery of e-government services with an aim to facilitate efficient
delivery of services through electronic means and enable such service providers to set-
up, maintain, upgrade the computerized facilities belonging to the government.
Service provider can be:
i. Individual
ii. Private agency
iii. Private company
iv. Partnership firm
v. Sole proprietor firm
vi. Any other body or agency permitted by the government to provide these services
through electronic means.
The government in order to enable private participation in e-governance has been issuing e-
procurement tenders with defined Scope of Work (SoW) and the service providers are
required to do their given work on the basis of:
i. BOO (Build-Own-Operate) Model
ii. BOOT (Build-Own-Operate-Transfer) Model
iii. ASP (Application Service Provider).
The appropriate government may also allow the service providers to collect, retain and
appropriate service charges from the concerned person utilizing those services and the scale
of the service charges charged and collected will be specified by the appropriate Government
by notification in the Official Gazette.
5) Retention of Electronic Records
Section 7 lays down certain conditions for the retention of electronic records which are as
follows:
i. Their information stored by means of the electronic form must be accessible for
future reference.
ii. The electronic record must be retained in the format in which it was originally
generated, sent, or received or in a format that accurately demonstrated the
information originally generated, sent, or received.
iii. The details of origin, destination, date, and time of despatch or receipt of such
electronic record must be contained in the electronic record.
This section does not apply to information that is automatically generated to record the
dispatch or receipt of electronic record.
Under this section, a huge responsibility is brought upon the government and its agencies in
fulfilling the necessary conditions for the retention of the electronic record and thus to ensure
and sustain effective governance.
States like Maharashtra, Chattisgarh already have their electronic record retention policies in
place. The Central Government has also introduced the Digilocker System with a digital
locker account for every Indian resident to store and retain all necessary electronic records in
one place for subsequent use.
6) Audit of Documents, etc. maintained in Electronic Form
According to Section 7A, if there is a provision for audit of documents, records, or
information, then the provision of audit will equally be applicable for such electronic
records or electronic counterparts. Thus, making auditing of such electronic records
compulsory. The audit period will be decided according to the law which is in force in
respect of a particular subject matter. For example the Income Tax Act, 1961 requires the
audit of documents or any similar records on an annual or semi-annual, or quarterly basis.
7) Publication of rules, regulations, etc. in Electronic Gazette
According to Section 8, where any law requires any rule, regulation, order, bye-law,
notification to be published in the Official Gazette, then the publication of such rule,
regulation, order, bye-law, notification in the Electronic Gazette will also be considered
legal and valid. This section makes Electronic Gazette functionally equivalent to Official
Gazette for the public of rules and regulation. The date of publication of any rule or
regulation would be the date in which it was first published in either form – official or
electronic.
In Orissa Consumer Association v. Orissa Electricity Regulatory Commission, it was held
that “ if a notification is published in the Electronic Gazette, the notification is deemed to
have been published in the Official Gazette. The proviso to Section 8 of the Act also makes it
clear that where the notification is published both in the Official Gazette and the Electronic
Gazette, the date of publication shall be deemed to be the date of Gazette which was first
published in any form.”
8) Section 6, 7, and 8 not to confer the right to insist document should be accepted in
electronic form
Section 9 of this Act highlights limitations of e-governance and rightfully points out that
no individual can insist the Central or State Government and its agencies to carry out
its monetary transactions in electronic form or to issue or accept documents in electronic
form as it depends upon the capability of the government to carry out its functions using
Information and Technology.
9) Power to make Rules by Central Government in respect of Electronic Signature
According to Section 10, the Central Government is entrusted with the sole authority to make
rules in respect of:
i. The type of electronic signature.
(a) The manner and format in which the electronic signature shall be affixed.
ii. The manner and procedure of establishing the identity of the person
affixing electronic signature.
iii. Control processes and procedures to ensure that sufficient integrity,
security, and confidentiality of the electronic records or electronic payments
are maintained.
iv. Any other matter necessary for the legality of electronic signatures.
10) Validity of Contracts formed through Electronic Means
Section 10A of this Act makes no distinction between contracts through physical
communication or contracts through electronic means as it gives legal recognition to all
contracts where there is communication of proposals, the acceptance of proposals, the
revocation of proposals etc. The contract does not stand unenforceable merely on the ground
that it was initiated through electronic means or with the help of electronic records.

Safe Harbour

The “safe harbour” provision in the Information Technology (IT) Act refers to legal
protection for Internet service providers (ISPs) and other intermediaries that host or transmit
third-party content online.
Under Section 79 of the IT Act, ISPs and other intermediaries are not held responsible for
any third-party content that they host or transmit on behalf of others, as long as they comply
with certain conditions. These conditions include:
 They must not initiate the transmission of the content
 They must not select or modify the content
 They must observe due diligence in the operation of their services
 They must remove or disable access to the content upon receiving actual knowledge
or notification of the content’s illegality
The safe harbour provision is intended to encourage the growth of the Internet and e-
commerce by providing legal certainty for intermediaries that enable the flow of information
and services online, while still holding them accountable for illegal content if they have
actual knowledge of it.
Need for reconsidering safe harbour
 The Information Technology Act of 2000 currently serves as the main regulatory
framework for online businesses. The law must be updated, though, as it was created
for a time when the Internet was substantially different from what it is today. The
government has occasionally found it challenging to enact regulations because of the
parent Act’s restrictions due to its narrow scope.
 The new Digital India Bill’s main goals are to speed up the development of
technological innovation and provide an open and secure Internet in the nation in
order to protect users’ rights and lower their online risks. The proposed Digital
Personal Data Protection Bill, 2022, the Indian Telecommunication Bill, 2022, and a
policy for non-personal data governance are all components of a larger framework of
technological rules that the centre is constructing.
 Need for balancing fundamental rights (freedom of speech and expression) with the
dignity of the individual and misinformation.
 The emergence of different types of intermediaries like e-commerce, digital media,
search engines, gaming platforms, significant social media intermediaries, fact-
checking portals, etc.
 MODULE 2

E-Contract

The use of the internet is not anymore limited up to communication or computing,

calculating, and analysing data, online contracts are in trend now and as a result, there lie no
differences between online and offline contracts. Hence, online contracts are also contracts
and all the rules that are needed for the formation of a contract will anyways apply.
E-contract is an essential part of E-commerce. E contracts are modern contracts, unlike
traditional contracts they don’t use papers they are digital and are generally made for swift
entering into a contract for the convenience of the parties. Parties sitting on a different corner
of the world can enter into an E-contract smoothly through the Digital Signature without any
inconvenience and getting physically or mentally exhausted.
Electronic Contract refers to a contract that takes place through e-commerce, often without
the parties meeting each other. It refers to commercial transactions conducted and concluded
electronically.

 What Is E-Contract?
An E-contract(that are not paper-based rather they are electronic based) is a kind of contract
formed in the course of e-commerce by the exchange of two parties using electronic means,
such as e-mail, telephones, faxes. The interaction of an individual should happen with an
electronic agent, such as a computer program, website forms like telephonic discussions, or
an exchange of at least two electronic agents that are organized to allow the existence of a
contract. An E-contract is a contract shaped, specific, executed, and expand by a software
system.
The 2 main parties to an e-contract are:
1. The Originator
An Originator, as per the IT Act, 2008, states that it is a person who sends, generates, stores,
or transmits any electronic message to be sent, generated, stored, or transmitted to some other
person, and does not, include any Intermediary.
2. The Addressee
An Addressee, as per the IT Act, 2008, states that it is a person who is intended by the
originator, to receive the electronic record, but does not, include any Intermediary.

 The Subject Matter

 Physical goods, where goods are ordered on an online platform and payment is made via
the internet, and delivery is made physically. For example, Amazon or Flipkart.
 Digital products like software can be ordered.
 Services like electronic banking, financial advice, etc are also subject matters.
 Essentials of E-Contract
1. Offer
The Indian Contract Act of 1872 defines an offer as an indication of a willingness to engage
into a legally binding contract with another party, according to Section 2(a). When a person
responds to an email or fills out any online forms, he is making an offer for a specific item,
and it is now up to the receiving party to accept or reject the offer by express confirmation or
by any other means. As a result, an invitation to offer is insufficient to convert it into a legally
binding contract by accepting its terms and conditions unless it is accepted
2. Acceptance
Once the offer is accepted, there is a formation of an agreement. But the postal acceptance
rule is an exception to it. The offer is accepted when it is posted, according to this rule. As a
result, the proposer's communication of acceptance is regarded complete when it is placed in
the course of transmission to him, whereas the acceptor's communication of acceptance is
regarded complete when it comes to the knowledge of the proposer.
In electronic contracts, after sending the information or offer, the originator may not be
confirmed about the receipt of the offer. Hence, it is required to acknowledge the receipt of
offer from the side of the addressee. The addressee, in case wants to accept such a proposal
through the electronic mode, he can do so by transmitting his acceptance through electronic
mode or by clicking on ‘I agree’ or ‘I accept’ button. Offer and acceptance both can be done
via email, website forms or an online agreement.
Section 12 of the Information Technology Act, 2000 says that, there is no agreement about
the mode of acknowledgement sent by the addressee between both the parties, the addressee
may acknowledge the receipt of electronic records by any communication modes to know the
originator as to the receipt of it by the addressee.
3. Intention to create legal relation
For a valid contract, the intention of both the parties to create a legal relationship is very
necessary. In case of online contracts, the existence of intention is normally automatic.
4. Lawful Consideration
It is given under Section 10 of the Indian Contract Act, 1872 that for a valid contract, there
must be a lawful consideration.
5. Competent to Contract
Both natural and legal persons are capable of making contracts, but computers are plainly not
natural persons, and neither American nor English contract law considers them to be legal
persons at this time. As a result, computers are unable to enter into contracts. Both the buyer
and the seller are natural persons in our scenario, and so are able to be participants to the
transaction. However, under current law, the autonomous computer cannot be a contractual
party
6. Lawful object
7. Free consent

 Mailbox Rule
Generally, a contract is formed when acceptance is communicated to the offeree. In face-to-
face negotiation, this rule provided few problems. However, the development of methods of
communicating over distances, and the associated reliability problems, the case often arises
when the offeree has dispatched an acceptance which either is never received by the offeror
or arrives after the expiry of the offer. The issue to be resolved in each case is whether the
acceptance is communicated to the offeree when it was sent or when it arrives. Case law
tends to distinguish between delayed forms of communication, such as mail and telegrams,
and virtually instantaneous forms of communication, such as the telephone, telex and fax
machine. The courts have yet to consider the electronic message.
Early case law saw the development of the "mailbox rule" for ordinary mail, wherein
acceptance is deemed to be communicated to the offeree when it enters the postal system.
This rule has been extended to telegrams and even couriers. The offeror, however, is free to
put conditions on the communication of the acceptance (e.g., offer must be received; must be
by telephone). In contrast to the "mailbox rule", acceptances communicated using
instantaneous or virtually instantaneous means, such as the telephone, telex , and fax, are
formed when the offeror receives the acceptance. These means are analogous to face-to-face
communications; presumably both parties will be aware of any break in the connection and
be able to take corrective action.
There is little case law on acceptance by electronic message. On the one hand, some cases
suggest the general rule is that the acceptance must be received by the offeror and that the
mailbox rule is only a narrow exception. On the other hand, receipt of electronic messages
may not be instantaneous and since the mailbox rule has been extended to telegrams, it could
be argued that it should be extended to electronic mail. Although some electronic message
systems, such as private EDI networks, provide almost immediate transmission, anecdotal
evidence suggests that Internet e-mail is inconsistent and could take minutes, hours or even
days to reach its destination.
Another justification for a mailbox-like rule for electronic mail is the offeror's role in
delivery. While telexes and faxes are received at the recipient's location almost immediately
after they are sent, some electronic mail systems use mail servers operated by third parties
that are not located at the recipient's location. Even after receipt by the mail server, the
recipient has to take steps to connect to their `mailbox' on the mail server before the
communication is complete. Since the offeror is partially responsible for ensuring delivery, it
may not be appropriate to allocate the entire risk in the delivery of electronic mail to the
offeree.
It is also quite possible that no simple rule will govern electronic messages. In a recent case
involving telex communication, England's House of Lords seemed to be backing away from
the application of a general rule:
“The message may not reach, or be intended to reach, the designated recipient immediately:
messages may be sent out of office hours, or at night, with the intention, or on the
assumption, that they will be read at a later time. There may be some error or default at the
recipient's end which prevents receipt at the time contemplated and believed in by the sender.
The message may have been sent and/or received through machines operated by third
persons. And many other variations may occur. No universal rule can cover all such cases;
they must be resolved by reference to the intentions of the parties, by sound business practice
and in some cases by a judgment where the risks should lie.”
For the convenience, e-mail communication is subject to the postal rule, which states that a
contract is formed when the acceptor sends his acceptance/assent (e-mail message) out of his
control. However, it is important to remember that when the acceptor enters his consent into
transmission, he becomes an originator (of an electronic record), and the law states that an
electronic record is presumed to be dispatched from the originator's place of business,
implying that the contract is complete in the acceptor's location of acceptance.

 Types of E-Contracts

1. Click-Wrap agreements
A click-wrap agreement is normally provided in a check box wherein the user is asked to
agree to terms of services and other information asked by the website or the software
concerned. However, sometimes, for dual confirmation, the user had to press the agree button
in addition to marking the check box.
Click-wrap agreements are generally referred to as those agreements or long blocks which
nobody reads, these blocks contain terms and conditions of the agreement. But it happens
many times that we just click on I agree and continue to the next page.
After clicking on the “I agree” button, it means we accepted all written terms and conditions
of the agreement. Such types of agreements are less negotiable and the user has to accept this
if he really wants to use that software or any other thing related to this agreement.
For example, you have seen two options: either pay or back while sending the money. Or,
while installing software
The terms of services, privacy policies, copyright policies and non-disclosure policies are
commonly used for the click-wrap agreement. Since it is a convenient way with minimal
hassles to enter into a contract, it is gaining a lot of popularity nowadays.
These agreements are non-porous i.e., there is no other way to move ahead without clicking
the “I agree” button. In this type of contract, the acceptance is very clear as the user will
either accept or reject the offer. On the screen, the user should be informed that this is an
enforceable contract and a binding on him for his action. The terms and conditions of the
agreement shall be in a readable font with sufficient visibility. All the terms and conditions of
the agreement shall be consistent with Section 10 of the Indian Contract Act, 1872.The
information fed by the user is generally retained by the consumer to avoid any future dispute
or litigation.
The Hotmail Corporation vs. Van $ Money Pie Inc.
It was one of the first cases in which the validity of the Click Wrap Agreement was upheld by
the court. The plaintiff (Hotmail) alleged that the consumer has violated the terms of the
agreement as the messages and e-mails were altered after submitting them once. The
defendant was also accused of violating the Computer Fraud and Abuse Act, breach of
contract, fraud, misrepresentation, etc.
The court after going through the terms and conditions of the agreement clearly held that it is
a valid and enforceable agreement in the eyes of the law. Since the customer has violated
them, he is liable to pay compensation.
2. Shrink-wrap agreements
Shrink-wrap agreements are mostly related to computer software. The software is mostly
distributed in CD-ROMs. When the licensing software is opened by the person for his use, it
means he accepts the terms and conditions of that software company.
The term “shrink-wrap” refers to the plastic wrapping which covers the software boxes. This
wrapping can be understood as the legally enforceable terms and conditions. As soon as the
user removes that wrapping, he is entering into a contract. In simple words, a shrink-wrap
agreement is a boilerplate or license agreement containing some terms and conditions
packaged with the product. The customer automatically gives his consent when he uses the
product.
PC programming organizations are mainly dependent upon this type of agreement. It is a sort
of unsigned undertaking given by the customer while submitting to the terms and conditions.
Following are the terms and conditions which can be made through the Shrink-wrap
agreements-
 License
 Fees and payments
 Warranties
 Limitations of liability
The legality of the Shrink Wrap agreement
The validity of the shrink-wrap agreement came into question in the case ProCd Inc vs.
Zeidenberg. In this case, the manufacturer has included a shrink license in its packaged
software. The customer purchased the software but didn’t follow the license restricting its
commercial usage. To enforce the license, the appellant filed for an injunction. The court
denied the injunction while stating that though the terms and conditions are not explicitly
provided, the license was to be treated as an ordinary contract. Thus, it is enforceable

3. Browse-wrap agreements
Browse-wrap agreements are probably seen on many websites while searching or reading
anything on websites. They are some kinds of pop-ups that ask you to click “OK” or “I
AGREE” though, you can use the website with or without clicking there.
In this agreement, there is a hyperlink or website containing the terms and conditions over the
screen of the website. When the person agrees to the above-stated terms and conditions, he
can access the material available and download the product available therein.
For instance- Electronic commerce websites such as Amazon and Paytm provide a disclaimer
while entering their website stating that by accessing or browsing the website, the user has
consented to all the terms and conditions. The terms and conditions clause are hyperlinked.
However, it is also observed that sometimes the browse wrap clause is hidden or not
explicitly shown on the website page. It may lead to conflict in the future.
 E-contracts under Information Technology Act, 2000

 Electronic contracts (E-Contracts) and electronic signatures (E-Signature) are legal in

India and are governed by the Information Technology Act of 2000. (IT Act). The
necessity for any information or matter to be in writing, typewritten, or printed form
under any legislation shall be deemed satisfied if such information or matter is in an
electronic form and is accessible so that it can be used for future reference, according to
Section 4 of the IT Act. Section 4 of the Information Technology Act reads as:
“Section 4: Legal recognition of electronic records: Where any law provides that
information or any other matter shall be in writing or in the typewritten or printed
form, then, notwithstanding anything contained in such law, such requirement shall
be deemed to have been satisfied if such information or matter is-
o rendered or made available in an electronic form; and
o accessible so as to be usable for a subsequent reference.”

 Proposals and acceptances may also be sent, accepted, and withdrawn electronically or
through electronic records, according to Section 10A of the IT Act. Section 10A says:
“Section 10A: Validity of contracts formed through electronic means- Where in a contract
formation, the communication of proposals, the acceptance of proposals, the revocation of
proposals and acceptances, as the case may be, are expressed in electric form or by means of
an electronic record, such contract shall not be deemed to be unenforceable solely on the
ground that such electronic form or means was used for that purpose.”
In light of the aforementioned provisions of the IT Act, Indian courts have upheld the validity
of contracts made in an electronic format on a number of occasions.
“The Hon'ble Supreme Court of India had held in the case of Trimex International FZE Ltd.
Dubai vs. Vedanta Aluminium Ltd., where the parties had communicated their offer and
acceptance via email in the absence of signed documents, that once a contract is concluded
orally or in writing, the fact that a formal contract must be prepared and initialled by the
parties would not affect the contract.”

 When it comes to contract signing, electronic signatures are regarded as comparable to

traditional wet signings and are legally recognised under Section 5 of the Information
Technology Act. Section 5 states:
“Section 5: Legal recognition of electronic signature- Where any law provides that
information or any other matter shall be authenticated by affixing the signature or any
document shall be signed or bear the signature of any person, then, notwithstanding anything
contained in such law, such requirement shall be deemed to have been satisfied, if such
information or matter is authenticated by means of electronic signature affixed in such
manner as may be prescribed by the Central Government.
Explanation- For the purpose of this section, “signed”, with its grammatical variations and
cognate expressions, shall, with reference to a person, mean affixing of his hand written
signature or any mark on any document and the expression “signature” shall be construed
accordingly.”
 Jurisdiction of E-Contracts
Jurisdiction is an extent of the power of the court to hear a case i.e., to take cognizance of the
case and to make legal decisions and judgements. It is the legal authority of the court to
resolve the dispute. E-contract involves instant communication of offer and acceptance.
Wherein the contract is complete at the end of originator where acceptance is received.
The Supreme Court of India in case of Bhagwandas Goverdhandas Kedia vs. Girdhari Lal
Parshottamdas & Co held that “at the place of proposer where the acceptance is received shall
have the jurisdiction for enforcement of contracts entered into by means of computer
internet.”
In India, the Code of Civil Procedure, 1908 provides the manner of determining the
jurisdiction of Civil Courts, which is based on the place of residence and the place where the
cause of action arises. Generally, the contracts insert a specific clause to determine the
territorial jurisdiction to resolve the dispute arising under such contracts.
An E-contract crosses the jurisdictional boundaries as it can be created from any place in the
globe. This raises the question of jurisdiction of the court in case of any dispute between the
parties to E-contracts.
If there is any dispute among the parties belong to the same jurisdiction related to E-contract,
then such dispute can be resolved similar to the traditional contract disputes. However, the
challenges would arise when the parties to E-contract are belong to the different countries.
Jurisdictional problem in E-contract has been resolved under IT Act in India. Specifically,
Section 13 of the IT Act deals with the time and place of despatch and receipt of an electronic
record and electronic contracts.

WWE v. M/S. Reshma Collection

Facts
The case in question was brought to the Delhi High Court on appeal from an order of a Single
Judge Bench which had rejected the plaintiffs argument of jurisdiction. The plaintiff in this
case is World Wrestling Entertainment, incorporated in Delaware, and all the defendants in
the case reside in Mumbai. Neither the plaintiff nor the defendants ‘carried on business’
within the territorial jurisdiction of the Court, but the plaintiff argued that the Delhi Courts
had jurisdiction to hear the matter under Section 134(2) of the Trademarks Act, 1999 and
Section 62(2) of the Copyright Act, 1957.
The High Court’s reasoning
The High Court, in allowing the petition, placed reliance on the M/S. Dhodha House vs S.K.
Maingi and the Bhagwan Goverdhandas Kedia v. Girdharilal Parshottamdas & Co. cases. In
this case, it was held that in order to meet the ‘carrying out business’ requirement, three
conditions have to be fulfilled. The first two conditions focus on ‘agents’, but it is the third
condition that is relevant here: “(iii) to constitute “carrying on business” at a certain place, the
essential part of the business must be performed at that place. “
Thus, the Court focused on the question that “when a transaction takes place over the
Internet, where is the contract concluded?”
Under existing Indian jurisprudence, a contract is concluded when the offeror receives
intimation that the offeree has accepted the offer. But there is a crucial difference between
contracts negotiated with the parties being in a ‘sense of presence’ of each other, and
contracts negotiated over slow mediums such as telegrams and post. Thus, there is an
exception to the general rule with regard to the latter, that in such cases the contract would be
complete when the acceptance of the offeree is put into a course of transmission by him.
The question then becomes which of these two categories does the medium of the internet fall
into. Crucially, in the case of Bhagwan Goverdhandas Kedia, the Supreme Court had stated
that the medium of the Telephone would fall into the former category due to the
instantaneous nature of telephonic conversations, and the exception would not apply.
The High Court noted the same, stating that the lower Court had misread the judgement, and
applied it to the context of the Internet. In the case before the Supreme Court, the offerer was
in Ahmadabad, and the offeree accepted the offer over the phone. The Supreme Court held
that the acceptance was conveyed to the offerror in Ahmadabad and thus a cause of action
can be raised in Ahmadabad.
The High Court’s Decision
The Court applied this line of reasoning to the Internet. It held that in this context, the website
of a plaintiff is an invitation to offer, not an offer itself. It becomes an offer when the
invitation is accepted by the consumer residing in Delhi, and he or she places an order. Thus,
the transaction is confirmed and payment is made to the website owner (offeree), the offeree
accepts the offer of the customer at Delhi. Since the transaction is instantaneous, the
acceptance of the offer by the website is instantaneously communicated to its customer
through the Internet at Delhi. Therefore, the Court held, in such a case, part of the cause of
action would arise in Delhi.
Using this line of reasoning, the Court held that since the offers are made by customers at
Delhi, subject to confirmation/ acceptance of the appellant/ plaintiff through its website, the
money would emanate or be paid from Delhi, the appellant/ plaintiff is, to a certain extent,
carrying on business at Delhi. The following extract from the case captures the judge’s line of
reasoning quite nicely:
“Because of the advancements in technology and the rapid growth of new models of
conducting business over the Internet, it is possible for an entity to have a virtual presence in
a place which is located at a distance from the place where it has a physical presence. The
availability of transactions through the website at a particular place is virtually the same
thing as a seller having shops in that place in the physical world.”
 MODULE 3

Copyright in Cyberspace

Copyright is about protecting original expression. Copyright protects "original works of

authorship" that are fixed in any tangible medium of expression from which they can be
perceived, reproduced, or otherwise communicated either directly or with the aid of a
machine or device, Copyright arises as soon as a 'work' is created (or fixed) does not extend
to any idea, procedure, process, system, method of operation, concept, principle or discovery,
unless fixed in a tangible form.
Copyrightable works include the following categories: literary works; musical works,
including any accompanying words; dramatic works, including any accompanying music;
pantomimes and choreographic works; pictorial, graphic, and sculptural works; motion
pictures and other audio-visual works; sound recordings, architectural works and computer
programs. In the digital medium, every web page accessible or published in the World Wide
Web is to be taken as a literary 'copyrightable' work.
 Caching-It is used to improve response time for end users. It means copying of a web
page/site and storing that copy for the purpose of speeding up subsequent accesses.
 Browsing - A software driven process for searching the world wide web using a browser.
 Mirroring:- It improves service for the users by replicating a web site across various
servers all over the world and make available the critical information to all the users at all
times)
 Downloading - It means to receive information, typically a file, from another computer
via modem.
 Uploading - It means to send information, typically a file, from another computer via
modem.
 File-swapping - A "peer-to-peer" transmission of digital files from one computer to
another via the Internet.
The question is whether such activities really infringe the five exclusive statutory rights of a
copyright owner, such as:
(a) to fix (store) the information in a tangible form
(b) to reproduce the copyrighted work.
(c) to sell, rent, lease, or otherwise distribute copies of the copyrighted work to the public.
(d) to perform and display publicly the copyrighted work.
(e) to prepare derivative works based on the copyrighted work.
The answer is yes. Internet activities like caching, browsing, mirroring, scanning, uploading,
downloading or file swapping may result in:
a) transmission of information from one computer system or network to another, involving
temporary storage (RAM) of that information.
b) unauthorized storage of such information a violation of the copyright owner's exclusive
right to make copies, i.e. to reproduce the copyrighted work
c) a violation of the copyright owner's exclusive distribution right.
d) an appearance of a copyright image in a web browser infringing the copyright owner's
public display right
e) an infringement of the copyright owner's exclusive right to prepare derivative works
That is, prima facie, the nature and characteristic of Internet activities is such that there will
certainly be infringements to the exclusive statutory rights of a copyright owner.
1) Digital downloads and RAM
These digital downloads are also part of the memory called random access memory, or RAM.
It is volatile and needs a constant supply of power.
When a computer is turned off, everything in RAM disappears. In other words, digital
downloads are temporarily stored in RAM. Whether it is to be referred as "fixed" and thereby
constitute copy" depends upon the facts and circumstances of a given case. In Apple
Computer v. Formula Internationals, it was held that copies stored in random access memory
(RAM) were temporary and running a computer program from RAM does not create a
fringed copy. But if one applies the 'copyright law' in the aforesaid situation, then the
question is whether this temporary storage of (generally copyrighted) code constitutes
"fixation" of the code in RAM. If a code temporarily stored in RAM is considered to be
"fixed," the RAM would constitute a copy of the work, further constituting prima facie
infringement.
2) Digital Downloads and Reproduction Rights
The reproduction and display of a copyrighted work of another person, in a non- removable
(for example, hard disc of a computer, web server etc.) or removable storage medium,
without his authorization amounts to an infringement of statutory exclusive rights vested in
the said copyright owner.
3) Digital Downloads and Distribution Rights
Distributing and displaying copyrighted work of another, without his authorization amounts
to an infringement of statutory exclusive rights vested in the said copyright.
4) Digital Downloads and Display Rights
As evident from the aforesaid discussions that whether it is the infringement of reproductions
right or distribution right, the display right of a copyright owner is also equally affected).
5) Digital Downloads and Derivative Works
Copyright also subsists in derivative works. A copyright owner has an exclusive right to
prepare derivative works based on his original (copyrighted) presentation.
The Copyright Act (of the U.S.) defines derivative work as "a work based upon one or more
pre-existing works, such as a translation, musical arrangement, dramatization,
fictionalization, motion picture version, sound recording, art reproduction, abridgment,
condensation, or any other form in which a work may be recast.
Any attempt to create a similar "look and feel" of a copyrighted work would amount to an
infringement. "Look and feel" is the overall organization of a website including its home
page and web pages) in terms of navigational elements such as buttons and dropdown menus,
their positions, command terms, the choice of letters, font, size, symbols, colour scheme,
arrangement of text, images, graphics or sound, frames, etc that makes the interface unique
and hence copyrightable.
 Exception of Fair Use
Google v/s Oracle
Facts
In 2005, Google acquired Android, Inc., signalling the search company’s intent to move into
software development for the nascent mobile device market. To attract “a sizeable number of
skilled programmers” to develop applications for Google’s Android-based smartphones,
Google wanted its platform to take advantage of programmers’ familiarity with the popular
Java programming language. It negotiated with Java’s developer Sun Microsystems to license
Java technologies, but talks broke down over Sun’s insistence that “all programs written on
the Android platform be interoperable.” Google then elected to create its Android platform
independently. However, to ensure that programmers’ familiarity with Java would aid in
developing Android applications, Google copied about 11,500 lines of code from the Java
API. In 2010, Oracle acquired Sun and the copyright to the Java computing platform, which
includes the Java API. Oracle filed a suit against Google for copyright and patent
infringement soon after.

Judgment
The Supreme Court remanded with Justice Breyer writing for the majority. It began by
affirming that the constitutional objective of copyright is “to promote the Progress of Science
and useful Arts.” The Court found that all four factors favored Google and held that
Google’s copying was fair use as a matter of law.
 For “expository purposes,” the majority opinion began by examining the second factor:
the nature of the copyrighted work. It noted at the outset that although software is
copyrightable, all code is not created equal.
 Turning to the first factor, the Court next addressed the purpose and character of the
use the majority considered whether Google’s use imbued the copied code “with new
expression, meaning or message, or, more simply, whether it was “transformative.”
 In addressing the third factor — the amount and substantiality of the use — the
majority noted that when the amount copied is “tethered to a [copier’s] valid,
transformative purpose,” the factor will “generally weigh in favor of fair use.” Here,
the Court characterized Google’s “basic objective” as allowing programmers to use their
pre-existing knowledge of the Java API to create new programs for Android. As declaring
code was the “key” to “unlocking the programmers’ creative energies,” this factor
weighed in favor of fair use.
 The Court reached the fourth factor, assessing the potential market harm from
Google’s copying. The Court noted that the “potential loss of revenue was not the
whole story,” and that it also had to consider “the source of the loss” in addition to any
“public benefits the copying [would] likely produce.”
Justice Thomas dissented. He asserted that the majority skipped over the
copyrightability analysis, thereby ignoring “half the relevant statutory text and
distorting its fair-use analysis.” He argued that by failing to analyze the Copyright Act’s
definition of a copyrightable “computer program.”

 Linking and Framing

1) Linking
"A "link" is a set of commands in Hypertext Markup Language (HTML) that when actuated
by right-clicking a mouse directs your browser to another page. The new page could be in the
website you're viewing or it could be a page in another website.
Three other well-known types of links are: "intra-page, intra-system, and inter-system. Intra-
page links connect different parts of the same document. For example, a long document may
have a link at the end which takes the user back to the beginning. Intra-system links connect
different documents on the same server. An intra-system link on a university's server might
connect the home pages of two different departments. An intersystem link connects
documents on different servers. Thus, a document concerning intellectual property law on a
university's server might be connected to the home page of the Governments Patent Office"
Some relevant cases in order to provide on a general perspective for linking:
Shetland Times, Ltd. v. Jonathan Wills and Another, is considered the first "linking" case;
"the issue presented in Shetland Times was whether the Shetland News's ("News") "deep
link" to embedded pages of the Shetland Times's ("Times") web site, through the use of
Times' web site's news headlines, was an act of copyright infringement under British law.
The matter settled on the day of trial, shortly after the court had issued a preliminary
injunction precluding the deep link. Although much discussed, this opinion has proved to be
of little legal significance, in part because of the extremely low evidentiary standard applied
by the court."
One of the most well-known cases was Ticket master v. Microsoft - The first major case
involving the practice of deep linking involved Microsoft's use of deep links from its
"Sidewalk" web guides. These web guides spotlighted, among other things, upcoming events
in a particular area, and would provide deep links to information on specific events on
interior pages of the Ticket master website. At that time, Ticket Master had recently signed
an agreement to provide event information and ticket-ordering links to a competing web
guide service, City Search. Through this agreement, City Search was paying Ticketmaster for
what Microsoft was taking for free. Ticketmaster filed suit against Microsoft on April 28,
1997, arguing that Microsoft's practices devalued Ticketmaster's site by bypassing its home
page.
2) Framing
Framing is a method of splitting one window into two or more screens. A web page can be
inserted into a frame, and that portion of the screen will remain static as a user moves through
other web pages. This method is called "framing," because it allows a webmaster to send an
individual through numerous web pages while retaining the appearance and the utility of the
frame inserted.
Most of the "Intellectual Property in Cyberspace" pages utilize frames. The pages in this
technical primer have been set to open outside of the frames." Technically explained, a
framing process works as follows: "The frames may contain either highlighted URL
addresses of other Web pages that are intended to be "selected" by the framing page user or
other pages within the same Web site.
Nevertheless, the most accepted legal concept is that framing can cause consumer confusion
and thereby violate trademark laws and under particular laws can be unfair competition. The
problem with a finding of copyright infringement of a literary work where such links are
concerned is similar to that raised in respect of meta-tags because these hypertext links are
likely to contain only relatively short phrases.
The case of Shetland Times is unlikely to be helpful as it was only an interim decision and
thus decided on a lower standard of proof. An example of such a pictorial link would be that
found in Ticketmaster Corp v Microsoft Corp where the link from the defendant's website to
the plaintiff's site comprised the plaintiff's logo. In that case, the plaintiff sold and marketed
tickets to various entertainment events through its website 'http://www.ticketmaster.com' on
the internet. The home page of the plaintiff displayed advertisements, products, and services
of other parties with which the plaintiff had contracts, thus providing it with an important
source of revenue. The defendant set up a website 'http://seattle.sidewalk.com' and initially
entered into negotiations with the plaintiff to have hyperlinks from their Seattle Sidewalk site
to the plaintiff's Ticketmaster site. When the negotiations failed, the defendant established the
links anyway.

 Copyright in the Digital Medium

An Indian Perspective It was in 1994, that for the first time, the Copyright Act, 1957 had
gone for a digital makeover by including computer programs as "literary work" [section
2(o)]. It is important to note that section 2(ffc) defines the term "computer program" as a set
of instructions expressed in words, codes, schemes or in any other form, including a machine-
readable medium, capable of causing a computer to perform a particular task to achieve a
particular result.

 Copyright in Computer Programs

The Act provides a very comprehensive definition of a computer program, it may include the
following copyrightable materials:
 Preparatory design materials, like flowcharts, diagrams, written specifications, form and
report layouts, designs for screen displays etc.
 Computer programs (object code and source code) and other executable code (executable
file).
 Software development tools, like relational database development compilers, report
generators etc.
 Databases and data files.
 Computer output, for example, sound, print-out, computer file or data, electronic signals
 Screen displays
 Manual and guides
 Programmed languages
Further the definition of "computer program" includes the term "... machine-readable
medium...." it implies that the said "computer program" must be capable enough to be read by
the machine [computer], stored or embedded in removable (magnetic, optical), non-
removable magnetic storage (hard disc) device, or RAM (temporary memory) of the
computer.
It is significant to note that in view of the enactment of the Information Technology Act,
2000, the definition of computer [section 2(ffb)] given in the Copyright Act, has to make way
for the much exhaustive definition in the former Act:
Section 2(1)(i) "Computer" means any electronic, magnetic, optical or other high-speed data
processing device or system which performs logical, arithmetic and memory functions by
manipulations of electronic, magnetic or optical impulses and includes all input, output
processing, storage, computer software or communication facilities which le co are connected
or related to the computer in a computer system or computer network.
The aforesaid definition of a computer consists of the following components: stems
(i) Any electronic, magnetic, optical or other high-speed data processing device or
system,
(ii) Performs logical, arithmetic and memory functions, and
(iii) By manipulating electronic, magnetic or optical impulses
And includes all input, output processing, storage, computer software or communication
facilities which are connected or related to the computer in a computer or system or computer
network.
The aforesaid definition of "computer" has further extended the concept of digital medium to
include any electronic, magnetic or optical material (or configuration) on which data is
recorded.

 Copyright in Digital Medium

Copyright subsists in the following classes of works [section 13]:
(a) original literary, dramatic, musical and artistic works;
(b) cinematograph films;
(c) sound recording.
Copyright arises as soon as a 'work' [section 2(y)] is created (or fixed). It does not extend to
any idea, procedure, process, system, method of operation, concept, principle or discovery,
unless fixed in a tangible form.
It is obligatory to note that under the Act, cinematograph film [section 2(f)] and sound
recording [section 2(xx)], may be fixed "regardless of the medium". That is cinematograph
film or sound recording may be taken as fixed in tangible form, even if they are stored or
embedded in an electronic, magnetic or optical medium. That is, the definitions of
cinematograph film [section 2(f)] and sound recording [section 2(xx)] to be read with section
14(d) and section 14(e) respectively of the Act in order to extend the "meaning of copyright"
to the digital copies of "cinematograph film" and "sound recording" as well. Surprisingly, the
right to reproduce an "artistic work" as defined in section 2(c) of the Act, "in any material
form" (i.e., tangible form) restricts the scope of the Act to cover digital copies of artistic
work.
Similarly by virtue of section 14(a)(i), "copyright" means the exclusive right in the case of a
literary, dramatic or musical work to "reproduce the work in any material form including the
storing of it in any medium by electronic means". That is, the copyright owner has an
exclusive right to reproduce the work in any form (including audio, video, data, text or
multimedia files generated, sent, received or stored in media, magnetic, optical, computer
memory, micro film, computer generated micro fiche or similar device).
 Copyright and Internet
Internet activities like catching, browsing, mirroring, swapping, scanning, and uploading may
result in:
(a) transmission of information from one computer system or network to another, Li
involving temporary storage (RAM) of that information.
(b) unauthorized storage of such information a violation of the copyright owner's exclusive
right to make copies, ie, to reproduce the copyrighted work.
(c) a violation of the copyright owner's exclusive distribution right.
(d) an appearance of a copyrighted image in a web browser infringing the copyright owner's
public display right.
(e) an infringement of the copyright owner's exclusive right to make adaptation, (re-
arrangement or alteration).
Hence, the Copyright (Amendment) Act, 2012 by amending the definition of
"communication to the public" [section 2(f)] provides protection to a copyright owner against
those who violate his statutory 'exclusive' rights to fix (store), reproduce, distribute, public
display (perform) and/or re-arrangement (adaptation) [section 14]. when they, upload,
download, scan or transmit any information (copyright material) on the Internet without
seeking authorization from the copyright owner. The new Amendment Act has made it clear
that acts, like caching and browsing do not constitute an infringement of copyright by
identifying "the transient or incidental storage of a work or performance...." in section
52(1)(b) & (c) as fair use category...
It is significant to note that the amended definition of "communication to the public" [section
2(f)] has made the intermediaries, including network service providers liable under section
51(a)(ii) of the Act, for copyright infringement in the digital medium. Intermediaries’ role to
provide communication service to download, transmit (distribute or swap files), and exhibit
(public display), someone else's copyrighted work would amount to copyright infringement
provided the intermediary is able to demonstrate that it was not aware and had no reasonable
ground for believing that such communication to the public would be an infringement of
copyright.
If one compares the role of an intermediary both under the Copyright Act and the Information
Technology Act, the following legal facts emerge:
Liability Standards Intermediaries under the Intermediaries under IT
Copyright act act
Immunity from liability No absolute immunity No absolute Immunity
Exemption from liability Yes, if and only if: Yes, if and only if:

(a) had no knowledge; and (a)the intermediary does not

(ii) initiate the
(b) had no reasonable transmission,
ground for believing that (iii) select the receiver of
such communication to the the transmission, and
public would be an (iv) select or modify the
infringement of copyright information
 contained in the
transmission;

b) the intermediary observes

due diligence while
discharging his duties (under
the Information Technology
Act) and also observes the
IT (Intermediaries
Guidelines) Rules, 2021;

(c) the intermediary has not

conspired or abetted or aided
or induced whether by
threats or promise or
otherwise in the commission
of the unlawful act; and

(d) upon receiving the actual

knowledge or on being
notified by the Government
or its agencies, the
intermediary has
expeditiously removed or
disabled access to that
material
Distinction with third-party No distinction Primarily deals with third
information party information
Subject matter application of Narrow Broad
the law

 Super Cassette Industries v/s MySpace Inc

Facts
 The Plaintiff claims to be the owner of repertoire of songs, cinematograph films, and
recordings, etc with over 20000 Hindi Non film songs and around 50000 songs in
regional languages.
 A suit is filed against Myspace which is a social networking platform for infringement of
copyright of Plaintiff as the platform of Myspace allowed the users to upload and share
files which were under the authorisation of plaintiff.
 The suit was filed for infringement under section 51(a)(i) and section 51(a)(ii) of the
Copyright Act, 1957.
 The plaintiff claims that in year 2007 there was a non-disclosure agreement signed
between the plaintiff and the defendants, following which there were discussions with
regard to the defendants procuring a license from the plaintiff to display the plaintiff’s
copyrighted material.
 However, there arose a dispute between the parties and the material of Plaintiff continued
to be on the website of the Defendant even without any licence.
 A legal notice was sent by the Plaintiff to the defendant to take down the material to
which the reply received by the Defendant provided that the material has been taken
down.
 A few months later, the Plaintiff found that the material was not taken down despite the
assurance from the Defendants.
 Dissatisfied with the assurances of the defendants the plaintiff filed the present suit before
the Delhi High Court; the plaintiff also sought interim relief before the same court.

Issues and Decision

1) Whether MySpace could be said to have knowledge of infringement so as to attract
liability for secondary infringement under Section 51(a)(ii)?
Ans. No, according to the Court, in the case of internet intermediaries, section 51(a)(ii)
contemplates actual knowledge and not general awareness.
Elaborating re the circumstances of the case, the Court held that to attract liability for
secondary infringement, MySpace should have had actual knowledge and not mere
awareness of the infringement. Appreciating the difference between virtual and physical
worlds, the judgment stated “the nature of internet media is such that the interpretation of
knowledge cannot be the same as that is used for a physical premise.”
As per the court, the following facts only amounted to a general awareness, which was not
sufficient to establish secondary liability:
1. Existence of user agreement terms which prohibited users from unauthorized uploading
of content;
2. Operation of post-infringement mechanisms instituted by MySpace to identify and
remove content;
3. SCIL sharing a voluminous catalogue of 100,000 copyrighted songs with MySpace,
expecting the latter to monitor and quell any infringement;
4. Modifying videos to insert ads in them: SCIL contended that MySpace invited users to
share and upload content that it would use to insert ads and make revenues – and this
amounted to knowledge. The Court found that video modification for ad insertion only
changed the format of the video and not the content; further, it was a pure automated
process and there was no human intervention.
Additionally, no constructive knowledge could be attributed to MySpace to demonstrate
reasonable ground for believing that infringement had occurred. A reasonable belief could
emerge only after MySpace had perused all the content uploaded and shared on its platform –
a task that was impossible to perform due to the voluminous catalogue handed to it and
existing technological limitations.
The Court imposed a duty on SCIL to specify the works in which it owned copyright and
being shared without authorisation on MySpace. It held that merely giving names of all
content it owned without expressly pointing out the infringing works was contrary to the
established principles of copyright law. Further, MySpace contended and the judge agreed,
that in many instances the works were legally shared by distributors and performers – and
often users created remixed works that only bore semblance to the title of the copyright work.
In such cases, it becomes even more important for a plaintiff such as MySpace to provide
specific titles because while an intermediary may remove the content fearing liability and
damages, an authorized individual’s license and right to fair use will suffer or stand negated.
(Para 38 in decision)
Thus, whereas MySpace undoubtedly permitted a place of profit for communication of
infringing works uploaded by users, it did not have specific knowledge, nor reasonable
belief of the infringement.

2) Does the proviso to Section 81 override the "safe harbor" granted to intermediaries under
Section 79 of the IT Act, 2000? AND 3) Whether it was possible to harmoniously read and
interpret Sections 79 and 81 of the IT Act, and Section 51 of the Copyright Act?
Ans. No, the proviso does not override the safe harbor, i.e. the safe harbor defence
cannot be denied to the intermediary in the case of copyright actions. The three sections
have to be read harmoniously, indeed.
The judgment referred to the Parliamentary Standing Committee report as a relevant tool in
interpreting the two provisions, declaring that the rights conferred under the IT Act, 2000
are supplementary and not in derogation of the Patents Act or the Copyright Act. The
proviso (u/s 81)was inserted only to permit copyright owners to demand action against
intermediaries who may themselves post infringing content – the safe harbor only
existed for circumstances when content was third party/user generated.
Given the supplementary nature of the provisions- one where infringement is defined and
traditional copyrights are guaranteed and the other where digital economy and newer
technologies have been kept in mind, the only logical and harmonious manner to interpret the
law would be to read them together. Not doing so would lead to an undesirable situation
where intermediaries would be held liable irrespective of their due diligence. (Para 49 in
decision)
Regarding section 79, the court reiterated that the section only granted a limited immunity to
intermediaries by granting a measured privilege to an intermediary, which was in the nature
of an affirmative defence and not a blanket immunity to avoid liability. The very purpose of
section 79 was to regulate and limit this liability; whereas the Copyright Act granted
and controlled rights of a copyright owner.

On MySpace Complying with Safe Harbor Requirements under Section 79 of the IT Act,
2000 (and Intermediary Rules, 2011)
The court held that MySpace's operations were in compliance with section 79(2)(b). The
content transmission was initiated at the behest of the users, the recipients were not
chosen by MySpace, neither was there modification of content. On the issue of
modification, the court reasoned that since modification was an automated process (MySpace
was inserting ads) which changed the format only, without MySpace's tacit or expressed
control or knowledge, it was in compliance of the legislative requirement.
Despite several safeguard tools and notice and take-down regimes, infringed videos find their
way. The remedy here is not to target intermediaries but to ensure that infringing material is
removed in an orderly and reasonable manner. A further balancing act is required which is
that of freedom of speech and privatized censorship. If an intermediary is tasked with the
responsibility of identifying infringing content from non-infringing one, it could have a
chilling effect on free speech; an unspecified or incomplete list may do that. (Para 62 in the
decision)
On the second aspect of due diligence, the court held that MySpace complied with the
due diligence procedure specified in the Rules - it published rules, regulations, privacy
policy and user agreement for access of usage. Reading Rule 3(4) with section 79(2)(c), the
court held that it due diligence required MySpace to remove content within 36 hours of
gaining actual knowledge or receiving knowledge by another person of the infringing
content. If MySpace failed to take infringing content down accordingly, then only will safe
harbour be denied to MySpace. This liberal interpretation of due diligence is a big win for
internet intermediaries in India.

Relief Granted
Setting aside the Single Judge's order, the Court directed SCIL to provide a specific catalog
of infringing works which also pointed to the URL of the files. Upon receiving such specific
knowledge, MySpace has been directed to remove the content within 36 hours of the issued
notice. MySpace will also keep an account of the removals, and the revenues earned from ads
placed for calculating damages at the trial stage.

Trademark in Cyberspace

 Trademark - The Basics

A trademark means a mark capable of being represented graphically and may include a word,
name, symbol, device, numeral, letters, signature, label, ticket, brand, slogans, pictures,
characters, sounds, smell, shape, logo, graphic designs, three dimensional form, moving
image, product or packaging features etc. It is distinctive of a person's goods or services and
is used in a manner that identifies those goods or services and distinguishes them from the
goods and services of others.
Trademarks are classified into five categories:
(a) Generic marks
(b) Descriptive marks
(c) Suggestive marks
(d) Arbitrary marks
(e) Fanciful marks
Whether these are registrable (protectible) depends on their extent of distinctiveness (inherent
or acquired) and the evidentiary support an applicant could provide to support his claim.
1. Generic Marks
They do not receive protection because they do not distinguish a mark of a business mark
from other products or services) A generic mark is a common descriptive term for a particular
good (or service) It does not function as source identifiers, and should be left free for use by
competitors/For examples, the word 'ESCALATOR' is in common use as the name of a type
of product by multiple sources. A generic mark is not registrable as it is incapable of being or
becoming distinctive of the goods or services of one person or business. The test for
determining if a term is generic involves assessing its primary significance to the relevant
public.
2. Descriptive Marks
Distinctiveness is needed for registration of any sign as a trademark. Distinctiveness may be
either inherently distinctive, or may acquire distinctiveness through a secondary meaning (in
the market place)/A secondary meaning does not require that the trademark was inherently
distinctive, as long as there was a change in the public perspective about the meaning of the
trademark. For example, 'Apple' is an inherently distinctive trademark for a computer.
A claim for acquired distinctiveness of a mark may require the applicant to provide for:
(a) Sales, volume, or revenue from goods (or services)
(b) Length of use prior to filing
(c) Geographical area of sales of goods (or provision of services) (d) Extent of advertisement
featuring the mark
(e) Degrees of popular awareness among the consuming public that the mark emanates from
the applicant (submission of survey(s), statements by customers, retailers etc.)
3. Arbitrary, Fanciful or Suggestive Marks
It is significant to note that inherently distinctive marks have often been referred to as
arbitrary, fanciful or suggestive.
APPLE, when applied to computers, is an arbitrary mark while EXXON is a fanciful mark.
The use of fanciful or arbitrary marks in connection with the goods and services with which
they are associated has no meaning or significance other than as a trademark Suggestive
marks, in contrast, suggest some attribute or characteristic of the goods (or services) with
which they are associated. It uses a consumer's cognitive facilities to make an association
between the mark and the goods or services concerned. For example, EVERREADY when
applied to batteries suggests that the batteries will have a long life.

 Representing a Trademark
A trademark must be capable of being represented graphically, either as a word, a logo, or
image. If it is not capable of graphic representation, like ideas, emotions or business methods,
it must be rejected/Thus, it is important to note that for trademark registration purposes only
graphic representations are accepted as it supports accessibility. As outlined above,
distinctiveness is a 'key' element required for registration. Even for non-traditional marks,
like three-dimensional marks, colour marks, sound marks, moving image marks -
'distinctiveness' plays an important role in their registrability.
Thus a registered trademark:
 is a 'distinctive' asset that can be bought, sold or licensed; helps in notifying and enforcing
ownership of rights;
 identifies the origin of goods and/or services;
 denotes the goodwill of the company
 indicates quality of goods; and
 is often the basis of establishing licensing or franchising arrangements.

 Rights of a Trademark Owner

A registered trademark is an asset and provides its owner with proprietary rights. A duly
registered mark grants exclusive rights to the owner to:
(a) 'own' and exploit the said mark for the goods (or services) specified in the registration in
the market place;
(b) sell, or permit its limited use (license) for a fee;
(c) assign it a goodwill value;
(d) sell, exhibit, market and/or promote the goods (or services) in an exclusive manner;
(e) stop others from using the said mark, or a substantially or deceptively similar mark; and
(f) initiate legal action against the infringer

 Trademark Infringement
A trademark infringement is a violation of the trademark owner's rights. Anm infringement
occurs, when the impact of the proposed trademark is such that it is likely to cause deception
or confusion or mistake in the minds of persons accustomed to the existing trademark.
In fact, in order to succeed in the court of law, the plaintiff has to show that the defendant has
used a mark 'deceptively similar to that of the plaintiff. It is crucial that the plaintiff must
make out a prima facie case of infringement against the defendant by articulating the
'defendants marks' visual, phonetic and/or structure closeness to its trademark.

 Establishing a Prima Facie Case

SC indicates that even prior small sales of goods with the mark are sufficient to establish
priority, the test being to determine continuous prior user and the volume of sale or the
degree of familiarity of the public with the mark. Bona fide test of marketing, promotional
gifts and experimental sales in small volume may be sufficient to establish a continuous prior
use of the mark. But on some other occasions, courts have classified small sales volume as so
small and inconsequential for priority purposes.
 Establishing Visual and/or Phonetic Similarities
In order to establish a strong prima facie case, a plaintiff has to identify visual and/or
phonetic similarities causing deception, confusion or mistake in the minds of persons
accustomed to the existing trademark.

 Passing off Action

Passing off is an action under Common Law. The passing off action depends upon the simple
principle that nobody has any right to represent his goods, as the goods of somebody else.
Passing off involves misrepresentations by a trader to his prospective customers, calculated to
injure (as a reasonably foreseeable consequence) to the business or goodwill of another. It is
treated as a form of unfair competition or wrongful appropriation of the plaintiff's
personality. In order to create a valid cause of action for passing off, as per Lord Diplock in
(Erven Warnink v. J. Townend & Sons Ltd. BV), five characteristics that must be present are:
 a misrepresentation;
 made by a trader in the course of trade;
 to prospective customers of his or ultimate consumers supplied by him; of goods or
services
 which is calculated to injure the business or goodwill of another trader (in the sense that
this is a reasonable foreseeable consequence); and
 which causes actual damage to a business or goodwill of the trader by whom the action is
brought or (in a quia timet action) will probably do so.

 Search Engine and Meta Tags

A search engine or directory is a searchable index of resources available on the Internet. A
large majority of these resources are web pages, but one can also search even the content of
some databases. A search engine has a tool called 'robotic spider, which regularly scans the
web, crawling from link to link, visiting web pages, recording URLs (Universal Resource
Locator) and helps in building an index for the search engine. The manner in which a
particular spider conducts its search and the decision criteria by which it decides which
resources to retrieve are both determined by the programming ogic and algorithms composing
that spider.
Thus, when a user uses a search engine, he types one or more search terms into the text box
and presses the button to initiate a search. This is often referred to as "keyword search'. The
user requests is passed on to the search engine software that searches the index for Internet
resources that contain those terms. It is not unusual for hundreds and even thousands of
matches to be discovered. The web addresses of these resources are then arranged in a
descending order of relevance criteria adopted by the particular search engine or directory
and returned to the user as a list of hyperlinks on a series of web pages. Reviewing these
results pages, the user can often identify the website or other resource that he is attempting to
locate and with a click of the mouse proceed directly to it. The user, quite often is in a hurry
to locate his 'search item' in the first few web pages thrown by the search engine. Thus, for
every website developer the task is not only to be part of the "search query but also to achieve
a good 'rank' as and when a search result in thrown up against a related query.)
The relevance ranking that a web page receives from a search engine is determined by an
algorithm built into that search engine's software. For example, Google, MSM etc. uses the
'link structure' of the Web to calculate site rankings. As a result, if a website developer
understands how a search engine's relevancy algorithm works, the developer can design and
optimize the website to receive a higher ranking on the results pages that search engine
returns to its users. Many search engines employ relevancy algorithms that take account of
the presence of search terms (1) in certain "tagged" locations within the HTML code that
comprises the web page, (2) in the text of the web page, and (3) in the URL of the web page.
The webmaster can try to increase their relevancy score under the first criterion by including
as many likely keywords as possible within the HTML tags- even when the keywords have
little or nothing to do with the content of the web page. This strategy is often referred to as
metatagging". Meta is codes contained within websites that provide a description (other than
the actual text contained in the web page) that can be searched.
To enhance the relevance ranking of a web page under the second criterion, some website
operators repeat likely keywords over and over again on a web page.
The third strategy for enhancing the relevance ranking of a domain name that contains a
likely keyword, or using the keyword as part of the website - obtaining a directory structure
of the website.
Recognizing the value of website designers place on a high relevance ranking, some search
engines and directories are now selling higher rankings directly to the website owners. That
is, for a price, some search engines will guarantee a premium relevance ranking for searches
containing certain keywords, often referred to as 'paid listings' (or sponsored links).
Metatagging raises several trademark issues, including: Is it trademark infringement or
passing off (or dilution) to embed another's trademark in HTML tags on one's web page?
What about repeating another's trademark as buried code or invisible text on one's web page?
Is it unlawful for a search engine or directory to sell premium placements for banner ads
keyed to another's trademark?

 Use of Meta Tags and Initial Interest Confusion

There have been few instances where the courts have recognized trademark infringement
resulting from the use of meta tags and also its use causing initial confusion. An infringement
action may be based on a claim that the alleged infringement creates initial consumer interest,
i.e. when a user conducts a search using a trademark term and the results of the search
include websites not sponsored by the holder of the trademark search term, but rather of
competitors. In other words, the competitor has captured the trademark holder's potential
visitors or customers.

 Domain Names: Digital Marks in the Online Medium

In the last ten years, domain names have become a kind of 'e-commerce marks' in the line
medium These are digital business addresses - a point of business contact or transaction.
The term domain name describes any alphanumeric designation which is registered with or
assigned by any domain name registrar, domain name registry, or other domain name
registration authority as part of an electronic address on the Internet.
A domain name consists of different parts. The first part is known as 'second-level domain'
(or sub-domain), and is the part that can be chosen by the person registering the name. The
end part, which reflects standard term throughout the world is known as 'top- level domain'
(or domain extension). These are commonly referred to as gTLDs, Le. generic' (or global)
Top Level Domains. Earlier there were only seven gTLDs (.com, .edu, gov, int, mil, .net, and
.org)

 Domain Name Distribution

The Network Solutions Inc. (NSI) has been registering domain names since 1992 under an
agreement with the National Science Foundation and the US Department of eCommerce In
1999, the Internet Corporation for Assigned Names & Numbers (ICANN), a non-profit,
private sector corporation based in Marina del Rey, California, USA assumed management of
the domain name system from NS1. The main functions of ICANN are: (a) sets rules for
giving the numbered IP addresses/protocol parameters (b) adding new suffixes to the
directory and (c) sets rules for arbitrating disputes over domain ownership)
It is significant to note that like NSI, ICANN and its accredited registrars are also responsible
for the registration of 'second-level domain name along with 'top-level domain'. They register
the 'second-level domain name on a first-come, first-serve basis and do not evaluate whether
'second-level domain name to be the same, or deceptively. similar to, a registered trademark.
The result has been mixed, on one hand it has given fillip to the growth of e-commerce all
over the world; on the other it has created a menace of 'cybersquatting. A cybersquatters is
"an Internet user who has registered multiple 'domain names' with the hope of selling them to
the businesses who own trademarks identical to those names". Another variant is a
typosquatter, who seeks to profit from controlling domain names, but instead of acquiring a
domain name identical to the registered trademark owner, the typosquatters obtains common
typographical permutations of domain names surrounding a high traffic site.
Examples are www.amazom.com, www.dismey.com, etc.

 Non-Judicial Dispute Resolution and ICANN's Uniform Domain Name Dispute

Resolution Policy (UDRP)
ICANN as successor of NSI came out with its own version of dispute resolution policy,
called 'Uniform Domain Name Dispute Resolution Policy' on October 24, 1999. It is a
comprehensive policy that covers domain name dispute areas, like trademark or service mark
infringements. It has been able to create a basis for global uniformity in the resolution of
domain name disputes)
All registrars in the aero,asia, .biz, cat, com, coop, info, jobs, mobi, museum. .name, .net,
.org, .pro, .tel and travel top-level domains follow the Uniform Domain- Name Dispute-
Resolution Policy (UDRP). Under the policy, most types of trademark- based domain-name
disputes must be resolved by agreement, court action, or arbitration before a registrar will
cancel, suspend, or transfer a domain name. Disputes alleged to arise from abusive
registrations of domain names (ie., cybersquatting) may be addressed by expedited
administrative proceedings that the holder of trademark rights initiates by filing a complaint
with an approved dispute-resolution service provider,
To invoke the policy, a trademark owner should either (a) file a complaint in a court of proper
jurisdiction against the domain-name holder (or where appropriate an in rem action
concerning the domain name) or (b) in cases of abusive registration submit a complaint to an
approved dispute-resolution service provider.

 The UDRP
The dispute resolution proceedings are conducted before one of the administrative- dispute-
resolution service providers as mentioned above. Every domain name registrant has to submit
himself to a mandatory administrative proceeding in the event that a third party (a
"complainant") asserts [Para 4(a)] to the applicable Provider, in compliance with the Rules of
Procedure, that:
(i) the registrant domain name is identical or confusingly similar to a trademark or service
mark in which the complainant has rights; and
(ii) the registrant have no rights or legitimate interests in respect of name; and the domain
(iii) the registrant domain name has been registered and is being used in bad faith.
In the administrative proceeding, the complainant must prove that each of these three
elements are present. Much emphasis has been given to the bad faith registration [Para
4(a)(iii)], which is to be read with Para 4(b) of the UDRP.
It is significant to note that UDRP is a proactive dispute resolution mechanism, as it provides:
(a) a domain name registrant may continue to use his or her domain name while the
complaining party in the domain name is being determined before an ICANN- approved
arbitration panel or a court of competent jurisdiction [UDRP Para 7: Maintaining the Status
Quo].
(b) it permits the trademark owners to challenge the use of domain names that are
confusingly similar to their trademarks. It goes beyond the Anti cybersquatting Consumer
Protection Act, which restricts a trademark owner to challenge the use of a domain name
because it is dilutive of his or her famous mark.
(c) it applies not only to nationally registered trademarks but also to state and common law
trademarks.
(d) the proceedings under the UDRP are limited to domain name disputes in which the
disputed domain name "has been registered and is being used in bad faith". [UDRP Para
4(a)(iii)]. The UDRP is primarily targeted at cybersquatting. It does not apply if the domain
name registrant has registered the disputed domain name in good faith.

 Infringement of Trademarks in Online Medium - An Indian Perspective

As discussed previously in this chapter, the trademark law in India is a happening law. One of
the most significant facets of trademark law in India is that the judges have always given due
weightage to Indian consumers and their cultural background.
As Desai J. of Bombay High Court (which was later affirmed by the Supreme Court) aptly
puts in his judgment Corn Products Refining Co. v. Shangrila Food Products Ltd., that
"English cases proceeding on the English way of pronouncing an English word by
Englishmen, which it may be stated is not always the same, may not be of much assistance in
our country in deciding questions of phonetic similarity. It cannot be overlooked that the
word is an English word which to the mass of the Indian people is a foreign word"

 Domain Name Disputes and Trademark Law

Trademark law gives statutory protection to the trademark owner against trademark
infringement and passing off action. In order to obtain temporary injunction against an
infringer, the trademark owner has to establish a strong prima facie case against him and this
means that the plaintiffs has to identify visual and/or phonetic similarities causing deception,
confusion or mistake in the minds of persons, who are of average intelligence and imperfect
recollection but accustomed to the existing trademark.

 Establishing a Prima Facie Case

If the judgments are any indication, then it may be said that the Indian Courts have given a
new interpretation to the phrase "a man of average intelligence and imperfect recollection" by
equating him with "an unsophisticated consumer of information". However, establishing a
strong prima facie case against the infringer on the basis of visual and/or phonetic similarities
remain the basic criteria in the domain name disputes.
In Yahoo! Inc. v. Akash Arora, the defendant was restrained from using the domain name
"yahooindia.com" which had the format, content and colour scheme identical to the plaintiff's
"yahoo.com" It was observed by Dr. M.K. Sharma, J. of the Delhi High Court that "if an
individual is a sophisticated user of the Internet he may be an unsophisticated consumer of
information and such a person may find his/her way to the different internet site which
provides almost similar type of information as that of the plaintiff and thereby confusion
could be created in the mind of the said person who intends to visit the Internet site of the
plaintiff, but in fact reaches the Internet site of the defendant".
Further, The Delhi High Court rejected the argument that the provisions of the Indian Trade
Mark Act would not be attracted to the use of the domain trade name or domain name on the
Internet. It held that although the word 'services' may not find place Test of A in the
expression used in section 27 and 29 of the Act, services rendered have to be recognized for
an action of passing off. That is, the two marks/domain names "Yahoo!" any sign of the
plaintiffs and "yahoo india" of the defendants are almost similar excepting for the use of
suffix 'India' in the latter.

 Kapil Wadhwan v/s Samsung

Facts
Samsung Electronics Co. Ltd. and Samsung India Pvt. Ltd. (now “Respondents”) are the
brand owners and registered proprietors of the mark “SAMSUNG” in India. The Respondents
had originally filed a suit against Kapil Wadhwa and a few other distributors (now
“Appellants”) who were importing Samsung printers from licensed dealers in foreign markets
and selling it in India without authorisation at a cheaper price. The Respondents alleged that
the Appellants infringed their trademark rights in India and accordingly a Single Judge Bench
 of the Delhi High Court passed a judgement in favour of the Respondents. The present
judgment by the Division Bench of the Delhi High Court arises out of an appeal to the
judgment passed by the Single Judge.

Issues:
i. Whether India follows the principle of national exhaustion or international exhaustion?
ii. Whether parallel import of goods is permissible in India?

Analysis:
i) Whether India follows the principle of national exhaustion or international
exhaustion?
Section 30(3) of the Trademarks Act, 1999 provides for the principle of territorial exhaustion
of trademark rights in India. It states that once lawfully acquired, the purchaser of the goods
may further sell those goods in the market without it constituting as trademark infringement.
(Principle of Territorial Exhaustion of Trademark Rights
The principle of territorial exhaustion of rights means that after goods are lawfully acquired
from the first owner, the rights of the first owner to prevent further sale of such goods is
exhausted. Principle of Territorial Exhaustion of Trademark Rights may be national,
international, and in some cases, regional.
National Exhaustion – means that any product can be lawfully acquired and sold within the
borders of a country, e.g. within India.
International Exhaustion – means that any product lawfully purchased could be sold
anywhere in the world, e.g. product lawfully acquired from Thailand sold in India.
Regional Exhaustion – means that any product may be lawfully acquired and sold within a
certain region, e.g. European Union.
The principle of territorial exhaustion of rights is based on the doctrine of first sale where the
title over any product passes on to the purchaser once it has been sold. In such a scenario,
the purchaser has complete rights over the product and may even choose to sell it to someone
else. This is also embodied in Section 19 of the Sale of Goods Act which provides that upon a
contract of sale for specific property, the property and the goods are transferred to the buyer.
Once the title passes to the buyer, no condition can be further imposed on the buyer.)
In order to determine whether parallel imports to India were permissible, the court had to first
determine whether the term ‘market’ in Section 30(3) of the Trademarks Act, 1999 referred
to a national or a global market. The Single Bench of the Delhi High Court held that India
only recognised the principle of national exhaustion.
However, on appeal, the Division Bench made a reference to additional documents to
determine the intent of the legislature while inserting ‘the market’ in Section 30(3). The
Division Bench relied upon the Statement of Objects and Reasons of the Trademark Bill 1999
placed before the Indian Parliament at the time of passing the Trademarks Act, India’s
communication at the Uruguay Rounds and a Report of the Standing Committee on the
Copyright (Amendment) Bill, 2010. It concluded that India follows the principle of
international exhaustion of rights.

ii) Whether parallel import of goods is permissible in India?

Section 29 of the Trademarks Act, 1999 provides for circumstances where a trademark is said
to be infringed. Section 29(1) of the Act states that trademark infringement means the use of
a registered trademark by any person unauthorised to do so, in the course of business and in
relation to deceptively similar goods and services. Section 29(6) enumerates what constitutes
use of a trademark – and includes but is not limited to import and export of goods bearing
such mark. Based on the aforementioned, the Single Bench held that import of goods,
whether genuine or fake, without authorisation, constitutes as trademark infringement.
On appeal with the Division Bench, the Respondent argued that it was entitled to prevent
such further sale based on Section 30(4) of the Act which seeks to limit the exception to a
trademark infringement already granted by Section 30(3). The Respondents argued that
allowing parallel imports would prejudice the rights of the trademark owners, and consumers.
In response, the Division Bench stated that Section 29 could not be read in isolation and must
be read with Sections 30(3) and 30(4). The Division Bench also stated that denial of
parallel imports will restrict the consumers’ access to a wider range of products at
better prices and stated that trademark laws are not intended to regulate the sale and
purchase of goods but to protect trademark rights.
It further held that since India recognised the doctrine of international exhaustion, the
Respondent cannot prevent the parallel import of its products in India. It also permitted
the sale of the printers under the condition that the Appellants shall provide disclaimers that
the product sold by them are imported independently and the Respondent gives no
guarantees/warranty qua the goods nor provide any after-sales service. The warranty and
after-sales services provided by the Appellants is at their own cost.

Conclusion:
The Division Bench of the Delhi High Court permitted parallel imports to India, on the
condition that the Appellants would provide certain disclaimers in their shops. The principle
of international exhaustion laid down in this judgment has clarified a rather grey piece in
India’s trademark legislation.

 Christian Louboutin v/s Nakul Bajaj

Facts
The plaintiff in the case, one Christian Louboutin is a luxury brand which is specialized in
shoes and other related goods, Christian Louboutin has many products which enjoy
exclusivity through Intellectual Property Rights. The defendant is Darveys.com, Darveys is a
members-only luxury online shopping portal. It was noted in the investigation that the
company required members to pay ₹2000 to use the website. It was stated that the product
sold by Darveys.com especially the product line of the plaintiff were stated to be
 unauthorized sales. The plaintiff further claimed that the products of their brand were sold
only under authorized sellers in India. The defendant claimed protection through section 79
of the Information Technology Act, 2000 as an intermediary.

Issues
i) Whether the "safe harbour" protection through section 79 should apply here?
ii) Whether the use of Mega Tags comprising the Plaintiff's Registered Trademark
amounts to infringement of IP rights?

Contentions by parties
i) The Defendant gave out certain points in their written statement:
That the praise for Mr. Christian Louboutin is not within the knowledge of the Defendants.
The Defendants have not had any direct dealings with the Plaintiff. They further claimed that
the sale was legally carried out.
ii) The Plaintiff in their contentions stated the following:
The use of the brand’s trademarks on the website is a clear indication of an infringement. The
usage of Mega tags comprising the brand names was also infringing. The use of an article on
the website by Christian Louboutin clearly differs from the plaintiff's contention of not
having knowledge about the brand. It also points at the various mentioning of the brand and
its founder through writeups and photographs.

Judgement
i. Whether the "safe harbour" protection through section 79 should apply here?
The website of the defendant comes under the definition of the intermediary under section
2(w). Section 79 of the Information Technology Act provide safe harbour protection to
intermediaries alone on certain conditions over content uploaded or sold through third parties,
like in the sense of Amazon, Flipkart.
The court examined various judgements and concluded that the knowledge of the
infringement by the intermediaries makes the liability shift. This was also stated in an Indian
Judgement MySpace Inc. v. Super Cassettes Industries Ltd. There too the concept of
constructive knowledge and the active knowledge was discussed. In the MySpace judgement,
it was declared that even if the intermediary has a knowledge of the illegality happening in
their website then the intermediary does not need a court order to stop the counterfeited
product or infringing product from using their intermediary service. The activities that
happen even after a minimum knowledge of the infringement can be claimed to be of a
sort of abiding by the infringement done by the third party and it would amount to the
intermediary becoming liable.

ii. Whether the use of Mega Tags comprising the Plaintiff's Registered Trademark amounts
to infringement of IP rights?
 In the issue of meta-tags, the decision of Delhi High Court itself in the Kapil Wadhwa v.
Samsung Electronics was relied upon, where it was stated that the use of meta-tags which
comprises of brand names of others would amount to infringement.
"Meta tags are links that are provided using keywords. If a trade name is used as a keyword
and a link is provided, the website comes up whenever a customer searches for the said
trademark. The trademark used in the code as a keyword is invisible to the end-user or
customer. Such use, though invisible to the customer, has been held to be illegal."

Decision
The court gave out the decision that the darveys.com in support of transporting the
infringed goods to the customer would definitely be held liable even as an intermediary.
The court also referred to the IT (Intermediaries guidelines) rules 2011. The court also
insisted that the aforesaid of intermediary guidelines is advisable but not a sole criterion for
providing the protection that the intermediaries need.

 Amway v/s Amazon

Facts
A Division Bench of the Delhi High Court overruled the judgment passed by Single Judge in
Amway India Enterprises Pvt. Ltd v. 1MG Technologies Pvt. Ltd. & Anr in 2019 (“previous
order”) where several e-Commerce marketplaces like Amazon, Snapdeal, 1MG, and other
independent sellers were barred from making any sale, advertise, offer to sell, or even display
any goods in violation of trademark and third-party agreements. Direct Selling Corporations
(“DSCs”) namely Amway, claimed that e-Commerce marketplaces were selling and
advertising their items without their permission, in violation of their trademark rights and the
Direct Selling Guidelines, 2016 (“2016 DSG”). An appeal was made against the previous
order.

Issues
i. Whether the DSCs’ merchandise being sold on e-commerce marketplaces amount to
trademark violation, as well as degrading their brands’ goodwill and reputation?
ii. Whether e-Commerce marketplaces could be considered “intermediaries” under the
Information Technology Act and the Intermediary Guidelines of 2011, and if they could
be granted Safe Harbor Protection?

Judgement

i. Whether the DSCs’ merchandise being sold on e-commerce marketplaces amount to

trademark violation, as well as degrading their brands’ goodwill and reputation?
The Division Bench was of the opinion that the reports presented before the Single Judge
were just not sufficient and even at present no evidence can prove conclusively that the goods
of DSCs were tampered with, altered, or counterfeited before being sold on e-commerce
marketplaces. It also rejected the alleged misrepresentation or passing off claims because the
Direct Sellers’ information was already listed on these marketplaces, and additionally stated
that even the DSCs had never asserted anything related to trademark registration in their
plaints.
Further, by citing the judgment laid down in Kapil Wadhwa vs. Samsung Industries, the
Division Bench reaffirmed that India adopts the Principle of International Exhaustion.
According to this principle, a trademark owner’s rights terminates when the goods are sold
for the first time, and the buyer acquires ownership of it. And therefore, it will not be
considered an infringement whether it is sold in any market, domestic or foreign. Also, the
Trade Marks Act of 1999, Section 30(3), does not limit the lawful acquisition and subsequent
sale to an international market.
Thus, the Division Bench held that the sale of Amway products by the Direct Sellers on
the e-marketplaces could not be deemed to be an infringement because once the goods
are sold and the ownership is transferred from the DSCs to their individual Direct
Sellers, no restrictions on online sales of the commodities can be imposed on the Direct
Sellers.

ii. Whether e-Commerce marketplaces could be considered “intermediaries” under the

Information Technology Act and the Intermediary Guidelines of 2011, and if they
could be granted Safe Harbor Protection?
According to Section 79 of the Information Technology Act, 2000 (“IT Act“), “safe harbor
protection” is provided to any intermediary that makes information, data, or communication
links available or hosted by him and shall be exempted from legal liability in such
circumstances.
The Single Judge wrongly interpreted Section 79 of the IT Act and ruled that e-Commerce
marketplaces are more than just passive non-interfering marketplaces; they are also providers
of additional value-added services, effectively removing them from the category of mere
intermediaries.
The Division Bench contrarily held that the mere fact of e-Commerce marketplaces
providing a wide range of value-added services such as packaging, shipping &
delivering, and warehousing does not preclude them from benefiting from the liability
exemption provided by Section 79 of the IT Act. It came to the conclusion that, under
Section 79 of the IT Act, an intermediary would not face any legal action for any third-party
information, data, or communication link is posted as long as it followed Sections 79(2) and
(3).
The court based this decision on Shreya Singhal v. Union of India, which ruled that a
social media marketplace’s obligation to remove content emerges only if a court order
or a notification from a government agency based upon the grounds listed under Article
19(2) of the Indian Constitution exists. As a result, claims from DSCs were insufficient to
trigger a takedown obligation without a supporting court order or government notice.
 Intermediary Liability

 Intermediary
An "intermediary", with respect to any particular electronic records, means any person who
on behalf of another person receives, stores or transmits that record or provides any service
with respect to that record. The term network service provider is ever-expanding. It is now
being seen as synonymous to the term 'intermediary' and includes telecom service providers,
network service providers, Internet service providers, web-hosting service providers, search
engines, online payment sites, online auction sites, online marketplaces, and cyber cafes.
Basically, intermediaries are kind of service providers providing services online.
The function of an intermediary has to be understood in terms of its role as a facilitator with
respect to any particular electronic message between an "originator" and an "addressee".

Information Carrier Information Publisher Information Seller

Intermediary which merely Intermediary, which Intermediary which

acts as a carrier of publishes and transmits the publishes, transmits and
information transmitting information. sells the
'electronic message’ from information/products and
one place to another, may take reasonable care in
without examining its relation to its publication
content. Its primary role is to
provide access to Internet
connectivity to the users

Examples: 'Access only Examples: 'Enhanced' Examples: 'E-commerce

intermediaries like, intermediaries like, portals/intermediaries,
airtel.in, rcom.co.in, etc. yahoo.co.in, rediff.com, like ebay.in, indiatimes.com.
google.com etc. flipkart.com, amazon.in etc

The question is under what circumstances, would an intermediary be held liable?

Section 79. Exemption from liability of intermediary in certain cases.-
(1) Notwithstanding anything contained in any law for the time being in force but subject to
the provisions of sub-sections (2) and (3), an intermediary shall not be liable for third party
information, data, or communication link made available or hosted 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 hosted; 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 otherwise 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 the purpose of this section, the expression "third party information" means
any information dealt with by an intermediary in his capacity as an intermediary.
Comment
The aforesaid section lays down the set of specific rules governing intermediaries. If sub-
section (1) provides for an all-encompassing exemption rule for the intermediaries, then
sub-section (2) and (3) refers to the applicability or non-applicability of the said
exemption rule, respectively.

 Applicability of exemption rule

Exemption rule, i.e., sub-section (1) states that "notwithstanding anything contained in any
law for the time being in force but subject to the provisions of sub-sections (2) and (3), an
intermediary shall not be liable for any third party information, data, or communication link
made available or hosted by him."
The courts' while addressing the question whether sub-section (1) of section 79 is applicable
or not have to perform the test of applicability. It has three distinct components. Presence of
any one of the components would grant exemption to any such concerned intermediary from
liabilities in certain cases. Three distinct components of 'test of applicability providing
exemption under sub-section (2) are:
Component 1:
(a) the intermediary merely provides access to third-party information, which is transmitted
or temporarily stored or hosted by such intermediary and includes:
i. storage for the purpose of carrying out transmissions (mere conduit), or
ii. storage for the purpose of making more efficient the information's onward
transmission (proxy caching), or
iii. storage of information provided by a subscriber (hosting).
OR
Component 2:
(b) the intermediary being a facilitator only plays a passive role in the sense that it does not.
i. initiate the transmission,
ii. select the receiver of the transmission, and
iii. select or modify the information contained in the transmission;
In other words, it was other than the intermediary, who initiated the transmission, -elected the
receiver of the transmission and selected or modified the information contained in the
transmission.
OR
Component 3:
(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.
'Due diligence' means reasonable steps taken by a person in order to avoid commission of
offence or contravention, ie, adopting reasonable steps to determine if the information content
it transmits is unlawful. It is defined as "such a measure of prudence, activity or assiduity, as
is properly to be expected from, and ordinarily exercised by, a reasonable and prudent man
under the particular circumstances; not measured by any absolute standard, but depending on
the relative facts of the special case." A due diligence exercise is a statutory duty on the part
of the intermediary to observe regulatory practices/guidelines as may be prescribed by the
Central Government to prevent transmission or publication of the unlawful content.

 Applicability of Non-Exemption Rule

Further, sub-section (3) of section 79 provides that the aforesaid exemption rule, i.e sub-
section (2) shall not be applicable, if:
(a) the intermediary has been involved in criminal acts, i.e., if he has conspired or abettor or
aided or induced whether by threats or promise or otherwise in the commission of the lawful
act.
Further, clause (b) of sub-section (3) of section 79 restricts immunity to the intermediaries on
the premise that:
(b) the intermediary has the actual knowledge of the fact 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 and the intermediary fails to
expeditiously remove or disable access to that material on that resource without vitiating the
evidence in any manner.
'Actual knowledge' here means constructive knowledge, i.e. a person is deemed to have
constructive knowledge of the contents of material, which would put a reasonable and
prudent person on notice as to the suspect nature of the material. In other words, the
intermediary knows, or has reason to believe that the information content it is transmitting is
unlawful. The sources of actual knowledge may include, use of appropriate filters (filtering
software), moderators, receipt of notices from offended parties or any user etc.

 Shreya Singhal v. UOI

It must first be appreciated that section 79 is an exemption provision. Being an exemption
provision, it is closely related to provisions that provide for offenses including section 69A.
We have seen how under section 69A blocking can take place only by a reasoned order after
complying with several procedural safeguards including a hearing to the originator and
intermediary. The intermediary applying its own mind to whether information should or
should not be blocked is noticeably absent in section 69A read with 2009 Rules.
Section 79(3)(b) has to be read down to mean that the intermediary upon receiving
actual knowledge that a court order has been passed asking it to expeditiously remove
or disable access to certain material must then fail to expeditiously remove or disable
access to that material. This is for the reason that otherwise it would be very difficult
for intermediaries like Google, Facebook etc. to act when millions of requests are made
and the intermediary is then to judge as to which of such requests are legitimate and
which are not. Unlawful acts beyond what is laid down in Article 19(2) striking down
section 79(3)(b) obviously cannot form any part of section 79. With these two caveats, we
refrain from section 79(3)(b).
Section 79 is valid, subject to Section 79(3)(b) being read down to mean that an intermediary
upon receiving actual knowledge from a court order or on being notified by the appropriate
government or its agency that unlawful acts relatable to Article 19(2) are going to be
committed then fails to expeditiously remove or disable access to such material. Similarly,
the Information Technology "Intermediary Guidelines" Rules, 2011 are valid subject to Rule
3 sub-rule (4) being read down in the same manner as indicated in the judgment.

 Avnish Bajaj vs State & Sharat Digumati vs State

In Avnish Bajaj v. State, one of the questions before the court was whether the Portal Baaze
had the actual knowledge of the content?
Facts
 However, in spite of the filters having the word ‘sexual’ in its list, the program of
Baazee.com failed to block off the offending advertisement.
 Further, in-spite of being categorically informed by one of the users thread [email protected]
on 27.11.2004 at 8:20 p.m. the company, Baazee.com a 24 x 7 platform, failed to act to
stop the sale immediately. All through the day on 28.11.2004 the sale was going on
unabated and it was finally closed on 29.11.04.
 The language of the advertisement written down and represented by accused Ravi Raj, on
the website clearly conveyed the meaning that school children were involved in explicit
sexual act.
 Further the portal has charged and received commission on the sale of the offending clip.
The portal knew of the illegality of the fact, as the same was blocked on 29.11.04 but still
chose to profit from it by appropriating the commission, 15 days later.
 The investigation proves that Avnish Bajaj as the MD of Baazee.com as well as Sharat
Digumarti as Head Fraud and Risk Control had knowledge of the contravention, through
the Community Watch scheme.
 In spite of being informed, the item was not blocked for 38 hours. 75% of all sales took
place after the web portal was informed about it. The filters that were put up by the website
were also grossly inadequate. In spite of the word 'sexual' (at serial number 70) the word
'dp (at serial number 106) and word 'RKP (at serial number 110) existing in the suspect list,
their program was not able to detect and block the advertisement which carried the same
word.
 Likewise, Avnish Bajaj was the domain administrator and all policy decisions were made
through him. In spite of the hue and cry made in the media about the issue, the policymakers
 for the website did not put the names like DPS, R.K. Puram on their watch list till after the
case was registered.
 Sharat Digumarti was the Senior Manager, Trust and Safety who was responsible for
maintaining the subject and banned key word list and ensuring that no lascivious item is
listed for sale on the website. Sharat Digumarti was responsible for ensuring that no banned
and illegal items are traded on the website.
 However, he did not take appropriate measures to ensure that the list of the banned and
suspect words are updated, keeping in mind the social and moral norms. Although the
website runs a 24 x 7 operations, no person had been deputed by him from his unit to review
the listings and to respond to alerts generated by the system.
 This allowed the item to remain listed for 38 hours after an alert was raised by the
Community Watch program. The filters that have been claimed by the accused as a measure
to block objectionable materials were found to be grossly inadequate during the
investigations. Sharat Digumarti has been charge-sheeted on recognizance without arrest.
Judgement
...the prosecution was unable to show at what stages the petitioner as MD was directly
involved in the screening of the listing or its subsequent removal. In the circumstances, it
would be a mere surmise that the petitioner was himself responsible for the offence. There
must be a specific allegation in the charge sheet that, despite knowing the failure of the
filters, he nevertheless did nothing about it. There is no such averment in the charge sheet.
In fact the liability sought to be attached to the petitioner is only in his capacity as MD of the
company and not in his individual capacity.

 Super Cassettes vs Myspace

Knowledge has a definite connotation, i.e a consciousness or awareness and not mere
possibility or suspicion of something likely. The nature of Internet media is such that the
interpretation of knowledge cannot be the same as that used for a physical premise. A general
awareness or apprehension that a work may be violative of copyright here would not pass
the knowledge test.
i. In the present case, where the system stores millions of videos, can MySpace be attributed
with specific knowledge of infringement as to attract content responsibility?
To say so would require MySpace - to know all owners of all works, and not just that of SCIL
- a possibility not contemplated by the Copyright Act. A further aspect to this exception is
"reason to believe" or what is referred to as constructive knowledge. Mere suspicion is
insufficient; and similarly apprehension is not enough.
ii. Here again would it be reasonable to expect defendant/content host to sift through millions
of videos or audio files to form a reasonable belief that certain specific data infringes the
copyright of someone?
The requirement is to give specific information to the content host or the website
(MySpace) that infringement occurs with respect to the specific work. A general or vague
description of the works would be insufficient as this then leaves room for MySpace to rely
guesswork as to what content has to be removed. Therefore, the onus is upon the plaintiff to
give a detailed description of its specific works, which are infringed to enable the web
host to identify them.
In the absence of such evidence, at a prima facie level, this Court is of the opinion that if
the modification/addition is entirely through an automatic process without any human
intervention then knowledge cannot be attributed to MySpace. (Regarding a contention
raised by SCIL that insertion of an advertisement by MySpase disclosed its knowledge,
Myspace contended that insertion of the advertisement was through an automated process)
The knowledge can also be attributed if the intermediary has been notified by the appropriate
Government or any of its agency that 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 and the intermediary fails to expeditiously remove or disable access to that
material on that resource without vitiating the evidence in any manner.

 Google India Put. Ltd. v. M/s Visakha Industries Ltd.

(Section 79 of the IT Act, prior to 2009 amendment, did not protect an intermediary in regard
to an offence under Section 499/500 of the IPC)
Facts
The complaint made by Complainant alleging that Accused No. 1's statement in the articles in
the group hosted by the Accused No. 2 (Google India Pvt. Ltd.] was filled with hatred towards
Complainant which was defamatory in nature, and which a person of ordinary intelligence in
society would believe the said statements. Indeed, the said statement injured the reputation of
Complainant. The Appellant came to be summoned by the Magistrate pursuant to the complaint
which seeks to invoke Sections 120B, 500 and 501 read with Section 34 of the Indian Penal
Code, 1860 (Code). The Appellant filed petition before the High Court to quash order passed
by Magistrate summoning Appellant for offences punishable under Sections 120B, 500 and
501 read with Section 34 of Code. The High Court dismissed the petition.
Issue
Whether appellant could avail of intermediary sale harbour for defamation under Section 79 of
the IT Act?
Decision
In this case, Hon'ble Supreme Court held that since the complaint was filed and cognizance of
the matter was taken prior to the substitution of Section 79 with the expanded scope of safe
harbour the adjudication of intermediary liability needed to be done as per the unamended
Section 79 only. Appellant argued exemption under the unamended Section 79 on the basis of
the 'Sharat Babu Digumarti v Government of NCT of Delhi' case before the Supreme Court,
where the criminal charge of obscenity had been made against an intermediary both under the
IT Act as well as under IPC.
The Supreme Court held that the matter is deemed to be decided on the basis of Section 79 of
the IT Act, prior to the amendment of 2009 as the complaint was filed before the amendment.
After the amendment, the scope of protection for intermediaries has increased, as it states
that intermediaries shall be granted exemption from liability 'notwithstanding thing
contained in any law for the time being in force'.
The only option to seek protection is if the intermediary had "knowledge" of the
objectionable material. "Actual Knowledge" was dealt by Supreme Court in the case of
'Shreya Singhal v. Union of India' to mean an order from court or a competent authority
under law. But the precedent of Shreya Singhal Case cannot be made applicable as the
complaint arose before the amendment. Hence, Section 79 of the IT Act, prior to 2009
amendment, did not protect an intermediary in regard to the offence under Section 499/500 of
the IPC.

 Swami Ramdev & Anr. v Facebook Inc. & Ors.

(Online Defamation - Global Injunction passed to block defamatory web content uploaded
from India)
Facts
The allegation of the Plaintiffs is that various defamatory remarks and information including
videos, based on a book titled 'Godman to Tycoon the Untold Story of Baba Ramdev' are being
disseminated over the Defendants' platforms.
The Plaintiffs submit that the defamatory content contained in the said book was subject matter
of a judgment passed in wherein a Ld. Single Judge of this Court had restrained the publisher
and author from publishing distributing and selling the book without deleting the offending
portion. The allegations contained in the videos, which have been uploaded on the
Defendants platforms are in fact the defamatory allegations contained in the book which have
already been directed to be removed. In the present case, the petitioners (Swami Ramdev and
Patanjali Ayurved Ltd.) asked the court to issue a global take down order, for the defamatory
content in question, to Facebook, Google, YouTube, Twitter and other unidentified Internet
intermediaries.
Issue
Whether a global injunction can be passed to block defamatory content uploaded from India or
located in India on a computer source?
Decision
In this case, Hon'ble Delhi High Court delivered a landmark judgment thereby ordering
to remove all defamatory content posted online against Plaintiff No. 1 Swami Ramdev,
without any territorial limit, stating that if the content is uploaded from India or such
content is located in India on a computer resource, then the Courts in India should have
international jurisdiction to pass global injunctions
The court directed all defendants to take down, remove block restrict/disable access, on a global
basis, to all such defamatory videos weblinks/URLS in the list annexed to the plaint, which
have been uploaded from IP addresses within India. Insofar as the URLs/links in the list
annexed to the Plaint which were uploaded from outside India are concerned, the defendants
are directed to block access and disable them from being viewed in the Indian domain and
ensure that users in India are unable to access the same.
The plaintiffs are allowed to notify the defendants in case they discover any further URLS
containing defamatory/offending content who shall then take down/block access to the said
URLS. (However, if the Defendant - platforms are of the opinion that the material/content is
not defamatory, they shall intimate the Plaintiffs and the Plaintiffs would seek their remedies
in accordance with law.
The court made important observations on the issue of intermediaries. It held that in order to
avail of the exemptions provided under Section 79(1) and (2), the intermediaries have a duty
to "expeditiously remove or disable access" The intermediaries have to remove or disable
access to "that material". The said material would be the information or data "residing in or
connected to a computer resource" What would be the material to which access is to be disabled
or expeditiously removed? The answer to this is in the Information Technology (Intermediaries
Guidelines) Rules, 2011. Under Rule 3(2), the information or data which constitutes "that
material" would be "the material or information that is grossly harmful, harassing,
blasphemous, defamatory.... or otherwise unlawful in any manner whatsoever Thus, the access
would have to be disabled to any material or information which falls in any of these categories
from (a) to (i) If a material or information falls in this category, upon receiving a Court order,
the intermediary has to remove expeditiously or disable access to the same.
As far as location of removal or disabling is concerned, the removal or disablement to the
offending material has to take place "on that resource". Here, "that resource" is a computer
resource in which the "information, data or communication link" is "residing in" or is
"connected to".
Computer resource is defined as a computer, a computer system or a computer network. It is
not merely a single computer. It encompasses within itself a computer network, which would
include a maze or a network of computers. Such a computer network could be a global
computer network. Thus, a proper reading of Section 79(3)(b) would mean that if any
information, data is residing in or connected to a computer network, .e., a computer resource,
the intermediary has to remove or disable access to the said information or data on that
resource. The use of the words "that material" and "that resource" shows that the same is
intricately connected to the initial part of the link" and "a computer resource." Thus, if any
information or data has provision which deals with "any information, data or communication
been uploaded network, the information or data which has to be removed or disabled from that
very computer resource or network. (The computer resource or is residing in a computer
resource i.e., a computer in the initial part of the Section is the same computer resource as used
in the later part of the Section/ The latter resource cannot be a sub-set or a species of the former.
It has be the entire computer resource which was initially connected when the uploading of the
information or data took place. Thus, if an information or data has been uploaded on a computer
network, the platforms would be bound to remove it and disable it from that computer network
completely.
 Module 4

The Cyber Offences

Cyber crime is a collective term encompassing both 'cyber contraventions' and 'cyber
offences.
The mens rea in case of 'cyber crime' comprises of two elements. First, there must be intent to
secure access to any program or data held in any computer, computer system or computer
network. Secondly, the person must know at the time that he commits the actus reus that the
access he intends to secure is unauthorized. The intent does not have to be directed at any
particular program or data or at programs or data held in any computer, computer system or
computer network.
The difference between 'cyber contravention' and 'cyber offence' is more about the degree and
extent of criminal activity rather than anything else. For example, a mere unauthorized access
to a computer, computer system or computer network may amount to 'cyber contravention'
but for a 'cyber offence it is the specific criminal violation that resulted from the unauthorized
access to a computer, computer system or computer network or computer resource that has to
be taken into consideration.
 Sec 66A Shreya Singhal

Brief Facts of the Case

In the year 2012, two girls named as Shaheen Dhada and Rinu Srinivasan, was arrested by the
Mumbai police. The arrest was made for expressing their displeasure at a bandh which was
called in by the members of Shiv Sena people in Maharashtra for the incident of Shiv Sena
chief Bal Thackery’s death. The accusation made against the petitioners was that they were
involved in posting their comments on the Facebook and liking the comment at the same time
which resulted in widespread public protest. The petitioners by the way of Public Interest,
filed the writ petition under Article-32 of the Constitution claiming that section 66A of IT
Act 2000 violates the right of freedom of speech and expression of an individual.

Issues involved
1) Whether Sections 66-A, 69-A and 79 of the IT Act are constitutionally valid?
2) Whether Section 66A of IT Act is violative of fundamental right of freedom of speech and
expression?

Judgment
In the case of Shreya Singhal vs Union of India, the supreme court of India has tried to
balance between rights guaranteed in Article 19(1)(a) and reasonable restrictions under
Article 19(2). In remarks of the judgment, the Supreme Court has rightly and clearly
observed that "when it comes to democracy, liberty of thought and expression is a cardinal
value that is of paramount significance under our constitutional scheme".
Further, most importantly, the Court has provided the distinction between discussion,
advocacy, and incitement and the Court held that reasonable restrictions under Article 19(2)
on free speech and expression may be imposed only in instances where incitement is evident.
In this case, the constitutional validity of section 66A of the IT Act was mainly challenged
because of its violative nature of right guaranteed under Article 19(1)(a), and also it falls
outside the ambit of reasonable restrictions under Article 19(2).
In this case, court found that section 66A is capable of limiting all forms of internet
communications as it doesn't "make any distinction between mere discussion or advocacy of
a particular point of view, which may be annoying or inconvenient or grossly offensive to
some and incitement by which such words lead to an imminent causal connection with public
disorder, security of State etc.". Further, section 66A of the IT Act fails to establish a clear
proximate relation to the protection of public order.
In the landmark case of Romesh Thappar, the term public order has been defined as "a state
of tranquillity which prevails amongst the members of a political society.” According to the
Court in Shreya Singhal's case under Section 66A, an offense has been committed by sending
a message for the purpose of causing annoyance or insult, but the same law fails to make a
distinction between mass dissemination and dissemination to an individual without requiring
the message to have a clear tendency of disrupting public order.
In this case, difference between "Hate Speech and Fair Speech" was also highlighted, and
according to the Apex court, "any innocent comment made by anyone whose aim is not to
defame or disrespect anyone cannot fall under the ambit of hate comment."
With regards to the vagueness of the section 66A, the Honourable Apex court in Shreya
Singhal's case referred to judgments given by U. S. Supreme Court in series of judgments
U.S. Supreme court held that:
"there where no reasonable standards are laid down to define guilt in a Section which
creates an offense, and where no clear guidance is given to either law-abiding citizens or to
authorities and courts, a Section which creates an offense and which is vague must be struck
down as being arbitrary and unreasonable."
Further, section 66A is also capable of imposing a chilling effect because the provision fails
to define terms like inconvenience or annoyance; therefore, "a very large amount of protected
and innocent speech" could be curtailed. Therefore, we can understand that section 66A of
the IT Act is unconstitutional. Similarly, the Honourable Supreme Court, in the case of
Shreya Singhal vs. Union of India, also struck down Section 66A of the IT Act and declared
it as unconstitutional.

Sec 67 Avanish Bajaj, Sharad Digumati

Factual Background of the case: Sharat Babu Digumatri v. Government of NCT of Delhi
 An obscene MMS video was listed for sale on the website www.bazeee.com (now An
obscene MMS video was listed for sale on the website www.bazeee.com
(now www.ebay.in) ("Website"). Though the Website had requisite filters to detect
such listings, this listing was not tracked.
 The item was first listed on the evening of November 27, 2004 on the Website and
deactivated only two days later i.e. on 29 November, 2004 after a complaint was
lodged. In the meantime, a few sales took place through the Website.
 Upon investigation by the Crime Branch of Delhi, Ravi Raj, Avnish Bajaj, the
managing director of the Website, and Sharat Digumarti, the manager of the Website,
were held responsible for handling the content on the Website. They were listed as the
accused on the charge sheet.

Relevant Provisions of the IPC and IT Act

 Section 292 of the IPC deals with obscenity, and states that a figure or any object
shall be deemed to be obscene if it is lascivious or appeals to the prurient interests
such as to tend to deprave and corrupt a person. Further, the section makes it an
offence to distribute, import, export, exhibit, advertise, etc. obscene content by means
of traditional print media
  Section 294 of the IPC makes it an offence to do any obscene acts, or utter obscene
words or songs in public places to the annoyance of others.
 Section 67 of the IT Act makes it an offence to publish or transmit obscene content
in electronic form.
Thus, the difference between Section 292 of the IPC and Section 67 of the IT Act is that
while the latter criminalizes the transmission of obscene content by electronic means, the
former criminalizes the dissemination of obscene content through conventional print media,
such as through writings, drawings, books or pamphlets.

Court Proceedings in the Avnish Bajaj Case

Avnish Bajaj filed a petition for quashing of the criminal proceedings against him. He
contended, among other grounds, that the MMS was transferred directly between the seller
and buyer without the intervention of the Website. Hence, he could not be held responsible
for a mere listing on the Website which was not obscene and in no way attracted either
Section 292 or 294 of the IPC or Section 67 of the IT Act.
In 2005, the Delhi High Court ("DHC") observed that1:
 There was a prima facie case against the Website in respect of the listing of the video
clip and its contents and an offence, under certain sub- sections of Section 292 of the
IPC was made out.
 Avnish Bajaj could not be held liable as the company was not arraigned as a plaintiff.
 The IPC did not recognize the concept of automatic criminal liability of a director of a
company, when the company itself was not a party to the suit.
 A prima facie case was made out against Avnish Bajaj for an offence under section 67
of the IT Act, since the law recognizes the deemed criminal liability of the directors
even where the company is not arraigned as an accused. This is because, Section
85i of the IT Act provides that, when a company commits an offence under the IT
Act, every person who was in charge of the company at the time may be proceeded
against.
However, the SC, in 2012, overturned this finding while holding that, vicarious liability
cannot be fastened to Avnish Bajaj and he could not be held guilty under the IT Act
provisions as the company was not arraigned as an accused. In this respect, the SC drew a
parallel between section 141 of the Negotiable Instruments Act, 1881 ("NI Act"), and section
85 of the IT Act. Section 141 of the NI Act is of the same substance as section 85 of the IT
Act, in the context of certain offences by companies under the NI Act. In interpreting section
141 of the NI Act, the SC held that the commission of an offence by the company was an
express condition precedent to attract the liability of others in charge of the company, hence,
since there was no case made against the company, Avnish Bajaj was acquitted.
Post this case, the IT Act was amended to introduce, amongst other amendments, an
amendment to Section 79(1) of the IT Act ("Section 79"). This section, subject to certain
conditions, provides immunity / safe harbor to intermediaries (such as the Website) from the
penalties under the IT Act for content made available on its platform by third parties.
Court Proceedings in Sharat Digumatri Case
Following the judgment of the SC quashing all proceedings against Avnish Bajaj, Sharat
Digumatri ("Sharat"), the other manager of the Website, filed an application before the trial
court to drop proceedings against him as well. The trial court dropped the proceedings against
Sharat for offences under section 294 of the IPC ("Section 294") and section 67 of the IT Act
("Section 67"), however it framed the charge in terms of section 292 of the IPC ("Section
292"). This order framing the charge was upheld by the DHC. The DHC stated 3 that liability
could attach to Sharat in his individual capacity. Sharat appealed against this DHC order
before the SC in the present proceedings.

Issue adjudicated upon by the two judge bench of the Supreme Court
Whether Sharat, who had been discharged under Section 67 could be proceeded under
Section 292?

Sharat's Arguments
It was submitted before the SC that:
 Sharat could not be proceeded under Section 292 after having been discharged under
Section 67. It was argued that, Section 67 was a special provision and it would
override Section 292. There was a distinction drawn between offences in relation to
the internet under Section 67 and offences in relation to conventional media under
Section 292;
 Even if all the allegations against Sharat were accepted, he would be protected under
Section 79 since it was established that the offending material was an electronic
record under the IT Act and hence Section 79 would have to apply;
 Section 81 of the IT Act ("Section 81") provided that the provisions of the IT Act had
overriding effect on any other law in force. 4 Hence, by virtue of Section 81, Section
79 would get automatically attracted to electronic forms of publication and
transmission of obscene material by intermediaries. The horizon of Section 79 had
been expanded to extend its protection to individuals as well. For this argument,
reliance was placed on the landmark case of Shreya Singhal v Union of India in which
the SC read down Section 79 to hold that an intermediary would have to receive
actual knowledge by means of a court order or a government notification prior to
taking down offensive content on the internet.

Judgment
The SC reasoned that it was beyond dispute that the alleged possession of the MMS clip by
Sharat constituted an electronic record under the IT Act.
The SC referred to the Shreya Singhal ruling in which the SC had at the time of striking down
section 66 A of the IT Act, held that the provision did not contain the word 'obscene.' It
criminalized what was 'grossly offensive' or 'annoying,' and hence, it could not be said to
create an offence pertaining to decency or morality. The SC further reasoned that what could
be grossly offensive or annoying under the section needn't have been obscene at all. In the
instant case, the SC was required to adjudicate upon which of the provisions and statutes i.e.
Section 292 or Section 67, or both, the accused were required to be tried under.
The SC looked at the nomenclature of certain provisions of the IT Act:
 Section 67 provided for punishment for publishing or transmitting obscene material in
electronic form.
 Section 67A of the IT Act stipulated punishment for publishing or transmitting of
material containing sexually explicit acts, etc. in electronic form.
 Section 67B of the IT Act, too, provided for publishing or transmitting material
depicting children in sexually explicit acts, etc., in electronic form.
The court referred to these provisions to emphasize on the fact that the legislature had
deliberately used the words 'electronic form' in all places. Relying on this, the court reasoned
that Section 67, read with section 67A and 67B, was a complete code relating to offences
under the IT Act. Section 79 was an exemption provision providing protection to individuals,
which protection had been expanded by virtue of the ruling in Shreya Singhal.
The SC rationalized that all the aforementioned provisions of the IT Act, along with Section
81, would apply if the offence applied to an electronic record. While Section 292 made it an
offence for the sale of obscene books, etc., once the offence had a nexus with an electronic
record, Section 79 could not be ignored. The logic underlying this interpretation, according to
the SC, was that Section 79 was a special provision laid down for a specific purpose.
The SC while quashing the criminal proceedings against Sharat, held that:
 obscenity pertaining to electronic records fell under the scheme of the IT Act.
 Electronic forms of transmission were covered by the IT Act, which was a special law
and if the alleged offender has been acquitted under the relevant provisions of the IT
Act, he could not have been proceeded against under the IPC for the same offence.
 the DHC had erred in holding that Sharat could be proceeded under Section 292
despite the charges against him under Section 67 being dismissed.

Sec 65B IEA, Anvar vs. PK Basheer

“Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal & Ors
The Supreme Court has held that the certificate required under Section 65B(4) is a condition
precedent to the admissibility of evidence by way of electronic record.
A Three Judge Bench of the Supreme Court comprising Justices RF Nariman, S Ravindra
Bhat and V Ramasubramanian delivered this judgment on a reference on the question "Is
requirement of certificate u/s 65-B(4) Evidence Act mandatory for production of electronic
evidence?" A two Judge Bench of Justices Ashok Bhushan and Navin Sinha had referred the
question in view of the conflict between “Shafhi Mohammad v. State of Himachal Pradesh”
and “Anvar P.V. v. P.K. Basheer”.