Delhi HC has expanded the scope of injunction orders in Internet jurisdiction: Geo-blocking to Global-blocking in IT law

This post has borrowed extensively from an earlier blog-publication by Aryan Babele on Tech Law Forum @ NALSAR.

On 23rd October 2019, the Delhi HC has delivered an impactful judgment authorizing Indian courts to issue “global takedown” orders to Internet intermediary platforms like Facebook, Google and Twitter against illegal content as uploaded, published and shared by their users. The Delhi HC delivered the judgment on the plea filed by Baba Ramdev and Patanjali Ayurved Ltd. requesting the global takedown of certain videos which are defamatory in nature.

The Court passed the order in the context of its observation that there is a ‘hare and tortoise race’ between technology and law such that the ‘technology gallops, the law tries to keep pace’. Such observation reflects that the Court’s intention is to interpret IT law in the manner which will ensure the effective implementation of the judicial orders throughout the internet jurisdiction and mitigate the circumvention of such orders by use of the advanced technology.

However, the Court’s order is attracting criticism globally from several internet-freedom activists. It seems that the Court has made a hasty attempt to win the ‘hare and tortoise race’ and has missed on considering the far-reaching implications of it on the IT law jurisprudence and conflict of law provisions. This article aims to analyze and indicate the significant points in the Delhi HC’s judgment, which the Court lacked in considering while relying on the unsettled jurisprudence of global injunction orders.

Background- The case of Swami Ramdev v. Facebook

In Swami Ramdev v. Facebook [CS (OS) 27/2019 – Delhi HC], Swami Ramdev (a prominent yoga guru and public figure) filed a case before the Court against Facebook, Google, YouTube and Twitter, inter-alia, praying for the global take down of defamatory contents (videos) as uploaded, published and shared by users of these intermediary platforms.

The given case stems out of the publication of videos on defendants’ platforms, which are based on those particular offending portions of the book titled “Godman to Tycoon: The Untold Story of Baba Ramdev’ by Priyanka Pathak Narain, which are already undergoing an ad-interim injunction as granted by the Court in Swami Ramdev v. Juggernaut Books [CM (M) 556/2018] in May 2018.

Subsequently, in January 2019, the Court passed an interim injunction against the defendants’ platforms to disable access to the offending URLs and weblinks for the Indian domain as per Section 79 of the Information Technology Act, 2000, [hereinafter referred as IT Act 2000] i.e. ordered geo-blocking.

However, the plaintiff argued that the geo-blocking is an ineffective solution as the objectionable content is widely available on the global internet and internet users in India can still access such content using VPNs and other such mechanisms. Therefore, the only effective remedy, according to the submission of plaintiff, is to issue a global blocking order.

Internet intermediaries have contended against such a global take down mechanism as it poses a number of technical and legal difficulties for them. Firstly, cross-jurisdictional laws vary in standards for determining defamation, and hence disabling access globally will breach the principles of international comity. Secondly, in order to globally disable access to the content, the intermediary platforms have to monitor every upload on their platforms which is technically difficult and legally wrong.

The Delhi HC’s Judgment

The Court agreeing with the plaintiffs’ submission went on to held that the online intermediary platforms can be ordered to take down content globally by a competent court in India, as the content is published on their global services. It observed that the complete removal is needed because there are easy –to-use technology applications available widely that helps local users in circumventing the geo-blocking and render the take-down order useless. Therefore, an absolute removal globally is an absolute remedy, as per the Court’s observations.[1]

Further, the following directions, hereby in brief, have been put forth by the Court to support its order:

  • The Court broadened the interpretation of Shreya Singhal v. Union of India: As per the Court, Section 79 of the IT Act 2000 provides that in order to avail the safe-harbor immunity, “intermediaries have to take down and disable access to the offending material residing in or connected to a computer resource in India”. It interpreted the definition of ‘Computer Resource’ as given in the IT Act, such that the “Computer Resource” as per the judgment “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”.[2]
  • Global take downs are technologically possible: The Court held that whenever any content violates the community standards of the internet intermediary platforms, such content is taken down globally by the platform on its own. Therefore, it observed that it is technologically possible for the platforms to take down content globally on the orders of the competent courts as well.
  • Application of IT Act in extra-territorial jurisdiction: In order to justify the global take down, the Court explained that, “a perusal of Section 75 of the Act shows that the IT Act does have extra territorial application to offences or contraventions committed outside India, so long as the computer system or network is located in India”.[3] Therefore, the Court held that as long as the content has been uploaded from the Computer Resource located in India, Indian courts will be competent to pass the global injunction/ take down orders.
  • Allowing the direct ‘Notice-and-Takedown’ mechanism for the future uploads of the objectionable content: The Court has held that the plaintiffs can approach the intermediaries directly if it finds the publication of the questionable content again on their online platforms in future. However, the Court has provided an option of the counter-notice system for intermediaries, by opting which the intermediaries can refute claims of illegality and shift the onus of proof back on plaintiffs, such that after which the plaintiffs will have to approach the Courts for an appropriate remedy.

Observations: the Loopholes, Unsettled Jurisprudence and the Comment

The Loopholes

It is completely understandable that the Court is favouring the global take-down order to make its injunction orders against global services more effective. Unfortunately, in its broad evaluation of legal feasibility of the global injunction order and technological capabilities of intermediaries to obey the same, the Court missed on considering certain very significant arguments[4]:

  • Use of VPNs another way around: The Court agreed to the plaintiffs’ argument that due to the wide availability of the easy-to-use applications like VPN, the geo-blocking is circumvented. However, it didn’t consider the circumvention in the case other way around, in which the user can upload the content using VPN and other web proxy services, and can further easily fake the IP address to make it look like as if the content is being uploaded from outside India, negating the Court’s jurisdiction. Therefore, global takedown order, even at prima facie, doesn’t seem to be the appropriate remedy.
  • In denial of the principle of international comity and right to information: The cross-jurisdictional defamation laws vary on a large scale. If global takedown was mandated, the platforms will be wary of falling foul of the law in other countries. For eg., if Indian courts mandate the global takedown of the content which is not at all questionable as per the laws of certain countries, the takedown order will be in contravention of the right to information of citizens of that country. Not respecting the laws of other country amounts to the breach of the principle of international comity and conflict of laws.[5]
  • Without due consideration to the rights to free speech and privacy: The Court failed to understand the technicalities that involved in the operation of global take down orders, the intermediary platforms have to start monitoring each and every content that is being uploaded in order to stop the dissemination globally. This will further impose the risk of private censorship on the Internet and affect the right to free speech and privacy of users. The constant and close monitoring has been held as not warranted by law as per various precedents of Indian courts.[6]
  • Shifting away from the law established by the Manila Principles on Intermediary Liability and Shreya Singhal case: The Court has allowed plaintiffs to directly approach the intermediary platforms in case of re-uploading of the objectionable content in future. This is a great shift away from the existing process under Section 79 of the IT Act, 2000 as established by the Supreme Court’s landmark judgment in the Shreya Singhal case, which requires intermediaries to take down or disable the access to the content only in cases of receiving an order from either the government or the Court to do so. The same is considered global best practice according to the Manila Principles on Intermediary Liability.
  • The question of extraterritorial application of the IT Act in the present case: As per the Section 75 of the IT Act 2000, it is clear that the Act applies extra-territorially to certain offences or contraventions committed outside of India if the same is committed using “a computer, computer system or computer network located in India, the contraventions as contemplated under the Act are provided for in Sections 43, 43A, 66A, 66B, 66 66E and Section 66F.” Defamation is not covered in any of these provisions.[7]

Heavy reliance on the unsettled jurisprudence

The Court has heavily relied on certain foreign judgments while reaching the conclusion in its own judgment. The issue with the same is that the jurisprudence around geo-blocking and global injunctions is unsettled and still developing; with the Delhi HC’s order adding more confusion to the same.

The Court has relied on the case of Google Inc. v. Equustek Solutions Inc., which is the living proof of the unsettled jurisprudence.[8] The Supreme Court of Canada ordered Google to de-index listings from its search results in order to provide protection to trade secrets of a subject from Google globally. While, the Supreme Court of Canada upheld a global injunction against Google, the US Court sided with Google ruling that the Canadian order “threatens free speech on the global internet”.

The Court also relied on the case of Eva Glawischnig-Piesczek v. Facebook Ireland Limitedin which the CJEU ordered Facebook and other platforms to remove questionable content, copies of the same and block the access to the same, globally. While emphasizing on the case, the Delhi HC didn’t consider at all the CJEU decision in the case of Google v. CNIL[9], in which it was held that the Google is not required to de-reference listings from its global service, just because the content has been declared to be illegal by an EU member state.

Comment

It is clear that the Delhi HC left a lot to consider before delivering the judgment such that from the complexities of territorial jurisdiction to the difference in nature of cross-jurisdictional laws. In the present case, the Court mainly failed to understand the varying nature of defamation laws across jurisdictions— such that in the UK, the burden of proof is on the defendants to prove that the content is not defamatory, while in the US, a heavy onus of proof is placed on the plaintiff.

The Court also failed to consider certain very important foreign judgments which have specifically highlighted the issue of difference in the nature of law. In Google v. CNIL, CJEU held that the ‘right to be forgotten’ (which was the main issue in the case) has differences in standards for its application and interpretation around the world. Therefore, it agreed that it is enough for Google to block access to the questionable content from the EU domain only. Further, in Bachchan v. India Abroad Publications Inc.[10], the Supreme Court of New York County refused to enforce a defamation judgment awarded by the High Court of Justice in London, England, ruling that it will be a threat to the free speech protections as offered by the First Amendment to the US Constitution.

Unarguably, internet jurisdictions have always been a challenge for the courts and governments. Courts have always been behind the technology in the race and unable to assert absolute jurisdiction. This makes the internet risks become a proverbial ‘wild west’ with no single comprehensive applicable law. The fact that injunction against an intermediary, on a global scale, doesn’t make it necessarily invalid and aggressive. After all, the limited denial of access in the local domain is not protecting the underlying rights at stake; global takedown seems the right method to ensure effectiveness. But all of this is required to be done while mediating the conflicting interests as well as recognizing the protection to certain forms of speech.

As Gautam Bhatia said in the context of Swami Ramdev v. Juggernaut Books last year, “Indian courts seem to increasingly view freedom of speech as a mere annoyance to be brushed aside when confronted with competing claims”. If global take-down orders will become mainstream, the regressive laws on freedom of speech and expression online will become a norm. The Courts and governments, in order to win this ‘hare and tortoise race’, shall not ignore the countervailing arguments in relation to freedom of speech and right to privacy. These rights shall not be considered under-weighed against the values like national integrity, security interests, etc., rather an effort shall be made to strike the balance between both the sides.

The judgment is under challenge now by Facebook before a Division Bench, and the matter is listed for final hearing on January 31, 2020. The Court must set a precedent in the unsettled jurisprudence that will consider the free speech and privacy rights in the world of internet at the intersection of technology and laws such as defamation law.

References:

[1] Para. 87, Swami Ramdev v. Facebook [CS (OS) 27/2019 – Delhi HC]

[2] Para. 78, Swami Ramdev v. Facebook [CS (OS) 27/2019 – Delhi HC]

[3] Para. 86, Swami Ramdev v. Facebook [CS (OS) 27/2019 – Delhi HC]

[4] Apoorva Mandhani, Why Baba Ramdev’s win against Facebook, Google in Delhi HC only adds to judicial confusion, The Print, https://theprint.in/india/governance/judiciary/why-baba-ramdevs-win-against-facebook-google-in-delhi-hc-only-adds-to-judicial-confusion/312403/.

[5] Balu Nair, Delhi HC Gives Expansive Interpretation to Section 79 of IT Act: Issues Global Blocking Order Against Intermediaries, SpicyIP, https://spicyip.com/2019/11/delhi-hc-gives-expansive-interpretation-to-section-79-of-it-act-issues-global-blocking-order.html.

[6] Delhi High Court Approves Take Down of Content Globally, SFLC, https://sflc.in/del-hc-orders-global-take-down-content.

[7] Para 16, Swami Ramdev v. Facebook [CS (OS) 27/2019 – Delhi HC]

[8] Google Inc. v. Equustek Solutions Inc., Cambridge Core, https://www.cambridge.org/core/journals/american-journal-of-international-law/article/google-inc-v-equustek-solutions-inc/E667668ED944EBE52233E17320478448/core-reader.

[9] Google v. CNIL, CJEU Case C-507/17.

[10] Bachchan v. India Abroad Publications Inc., 154 Misc 2d. 228, 585 N.Y.S.2d 661.

Para 5.2.15.2 of the Consolidated FDI Policy (e-commerce activities): A Work in Progress

Introduction

The Department of Industrial Policy and Promotion (DIPP) of the Ministry of Commerce and Industry, Govt. of India has recently issued a Press Note No. 2 (2018) (“P.N.2”) on 26 December 2018 providing clarificatory amendments to the para. 5.2.15.2 (related to e-commerce sector) of the Consolidated Foreign Direct Policy (“FDI”) of 2017. Para. 5.2.15.2 incorporates the substance of the Press Note 3 (2016) dated 29 March 2016 under which DIPP allowed the Foreign Direct Investment (FDI) up to 100% in entities enagaged in e-commerce activities under the marketplace model of e-commerce, subject to certain conditions. The same note has expressly prohibited the FDI in entities undertaking the activities of inventory-based model.

However, the e-commerce giants in India are constantly engaging in the inventory-based model to the extent that they are now making huge investments in expansion of it. Considering such developments, the DIPP realised that the wordings and intentions of Press Note 3 lacked in stringency that is needed to achieve the intended goal. Therefore, through the Press Note 2 of 2018, that will be in effect from 1st February 2019, the DIPP is bringing in certain significant clarifications and modifications regarding the provisions that govern functioning and availing of FDI benefits by the e-commerce entities. The DIPP has issued these changes with an aim to ensure level playing field for e-commerce entities as well as the brick and mortar retailers.

 

Significant Developments:

The P.N.2 mainly reflects the clarifications related to following four significant points:

  1. Ownership and Control of the e-commerce entity over the inventory;
  2. Equity participation in seller or vendor entities;
  3. Fair and non-discriminatory business dealings by the e-commerce entities on the platform;
  4. Exclusivity Sale Arrangements.

DIPP in the note has explicitly clarified that the P.N.2 intends to ensure the comprehensive implementation of the policy in letter and spirit.

 

Control of the e-commerce entity over the inventory

Setting forth the clear definitions of the Marketplace-based model and Inventory-based model of the e-commerce, the P.N.2 introduces the test of ‘ownership’ or ‘control’ over the inventory of sellers. This test determines the distinction between a marketplace-based model and inventory-based model.  As given in the note, a marketplace-based model provides an Information Technology platform by the e-commerce entity on a digital and electronic network to act as a facilitator between buyer and seller. Whereas the inventory-based model provides the inventory of goods and services owned by the e-commerce entity and is sold to the consumers directly.

In the present scenario, entities providing an online marketplace platform to various sellers for selling their products online are prohibited from:

  1. Holding the actual ownership over the inventory;
  2. Permitting total sales value from one seller or such seller’s group companies to exceed the 25% of such marketplace’s sales value in a financial year.

The previous clarifications of DIPP provides that the ‘group companies’ include two or more companies that are owned and/or controlled by a common parent company (either directly or indirectly). Further, ‘group companies’ also includes two or more enterprises which have power to directly or indirectly: (a) exercise 26% or more of voting rights in other enterprise, or (b) appoint more than 50% of the strength of Board of Directors in the other enterprise.

Pursuant to P.N.2, inventory of a seller or vendor will be deemed to be in ‘control’ of an e-commerce entity if more than 25% of purchase of such seller or vendor is from the e-commerce entity or its group companies. Therefore, such an ‘ownership’ or ‘control’ will render the e-commerce marketplace-based entity into inventory-based entity.

Therefore, ‘ownership’ has been clearly demarcated now under the changed para 5.2.15.2. This will impact on the e-commerce entities that sell goods or sell goods through a group of companies to sellers such that the sellers then put that goods on the entity’s online platform for sale to retail customers. It will further also impact the vendors of inventory that have no contribution from any foreign element as they have to seek multiple sources for acquiring their inventory. This will put an additional capital burden on such sellers.

 

Equity participation of the e-commerce entity in seller’s entity

The P.N.2 has brought in a new restriction under which sellers are not permitted to sell their goods on a platform run by an e-commerce entity, if such entity or its group companies have equity participation in the seller or have control over their entity. This brings in effect a prohibition that any entity related directly or indirectly to the e-commerce entity will be prohibited from selling on a platform. However, there is a further clarification needed from DIPP on this point as it is unclear about including direct participation only or including both i.e. direct and indirect participation.

DIPP on January 03, 2019 provided a ‘Response to comments reported in the media on Press Note 2 (2018), wherein DIPP stated that various concerns have been raised that Press Note prohibits sale of private label products through marketplace. However, it was clarified that the Press Note does not impose any restriction on the nature of products which can be sold on the marketplace. There is no further clarification have been made on this stand by the DIPP which is in contradiction to what can be inferred from the P.N.2, but it is the final law. This means that no equity participation in suppliers selling on the platform but no ban on private label sales.

 

Fair and non-discriminatory business dealings

In order to maintain level playing field, it is stated in the present FDI policy that the marketplace-based entity will not directly and indirectly influence in determining the sale prices of goods or services that are provided by the sellers on their platforms. The P.N.2 has taken a step forward by introducing various restrictions in the business dealings.

It has specifically provided that services should be offered by an e-commerce marketplace entity to vendors on an online platform at an arm’s length and in a fair and non-discriminatory way. Such services will include logistics, warehousing, fulfilment etc. and should be provided in similar terms as provided to other vendors in similar circumstances. Another restriction, that has been introduced to ensure to bring local retailers at par with their e-commerce counterparts, is on the cashback facility provided to buyers. By disallowing irrational discount and cashback schemes for providing undue benefit to a section of vendors, DIPP is aiming for promotion of fair competitive practices.

However, with the kind of wordings used in this part of P.N.2, DIPP has continued the legacy of confusing notifications on account of certain vagueness. The P.N.2 is not at all clear about what ‘similar circumstances’ mean for determining the fair and non-discriminatory terms of services provided to various sellers. Further, as there is no restriction on various sellers who may want to independently provide huge cashbacks through these platforms, it will be practically difficult to ensure the fair and non-discriminatory nature of offers and discounts.

 

No exclusivity in sale arrangements

Through the P.N.2, the DIPP has clarified that all the marketplace entities are prohibited from mandating the sellers to sell their products exclusively on their platform only. However, the wordings of the provision related to this doesn’t provide anything related to the situation in which a vendor voluntarily wants to sell exclusively on one platform. Further there is absence of any clarification from the DIPP, that the restriction is only on positive exclusive sale arrangements or the arrangement between entity and seller is also included in it.

 

Some other significant changes

Compliance Certificate

The P.N.2 provides the stipulation that the e-commerce marketplace entities have to get a certificate with a statutory auditor’s report. This is to be submitted to Reserve Bank of India by September 30 of every year for preceding financial year, indicating the fulfilment of the compliances of all the guides as introduced by the P.N.2.

Removal of the aforementioned 25% restriction cap on total sales value

The aforementioned condition has been omitted.

 

Conclusion

The introduction of amendments to the FDI policy related to e-commerce activities would have impacted on e-commerce giants highly if the sale of the products under private label has been restricted. The DIPP’s response to media reports has provided a huge relief to e-commerce entities like Amazon and Flipkart which are bullish on growth of their private label brands and investing heavily for its expansion. The P.N.2 has brought in various restrictions on the marketplace entities with an intent to ensure the fair and non-discriminating business dealing such as to make a level playing field for e-commerce entities and local retailers. However, most of the f introduced changes still need additional clarifications relevant to their applicability and scope.

To read the Press Note 2, Click Here

To read the Press Note 3, Click Here

Image Credits: http://www.trak.in

(This is the first blog of the series of two blogs discussing the impact of DIPP’s Press Note 2 on regular special Offer, Discount and Cashback schemes given by various e-commerce entities. This blog has explained all the law behind the press note 2. In the next blog, we will understand the impact of this law on the market by talking in terms of the practical instances. Keep checking for the next blog, it will be interesting)