Thanks to PRS Legislative the Copyright Act Amendment Bill, 2010 is finally online. While glancing through the bill I noticed four provisions which can have direct impact on electronic commerce. The first two are exceptions from Copyright Liability where provisions have been inserted to further shield intermediaries. Here, Sec. 52(1)(b) contains a standard exception from liability in cases of transient and incidental storage of a work. Sec. 52(1)(c)  which will apply to online service providers is more intresting contemplates a notice a takedown provision. The section has the requirment of a court order within 14 days of the orignal complaint from the rights owner to maintain the continued prevention of the delivery of the alleged infringing content.

In the continuing tradition of balance in the copyright universe the next two provisions create liability. However, I get a sense they go a bit further. These two provisions relate to protection of “technological measures” and “rights management information”. For the violation of both these provisions, the sanctions are criminal. With the insertion of Sec.65(b), the circumvention of any technological measure to protect rights under the copyright act will be an offence carrying a penalty of imprisonment for 2 years. There are important limitations to this section as firstly the circumvention should be with an intention of infringment of the statutory rights and secondly the section will only apply for infringment of statutory rights and not contractual rights. Hence with the second limitation will be inapplicable with respect to the extended rights which are usually contained in software licenses.

The second section which is inserted is more problematic in my opinion as Sec. 65(b) which reads as protection of rights management information. Alongwith the section defintiion clause 2(xa) is also bieng inserted, which defines “rights management information”, as “(I) title of the work; (2) name of the author; (3) the name and the address of the owner of the rights; (4) terms and conditions regarding the use of the rights”.  Here any person removing or altering the rights management information will be liable for the 2 year imprisonment. Hence, the section seeks to extend the rights of idenitification and ownership while providing for penalties in itself. There are no exceptions under this section and it applies absolutely. In my view this section will generate considerable litigation.

For those who are intrested in reading the bill, click here.

One of the decisions I came across while recently authoring a paper on privacy law was the Delhi High Court decision in the case of Petronet LNG v. Indian Petro Group and Anr. (CS (OS) No. 1102/2006). What I found interesting were the categorical findings in the decision on the rights of privacy, a branch of law which often causes courts to unnecessarily digress and employ foreign precedent. The Plaintiff (LNG Petronet), a company setting up LNG terminals in the country approached the Court asking it to restrain the Defendant from publishing information relating to the plaintiff’s commercial developments on the defendants website at www.indianpetro.com. The Plaintiff alleged that these news reports published by the Defendants were interfering in its contract negotiations with third parties as well as limiting the Plaintiffs ability to negotiate as to the rates for LNG supply.

The legal grounds utilized to press for the relief was on  the grounds of, (a) breaches to the right of privacy; (b) publication of the information related to confidential negotiations and contractual clauses; (c) the publication violated the SEBI regulation on price sensitive information. The court rejected all the three contentions, playing on “public interest” served in the disclosure of the information as opposed to a “gag order” placed on a journalistic entity, especially when the information related to a company which was partly owned by the government as well as provided public utility services.

Privacy

The court dealt with the arguments advanced on the grounds by the Plaintiff on the issue of privacy through a study of legal precedent. The argument was defeated by the court easily holding that, that the right to privacy arises under Article 21 and can as a constitutional limitation be placed only on public authorities. The court categorically holds that:

38. In view of the above discussion, it is held that the present suit, so far as it is founded on a claim for breach of the plaintiff’s right to privacy, as part of Article 21 of the Constitution of India, is not maintainable. Neither is the plaintiff a person, entitled to the right to life and concomitant attributes of that right -which includes the right to privacy- nor is such right, assuming it to be applicable to companies and corporations, available against non-state individuals, or “actors”. This issue is, accordingly answered against the plaintiff

Through my review I have found Indian cases where the tort of privacy has also been utilized by Plaintiffs. It is indeed quite odd that for a case built on the primary contention of violation of privacy, infringement of privacy as an independent tort has not been pleaded. It is true that the majority of cases where the tort of privacy has been pleaded do not offer a categorical pronouncement the issue or become too remote for application. However, the tort of privacy has clearly been recognized in Indian Law and for the Plaintiff not to plead it, is surely a lost opportunity.

Confidentiality of Information

The Plaintiffs assertions of confidentiality of the information properly arise from the confidentiality clauses in the agreements and the negotiations the Plaintiff entered into. The problem which is posed by this line of argument is the difficulty of placing third party obligations arising from a contract which can naturally only bind the parties to the contract. The plaintiff, probably realizing, the dangers its argument was fraught with, pleaded confidentiality in the nature of information itself, stating it to be, “extremely sensitive”. The court rejected the argument giving its, reasons as follows:

72. In view of above conclusions, it is held that the plaintiff has been unable to substantiate its claim for confidentiality or that the information in regard to the news items complained against are of such sensitive nature as to warrant prior restraint of their disclosure. On the other hand, the defendants, in the opinion of the Court, have been able to show public interest in news reporting and discussion about the plaintiff’s functioning – in the areas sought not to be intedicted by the kind of injunction sought. Clearly, the grant of injunction would destroy the very essence of press freedom and the right of the general public to be informed about the functioning of an entity in which 50% stake is held by the Central Public Sector Undertakings.

In my opinion an argument which could have been adopted premised on the tort of tortuous interference. The ingredients of tortuous interference could have are clearly satisfied in the instant case. Moreover, the Plaintiff, is seeking a claim which falls in the pith and substance of tortuous interference. Again, though tortuous interference has been pleaded in Indian Courts, there is an absence of a categorical pronouncement in this regard. Moreover, tortuous interference as a concept has been pleaded in employment contracts. However, again, I find no reason not to plead it as a ground. Technology has recently given a new lease of life as well as revitalized old torts such as, trespass to chattels. In my opinion, tort law depending on the level of judicial acceptance, had the power and persuasiveness to change the ultimate decision in the instant case.

From now I will be contributing at this blog and I hope you all will enjoy my posts and other contributions.

My first post seeks to address few issues related to the newly introduced TRAI regulations regarding Mobile Number Portability (hereinafter referred as MNP). Number portability, is a kind of service which allows a telephone subscriber to retain his/her number despite moving from one access provider to another. The reason behind such a move by the Telecom Regulators is to enhance the freedom of subscribers, and to increase competition amongst access providers, with an objective to further encourage improvement in the quality of services. After a detailed discussion and consultation with the stakeholders, TRAI issued the Telecommunication Mobile Number Portability Regulations, 2009 on 23-9-2009 (available at http://www.trai.gov.in/WriteReadData/trai/upload/Regulations/89/Regulation23sep09.pdf). There are certain new concepts introduced through these regulations.

Mobile Numbers Portability- Regulation 2 (i) defines MNP as “the facility which allows a subscriber to retain his mobile telephone number even  when he moves from one access provider to another irrespective of the mobile technology or from one cellular mobile technology to another of the same access provider.”  Now as per this definition a subscriber will be able to shift from (1) one access provider to another (2) CDMA to GSM or from GSM to CDMA of different access providers (3) one technology to another technology of the same access provider. This service is highly beneficial for the subscribers as it gives ample choice to choose from various access providers. But it is also important to know the process and how this whole system of MNP works.

Porting- The process initiates with the subscribers request for a new connection. The subscriber is suppose to submit a “porting request form” to the recipient operator (access provider who will be providing mobile telecommunication service to the subscriber after porting) with all documents required for a new connection i.e. photo id, address proof, etc. along with a copy of the last bill of the donor operator (to whose network the mobile number belongs at the time the subscriber makes a request for porting). The recipient operator then verifies all the documents and after verification the recipient operator has to inform the subscriber. The subscriber has to send a request to the donor operator to initiate porting process and the donor operator in return will forward an SMS with a unique porting code to the recipient operator. After receiving the porting code the recipient operator has to send all the documents with porting code to the MNP operator within next 24 hours.

The MNP operator’s task is to facilitate porting process between two operators. After receiving all the details from recipient operator including porting code the MNP operator forwards all the documents to the donor operator for clearance. But before forwarding the documents MNP operator has to verify few details i.e. the number has been previously ported in the immediately preceding 90 days (as ninety days is compulsory for a subscriber to stick to one access provider) or if there is any other request for porting the same number is pending. After receiving all the details the donor operator within 24 hours and has to report back to MNP operator after verifying all the details and the porting code.

Thereafter MNP operator has to complete the porting within next 36 hours and is supposed to communicate the date and time of porting to both the operators. The MNP operator at the specified time instructs the donor operator to disconnect the subscriber’s number from its service and report compliance within one hour of such instructions. Thereafter, the MNP operator informs the recipient operator to activate the number on its network within one hour thereof.

Also the subscriber is supposed to pay a porting charge and he is also entitled to cancel his porting request but his porting charge will be non- refundable.

Till this date the MNP regulations remains unopposed as it was drafted after a prolonged and detailed discussion with the concerned stakeholders. Though at a preliminary stage there was little opposition but even that was also addressed by the authorities. Most of the regulations was supposed to be effective from 31^st December, 2009 in respect of Metro and Category ‘A’ licensed service areas; and the 20th March, 2010 in respect of other licensed service areas. Though Number Portability got further delayed due to disagreement between the operators with respect to the prescribed Tariff distribution (details available at Govt puts off mobile number portability by three months http://www.livemint.com/2009/12/31142858/Govt-puts-off-mobile-number-po.html).

But there remains certain issues which both the industry and the policymaker should address.

• There are problems with the institutional framework envisage by the MNP regulations as the MNP operator is left without any recourse if the porting charges are not paid, as the Regulations prohibit suspension of porting facility despite non-payment of porting charges.

• Though the onus of this whole procedure of porting more or less lies with the recipient operator which is beneficial for the subscribers up to a certain extent. But few important subscriber rights are also ignored like the pre-paid subscribers are not entitled to a refund of the balance talk-time and the post-paid subscribers also has to do a lot of time consuming paper work for a refund of any deposits, etc. It would have been much viable if balance talk time could have been transferred with the subscriber’s number to the recipient operator.

• Another major lacuna which this regulation fails to address is the problem associated with repeated incorrect billing and/or overcharging by the access providers. Since the onus lies with the subscriber to prove that all the dues of the donor operator has been paid, then in that case if the  bills are incorrect, the subscriber is left without any remedy while the donor operator could, without justification, prevent the porting. I would like to suggest for a creation of ombudsman or similar kind of mechanism to deal with this problem. As we are all aware that if the subscriber proceeds under Consumer Protection Act how much cumbersome and time consuming the process is. In the meanwhile the subscriber cannot switch over to a new access provider with the same number. Therefore it negates the whole vision of Consumer benefit which these regulations envisage to promote.

Guided by a similar intuition the Supreme Court held that the DoT could not increase tariffs previously agreed between the parties by a license agreement, on the basis of internal circulars. The court held that even though the Government of India had an absolute monopoly with regard to telecommunication services under the Telegraph Act, these circulars did not form part of that law. The provisions of the contract were to be governed on the basis of the terms of the contract itself, since the circulars did not have the force of law to modify the contract. The contract could only be modified by mutual agreement between the parties

The court then went on to hold that since the circulars were internal rules and not within the knowledge of the licensee there could not be any mutual agreement or acquiescence. The court further held that even if the circulars were mentioned in some meetings and casually came to the knowledge of the licensee they would not evidence agreement as to the terms of the contract. The position is succinctly summarized in the following para :

“They [the circulars] may have been published by some publisher but indisputable they are not statutory in nature. They have not been framed under any statute. The telegraph act or the rules framed under do not provide for the issuance of such circulars. The circular letters collected at one place are loosely called rules. They are meant for office use only.”

___

The full text of the decision is available on the following link. I have also prepared a case brief which is available on the following link. The decision has an interesting commentary on the law of unconditional guarantee and is a recommended read!

The findings of the court suggest that technology neutrality has always been part of the deregulatory process. The implications of the findings are that telecommunications companies will not be bound by legacy contracts or provisions and be tied to one particular technology. This will result in a market based adoption of technology, which is most efficient and economical for companies.

Another thing which I find interesting is the reliance which has been placed by the TDSAT on the obiter of the Delhi High Court. When the case was initially filed before the TDSAT, the TDSAT refused to grant stay on the allocation of spectrum, impugning this order the petitioners filed a writ petition before the High Court. The High Court declining to interfere with the order, made certain remarks in the text of its judgment though it cautiously added the caveat that the obiter was restricted to the impugned stay application and was not a finding as to the merits of the case. However, whenever the TDSAT could utilize the obiter of the court to buttress its own findings it has done so and has quoted the obiter to some extent. This shows that the TDSAT though acknowledging that it is not controlled by the obiter still looks to support and guidance from it.

Readers who are interested in more information and background into the Dual Spectrum Allocation Case may refer to a case brief which I have made for the judgment.

The success and popularity of the creative commons license is symptomatic of the growing sentiment of Internet users and authors against the expansionary nature of intellectual property law. The creative commons license allows the authors of creative works to license out of default copyright provisions and allows greater rights to the users of their works. The creative commons license is not the only one kind of license and there exist several such licenses. The different between the creative commons license is its wide implementation due to its user friendliness.

The standard form creative commons license comes in several flavors and allows authors to pick and choose which rights they want to grant the users and which they want to retain. Aiding this process are pictorial representations which help an artist choose the license. Such a pictorial representation is called by the creative commons website a, “human readable contract” (as opposed to a lawyer readable contract??).

The success of the license calls into question the implementation of, “human readable contracts” on an industry wide level (by industry I mean the online services industry). Such a system would help be a great alternative to the process of making an online user of the service scroll through a page of contract terms, which are either incomprehensible or too long to read. In most situations a subscriber sees the long flowing paragraphs as walls between him and the service and wants to get it out of the way. An analysis of the data would reveal that if a website requires a sign up the user just quickly wants to avail the service and will rarely go through the terms.

A consumer society administered system, with a standard form of such terms matched with pictures would go a long way in making substantial assent to the terms presumptively existent. On the sign up besides the “human readable contract”, the service provider can also provide the subscriber with the actual terms of the contract and then avoid any quandary in court. This system will be mutually beneficial to both online service providers as well as subscribers. It will be especially helpful to online services which sell different services on the basis of different contract terms, such as online car insurance companies. Also litigation prone online services, where the validity of the acceptance and the lack of agreement between the parties always comes in to issue.

However, a question does loom as to how much do the service providers want us to know about the terms of a contract, their policies as to targeted advertising as well as the personal data they collect about us. Though if such a system is adopted it would be immensely popular with subscribers. To be popular with lawyers it just would have to change its name to, laymen readable contracts.

Soon there may be statutory augmentation to this in the form of the Innovation Act, 2007. A Draft of the enactment has recently been made available. The draft enactment when seeking to provide measures to support innovation provides for an entire chapter on confidentiality. It recognizes the contractual right of parties to set out terms and conditions in respect of confidentiality. The act also provides for confidentiality arising from non contractual relationships.

The Draft Innovation Act, 2007 goes beyond sounding positive in its title. It recognizes the harm which may be done by the dissemination of confidential information. This recognition comes through by providing for an elaborate provision for preventive or mandatory injunctions restraining the misappropriation of confidential information. Another feature which appears to be striking against disclosure of confidential information is the liability for third party disclosure and consequential damages. The act finally contains a simple good faith safe harbor from penalties.