The Technology Disputes Law Review: India

Technology disputes in India typically fall within the ambit of contractual disputes, unless they relate to the enforcement of statutory or common law rights. With the global shift of business into cyberspace, disputes and jurisprudence in respect of public policy and privacy have changed over the years.

Like any other commercial arrangement, technology disputes are determined according to terms and conditions stipulated in contracts coupled with interpretations of relevant statutes. Technical expertise may be warranted in deciphering certain terms and obligations that flow from the contract.

The second broad category pertains to intellectual property disputes that specifically relate to patents and trademarks, and copyright involved in databases, cyberspace and software. While specific legislation governs copyright and patents, the courts have often referred to the same as statutory torts. Wherever there exists a white space, courts fall back on and import common law principles with such deviations as may be necessary to compensate for inadequacies.

With the incremental shift towards and reliance on the internet, data privacy concerns have been looming. India recently sought to codify a law that weighed in on the right to privacy alongside public policy considerations. Although the specific legislation is yet to be brought into force, there is much discussion surrounding the recently introduced Rules on Intermediary Liability. These rules have been subject to considerable backlash with several intermediaries challenging how the provisions cast liability and the onerous burden of compliances.

i Domain names

Any unique name capable of identifying and distinguishing the goods or services of a company from that of other companies while acting like a source identifier for goods and services on the internet may be registered and protected as a trademark provided that it satisfies requirements stipulated in the statute.

Courts have recognised that, with an increase in commercial activity on the internet, domain names are used as identifiers by companies. Domain names are increasingly becoming more valuable, leading to a high potential for disputes.² In several cases, courts have injuncted diversion of traffic to a website through typing errors.³ The jurisprudence is that spelling or typing errors result in the user being confused and deceived into believing that both domain names belong to one common source, although no connection exists. Courts have also readily applied passing off in respect of well-known marks⁴ and protected the domain names.

ii Copyright protection and cyberspace

Rapid advancement in technology has also impacted the functioning of copyright laws, and led to expanding their scope and subject matter. For owners of copyrights, although technology has facilitated the highest quality of digital copies and increased ability to distribute work, it has also jeopardised owners’ abilities to enforce rights in cyberspace.

Copyright enforcement in cyberspace is hampered by the usage of tools such as downloading, uploading, copy-cut-paste, deep-linking and peer-to-peer file sharing. The fundamental principles of copyright laws are constantly challenged in the digital context. Infringement of copyrights through the internet is one of them, as it is extremely difficult for the copyright owners to identify and bring actions against individuals involved in the infringement of copyrighted works.

Copyright Act 1957

The 2012 amendment to the Copyright Act 1957 was a step towards copyright protection in the digitised sphere.

The amended act acknowledges a ‘computer-generated work’⁵ and recognises that the person (or persons) who cause such a work to be generated as the author⁶ of the work. The term ‘broadcast’ is defined as a communication to the public by any means, including a re-broadcast.⁷ The act defines ‘communication to the public’ as making ‘any work or performance available for being seen or heard or otherwise enjoyed by the public directly or by any means of display’.⁸

Copyright protection is accorded to computer⁹ programs¹⁰ and databases as literary works. The reproduction of literary, dramatic, musical or artistic works other than in the form of cinematographic film is considered an infringement. The rights of the copyright holder with respect to computer programs have specifically been enumerated.

Temporary copying, also known as ‘caching’, is an important part of internet transmission. Under Indian law, reproduction must be in a physical form, but also includes storing in any medium by electronic means,¹¹ which makes caching a copyright violation.

Further, the Copyright Act protects ‘databases’ as literary works. In addition, the Information Technology Act, 2000 defines the phrase ‘computer database’. Any person violating copyright can be fined under the Information Technology Act 2000. This legislation criminalizes a wide range of offences, including computer trespass, digital copying, invasion of privacy and data theft.

When it comes to enforcing liability, it is critical to determine who is responsible: the party that gets the work, the internet service provider (ISP) or the person who transmits the work. There is no responsibility under Section 79¹² of the Information Technology Act 2000 if the subscriber establishes that the breach or crime was committed without the knowledge of a person or that a person had exercised all reasonable diligence to prevent the commission of such a breach or offence.

iii Data privacy

Information Technology Act 2000

The Information Technology Act 2000 penalises ‘cyber contraventions’,¹³ which attract civil prosecution, and ‘cyber offences’,¹⁴ which attract criminal action. The act, as originally passed, had no express provisions regarding data security. Accordingly, amendments were introduced that, among other things, incorporated Section 43A¹⁵ and Section 72A¹⁶ to provide remedies to persons who have suffered or are likely to suffer a loss on account of their data not having been adequately protected.

Rules

Under the Information Technology Act 2000, the government routinely issues Information Technology Rules to broaden its scope. Some key Information Technology Rules formulated under the parent statute are:

1. the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, which require entities that hold users’ sensitive personal information to maintain specified security standards;
2. the Information Technology (Guidelines for Cyber Cafe) Rules, which require cybercafes to register with an agency as well as maintain a log of users and their internet usage; and
3. the Information Technology (Electronic Service Delivery) Rules, which allow the government to specify that certain services – such as applications, certificates and licences – be delivered electronically.

In addition, the Personal Data Protection Bill 2019, which sought to codify the law relating to privacy, data management and protection, has since been withdrawn. It is expected that the Indian government will introduce a more comprehensive legal framework on the digital ecosystem in the near future. With an ever-growing internet user base, the codification of a comprehensive regime is, in fact, the need of the hour.

i Dynamic injunctions

While dealing with cases of digital piracy, Indian courts have adopted website-blocking injunctions to protect the rights of content creators. Dynamic injunctions specifically help in cases where an infringing website may reappear as a redirecting, mirror or alphanumeric website. A dynamic injunction requires the owner to notify the ISPs of additional domain names or URLs that provide access to the websites, which were the subject matter of the main injunction.

The procedure being adopted by courts in India is to permit the plaintiff to file a subsequent application, (i.e., after obtaining an interim order bringing on record additional URLs or mirror sites, among others).¹⁷ High courts have been permitting extension orders to be passed by the subordinate courts on receipt of such applications.

ii Intermediary guidelines

The Ministry of Electronics and Information Technology released the Information Technology (Guidelines for Intermediaries and Digital Media Ethics Code) Rules 2021. These rules replaced the Information Technology (Intermediaries Guidelines) Rules 2011.

These rules, among other things, distinguish between social media intermediaries¹⁸ and significant social media intermediaries¹⁹ based on the number of users, and place a much heavier burden on significant social media intermediaries for personal data protection. For instance, all social media intermediaries are now required to have a grievance redressal mechanism for users, conduct due diligence if they wish to seek refuge under safe harbour provisions and ensure the safety of users online.

Significant social media intermediaries, on the other hand, must institute additional due diligence mechanisms. These include the appointment of a chief compliance officer, who must be a resident of India and is responsible for ensuring compliance with laws, and a nodal contact person, who must also be a resident and available for coordination with law enforcement agencies. Significant social media intermediaries are also required to publish a monthly compliance report, which should include details of any complaints received and actions taken to address such complaints.

Several other restrictions and obligations include informing users periodically of privacy policy guidelines; the collection, retention and preservation of information; the technical configuration of computer resources; and the reporting of cyber security incidents, among other things.

iii Anti-enforcement injunction order

In the case of Interdigital Technology Corporation & Ors v. Xiaomi Corporation & Ors,²⁰ the High Court of Delhi restrained Xiaomi from pursuing or enforcing the anti-suit injunction passed by the Wuhan Intermediate People’s Court, which directed Interdigital to withdraw or suspend the patent infringement proceedings in the Delhi suit.

After examining the contentions of the parties in the two proceedings, the High Court of Delhi observed that the Delhi suit primarily dealt with patent infringement while the Wuhan case related to setting off the global royalty rate of Interdigital’s global patent portfolio. Thus, the issues involved in the two proceedings were considered different. In fact, the relief sought by Interdigital in the Delhi suit did not even form part of the Wuhan case and the mere possibility of conflicting orders between two courts was not sufficient to impinge over the lawful jurisdiction of another court in a sovereign country.

Development and enforcement of such orders by courts in India assumes importance as, often, the use of patents and copyrighted work may transcend boundaries. Typically, commercial contracts relating to rights and obligations may not be jurisdiction specific. Thus, a ruling on the lawful exercise of jurisdiction by Indian courts may be perceived as a stepping stone for curbing the practice of forum shopping in technology and cyberspace-related cases.

iv Patentability of computer software

The bar on patenting under the statutory regime is in respect of ‘computer programs’ per se²¹ and not all inventions based on computer programs. In today’s digital world, when most inventions are based on computer programs, it would be retrograde to argue that such inventions are not patentable. It is rare to see a product not based on a computer program. Thus, the effect and extant of such programs in digital and electronic products would be crucial in determining the patentability test. Patent applications in these fields would have to be examined to see if they result in a ‘technical contribution’.²²

There has also been rapid growth, advancement and innovation in the field of artificial intelligence (AI), blockchain technologies and other digital products. It would not be sensible to simply rule out these things as non-patentable inventions simply because they are based on computer programs. Such an interpretation may act as a roadblock in affording protection to owners and would open floodgates of litigation.

v AI as co-author of artwork

The copyright office in India has recognised and accorded recognition to AI-created work – a painting titled Suryast. This stands in stark contrast to the copyright office’s refusal to register an application wherein AI was named as the sole author.

This inclusion has paved the way for AI and its role in artistic work that can be subject to copyright. That said, the key issue to be addressed is the interpretation of the definition of ‘author’.

vi Right to be forgotten

Courts have been approached repeatedly for an assertion of the right to be forgotten. The premise of this assertion is that the image of the person concerned has been tarnished and the fact that the petitioner has suffered loss. While the courts have not accepted the generalised right to be forgotten, they have, in specific instances, granted interim relief.²³ Taking an opposite view, the Madras High Court held that the right to be forgotten must be construed in light of access to open justice.²⁴ In this case, the petitioner was an accused in a case and had been granted acquittal subsequently. The court opined that a redaction of judgment would not fall under the exception of open justice as several other pieces of material in respect of the petitioner were available in the public domain.

i Types of relief for infringement

Patent

Patent infringement in technology disputes may arise where the technology is considered a patentable invention. Although the Patents Act 1970 is silent on what qualifies as an infringement, it vests exclusive rights upon the patentee, violation of which would constitute infringement. The Patents Act 1970 also provides the types of relief that a court may grant in any suit for infringement, including an injunction as well as either damages or an account of profits. Additionally, the court may order infringing goods to be seized, forfeited or destroyed.

Copyright

What amounts to infringement has been provided for under Section 51 of the Copyright Act 1957. Infringement is said to occur when any person, without a licence granted by the owner of the copyright or in contravention of the conditions of a licence:

1. does anything that the exclusive owner has the right to do;
2. makes the copyrighted object available for sale or hire;
3. distributes the copyrighted object either for the purpose of trade or to such an extent as to affect prejudicially the owner of the copyright; or
4. by way of trade exhibits the copyrighted object in public or imports it.

Both civil and criminal remedies are provided for under the Copyright Act 1957.

ii Anton Piller orders

A party in a civil suit may move the court for an Anton Piller order if it seeks detention, preservation or inspection of any premises that are the subject matter of the suit. When allowing an application of this nature, the court may authorise a person designated by the court to enter the premises and take samples, and search and seize the infringing material necessary for obtaining full information or evidence.

Commissioners may also be appointed for a scientific investigation or for conducting local investigations that the court may find necessary. A court commissioner is given wide powers while conducting an investigation and is ‘an extended arm and agent of the Court’.²⁵

iii Damages and compensation

In suits for infringement, a plaintiff is entitled to seek damages or an account of profits. For copyright infringement specifically, the claimant may be entitled to damages, accounts and even conversion damages. A recent trend of awarding damages has been observed particularly in cases of software piracy. Principles for grant of damages have evolved with time, and the courts are inclined to grant both compensatory and punitive damages.

iv Interim injunctions and permanent injunctions

Interim injunctions (or temporary injunctions) are sought in every suit for a permanent injunction (of infringement, or matters seeking to restrain use or display in any form) to protect the rights and interest of the party during litigation.

Interim injunctions are granted in cases where there is prima facie proof of infringement and the balance of convenience is found to be in favour of the plaintiff owing to irreparable injury that is likely to follow if an interim injunction is not granted.

A permanent injunction follows, after conclusion of trial on appreciation and examination of the evidence, if the court is satisfied as to ownership, unauthorised use, infringement, or such other action or omission that is complained of.

v Invocation of writ court

Often, intermediaries and other body corporates approach the court seeking intervention and quashing of action taken pursuant to the Information Technology Act 2000 and the rules framed thereunder, including the Information Technology (Guidelines for Intermediaries and Digital Media Ethics Code) Rules 2021. Arguments canvassed by such body corporates pertain to freedom to do business as well as the right to privacy, both of which are recognised as fundamental rights.

Specific rules may also be challenged as being ultra vires while invoking the writ jurisdiction of the court. There is no embargo for invocation of writ court, even for seeking the quashing of a notice issued under the criminal statute, information on a user, origin of a message or the blocking of accounts, among other things. Writ jurisdiction is only vested with the high courts and the Supreme Court.

vi Criminal proceedings and offence

Criminal action and cognisance can only be taken in relation to offences as provided for in law. For instance, the Copyright Act 1957 provides for certain actions that are classified as offences. Further, notices may also be issued under the Information Technology Act 2000 and the rules framed thereunder for such matters that are described therein, including but not limited to search, seizure and takedown notices.

i Courts

At present, there are no specialised courts or tribunals that deal with matters pertaining to technology. The Indian judiciary is essentially three-tiered, with district courts at the base level hearing cases in the first instance, followed by the high court of each state and the Supreme Court at the apex. The Supreme Court is the court of final appeal. High courts are the highest judicial bodies in a state, and have superintendence over all courts and tribunals within their territorial jurisdiction, including the district courts.

District courts generally have an unlimited pecuniary jurisdiction on the civil side, save and except for certain jurisdictions such as Delhi, Mumbai, Kolkata, Madras and Shimla. These high courts also have first instance jurisdiction.

Choice of court is determined by territorial jurisdiction and pecuniary limits. The court that is vested with both would be competent to deal with the issue at hand.

ii Protection of trade secrets

The filing of confidential information with leave of the court in a sealed cover is often the norm in suits relating to technology. This practice is usually adopted given that case files are public records.

To maintain confidentiality, the courts are also testing the water with so-called confidentiality clubs. An agreement is signed between parties to the proceedings that helps with the restrictive dissemination of confidential information and documents to certain authorised persons. Documents can be seen only by authorised people who are allowed to have access to the documents and information, either by order of the court or through the agreement itself.

This is a fairly new concept to Indian jurisprudence, which has not fully evolved, and the intricacies involved in setting up the clubs are still moot. Not many courts have come up with codified rules and procedures for establishing and regulating these clubs.

The Indian Evidence Act 1872 is the central piece of legislation that deals with the manner of presentation of oral and documentary evidence in an action, whether civil or criminal. Specialised statutes may govern other ancillary issues in relation to the nature, authority or validity of documents, or their certification, among other things.

i Discovery

The Civil Procedure Code 1908 provides for discovery (i.e., a pretrial procedure wherein each party is given an opportunity to obtain evidence from the opposite party or parties). It is a formal process wherein the parties have the chance to exchange information regarding witnesses and evidence that will be presented during trial. The main purpose of discovery is to make parties aware of the case and to prevent any ambiguity in claims or issues of fact. It also ensures that the opposite party is not caught off guard.

There are various types of discovery:

1. interrogatories;
2. requests for production of documents and inspection;
3. requests for admissions;
4. depositions;
5. subpoenas duces tecum; and
6. physical and mental examinations.

Every civil suit consists of two types of fact. First, facts that constitute a party’s case (factaprobanda) and, second, facts by which the said case is to be proved (factaprobantia). The first type of fact reveals the nature of the party’s case and the latter constructs the evidence of the case. The party is only entitled to know the first type of facts and not the latter. The scheme of the provision is such that it compels the opposite party to produce documents being relied upon other than the evidence.

ii Interrogatories

Interrogatories are sets of questions in writing that a party initiates on the other party with the leave of the court. Interrogatories are answered by an affidavit within a time period prescribed in law or in such a time as fixed by the court. After the order is passed by the court to answer interrogatories, if the party fails to comply, the suit can be dismissed or a defence can be struck off.²⁶

iii Cross-examination

The party in whose favour a witness gave the testimony may be re-examined by the opposing party (cross-examination).

Interrogatories take place before the trial begins, while cross-examination forms parts of the trial. Parties can get confidential information during cross-examination, which is not permissible through interrogatories.

iv Recordal of evidence

Oral evidence is given on the issues framed by the court that are to be adjudicated in the proceedings. Apart from formulating issues, the court also fixes the onus or burden of proof for each issue, which assists parties in preparing for trial.

Evidence led by parties, depending on the forum, may be recorded by:

1. the presiding judge in district courts;
2. junior or subordinate courts in the high courts; or
3. judicial officers or other competent persons appointed by an order of the court.

Specifically in the case of patent infringement or other proceedings relating to patents, Indian law provides for the appointment of an independent scientific adviser to enquire and report on the question of fact.²⁷

v Expert witnesses

Expert evidence is provided for and accorded due recognition under centralised procedural statutes. Expert evidence is required in matters that are outside the knowledge of a layperson and involve scientific questions, which are presumed to be not within the court’s knowledge. While there are no specific guidelines or procedures under Indian law, the courts have developed guidelines by virtue of precedents on the manner in which expert testimony should be dealt with.

An order of temporary or interlocutory injunction may be passed at any stage prior to the culmination of proceedings into a final order or decree. If the court has granted interim relief to a party that is disobeyed or breached, the affected party may approach the court seeking enforcement. The plaintiff or assertor can invoke powers of the court under Order 39, Rule 2A of the Code of Civil Procedure 1908, which provides for the consequences of disobedience and breach. The courts are vested with far-reaching powers to make good a wrong suffered by a party owing to wilful disobedience of order in the form of civil prison or attachment of assets, or both.

For breach or disobedience of any other order passed by the court during litigation, a request can be made to the court to take action under the Contempt of Courts Act 1971. For redressal of wrong done, the court exercises wide powers of imprisonment or impositions of fines.

Similar relief as that granted for the enforcement of an interim order is available for an order of a permanent injunction. A party seeking to enforce the decree of permanent injunction must apply under Order 21 seeking enforcement of the court order.

With regard to an order of damages (quantified in the court order), if not ordinarily remitted to the plaintiff in the time period stipulated or otherwise, the court is vested with wide powers of execution. The executing court can direct attachment of assets or sale, among other things, for the realisation of the amount due and payable under the order. Other specific orders such as delivery-up and inspection are executed by court-appointed receivers and commissioners in compliance with the directions contained in the order.

Orders and actions on complaints and other criminal proceedings – including but not limited to seizure and arrest – are carried out by local or other investigative authorities.

The technology industry has grown in leaps and bounds over the past decade and has given birth to newer contractual obligations, which have resulted in disputes. Most such agreements are centred on the confidentiality, sharing, exchange, storage and management of information, licensing, and payment and collection of royalties. While the obligations and the performance thereof would be well crystallised under the covenants of the agreement, a certain element of technicality and specialised knowledge go hand in hand. A recent trend that has emerged in the dispute resolution landscape is an incremental reliance of parties that have entered into a commercial transaction on alternate dispute resolution (ADR) mechanisms.

As previously mentioned, India does not have a specialised tribunal, court or establishment to tackle such hyper-technical disputes. There is bound to be an intersection with science and technology, and thus there is a need for special adjudicating officers who can comprehend the interdisciplinary nature of the dispute at hand. This is where ADR plays a key role and bridges the gap.

i Arbitration

The issue of arbitrability of claims is typically tested on the premise of whether the dispute relates to rights in rem or rights in personam.²⁸ It has been propounded that there is a line of distinction in relation to disputes arising out of contracts that also intertwine with rights pertaining to intellectual property. In commercial disputes where the parties have decided to refer the dispute to a private forum, such actions are in personam, with one party seeking specific relief against a defined party and not against the world at large.²⁹

The Supreme Court has recently clarified the position with respect to arbitrability of disputes and has carved out a four-fold test for determining when the subject matter of dispute in an arbitration agreement is not arbitrable. This is the case when the cause of action and subject matter of the dispute:

1. relate to actions in rem that do not pertain to subordinate rights in personam that arise from rights in rem;
2. affect third-party rights, require centralised adjudication and mutual adjudication would not be appropriate or enforceable;
3. relate to inalienable sovereign and public interest functions of the state and, hence, mutual adjudication would be unenforceable; and
4. are expressly or by necessary implication non-arbitrable under mandatory statutes.³⁰

These tests are not watertight, but they dovetail and overlap. When applied holistically and pragmatically, the tests will help in determining and ascertaining when a dispute or subject matter is not arbitrable under Indian law.

Interestingly, applying the above four-fold test on the subject matter of dispute, the High Court of Delhi held a dispute to be arbitrable in a case that involved overlapping issues in respect of exclusive rights and validity of registration in respect of intellectual property. It held that the dispute was not one of deceptive similarity or infringement, but rather focused on the right to use, which arises under an agreement between the parties.³¹

ii Pre-institution mediation

Disputes that may arise under and from a contract covering technology would likely fall under the ambit of a commercial dispute under the Commercial Courts Act 2015.³² The Commercial Courts Act 2015 was amended in 2018 to introduce the concept of a pre-institution mediation under Section 12A. This section mandates that parties must exhaust the remedy of mediation prior to initiating a civil action, with the exception of cases where urgent relief is sought.

The amendment also resulted in the promulgation of the Commercial Courts (Pre-Institution Mediation and Settlement Rules) 2018, which bring clarity on procedure and timelines. The plaintiff is required to file an application with the relevant authority to initiate mediation.³³ On receipt of the application, the authority will issue notice to the opposing party to appear and give consent to participate in mediation proceedings. A final notice is issued in the event that there is no response. If the opposing party fails to appear following the final notice or refuses to participate in the mediation proceedings, the authority will treat the mediation process as a non-starter and prepare a report to that effect. If the opposing party agrees to participate, the mediation process begins. Pre-institution mediation pertaining to commercial suits must be completed within a period of three months of the date of application made by the plaintiff, with a possible extension of two months with the consent of the parties.

The only drawback in this procedure is the option to refuse to participate given to the opposite party. Further, the courts have interpreted the exception to Section 12A (cases where urgent relief is sought) to mean that, if an application for interim relief is filed, it is deemed that leave is granted to not go through the pre-institution mediation process.³⁴ That said, the tool of pre-institution mediation could go a long way towards settling disputes at the first instance instead of going through the long, drawn-out process of a trial.

iii Early neutral evaluation

This process is mostly deployed in litigation that pertains to intellectual property. However, the process assumes importance in resolution of disputes that have an interplay of science and technology.

Early neutral evaluation (ENE) has the same features as a mediation process.³⁵ The difference is that, in mediation, the solution normally emerges from the parties and the mediator endeavours to find the most suited and acceptable solution, whereas in ENE, the evaluator acts as a neutral person to assess the strengths and weaknesses of the parties. The process of ENE is confidential and cannot be used by one party against the other. It can be a cost-effective tool, especially in disputes that pertain to, among other things, licensing, patentability, copyright of software and biotechnology.

India’s information technology industry and its digitally skilled pool have grown exponentially over the years. The rapid development of technology has led to several legal and regulatory complexities. India is likely to see further developments in the trends discussed above. The courts and agencies have recently witnessed increased litigation on novel issues owing to technological developments in cryptocurrency, data privacy and protection, and AI, among other things. There is a likelihood of increased litigation and contractual disputes in these areas.

ADR mechanisms, such as mediation and arbitration, whether institutional or ad hoc are likely to play a key role in the settlement of such disputes. These mechanisms also save judicial resources and reduce dependency on courts, which are reasons for the government’s increased focus on developing institutions and passing legislation to ease the process.