Tag: competition law

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Laws governing the Telecommunications sector in the United Kingdom

The current legal regime governing the telecommunications sector in the United Kingdom (UK) comprises primarily of two laws:

  1. The Communication Act of 2003[1], and
  2. The Wireless Telegraphy Act of 2006[2]

Before the 2003 Act was enacted, the Director-General of Telecommunication (DGT) was established as the independent regulatory authority under the Telecommunication Act, 1984. However, the 2003 Act replaced the 1984 Act to give effect to the Framework Directive (2002/21/EC)[3], which resulted in the setting up of the Office of Communications (Ofcom) as a new regulator of communications under the 2003 Act. The Digital Economy Act, 2017 prescribes that Ofcom is to be entirely funded through industry fees.

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Ofcom is responsible for the regulation of all electronic communication networks and services and for licensing of broadcasting services as well as promoting fair competition across the industry, in collaboration with the Competition and Markets Authority (CMA), by enforcing the competition laws.

The main idea behind the new regime of the 2003 Act was to reduce the regulatory burden on the communications providers (referred to as providers hereafter)[4]. This approach was implemented employing general conditions and certain special conditions (if applicable), which the providers must comply with. General requirements apply to all providers, while special conditions apply to certain providers in certain situations. It is pertinent to note that there is no need for general authorization or licensing to provide electronic communications networks and services in the UK. Providers are merely required to comply with the General Conditions of Entitlement[5]. The general conditions were recently revised in 2018. Furthermore, Ofcom has the power to set specific requirements relating to universal service, access (network access and service interoperability), privileged operators (public communications providers) and significant market power (SMP- having dominance either alone or collectively with others in relevant markets). [6] Ofcom can impose financial and other penalties on failure to comply with specific conditions[7].

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Concerning radio and mobile communications in the UK, service and network providers must receive a license from Ofcom under the Wireless Telegraphy Act, 2006 (WTA). The permit contains details relating to the specific frequency, use, fees and duration of the license. Ofcom is also empowered under the WTA to prescribe ‘Administered Incentive Pricing’, which allows setting fees above the administrative costs to encourage efficient spectrum use.

After UK’s exit from the EU, certain amendments were required to be made to the existing laws. These changes were incorporated through various Regulations in 2019[8], and now, the UK is no longer necessary to comply with any EU Directive or Regulation of the telecommunications sector.

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[1] Communication Act, 2003.

[2] Wireless Telegraphy Act, 2006.

[3] To give effect to Directive 2002/21/EC, Directive 2002/20/EC, Directive 2002/ 19/EC and Directive 2002/22/EC.

[4] The general authorization regime under the Act does not distinguish between fixed, mobile and satellite networks and services.

[5] OFCOM, Original Notification setting general conditions under section 45 of the Communications Act

2003, Jul. 22, 2003, http://stakeholders.ofcom.org.uk/telecoms/ga-scheme/general-conditions/archive/.

[6] Supra note 57, § 45.

[7] Supra note 57, § 96A-104.

[8] Electronic Communications and Wireless Telegraphy (Amendment etc.) (EU Exit) Regulations 2019 and the Broadcasting (Amendment) (EU Exit) Regulations 2019.

 

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Right to Privacy and its Significance in Social Media

Life and personal liberty can be considered as inalienable rights which an individual enjoys by virtue of being a human. These rights are inseparable from a dignified human existence.[1] According to J S Mill, “privacy is an aspect of liberty grounded on the permanent interests of man as a progressive human being”.[2] It exists in every human being, irrespective of socio-economic status, gender or orientation.

Until a few years ago, there was a lack of clarity with respect to the scope of the right to privacy under the Indian Constitution. However, in 2017, the nine-judge bench of the Supreme Court in Justice K.S. Puttaswamy v. Union of India[3] held that privacy is a fundamental right, as part of the right to life and personal liberty under Article 21. However, it cannot be considered as an absolute right and is subject to invasion by state, only if such an invasion is based on “legality, need and proportionality for safeguarding this cherished right”[4].

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It is pertinent to note that privacy should not only be protected in the physical world but in cyberspace as well. The use of the Internet and social media has become very common in India owing to the availability of smart devices, lower internet tariffs and global connectivity.

The social media platforms, on one hand, provide an effective platform to freely express oneself to a large audience, and on the other hand, risk the exposure of certain sensitive personal data of the users. In certain situations, the user is aware of the information being collected by the social media networking sites, however, there might also be instances where the user is completely unaware of the information trail he is leaving online, over which he has no control. Such information can be used by potential offenders to commit physical crimes. For example, in 2016, a group of thieves pretended to be Police officials, entered a hotel in Paris where Kim Kardashian,[5] an American model, was staying for the time being and robbed her at gunpoint. It was later found out that the thieves were following Kim’s Instagram posts where she uploaded pictures wearing costly jewellery and tracked down Kim’s location using her Instagram. This instance shows how potential cybercrime offenders can exploit social media platforms to commit conventional crimes. This example was just one of many instances where information either provided or retained by the social media sites could be made use of for purposes unknown to the user, thus violating the user’s privacy. Therefore, just like any other aspect of life, privacy is an indispensable part of social media life as well.

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The existing and emerging legal framework governing the right to privacy vis-à-vis social media in India

  • The Information Technology Act, 2000 (I.T. Act)[6]

The right to privacy in social media has been protected in India even before privacy was even recognized as a fundamental right. The Information Technology Act, 2000 is considered comprehensive legislation dealing exclusively with the aspects of privacy in the realm of cyberspace.

Section 43A of the I.T. Act obligates a body corporate that possesses, deals or handles any sensitive personal data or information in a computer resource, to implement and maintain reasonable security practices and procedures. If the body corporate fails to do so, and as a result, there is a wrongful loss or wrongful gain to any person, such body corporate can be made to pay damages to the affected person.[7] The provision further defines ‘body corporate’[8] and ‘reasonable security practices and procedures[9].

Furthermore, the I.T. Act, under Section 69A, authorizes the Central Government to block public access to any information through any computer resource under certain grounds[10]. This provision has been relied on by the Government to ban various Chinese apps, including the social media site TikTok, over privacy concerns.[11]

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  • The Information Technology (Reasonable security practices and procedures and sensitive personal data or information) [SPDI] Rules, 2011[12]

With respect to the reasonable security practices and procedures which the body corporate is required to implement under the I.T. Act, section 43A has to be read with the SPDI Rules of 2011. These rules provide a detailed framework for the implementation of section 43A.

The Rules firstly define ‘personal information[13] and ‘sensitive personal data or information.[14] It obligates the body corporate to-

  1. Provide a privacy policy for handling personal information, including sensitive personal information, to the users[15]. The same has to be published on the website of the body corporate[16];
  2. Obtain the consent of the user providing sensitive personal information, regarding the purpose of usage, before collecting such information[17];
  • Take prior consent of the user before disclosing any sensitive personal information of the user to a third party[18];
  1. Have a documented policy containing managerial, technical, operational and physical security control measures that are proportional to the information assets being protected with the nature of business.[19]

Therefore, it is evident that the SDPI Rules primarily cover privacy concerns over sensitive personal information. However, such protection has not been provided to the personal information of the user.

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  • The Personal Data Protection Bill, 2019[20] (PDP Bill)

Taking into account the limited protection provided to privacy on social media by section 43A of the I.T. Act read with the SDPI Rules of 2011, and the judgement of the Apex Court in the Puttaswamy case[21] recognizing privacy as a fundamental right, the Personal Data Protection Bill, 2019 was finally drafted to provide a robust framework on privacy and data protection in India.

The Bill defines ‘personal data’[22], ‘sensitive personal data[23], ‘data principal’[24], ‘data fiduciary’[25] and ‘consent’[26].

By dealing with the loopholes of the existing legal framework in India, the PDP Bill obligates the processing of ‘personal data of an individual only for specific, clear and lawful purposes [27]. It further provides that processing of personal data should be carried out in a fair and reasonable manner to ensure the privacy of data principal and for the purpose consented to[28]. Furthermore, personal data should be collected only to the extent necessary for the purpose of processing.[29]

With respect to the consent of data principal, consent should be obtained prior to processing of personal data[30] and should be specific vis-à-vis the purpose of processing[31]. Furthermore, with respect to consent for the processing of sensitive personal data, it should be obtained after giving the choice to the data principal to separately consent for purposes of the use of different categories of sensitive personal data[32].

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The PDP Bill has not yet become law and is currently referred to the Standing Committee[33].

  • The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021[34]

The Government of India notified the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, which replaced the Information Technology (Intermediaries Guidelines) Rules, 2011.

Under the Rules, the intermediary is required to publish its privacy policy on its website[35]. Further, the intermediary is required to periodically inform its users that in case of non-compliance with privacy policy, it has the right to terminate the account of such users [36]. However, the Rules do not talk about the elements and aspects of the privacy policy, leaving it to the whims and fancies of the intermediaries in the absence of a privacy and data protection framework in India. Furthermore, the provision of traceability of originator of information[37] under Rule 5(2) has the implication of violating the privacy of the users as for tracking the first originator of a message/information, the intermediary should have access to the metadata of the entire chain of the conversation. Therefore, in order to comply with the traceability requirement, the significant social media intermediaries will have to break end-to-end encryption, thereby compromising the privacy of communication.

WhatsApp privacy policy issue

The current privacy policy change by WhatsApp is undoubtedly the best example to illustrate the concern of the right to privacy on social media. Before understanding the implications of policy change in 2021, let us first understand the policy change in 2016.

WhatsApp was launched in 2010 and was bought by Facebook in 2014. Facebook affirmed that it would not change the privacy policy of WhatsApp. However, in 2016, WhatsApp announced a change in its privacy policy to be effective from the 25th of September 2016. The new policy sought to collect information like phone numbers, names, device information etc. of every WhatsApp account, and share the same with the parent company, Facebook. As a result, a petition was filed in the Delhi High Court challenging the change of the policy. In Karmanya Singh v. Union of India,[38] the Delhi High Court rejected the petition but directed WhatsApp to delete the data collected till 25th September 2016 from its servers. The information shared post-25th September was allowed to be shared according to the new policy. Aggrieved by the decision, the petitioners appealed to the Supreme Court, where this case is presently pending.[39]

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In January 2021, WhatsApp came up with a new privacy policy that basically does not touch upon the end-to-end encryption feature, however, WhatsApp can now share user metadata with its parent company and its subsidiaries[40]. WhatsApp gave two options to its users- either accept the policy and continue using the platform, or the WhatsApp account will be eventually deleted. Therefore, in essence, an opt-out option for the new policy change was not provided to the users.

Taking these developments into account, an application[41] was filed in the Apex Court challenging the new privacy policy. The application claimed that WhatsApp was offering lower privacy protection in India as compared to Europe[42]. The primary issue in the case is whether the ‘opt-out’ provision simply opts out of the application in totality i.e. whether WhatsApp is obligated to provide a specific option of ‘Not sharing data with Facebook. The case is currently pending in the Supreme Court.

It is pertinent to note that WhatsApp was able to come up with a privacy policy of ‘take it or exit it’ because of the lack of privacy and data protection framework in India. In such a situation, users have to rely on the privacy policies of the company as the I.T. Act read with SDPI rules provide very limited protection in this regard. If the PDP Bill had become law, WhatsApp would never be able to come up with a policy like this as the provisions of the Bill ensure that information is collected only for a specific purpose for which consent of data principal is explicitly taken and that the data fiduciary takes consent for processing sensitive personal data separately for each different purpose[43]. This provision would have prevented WhatsApp from taking consent for both purposes (for a chat with friends and family and chat with businesses) together, as messages with business entities could reveal sensitive personal data like health information, sexual orientation, etc. However, the scope of Clause 11(3)(c) should be expanded to include ‘personal data’ rather than ‘sensitive personal data of the data principal, just like Article 7(2) of the GDPR.

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[1] Opinion of Justice D Y Chandrachud in Justice K S Puttaswamy v. Union of India, (2017) 10 SCC 1.

[2] Jack Stillinger, Introduction in John Stuart Mill Auto biography, OXFORD UNIVERSITY PRESS, 7 (1971).

[3] Justice K.S. Puttaswamy v. Union of India, (2017) 10 SCC 1.

[4] Id, part T(3)(H).

[5] VANITY FAIR, https://www.vanityfair.com/style/2016/10/solving-kim-kardashian-west-paris-robbery (last visited Apr. 26, 2021).

[6] The Information Technology Act, 2000, No. 21, Act of Parliament, 2000.

[7] Id., § 43A.

[8] Id., explanation (i).

[9] Supra note 7, explanation (ii).

[10] If such information is prejudicial to the sovereignty and integrity of India, defense of India, security of the State, friendly relations with foreign States or public order or incites the commission of any cognizable offence relating to above.

[11] BBC, https://www.bbc.co.uk/newsround/53266068 (last visited Apr. 26, 2021).

[12] The Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011.

[13] Id., Rule 2(1)(i).

[14] Supra note 12, rule 3.

[15] Supra note 12, rule 4.

[16] Id.

[17] Supra note 12, rule 5.

[18] Supra note 12, rule 6

[19] Supra note 12, rule 8.

[20] The Personal Data Protection Bill, 2019.

[21] Supra note 3.

[22] Supra note 20, cl. 3(28).

[23] Supra note 20, cl. 3(36).

[24] Supra note 20, cl. 3(14).

[25] Supra note 20, cl. 3(13).

[26] Supra note 20, cl. 3(10).

[27] Supra note 20, cl. 4.

[28] Supra note 20, cl. 5.

[29] Supra note 20, cl. 6.

[30] Supra note 20, cl. 11(1).

[31] Supra note 20, cl. 11(2)(c).

[32] Supra note 20, cl. 11(3)(c).

[33] PRS INDIA, https://prsindia.org/billtrack/the-personal-data-protection-bill-2019 (last visited Feb. 26, 2021).

[34] The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021.

[35] Id., rule 4(1)(a).

[36] Supra note 34, rule 4(1)(c).

[37] Supra note 34, rule 5(2).

[38] Karmanya Singh v. Union of India, 233 (2016) DLT 436.

[39] SC OBSERVER, https://www.scobserver.in/court-case/whatsapp-facebook-privacy-case (last visited Apr. 26, 2021).

[40] The latest clarifications from WhatsApp drew a differentiation between “messages with friends or family” and “messages with a business”. It claims that the new privacy policy pertains to the latter alone and the former remains unchanged. WhatsApp has clarified that some “large businesses might need to use secure hosting services from Facebook to manage WhatsApp chats with their customers, answer questions, and send helpful information like purchase receipts”.

[41] Supra note 38.

[42] In Europe, by virtue of General Data protection Regulation, though WhatsApp privacy policy talks about data sharing with Facebook, however, the users can rectify, update or erase information that the platform controls.

[43] Supra note 20, cl. 11(3)(c).

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Initial Public Offering (IPO)

By: Mahima Bheemaiah

What is an IPO?

Most companies that kick off their business starts with a limited source of capital and resources, but soon these companies over a period of time grow into a sustainable business and will need more capital to expand and to grow their business. These funds can be raised through private placements and by also taking loans but when a company needs much more money for its business then it issues securities to the general public. This raising of fresh funds through the public is done through the primary market. Funds are raised through retail investors, qualified institutional buyers and non-institutional investors. The primary market is nothing but a capital market where a company issues securities to the general public for the first time and which is not previously traded in the stock exchanges. Securities are directly issued to the investors through the company. The primary market is also known as the New Issue Market (NIM). The secondary market is where the trading of the stock takes place and keeps varying from time to time. The initial raising of capital is done through the stock market where the general public is allotted shares of that respective company. This process of initially raising capital is known as “Initial Public Offering”.

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Initial Public Offerings or in its abbreviated form called ‘IPO’ raises funds by listing a company in the stock market exchange and by selling securities to the people who have been allotted their respective shares. Only a limited number of shares are available and are allotted in a random process without any bias. Securities could be shares, stock, debentures, bonds etc., but in an IPO it is only the selling of shares to the public. Only a public company is allowed to raise funds through the stock market and a private company cannot do so. IPO raises funds by a company to fulfil its long term goals.

IPO is a fundamental aspect of Capital Markets. It is the very first step for a public company to grow its funds for the development of a company. A company raises capital for the growth of the business, for new investments, to expand their business, to reimburse their debt, for research and development, to acquire any company for strategic planning etc. It can also help in expanding their brand name which provides companies with a huge amount of publicity which may help in securing better terms in lenders. In terms of the economy, when a large number of IPOs are issued, it is a sign of a healthy stock market and economy.

In an IPO the relationship is directly between a shareholder and the company. A shareholder carries the risk factor associated with the shares of the company. A shareholder becomes the owner of a company when he acquires the shares of the company, hence the risk factor which comes with it. If a company performs well in a financial year, these shareholders will also get dividends or bonus shares according to the number of shares they hold in that company. Along with it if there is an increase in demand for the shares of that particular company then the profits of the capital returns will also add to the advantage of the shareholders. A company is liable to its shareholders and must disclose requirements such as filing quarterly and annual financial reports. The money that flows into a company from its investors is known as the ‘Share Capital’ of a company. IPO is the largest source of funds to raise capital for a company.

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While IPO seems like an easy option for a company to raise the capital it does have its share of ups and downs. A company cannot raise capital as and when it wants to. Filing an IPO comes with huge costs and resources. If a company is not well-advised by its financial advisors the company could flop in the open market and might lose out financially. Advantages of going public could be for 1) Easier raising of funds 2) Exit for existing investors 3) Liquidity 4) Increased trust of shareholders 5) Possibilities of takeovers 6) Employee motivation through ESOPs 7) Enhanced visibility and 8) Cost-effective way of raising funds compared to bank loans. Some of the disadvantages of going public can be 1) Loss of Autonomous control over the company and 2) Increase of Compliance Requirements.

What is the process of an IPO?

An IPO process in India typically takes at least seven to nine months. However, the timeline may vary depending on the transaction involved, compliance with the law, preparation of financial statements, receipt of all necessary regulatory approvals and other market conditions. The first step while applying for an IPO is to recruit merchant bankers. He is responsible for making sure the company follows the rules and regulations which goes from application till the listing date. The merchant banker and the company go and apply to the SEBI with their registration application which talks about the health of the company. After this process, the SEBI needs to give their approval for the listing of the company. Once the nod from SEBI is acquired then the company needs to draft a prospectus and this prospectus needs to be filed with SEBI at least after 30 days, it needs to be filed with the Registrar of Companies (ROC) and with the stock exchanges. If it’s a red herring prospectus then it needs to be filed at least 3 days before the ROC before listing takes place. Once the prospectus is issued which contains information about the company which talks about what the company has done so far, its management, the goals it wants to achieve, the risks associated with the shares of the company etc. This is followed by an IPO roadshow or simple marketing of the company, this could be advertising on TV, radio, newspaper etc., so that the general public comes to know about it. Further, the company needs to fix the price range to the shares, this process is known as the book-building process. SEBI guidelines define Book Building as “a process is undertaken by which a demand for the securities proposed to be issued by a body corporate is elicited and built-up and the price for such securities is assessed for the determination of the quantum of such securities to be issued employing a notice, circular, advertisement, document or information memoranda or offer document”.2 In this process bids are placed by the investors which could be above or below the floor price, and once the bidding ends a final offer price is fixed. And lastly, the listing day is when the company gets listed on a stock market exchange and according to the demand and supply of the market participants, the share price may be premium or discount.

Legal Framework over IPO

A company while filling for IPO is mainly regulated by the Securities and Exchange Board of India (SEBI) addition with it, it is also regulated by Securities Contract (Regulations) Act, 1956, Securities Contract (Regulations) Rules, 1957 and Companies Act, 2013. The SEBI ICDR (Issue of Capital and Disclosure Requirement), Regulations 2018 deals with all aspects of the IPO. This Act provides detailed provisions governing an IPO. They provide detailed provisions related to disclosure requirements, opening and closure of issuance, publicity guidelines etc. The other Act is the SEBI LODR (Listing Obligations and Disclosure Requirements) Regulations, 2015 deals with disclosing details of a company when a company is going to list itself in the stock exchange. The Listing Regulations cover principles, common obligations and continuing disclosure requirements for all entities that have already been listed on any of the stock exchanges in the country.

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IPO during Covid Outbreak

December 2019 saw the rise of a new virus called Covid-19. This outbreak disrupted the entire world. Everything came to a standstill when restrictions were imposed due to Covid. There was uncertainty everywhere around the world. When the lockdown was imposed in March of 2020 nobody expected that it would prolong around for months together and would still be looming around in the environment even today. Many sectors were affected by the impact of the Covid such as the manufacturing sector, agricultural sector, service sector and the list goes on and on.

The market was low during this period and took time to recover from the sudden crash in the market. The next few month’s companies were not listing themselves and IPO’s in India which was already staggering due to prolonged slowdown and also due to threat to financial stability only saw 146 IPO’s in the fiscal year of 2019-2020 which was little higher than the previous year. The past 3 years saw a downfall of IPO with the least in a year being 116 IPO’s. The start of 2020 saw the listing of 50 IPO’s, but after the lockdown was imposed the markets were very low. The next four months of FY2020 saw only 19 companies get listed in the stock exchanges, which was a 62% downfall compared to the previous fiscal year.

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The second half of the year saw a rise in IPO’s even though there was still a rise in Covid cases. A few of the company’s IPO was even oversubscribed. This was due to excess liquidity, positivity in the markets and positive sentiments that has resulted in even companies which were impacted by Covid-19 raising funds. There was also a rise in retail investors during this period it was reported by Zerodha that about 250,000 accounts were opened during the month of April 2020 alone which took them about 6 years since the inception of their company to gain their first 100,000 investors. Many young investors have joined the market during this period due to increased awareness and also due to a lot of social media platforms have been promoting and teaching how to trade in the market during the pandemic. The increase in user growth can also be attributed to the easy access to these platforms. Not only in India, but even the global markets saw a rise in IPO. One of the keys to raising in IPO’s is due to sectorial resilience that is a lot of pharmaceuticals, medical and biotech industries and chemical as well as technology sector were welcomed in the second part of 2020 with companies like Chemcon Specialty Chemicals Ltd., Mazagon Dock Shipbuilders and Happiest Minds Technologies Ltd was the most-subscribed IPO’s in 2020.

IPO post-Covid

Post-2020, there was a rise in IPO’s in the country. Not only was there a raise but there was stellar growth in IPO as compared to the previous few years. With the second wave still creating panic amongst the public, there seemed like no stop for IPO’s being listed in the stock exchanges.

In 2021 alone, 63 companies collectively raised 1.2 lakh crore through Initial Public Offerings-the highest amount raised in a single calendar year. December was the busiest month for IPO with 11 companies offering their securities through the primary market. Anuj Kapoor, head of investment banking at UBS India, told Bloomberg News that companies will raise twice the money in comparison to last year.5 Many companies have opted for IPOs since the end of 2020, primarily due to the impact of the Covid-19 pandemic on business and exuberant stock market activity. Due to the high number of first-time retail investors and huge foreign influx investors as well as due to excellent performance seen in the market a high number of companies issued securities through IPO. Some of the companies that excelled in the market are Nazara Technologies, Sona BLW Precision, FSN E-Commerce Ventures, and Tatva Chintan Pharma Company etc. Even though the Covid pandemic continues to wreak havoc on India’s economy, the domestic market still remains very optimistic, hence giving confidence to the issuer.

Most of these companies are raising capital due to losses suffered due to the pandemic as well as expanding business due to an increase in demand. Also high retail investors coupled with liquidity makes it a perfect platform for companies to use this space now for companies to go public. However, heading into 2022 the markets can still be volatile with omicron cases spreading and due to high inflation further raising and it could be that central banks may raise interest rates which could curb liquidity. Still, it is expected that IPO’S in 2022 might be vibrant and robust just like in the year 2021.

Regulation Changes by SEBI to IPO’s

2021 ended with a bang for IPO’s in the country. It was a stellar year with 63 companies listed in the stock exchanges. A lot of new-age companies listed their securities in the market with companies such as Zomato, Paytm etc., introducing themselves in the primary markets. SEBI has come up with new regulations to curb the listing of companies.

To enhance the growth and development of public markets as well as to keep transparency and to remove ambiguity before going public and also keeping in mind the best interests of retail investors, SEBI has made amendments to an already existing volatile market.

SEBI has introduced a maximum cap limit of 35% to use from the equity-issuance proceeding (25% towards unidentified acquisition) for acquisition where there was no regulation before the amendment.6 SEBI is of the view that raising funds for unidentified acquisitions leads to ambiguity in IPO objectives. Limits are also imposed on the existing investors of the company to sell their shares through OFS (Offer for Shares). The purpose of doing this is to instil confidence in the investors and can also let pre-IPO investors look for an alternate form of selling their shares.

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From 1st April 2022, half the anchor investors should have a lock-in period of 90 days from the previous existing 30 days. While the remaining half will go through a 30 day lock-in period. This is done with the intention to make investors stay invested for a longer period and to provide confidence to the other investors. SEBI had proposed to introduce a minimum price band in all public issues, with the upper one at least 5% more than the floor price, so that the process will be more dynamic and flexible with the final price falling within or outside the scope of price band depending upon the demand.7 Regulations have also been done to preferential shares by relaxing pricing norms and lock-ins requirements for promoters, to make it easier for companies to raise funds.

Conclusions

India has become a global hotspot for IPOs. Global investors are also eyeing IPO’s in India. India has generated triple-digit annualised profit through IPO’s. IPO’s offer the biggest opportunity to raise funds for a company. Some IPO’s are a success and some can tank at the market. All of this depends upon the market sentiments. The LIC of India is coming out with the biggest IPO during the month of Feb/Mar 2022 with an issue size of Rs.1 lakh crores.

Some of these provisions which are done by SEBI are in the wake of frenzy number of IPO’s going public and due to high valuations in the markets. To keep a tab on companies and to curb their regulations these changes are placed so that the capital markets are not impacted in the long term. Hopefully, with these changes, the current year IPO’s does not get impacted due to these regulations.

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Blog Intellectual Property Law

Role of IP in E-Commerce

By: Syeda Fauzia

Introduction:

What are Intellectual property Rights?

Intellectual Property Rights (IPR) would refer to anything and everything that is the conception of the human mind which creates an exclusive right bestowed upon the person over the creations of their intellect. According to the Oxford Dictionary, “intellectual property is an intangible property as a result of human creativity.” Intellectual Property is of various kinds, few significant ones being Copyrights, Trademark and Patents. IPR also include inventions of a product or process, a start-up business, creating new music or lyrics of a song and many more.

What is E-Commerce? 

Electronic Commerce or E-Commerce as simply told is where commercial transactions are conducted through online mode. These would include conducting or establishing businesses, exchanging goods and services or both primarily over the internet. Examples For E-commerce would include platforms such as: Amazon, Swiggy, Zomato and so forth.

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How are IPR and E-commerce interlinked? Let’s find out!

In today’s world, economies are constantly growing and changing. Internet as such plays a vital role in the development of the same. That being the case, it is necessary to understand that IPR plays a crucial role in the process of conducting e-commerce business and its impact in the virtual world. It is necessary to keep a tab on E-commerce along with the technology infrastructure in such a manner that the value of the intellectual property is not disregarded. It is crucial than ever that there needs to be a constant process of improvement in this technicality of internet access.

The methodology to understand the role of Intellectual Property in E-commerce is based on certain aspects. They are:

  1. Protection of business

IPR plays an important role in safeguarding the core business interest of a company including all its affiliates/subsidiaries, its domain in the corporate world. More fully against unfair competition amongst the businesses. In case there is no application of IPR or the IPR laws are not abided by, it will lead to severe violations of IPR and the consequences will surely affect the goodwill of a Company. That means to say that IPR plays a significant role in the digital economy. Without IPR in place, anything and everything can be pilfered. It may extend from design to software. The Owners may be perplexed by such duplication and stealing and then the same being floated over the virtual domain. The Owners will never be recognized for their unique innovations.

  1. Safeguarding the ownership of the factors involved in the business development.

There would be several factors that enable a company to be structured and with Intellectual Property law in place, especially for the e-commerce transactions helps to safeguard the digital and technical components which are critical to the company. For instance, there can be software that is connected to networks/routers, software designs, software programs, HTML codes etc. All these factors may be available in different forms and may contain an intellectual property right that not only needs to be protected but to be continued to be protected. This will enable E-commerce to run efficiently and smoothly. Thus, the IPR coated E-commerce safeguards these important factors which are essentially the enablers.

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  1. Protection of IPR

Every E-Commerce business recognizes IPR on all such creations/innovations especially the patents, copyrights, marks and trade secrets. A product that is developed by a company or an individual and commercializing the product involves the development of a variety of technologies so as to protect the product in the public domain. In such cases, the companies/individuals turn up to technology providers who will enter into licensing Agreements wherein certain rights are given for a certain period of time and for a specific purpose. The License Agreement facilitates the owner of the product to safeguard his intellectual property rights in his products by way of acceptance of the owner’s standard terms and conditions wherein the IPR protection is deemed a material term of the contract.

  1. Preservation of patent portfolios and trademarks

If a business has to capture the market in the e-commerce arena, IPR creation becomes an impeccable asset to the Company. The Company will own the portfolio of such intellectual property eg: by Patent or trademark registration. This enhances the company’s credibility and of course will lead to significant development in the company’s financial position as the online business world catches the company that shows their business in the light of the preservation of their patent portfolios and trademarks.

IPR and E-Commerce

Several Companies believe in the fact that their intellectual properties are worthy to a great extent such that the protection of the tangible assets owned maybe a secondary priority. This is very much true in the global market and with the recent happening of online businesses because the intellectual property rights and the law that exists with regard to the same enables the companies from keeping their trade secrets protected and disallows any unfair competition.

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IPR plays an important role in E-commerce in today’s digital economy. The laws that govern the IPR has brought businesses globally to function by supporting new creations but also guarding the tedious inputs that are gone into by the creator of such intellectual property. The laws pertaining to Intellectual Property Rights allows the law to block others from stealing the Intellectual property of the owner. So that there is no impact on the financial position of the inventor and their struggle in bringing the goodwill in the b2b market which is available in the electronic network.

Fundamentals of IPR in e-commerce:

E-Commerce is a great enabler of a business. However, it is the owner who is solely responsible for protecting intellectual property rights. If the owner while revealing the intellectual property to the public or in any media through E-commerce fails to protect it beforehand. This becomes fatal and gives scope for the others to use the owner’s intellectual property unfairly much before filing for its protection. There may not be any legal solution that the owner can adapt and also leaving the culprits to walk away freely with no reprimand whatsoever. No trade secrets can be protected once it is in the public domain. The owner loses all his rights against the virtual world. Eg secrets of a Software algorithm if shared, then such software algorithms cannot be protected.

Breach of Intellectual property

Any website that involves transactions that are mostly buying or selling online is a part of E-commerce websites. Companies while doing e-business may knowingly or unknowingly tend to violate the intellectual property rights by displaying the images, designs or even products of other companies. The most common example is that of Chinese products that look similar but are just a duplication of the original product. Such companies should carefully ensure that they do their due diligence effectively to avoid any infringements of the owner’s intellectual property rights and also that they do not violate the laws that protect the intellectual property in the country of origin of the product.  They should be able to show that the sale is on an original development and that the intellectual property owner is well aware and there is permission to sell in the online platform.

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Protection of IPR under E-commerce

IPR in retail and e-commerce deals with buying and selling products through a physical shop and a website, respectively[1]. In retail also a owner needs to protect his intellectual property rights. Iit is no different that is for E-commerce and should various types of intellectual properties. The following states the usual IPR in E-commerce.

Various patent models protects E-commerce like search engines etc. Patent Law or the Copyrights Act depend from country to country and their IPR laws may be divergent in application. Eg. A website design protected by copyright law. The copyright protection is available under the copyright law for the graphics, designs, materials, audio or video clippings, photographs etc. Therefore the companies in e commerce world can protect their database under such copyright laws as applicable in their specific country.

Protection of brands:

Features that are posted on their application and/or their websites under the Trademark Law. the Intellectual Property Rights also encompasses protection of webpages, displays that are computer-generated, graphics, graphical user interfaces. This may also be protected under at the Industrial Design Laws as per the applicability in their respective country.

There would be certain websites which will have hidden characteristics like graphics that are confidential in nature, source codes, flow charts, data structure, algorithms, various technical descriptions, manuals, contents etc to name a few, are entirely protected under various Trade Secret Laws and opens up the various other laws in protection of such intellectual property rights.

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Conclusion:

In today’s world there is no denying of the fact that achievement of fair and ethical compliance of online businesses and practices cannot be accomplished without the effective use of Intellectual Property Laws. The society is more relying on e commerce and not only the E- businesses development wherein the retail activity is drastically reduced. Like the pandemic struck economy wherein the E-commerce led to significant growth in the virtual market. Making it more diverse and dynamic approach of online platforms.

As the growth of online business expands the Intellectual Property Rights facilitates the companies to protect and monitor their trade activities that are especially to maintain secrecy. IP rights in e-commerce also allow IPR owners to claim a share of the company’s profits. The Implementation of intellectual property rights will focus on the features that are exclusive and are unavailable to others and thus making the implementation of E-Commerce activity in the public domain successfully. The Legal protection of intellectual property rights brings in sturdiness in the usage of intellectual property which helps in not only in licensing, contracting, outsourcing but also helps in building strategic relationships, developing new concepts which in return enhances the sales and E-Commerce business by bringing in features that are unavailable to its competitors. This enables a healthy competition in the internet world and bringing in profits to the right owners of the intellectual property. Therefore Intellectual property stands as a guard to the E-Commerce and enhances fair play in the economy while adopting right measures of protection if Intellectual Property Rights.

 [1] What’s the Role of Intellectual Property in Ecommerce? (thebalancesmb.com)

 

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The Effect of Artificial Intelligence on Human Beings and Society

Individuals today live in the world of Artificial Intelligence (AI). It permeates our lives in numerous ways, either directly or indirectly, by performing tasks that, until quite recently, could only be performed by a human with specialized knowledge and training. Some of the examples of the use of AI in our daily lives include spam filters, Alexa, Siri, driverless cars, automatic vacuum cleaners etc. These technologies are used in different sectors like technological industries, healthcare, education, transportation, defense, law and agriculture, among many others. This list keeps on increasing with time owing to the technological advancements taking place in the modern world.

The increasing ubiquity and rapidly expanding commercial potential of AI in different sectors has spurred massive private sector investment in the AI projects. The potential for further rapid advances in AI technology has prompted expressions of alarm, wherein some scholars highlight the role of government in regulating the development of AI and putting restrictions on AI operations.

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Before understanding what steps have been taken by different jurisdictions to address the implications of growing use of AI, it is important to understand exactly what issues relating to AI needs government deliberation. Broadly, the most significant issues can be listed as- data protection concerns, the issue of biasness, the challenges to the Intellectual Property regime, the issue of civil liability as well as the impact of AI in the criminal justice system.

As AI continues to find its way into our daily lives, its propensity to interfere with human rights only gets more severe. Privacy is recognized as an international human right that is essential to human dignity and is inalienable. Data protection also forms an intrinsic part of an individual’s privacy as privacy can be guaranteed only when the personal and sensitive personal data of an individual is protected. Taking this implication into consideration, many jurisdictions now recognize the right to data protection, as part of right to privacy, and therefore, a fundamental right. The increasing use of AI creates an issue in the domain of data protection as the AI systems are often trained through access to and analysis of big data sets. This makes the right to data protection susceptible to violation as there is a possibility of leak of personal data or sensitive personal data of an individual by an AI.

Machine learning is a type of artificial intelligence which uses data sets to understand the pattern and learns to perform a particular task from it. Because machine learning algorithms use data sets to derive a conclusion, if the data set provided to the machine learning system is itself biased, the system will provide biased results. Furthermore, since AI is a technology, it is susceptible to minute measurement errors. However, such minute errors might lead to a big problem with millions of users, when thousands could be affected by error rates. These two issues create biased results. For example, Google Photos’ image recognition software, in 2015, labelled photos of black people as ‘gorillas’. Owing to the complex software model, the developers were unable to resolve the issue. Therefore, the only recourse available was to remove any monkey-related words from the data which was fed to the AI.[1]

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With respect to the impact of AI in the intellectual property (IP) regime, there are two sets of implications. Firstly, the impact of law on the creations of artificial intelligence, and secondly, the impact of AI on law i.e. how AI technology is being used in the field of law. With respect to the former, there is much debate going on around the world with respect to giving the AI the IP rights of its own creations, without human intervention. Since some types of complex AI can ‘invent’ or ‘create’ creative work without human involvement, there is a unanimity in addressing the legal status of such invention or creation. This is where the role of patent and copyright regime comes into picture. Although a number of applications mentioning AI as an inventor, have been filed in the patent offices of different jurisdictions, however, these jurisdictions have shown their reluctance in granting the AI intellectual property rights. In the similar way, courts in various jurisdictions have reiterated that copyright can only be granted for works which involve human as a creator. However, it should be kept in mind that AI technology is developing and in future, there might be cases where AI invents or creates something which the programmer of such AI has no idea about, or has no role to play. In such a situation, is it justified to not develop the IP regime to accommodate such inventions and creations.

There are many documented cases of AI gone wrong in the criminal justice system. Machine learning is often used for risk scoring the defendants as a means to remove human bias prevalent in judges while adjudicating cases with respect to sentencing and bail. Predictive policing, on the other hand, is used as a measure to allocate police resources to prevent crime. However, the conclusions arrived at using such AI systems in the criminal justice process re-introduces the element of bias against the accused, which these AI systems were aimed at addressing. Another issue with respect to the intersection of AI and criminal law is the ambiguity with respect to the criminal liability in case AI does an act, which, if done by a human, would constitute an offence under the criminal law.

Lastly, the issue of civil liability of AI highlights the situation where the traditional concepts of conceptualizing liability is being adopted by the courts if a product liability claim involves an AI.

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[1] WIRED, https://www.wired.com/story/when-it-comes-to-gorillas- google-photos-remains-blind/ (last visited Feb. 1, 2021).

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Cyberspace Regulatory Models and their Feasibility

In order to address the issues posed by cyberspace in the present day, few scholars have contended that it should not be regulated at all, as any form of regulation might stifle the unfettered potential for growth in cyberspace.

These arguments rely on the fact that over a period of time, cyberspace as well as its users, will mature, which will automatically create a robust and socially organized system. This contention is further based on the premise that the act of discouraging or looking down upon undesirable conduct on the internet is similar to how such undesirable acts are looked down upon in real life. Informal social control regulates the behaviour of an individual even though no one is looking. If such social control fails in any manner, sanctions like explicit disapproval in the society, ridicule or ostracism, act as a form of payback to the individual.

Scholars who base their arguments on informal social control also assert that when an individual uses the internet, he abstains from any misconduct out of the fear of internalised norms, and not out of the fear of law, taking into consideration that most of the individuals are unaware which acts are not acceptable in the cyberspace. Therefore, they apply the same standards of caution and care as they would apply, in case of the real world.

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Thus, over a period of time, individuals will acquaint themselves with what is and what is not acceptable in the cyberspace, and the informal social control will act as an effective regulator.

However, these arguments fail because even in the real world, there are deviant subcultures who do not conform to the norms of the society. Also, misconducts in the real world differ from the misconducts in the cyberspace. Therefore, there is a need for formal regulation of cyberspace. This need is further amplified owing to the cross-national impact of use of cyberspace. Furthermore, cyberspace regulation is necessary as an unregulated cyberspace creates an environment where the rights of individuals as well as the remedies available to them, is uncertain[1]. This uncertainty has the capacity to undermine the legal systems of the world, owing to cyberspace’s global import[2].

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Taking into account the nature of cyberspace and its implications on different aspects of an individual’s life, the conduct of various nation states and corporations, it can be concluded that there is a need to address the question of governance of cyberspace. The current literature and deliberations by various scholars suggest that the question is not whether cyberspace should be regulated, but how it should be regulated and who are the stakeholders in the process of regulation.

The following are the proposed models of cyberspace regulation by various scholars-

  • Regulation by code and architecture

Certain scholars[3] propose the use of code and architecture for regulating cyberspace. They believe that since internet was invented for research and not for commerce, its founding protocols are inherently unsecure and are primarily designed for sharing the data, rather than concealing it. This provides a breeding ground for cybercrime activities.

However, it is argued by these scholars that the internet is, by far, the most regulable space, since, through its architecture, it can reveal who someone is, where they are and what they are doing[4]. The code and architecture of the technology can very easily help in identifying the wrongdoer by tracing the Internet Protocol (IP) address of the computer used for the commission of cybercrime.

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The scholars also argue that the specific issue of territoriality posed by the cyberspace can only be addressed by the use of code and architecture to trace down the actual location of the computer which was used to commit wrongful acts on the internet[5].

However, merely relying on codes and architecture can, although help in identifying the cybercriminal, but it will not play a key role in preventing cybercrimes and ensuring prosecution of such cybercriminals.

  • Regulation by the Government

The role of government in the regulation of cyberspace comes in picture by virtue of sovereignty, territoriality (over its subjects who might be victim of cybercrime), public interest (addressing cybersecurity issues which are posed to its subjects) and national security.

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Government is considered to have a primary responsibility for formulating cyberspace policies which govern the cyberspace and stimulate the rights, liabilities and remedies available to the parties involved. It is also obligated to take steps for international co-operation in the field of cyberspace regulation, owing to the borderless nature of the cyberspace and the jurisdictional issues stemming from it.

However, the model of governance where just the government is responsible for regulating the cyberspace fails to take into consideration the ineffectiveness of government in addressing the issues faced in the real world. If the state is not competent to regulate its territorial limits itself, how can it be expected to single-handedly regulate the cyberspace, which has no territorial limits. Further, the state might not have appropriate strategies to tackle these issues, owing to the technical nature of such activities.

  • Self-regulation by private players

Another model of cyberspace regulation relates to the regulation by the market i.e. self-regulation by the key market players or the private institutions.

The private players are the major stakeholders in the cyberspace due to which they have a great impact on the policies formulated by the government. Some scholars believe that compared to the regulation by government, self-regulation offers greater speed, flexibility and efficiency[6]. Furthermore, the fact that self-regulation responds to the specific industry circumstances makes it more desirable form of regulation.

There are primarily three forms of self-regulation by the private players with respect to the role of government in such regulation[7]–

  1. voluntary or total self-regulation, without government involvement;
  2. mandated self-regulation, which involves direct government involvement;
  • mandated partial self-regulation, with partial government involvement.

It is difficult to see the first form of self-regulation i.e. pure self-regulation, without any governmental involvement. However, such form of self-regulations do exist. For example, to address the issue of online infringement of copyright in the United States, the Recording Industry Association of America (RIAA), an association formed by music companies in the United States, conducts its own investigations to locate the IP addresses of those who are illegally sharing music[8].

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Self-regulation by private players is mostly directed, shaped or endorsed by the government[9]. One example of such model is the Internet Corporation for Assigned Names and Numbers (ICANN)[10]. It is a non-profit organisation that operates the internet’s Domain Name System (DNS). It is contracted by the US Department of Commerce and overseen by the US Government.

Taking into consideration its effectiveness in efficiently addressing the issues at hand and its viability, self-regulation is often considered the only legitimate form with which to govern cyberspace.[11]

However, self-regulation without governmental involvement to a certain degree, can prove to be detrimental to the society, owing to the global import of cybercrimes and the lack of resources with the private players to address the issues faced in the cyberspace, which is often a chain reaction with a number of victims.

  • Judicial model[12]

The judicial model of cyberspace regulation is based on the premise that since the issues faced in the cyberspace are same or similar to the ones faced in the real world, the regulation of cyberspace should be left at the hands of judiciary as it can regulate the same by applying the existing principles which are used to address the legal issues in real world. Therefore, such principles can be applied to Cyberspace to facilitate an effective regulatory regime[13].

However, this model is inherently flawed in a number of ways. Firstly, courts cannot transpose the existing principles of the physical world to the cyber world owing to the nature of the issues. Also, many issued faced in the cyberworld have no equivalent in the real world. Secondly, this model of regulation totally disregards the question of jurisdiction while applying the traditional legal concepts to the cyberworld. This role of judiciary might come into picture in developing new principles[14] to be applicable to the cyberspace. However, this is the last step towards the prosecution of cybercriminals and is not, in itself sufficient to regulate the cyberspace.

  • Multi stakeholder model of regulation

This model of regulation highlights the flaws in putting the obligation of regulation on the government or the private players. Unlike crime in the real world, cybercrime is not typical one-to-one victimisation[15]. Therefore, scholars have argued that in order to tackle the issues arising from the use of internet in the cyberspace, a higher level of cooperation with states, the private sector and even individual users is required.[16]

This model brings into picture the active and responsible role played by the civilians, as they are the first ones who come to know about the commission of such cybercrimes.[17] Further, since cybercrimes are mostly chain reactions, there is a need for sharing of information about commission of such crimes or cyber security breaches by the individuals and the public and private sectors[18].

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There is no ‘one-size-fits-all’ approach for regulation of cyberspace. All the stakeholders have their own interests and limitations in playing a role in regulating the same. Therefore, the approach involving all the stakeholders addresses the flaws faced by other regulatory models like code and architecture, regulation by the government, self-regulation and judicial regulation and might be the best suited solution for now.

[1] S. M. Hanley, International Internet Regulation: A Multinational Approach, 16 JOHN MARSHALL JOURNAL COMPUTER AND INFORMATION LAW 997, (1998).

[2] D. R. Johnson and D. G. Post, Law and Borders- The Rise of Law in Cyber-Space, 48 STANFORD LAW REVIEW 1367, (1996).

[3] L Lessig and Neal K Katyal.

[4] Lessig

[5] NK Katyal, Digital architecture as crime control, 112(8) YALE LAW JOURNAL 2261, (2003).

[6] N Gunningham, P Grabosky and D Sinclair, Smart Regulation: Designing Environmental Policy, OXFORD CLARENDON PRESS, 52 (1998).

[7] Id.

[8] RIAA, https://www.riaa.com/ (last visited Jan. 29, 2021).

[9] N Tusikov, Chokepoints: Global Private Regulation on the Internet, UNIVERSITY OF CALIFORNIA PRESS, (2016).

[10] ICANN, https://www.icann.org/ (last visited Jan. 29, 2021).

[11] Supra note 4.

[12] Yee Fen Lim, Law and Regulation in Cyberspace, International Conference on Cyberworlds (2003).

[13] Bick J. D., Why Should the Internet Be Any Different?, 9 PACE LAW REVIEW 41, (1998).

[14] Effects test of intentional targeting, Zippo sliding scale test etc.

[15] S W Brenner, Distributed security: Moving away from reactive law enforcement, 9 INTERNATIONAL JOURNAL OF COMMUNICATION LAW & POLICY, (2005).

[16] R Ericson, Crime in an Insecure World, POLITY, (2007).

[17] Supra note 17.

[18] LYC Chang, Cybercrime in the Greater China Region: Regulatory Responses and Crime Prevention across the Taiwan Strait, (2012).

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The Chancellor, Masters & Scholars of University of Oxford and Ors.Vs. Rameshwari Photocopy Services and Ors

Delhi High Court

Judges: Justice Pradeep Nandrajog and Justice Yogesh Khanna

Applicable law: Section 52 of the Copyright Act, 1957

Did you know: A reproduction of a copyrighted work by a teacher or pupil in the course of instruction is allowed and is not an infringement of the copyright

Where it all began:

  1. University and Photocopy Shop were photocopying excerpts from the publications of the plaintiffs and were issuing/selling the said compilations in the form of course packs
  2. The world famous publishers alleged that such publication and sale constituted a copyright infringement and filed a case to require the University of Delhi and the photocopy shop to obtain a license.
  3. The Hon’ble single bench of the Delhi High Court dismissed the suit and an appeal was filed by the publishers before the division bench.

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Legal issue: Whether the right to reproduce work by a teacher or a pupil in the course of instruction is absolute or there are any conditions attached to such a right?

Publisher’s arguments: There are restrictions of fair use that apply to reproduction of materials by teachers and pupils and a license is necessary

University’s arguments: There are no restrictions that apply to the right of reproduction ad no infringement has occurred in this case.

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Judgment in the case:

  1. The court held that it only has to be seen is whether the work used was necessary for achieving the purpose of educational instruction- if it is there will be no infringement
  2. There is no adverse impact on the market of the books because the students still have access to the books in the library.
  3. It was held that the phrase ‘course of instruction’ used in the section will not be limited to just teaching in the classroom but will also apply to the entire program of education
  4. Because the university was not engaged in profit-making the activitiy could not be termed a publication.
  5. The appeal was dismissed and it was held that the preparation and distribution of the course packs was permitted and not an infringement of copyright. The case was sent back to the Single Bench for decision on the question whether whether the course packs were necessary for the educational instruction or not. The suit was finally withdrawn by the publishers

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Significance

The judgment in the case is hailed as a big victory for promoting the access to education. Many writers and academicians, many of whom were infact associated with the publishers, from all over the world condemned the filing of this suit and asked the publishers to withdraw it.

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The Puttaswamy Judgement- How Is Privacy a Fundamental Right?

The jurisprudence in India with respect to the status of right to privacy as a fundamental right has been quite dicey, as pointed out in the previous section. It was only in the case of Justice K. S. Puttaswamy v. Union of India[1] that the Apex Court exclusively dealt with this issue. The case was a reference made by a five-judge bench of the Apex Court to a nine-judge bench. The reference was made owing to the ambiguity arising from the judicial precedents on the status and scope of the right to privacy. The nine-judge bench unanimously held that the right to privacy is an intrinsic part of personal liberty under Article 21 of the Indian Constitution.

The majority opinion authored by Justice Chadrachud discusses in detail, a number of reasons which led to the recognition of privacy as a fundamental right. The following are some of the reasons pointed by the Hon’ble Court in this regard-

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  • Natural and inalienable rights[2]

The court pointed out that privacy, as a right, can be traced to the notion of inalienable rights i.e. the rights which are inherent in and are inseparable from a human being.

Although these rights are inalienable, however, the autonomy which an individual enjoys, by virtue of these rights, is not absolute. The court pointed out an example wherein one employs another person to kill oneself. Here, the individual exercised his autonomy to violate his inalienable right to life. For this simple reason, such autonomy cannot be absolute in nature.

  • Jurisprudence on dignity[3]

The court asserted that ‘dignity’, as a constitutional value, finds its place in the Preamble of the Indian Constitution[4]. The court also said that individual is the main focus of the Constitution as the realisation of individual rights plays a key role in achieving the collective well-being of the community. Therefore, human dignity forms an integral part of the Constitution.

The court held that the sanctity of privacy lies in its functional relationship with dignity, thereby establishing a link between dignity and privacy.

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  • Essential nature of privacy[5]

The court was of the opinion that privacy highlights the reservation of a private space for the individual; the right to be let alone. The concept is based on the autonomy of the individual.

The court further held that the ability to make choices lie at the core of the human personality. In this process, privacy plays an instrumental role by enabling the individual to assert and control the choices he/she makes. Recognizing a zone of privacy is a mere acknowledgment that individual should enjoy autonomy in the development of his/her personality.

Therefore, the court established a relationship between dignity and autonomy with privacy. By virtue of this relationship, the right to privacy forms an important element of human dignity as well.

  • International obligations[6]

Secondly, the court pointed out India’s international obligations towards protection of privacy by virtue of Article 12 of UDHR[7] and Article 17 of ICCPR[8]. Further, Article 51 of the Constitution requires the State to endeavour to “foster respect for international law and treaty obligations in the dealings of organized peoples with one another”[9].

The Protection of Human Rights Act, 1993 also defines “human rights” and includes ‘dignity of individual’[10] under its ambit. Therefore, India is under an obligation to safeguard the privacy aspects of human dignity.

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The court also took note of India’s commitment towards international obligations by pointing out the stand of the Indian judiciary in Bacchan Singh v. State of Punjab[11], with respect to the use of the death penalty underlining India’s obligations under ICCPR, and Vishaka v. State of Rajasthan[12], where the court relied on the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) to provide guidelines prohibiting sexual harassment.

  • Statutory protection cannot deny a constitutional right[13]

The court stated that although certain aspects of privacy have been protected under different statutes, nevertheless, providing constitutional protection to a right, places it “beyond the pale of legislative majorities”[14]. If privacy is considered as a part of the basic structure of the Constitution, it becomes inviolable even through an amendment. However, ordinary statutes come under the ambit of amendment/modification.

  • Not a mere common law right[15]

The court, while addressing the issue that privacy is protected through common law, held that common law protection cannot bar constitutional recognition of a right, which is afforded because such right is an aspect of fundamental freedom or liberty which the draftsperson considered to be so significant as to require constitutional protection.

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  • The ruling of the court- Right to privacy as a fundamental right[16]

Taking into account the reasons summarized above, the court finally held that the right to privacy is constitutionally protected, emerging from the right of life and personal liberty under Article 21 of the Constitution.[17]

Secondly, privacy safeguards personal intimacies, the sanctity of family life, marriage, procreation, the home and sexual orientation[18]. However, this list is not exhaustive[19].

Thirdly, the right to privacy is not an absolute right, like any other right under Part III of the Constitution, including the right to life and personal liberty. Privacy can be encroached by law however, such law should withstand the touchstone of permissible restrictions on fundamental rights. The court formulated a three-pronged test which a law has to pass to intrude into the right to life and personal liberty[20]–

  1. Legality
  2. Legitimate state aim
  3. Proportionality

The Court also unequivocally held that the doctrinal premise of M.P. Sharma[21] and Kharak Singh stand invalidated. The court also appreciated the minority view of Justice Subba Rao in Kharak Singh[22].

  • THE IMPLICATIONS OF RIGHT TO PRIVACY AS A FUNDAMENTAL RIGHT

Common Cause v. Union of India[23] represents the first important application of the principles laid down in Puttaswamy[24] with respect to right to self-determination and freedom to make fundamental choices about how to use one’s body[25], as part of fundamental rights under the Constitution.

Further, the Supreme Court while restoring Hadiya’s marriage opined that Hadiya is having internal freedom of choice, marriage and autonomy.[26]

Therefore, ‘privacy’, as a concept incorporates a number of aspects that are now accorded protection under the umbrella of personal liberty under Article 21 of the Constitution.

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[1] Justice K. S. Puttaswamy v. Union of India, (2017) 10 SCC 1.

[2] Id, part G.

[3] Supra note 32, part I.

[4] Supra note 6, Preamble.

[5] Supra note 32, part R.

[6] Supra note 32, part J.

[7] Supra note 4.

[8] Supra note 5.

[9] Supra note 6, Art. 51.

[10] Protection of Human Rights Act, 1993, s. 2(1)(d).

[11] Bacchan Singh v. State of Punjab, (1980) 2 SCC 684.

[12] Vishaka v. State of Rajasthan, (1997) 6 SCC 241.

[13] Supra note 32, part N.

[14] Supra note 32, para 153.

[15] Supra note 32, part P.

[16] Supra note 32, part T.

[17] Supra note 32, part T(3)(C).

[18] Supra note 32, part T(3)(F).

[19] Supra note 32, part T(3)(G).

[20] Supra note 3.

[21] Supra note 14.

[22] Supra note 9.

[23] Common Cause v. Union of India, (2018) 5 SCC.

[24] Supra note 32, part T.

[25] Recognition of right to die with dignity as a part of right to life under article 21.

[26] Shafin Jahan v. Ashokan K.M, 2018 SCC Online SC 201.

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Challenges Posed by the Development of Information Technology

Technology is an essential part of our day-to-day lives. It has made communication and dissemination of information faster and easier. Further, exchange of ideas as well as sale and purchase of goods and services have been facilitated with the advent of internet. Technology and the internet has become so intrinsic a part of our life that we cannot even think about planning our day without the involvement of such technology or the internet. However, this is just one side of the coin. On the flip side, technological advancement has created issues which impact different aspects of our lives. The following part analyses different challenges posed by information technology and the internet to the global community at large.

  • Criminal law

Technological advancement and the internet has provided a breeding ground for commission of crime as the use of computers and the internet is a cheaper means to perpetrate crime which simultaneously impacts a large section of society. These crimes are termed as cybercrimes. They are specifically different from traditional crimes owing to its global import, the anonymous identity of the perpetrator and the involvement of third parties like the Internet Service Providers and the Intermediaries. However, this difference is discarded by the scholars who believe that traditional system of laws are adequate to deal with the crimes in the digital age.

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It is pertinent to note that although cyberspace just acts as a medium to perpetrate a crime, however, it has a number of implications attached to it, which highlights the need for a separate legal framework to punish cybercrimes. Taking into account this issue, different jurisdictions[1] have enacted separate piece of legislations to specifically deal with cybercrimes.

Generally, cybercrimes can be classified as-

  1. Against persons (for example, harassment, spoofing, stalking)
  2. Against property (for example, IPR, data theft, trespass, squatting)
  • Against infrastructure (for example, attack on critical infrastructure)
  1. Against society (for example, pornography, gambling, cyber trafficking, forgery etc.)

Therefore, considering the fact that certain crimes emerged only because of the use of technology, traditional laws cannot be applied to address the criminal law issues posed by cyberspace.

  • Privacy and data protection

Right to privacy is considered a fundamental human right[2] and state is under an obligation to protect the same from unnecessary intrusion. Although cyberspace is not a real place and does not actually exist, however, vast amount of digital information exist in the servers, which includes personal as well as sensitive personal data of individuals. Further, with time, the collection of such data will only increase, which further increases the risk posed by technology in protection of such data.

The manner in which data of individuals is collected and stored has changed after technology came into being. Previously, such data was stored in paper files locked in the chambers of the institutions which collected it. Therefore, the sheer costs of retrieving such data, the impermanency of the forms in which it was stored and the inconvenience experienced in procuring access (assuming that its existence was known), made the issue of privacy and data protection were negligible. However, information stored in servers, which are susceptible to cyberattacks, has significantly increased the risk of data breach/leak.

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Therefore, cyberspace is, in essence, a public domain and if such space is left unregulated, the violation of individual’s right to privacy is a real possibility.

  • Intellectual property rights

With respect to intellectual property right, advances in digital technology and the commercialization of the Internet has altered the core of copyright. The internet has facilitated the level of online piracy of copyrighted works. Unlicensed, but always perfect, copies and streams of copyrighted works are readily available on the internet. With the growth of streaming services, direct download sites, and peer-to-peer services such as BitTorrent, the old problem of online piracy has extended and spread in an unanticipated manner.

With respect to the realm of trademark, information technology and the internet has led to emergence of domain name issues like typosquatting (where a person registers a domain name similar to a real domain name, but with a typo, in hopes that web surfers reach it by accident), cybersquatting (Cybersquatting is done when domain names are registered, sold or trafficked-in with the intention to make profit from the goodwill of someone else) and pagejacking (when the offender copies part of an existing website, and then puts it up on a different website to make it look like the original).

Therefore, technology and the internet have created new issues with respect to the protection of intellectual property rights and has compromised the rights of individuals who legally own the intellectual property.

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  • Contract and tort law

Internet has ensured that communication is no more restricted to the constraints of geography and time. The speed and ease with which communication as well as transactions take place on the internet has led to the evolution of electronic commerce sector, which provides flexibility to business environment in terms of place, time, space, distance, and payment.

With the growth of e-commerce, there is a rapid advancement in the use of e-contracts. These e-contracts are different from the traditional paper contracts, not just in the form, but also with respect to the specific issues posed by it, for example when exactly is acceptance considered to be communicated on the internet. To address these specific issues, the courts have modified the traditional principles of contract law to adapt to the changing requirements posed by the technology.

Further, the issue of defective softwares as well as cyber defamation require specific deliberation with respect to the applicability of conventional contract and tort law respectively.

  • Jurisdiction

With respect to the issues highlighted above, one of the remedies available to the aggrieved party is to approach the court. However, internet and cyberspace has further created issues in ascertaining appropriate jurisdiction to entertain a suit. The traditional territorial principles become fallible in the computer-world as the Internet greatly diminishes the significance of physical location of the parties, because transactions in cyberspace are not geographically based and are borderless.

A cybercriminal might be a national of one country, operating his computer, in second country and hacking the computer systems of a company located in the third country. If we adopt the traditional territorial principle of jurisdiction, the country from where the cybercriminal is operating his computer will assume jurisdiction over him. But if that country does not have proper legal framework criminalising such cybercrime, then the territorial principle could be made use of for evading criminal liability, as then such criminals will necessarily locate their computers in the jurisdictions with weak or no control over the cybercrime. Thus, the effective prosecution of such a crime can be seriously hampered if proper jurisdictional principles are not evolved.

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This highlights the need to have principles which allow application of extra-territorial jurisdiction in cases of cyber crime.

[1] Computer Misuse Act, 1990 (United Kingdom), Information Technology Act, 2000 (India) etc.

[2] Universal Declaration of Human Rights, 1948, Art. 12; International Covenant on Civil and Political Rights, 1966, Art. 17.

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Artificial Intelligence and Copyright Protection of Computer-Generated Works

Copyright is a type of intellectual property which provides the exclusive right to the owner to make copies of a creative work, either artistic, literary, dramatic, musical or otherwise. The creator of such creative work, or “author” has the exclusive commercial rights over the work.

Artificial intelligence has great significance in the realm of creative work. Recent successes have demonstrated that AI can independently learn how to perform tasks, prove mathematical theorems, and engage in artistic endeavors such as writing original poetry and music, and painting original works. AI with and sometimes without human assistance is also able to create artistic or innovative works. Therefore, such interplay of AI with the creation of creative work raises certain concerns in the field of copyright law.

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Before understanding the specific issues pertaining to copyright protection of AI generated work, it is pertinent to understand the difference between AI code and AI’s work product. AI code relates to the computer program or algorithm or the source code per se which constitutes AI. This code is what the programmer inputs into an AI. Such code is provided protection under copyright laws of various jurisdictions as TRIPS agreement provides that “Computer programs, whether in source or object code, shall be protected as literary works under the Berne Convention (1971)”[1]. Therefore, the programmer, or the person/entity which buys such AI from the programmer, is considered as the owner of such AI and enjoys the fruits out of copyright protection. On the other hand, AI’s work product relates to the creative product created by the AI. The major legal issue concerns the copyright protection provided to the work created by AI, either with or without human interference.

As discussed above, the AI’s creative work product can further be bifurcated into two categories, one where there is no human intervention, and the other where the programmer has minimal input into the final product. The legal issue pertains to whether in the former situation, the AI can be given authorship over the creative product, and in the latter situation, whether AI can be considered as a co-author of the creative work.

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With respect to the first issue, the jurisprudence developed in different jurisdictions clarify the situation as they unanimously believe that the creative works generated solely by AI are not copyrightable, if such creation does not involve any input or intervention by a human author.

In the United States of America, human authorship is the basic requirement as the Copyright Office reinforced the decision in New Idea Farm. Equip Corp. v. Sperry Corp[2] by holding that it will not register works produced by a machine or mechanical process if there has been no creative input or intervention from a human. Further, in Naruto v Slater[3], the court has opined that a non-human cannot hold copyright and hence cannot sue for infringement of copyright.

In the United Kingdom, the Copyright Designs and Patents Act, 1988 provides that the author of any literary, dramatic, musical or artistic work created by a computer is the person that made the arrangements necessary for the creation of the work undertaken[4]. A computer-generated work has further been defined by the Act as “work generated by computers without any human author of the work”[5].

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India also adopted a similar approach under Section 2(d) of the Copyright Act, 1957 by providing that “in relation to any literary, dramatic, musical or artistic work which is computer-generated, the person who causes the work to be created.”[6] However, it does not contain any explicit exclusion of interference from human author for computer-generated works.

Therefore, the copyright law regime of different jurisdictions expressly mention that the author of a computer-generated work is the person by whom the arrangements necessary for the creation of the work are undertaken.[7] Therefore, intervention by a human is necessary to render the output of an AI copyrightable.

Therefore, AI cannot be an author of the creative work. However, if we take this proposition into consideration, then the next issue arises as to who would be an author of the work created by AI if no human intervention takes place in the process of such creation?

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Let us consider a situation wherein an AI creates an artistic work without any human intervention and this work is infringing the right of another author of same/similar work. Even though work created by AI without any human intervention is not given copyright protection, however, does it imply that others also lose their right to sue for copyright infringement? To resolve such conflicts and the issue of liability arising out of the works created by AI, it is imperative to understand who should be considered the author of the work created by AI, without human involvement.

A possible solution to this issue is the doctrine of principal-agent relationship. If AI is considered as a mere agent of the person (human) who has a control over it, the issue of liability will be resolved. Also, since AI is created by a programmer and it functions according to the algorithms which have been programmed into it by the programmer, such programmer can be considered a principal, and AI be considered as its agent, as AI performs the specific tasks for which it is programmed. In the course of such performance, if the AI creates a creative work, the principal i.e. the programmer can benefit out of such creation, and also be considered liable, in case of any infringement (as principal is vicariously liable for the acts of agents). Further, though compensation is considered an important factor in the principal-agent relationship, and AI cannot be “paid” by the programmer in practical sense, the AI can be considered as a gratuitous agent as a gratuitous agent acts without a right to compensation from the principal. Furthermore, the gratuitous agent owes the same duties of care and loyalty that it would otherwise owe the principal as if it were a standard agent.

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If the AI is sold by the programmer to a third person/entity, such person/entity becomes the principal and enjoys the benefits and the burdens arising out of the creation of AI.

Therefore, although the copyright law regime globally necessitates human involvement or interference for protection of a creative work, the work generated by AI without such human interference should be given protection because firstly, it would provide incentive for further creations of such nature and secondly, it would provide a remedy to the party whose rights have been infringed by the creative work of AI. Thus, the principle of principal-agent relationship between the programmer and the AI can help in addressing these lacunas.

 

[1] Supra note 3.

[2] Supra note 7.

[3] Naruto v. Slater, 2018 WL 1902414.

[4] The Copyright Designs and Patents Act, 1988, s. 9(3) (United Kingdom).

[5] The Copyright Designs and Patents Act, 1988, s. 178 (United Kingdom).

[6] The Copyright Act, 1957, s. 2(d) (India).

[7] Ireland, UK, New Zealand, South Africa, and India.

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