Govt Should Consider Setting Age Limit for Using Social Media: HC

While hearing a writ appeal filed by X Corp concerning certain blocking orders, the Karnataka High Court remarked that the Central Government should consider setting an age limit for the use of social media.[1]

Pointing out that school-going children are addicted to social media, Justice G Narendar opined that an age limit should be put in place, “as in the Excise rules”. He further stated, “When a user registers, he will have to give some material, just like in online gaming where a person not having Aadhar etc. cannot join. Why don’t you extend it here also? It will be a boon”.

Earlier, X Corp had approached the Single Judge Bench of the Karnataka High Court, challenging the blocking orders issued by the Ministry of Electronics and Information Technology (MeitY) under Section 69A of the Information Technology Act, 2000. The blocking orders were issued between February 2, 2021, and February 28, 2022. Dismissing the plea, the Court imposed a cost of Rs. 50 Lakh. On appeal, the order passed by the Single Judge Bench was stayed, and X Corp was directed to deposit Rs. 25 Lakh.

When the interlocutory applications were taken up for consideration yesterday, X Corp requested that the blocking orders be reconsidered by the Central Government. In this regard, the Court has sought the Centre’s response.

The matter will be heard next on September 27, 2023.

[1] X Corp. v. Union of India & Ors. (WA 895/2023)


SC Stays Order Quashing GST Notice Against Gameskraft

Recently, the Supreme Court issued a stay on the Karnataka High Court’s judgment setting aside the GST show cause notice issued against the online gaming company, M/s. Gameskraft Technologies Private Limited.[1]

The said notice was issued on September 23, 2022, to Gameskraft for failing to make payment of tax to the tune of Rs. 21,000 Crore with respect to online rummy games played on its platforms. Holding that such games are “substantially and preponderantly” games of skill and not of chance, the Karnataka High Court dismissed the argument that they were taxable as ‘Betting’ and ‘Gambling’. The court proceeded to set aside this show cause notice in May 2023, deeming the same to be “illegal, arbitrary and without jurisdiction or authority of law”.

The present special leave petitions have been filed challenging the said decision of the Karnataka High Court. One of the paragraphs of the said judgment wherein the tax authorities were reprimanded for their attempt to “cherry pick stray sentences” from Court judgments and “try to build up a non-existent case out of nothing which clearly amounts to splitting hairs and clutching at straws” has been flagged. Further, the petitioners cited the Apex Court’s decision in Skill Lotto Solutions Private Limited v. Union of India & Ors.[2] in support of their contentions.

The matter will be heard next on October 10, 2023.

[1] Directorate General of Goods and Services Tax Intelligence (HQS) & Ors. v. Gameskraft Technologies Private Limited & Ors. [SLP(C) Nos. 19366-19369/2023]

[2] (2021) 15 SCC 667


‘Dynamic+ Injunction’ Issued Against Rogue Websites for Streaming Hollywood Studios’ Content

In an order dated August 9, 2023, the Delhi High Court issued a “dynamic+ injunction” restraining the 16 rogue websites impleaded as defendants along with their redirect/ alphanumeric/ mirror websites from streaming, reproducing, distributing, or communicating to the public any copyrighted content, including future works of the plaintiffs[1].

The plaintiffs, Universal City Studios LLC, Warner Bros. Entertainment Inc., Columbia Pictures Industries Inc., Netflix Studios LLC, Paramount Pictures Corporation and Disney Enterprises Inc., filed a suit before the Delhi High Court seeking an injunction restraining rogue websites from infringing their copyright. It was pointed out that several alphanumeric/ mirror websites of those previously injuncted by courts have resurfaced and currently transmit pirated content.

The Court acknowledged the negative impact of such rogue websites on the content creation industry in India and abroad. Considering the “dynamic nature” of copyright infringement by hydra-headed websites and the possibility of films and series getting uploaded on these websites immediately upon release, the Court expressed that an injunction should apply not only to existing content but also to future content as may be produced by the plaintiffs on a day-to-day basis. With this, the Court issued a “dynamic+ injunction” to accord protection to copyrighted content or works soon after their creation and to ensure that no irreparable loss is caused to the works’ authors and owners.

Apart from issuing the said interim injunction, the Court gave directions to the Internet Service Providers (ISPs) to block the websites and the Ministry of Electronics and Information Technology (MeitY) and the Department of Telecommunications (DoT) to issue blocking orders against the rogue websites within a week from the release of the order.

The matter will be heard next on January 15, 2024.

[1] Universal City Studios LLC. and Ors. V. DotMovies.Baby and Ors. [CS(COMM) 514/2023 and IA 14120/2023, 14122/2023]


ESFI President Asserts 28% GST is Not Applicable to Esports

On July 24, 2023, the Esports Federation of India (ESFI) issued a statement specifying that the Goods and Services Tax (GST) at the rate of 28% applicable to online gaming did not have a bearing on the esports segment.

Recently, the Goods and Services Tax (GST) Council, in its 50th meeting, proposed the imposition of tax at a rate of 28% on online gaming, casinos and horse racing. In the case of online gaming, the tax was said to apply to the full value of the bets placed.

The GST council reiterated the imposition of the tax in its 51st meeting and plans to implement it from October 1. There are hints of review down the line, however, they may be limited to valuations and tax rates. States are required to amend their laws for implementation, however, the norms will explicitly clarify that tax cannot be levied in states where ban is in place.

The President of ESFI, Vinod Kumar Tiwari, stated that the said rate “is going to be applicable to the iGaming sector, including real-money gaming (RMG), fantasy sports, teen patti, rummy, and poker, which are classified under gambling or betting in the rest of the world. Contrary to some media reports, this GST is neither applicable nor will it have any impact on the ‘video games or the eSports industry”.

Mr. Tiwari, who also serves as the Director (NOC & International Relations/Marketing Department) at the Olympic Council of Asia (OCA), added that the concepts of “game of skill” and “game of chance” do not have any relevance in the esports industry. He expressed dismay at the correlation assumed between esports and iGaming (and other games involving betting & gambling) and asserted that video gamers seek entertainment and not monetary gains.

It was clarified that esports differs from activities such as iGaming, especially considering the strict policies adopted by video game publishers against charging entry fees for esports events, and that esports will continue to be taxed at the rate of 18%.


Interim Injunction Issued Against Canva for Infringing Indian Startup’s Patent

In an order dated July 18, 2023, the Delhi High Court issued an interim injunction and restrained the defendant, Canva Pty Ltd, from making available the “Present and Record” feature on the Canva platform in infringement of the plaintiff, RxPrism Health Systems Private Limited’s patent[1].

In December 2018, the Indian startup filed a patent application for one of its products, “My Show & Tell” before the Indian Patent Office. It was specified that the said product enabled users to create content for promoting products or services online. For this, a layered approach was followed, which involved recording and uploading the video after uploading the slides. The next stages involved link creation, storage on a server and use of the Call-to-Action button. After watching the product video, the consumers could click on the Call-to-Action button to proceed with buying the product or service, send messages, make calls to the concerned person, etc. The product was launched in May 2020, and the patent for the same was granted on March 10, 2021.

The defendant filed a provisional application in Australia for patenting its feature on May 26, 2020, and launched this feature in August. Here, users could create and upload slides and audio or video separately and merge them through the said feature. On May 26, 2021, a PCT application was filed, claiming priority from the Australia patent application.

Alleging infringement of its patent, the plaintiff approached the Delhi High Court. The plaintiff cited the layered approach, integrated Call-to-Action button, and claimed that all the essential elements of its patented product were contained in the defendant’s feature.

In its response, the defendant cited differences between both the products and referred to several prior art documents.

Disregarding minor differences, the court arrived at the decision of infringement by comparing the claims of the plaintiff’s patent with the features of the defendant’s product. After analysing the three closest prior arts – Auto Auditorium, the Loom System and Microsoft PowerPoint 2016, the court concluded that the plaintiff’s patent is “inventive” over these prior arts.

The court observed that the “functionality of the Defendant’s product, which has been demonstrated to the Court, clearly falls within the claims of the suit patent and all the essential elements of the suit patent exist in the Defendant’s product”. Also, the court noted that the defendant’s conduct in abandoning the PCT application during the pendency of the suit was “prima facie evidence of the Defendant’s attempt to camouflage its stand”. This remark was made considering that the petitioner relied upon the application in its rejoinder submissions as evidence of infringement. The court also took into account that the Australian patent application lapsed in 2022.

It was further held that the balance of convenience was in the plaintiff’s favour, and the plaintiff would suffer irreparable loss and injury if an injunction was not issued. With this, the court granted an interim injunction restraining the defendant from making available the “Present and Record” feature on the Canva platform in infringement of the plaintiff’s patent.

After making note of the revenue generated through the use of the said Canva feature in the country, the court directed the defendant to deposit a security amount to the tune of Rs. 50 Lakhs with the court’s Registrar General. Holding the language used in the written statement to be “libelous and slanderous” thereby violating the principles governing permissible language in pleadings, the court awarded costs of Rs.5 Lakh to the plaintiff.

[1] RxPrism Health Systems Private Limited & Anr. v. Canva Pty Ltd & Ors. [IA 14842/2021 in CS(COMM) 573/2021]



TRAI Proposes AI Framework for Telecom Sector

On July 20, 2023, the Telecommunication Regulatory Authority of India (TRAI) released several recommendations on “Leveraging Artificial Intelligence and Big Data in the Telecommunication Sector”.

Through a letter dated June 6, 2019, the Department of Telecommunications (DoT) requested TRAI to prepare and share its recommendations on the provision of the National Digital Communications Policy, 2018 pertaining to leveraging Artificial Intelligence (AI) and Big Data. Subsequently, a consultation paper was made available to the public in August 2022. The recommendations have been finalised after holding due discussions and considering the stakeholder comments on the said paper.

Some of the major recommendations are as follows: –

  • An Artificial Intelligence and Data Authority of India (AIDAI) has to be established to ensure the development of responsible AI and regulation of use cases in India.
  • Certain changes have to be made in the existing legal framework through amendments to ensure that AI/ ML can be effectively used in curbing spam messages, phishing, etc. and so that TRAI may issue appropriate directions in this regard.
  • Every State or Union Territory (UT) should have at least one Centre of Excellence for Artificial Intelligence (CoEAI). These Centres are expected to help startups, educational institutions, etc. develop technological facilities.
  • A mandatory course on the ethical use of AI must be provided in all technical institutes through collaboration with the All India Council for Technical Education (AICTE).
  • The Department should hold AI/ ML events such as challenge programmes and bounty programmes by using the ‘Digital Communication Innovation Square (DCIS). This is to enable startups and other organisations to demonstrate their ideas, collaborate with stakeholders and improvise their solutions or products.


NITI Aayog Releases TCRM Matrix Framework to Promote Innovation

Emphasising the role of science, innovation, research and development (R&D) in the progress of a nation, the NITI Aayog released the Techno-Commercial Readiness and Market Maturity Matrix (TCRM Matrix) Framework on July 18, 2023, to promote innovation and entrepreneurship in the country.

In the working paper, reference is made to the growth in, and contribution and future potential of the country’s sectors including IT and software, etc. It establishes the necessity to assess tech-based projects before time, energy and resources are invested in the project. Further, such an assessment helps in coming up with an effective Science, Technology and Innovation (STI) policy and can be used in identifying any new trends and opportunities as well.

The working paper lists out the existing assessment frameworks which have been classified into technology-focussed, business-focussed and market-focussed frameworks. This classification has been done on the basis of the project’s aspect on which the framework focuses. However, assessing only one aspect of the project provides limited insight, highlighting the need for a joint assessment.

Accordingly, the TCRM Matrix framework has been constructed as a joint assessment framework on the basis of the existing Technology Readiness Level (TRL), Commercialization Readiness Level (CRL), and Market Readiness Level (MRL) frameworks. This assessment tool would be beneficial for stakeholders involved in the technology development and innovation landscape, including the government, academia, industry, startups and the investor community.


Hermes Trademark Case: Permanent Injunction Issued Against ‘MetaBirkin’ NFT Artist

A U.S. District Judge, Justice Jed S. Rakoff, has granted Hermes’ request for a permanent injunction against the artist, Mason Rothschild, preventing him and persons in “active concert or participation with him” from using their trademark “Birkin” holding that the continued sale and marketing of “MetaBirkin” NFTs would likely cause confusion and cause irreparable harm to Hermes. The Hon’ble Judge’s decision comes at a critical juncture and highlights the blurring lines between artistic expression and trademark infringement in the digital realm, particularly in the context of NFTs.

In the previous year, Hermes International and Hermes of Paris, Inc. filed a case against Rothschild, accusing him of infringing their trademark “Birkin” and creating a false impression of endorsement by the luxury fashion house with his digital NFTs known as “MetaBirkin”, which depicted Birkin handbags covered in fur and artwork.

In February 2023, a jury awarded Hermes $133,000 in total damages holding Rothschild liable for trademark infringement, dilution, and cybersquatting. The jury held that the sale of these NFTs amounted to trademark infringement as customers were likely to be confused with the origin of the bags. It was further noted that NFTs as artistic work could not be protected under the First Amendment of the U.S. Constitution if it violates trademark laws and deceives consumers.

Following the jury’s verdict, the parties filed post-trial motions; Rothschild requested a judgment in his favour or a new trial along with leave to interview the jury, and Hermes sought a permanent injunction against Rothschild to prevent continued infringement of their trademarks by promoting the said NFTs on social media platforms, etc.

The matter was heard in the U.S. District Court for the Southern District of New York. The Hon’ble Judge opined that Rothschild’s continued marketing of the NFTs would likely confuse consumers and cause irreparable harm to Hermes, and thus, a permanent injunction was necessitated. He denied Rothschild’s requests to dismiss the verdict or hold a new trial, stating that Rothschild’s scheme defrauded consumers into believing that Hermes endorsed his “MetaBirkin” NFTs by using variations on the company’s trademarks.

However, the federal Judge refrained from ordering Rothschild to transfer the NFTs in his possession considering that (a) Rothschild and associated parties have already been restrained from further infringement, (b) “MetaBirkin” NFTs are at least in some respects works of art, and (c) though he continued to market his NFTs, it was done before an injunction was issued.

Given the jury’s decision holding Rothschild liable for cybersquatting, the court directed the defendant to hand over the domain name – and related materials to Hermes. Further, the defendant has been ordered to transfer the royalties, financial benefits, etc., earned from the “MetaBirkin” NFTs from January 31, 2023, through June 30, 2023, to Hermes by July 15, 2023.


Health Ministry Issues Anti-Tobacco Guidelines for Online Content

On the occasion of World No Tobacco Day, the Ministry of Health and Family Welfare (MoHFW) came out with guidelines for publishing online content depicting tobacco products. At the event organized by the Ministry, the Union Health Minister, Dr. Mansukh Mandaviya urged people “to break free from the shackles of tobacco and embrace a healthier lifestyle”.

Some of the features of the guidelines are as follows: –

  • Anti-tobacco health spots must be displayed at the beginning and middle of the content program for a minimum of 30 seconds.
  • When tobacco products or their use are depicted, anti-tobacco health warnings must be broadcast at the bottom of the screen as a prominent static message during such telecast or streaming. These warning messages have to be legible and readable with black font on a white background and have to include the warnings – “Tobacco causes cancer” or “Tobacco kills”.
  • A 20-second audio-visual disclaimer on the ill effects of using tobacco has to be displayed at the beginning and middle of the program.
  • The language used in the online curated content has to be used for health spots, warning messages and audio-visual disclaimers as well.
  • The publishers of online curated content may access the health spots, messages, and disclaimers on the Ministry’s website. These details will soon be uploaded to the portal.
  • Depiction of the brands of cigarettes or other tobacco products, etc. in online curated content is prohibited.

The press release dated May 31, 2023, specifies that action would be taken by an inter-ministerial committee for non-compliance with these guidelines. The committee would issue a notice giving the publishers a reasonable opportunity to present their cases and ask them to make required modifications to the online content. 


Update on the Challenge to the IT Rules’ Fact-Check Mechanism

On April 6, 2023, The Ministry of Electronics and Information Technology (MeITY), Government of India, notified the amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code), Rules, 2021 (hereinafter referred to as the “IT Rules”).

In this amendment, the due-diligence requirement of intermediaries under Rule 3(1)(b)(v) was amended to introduce a provision that would result in partial censorship of the media. According to this amendment, intermediaries are not allowed to host any such information relating to the Central Government, that is categorized as false, fake, or misleading by a fact-checking authority that is established by the Central Government itself.


On April 11, 2023, this amendment was challenged before the Bombay High Court on the ground that it is violative of Article 19(1)(a), as it fails to define what ‘fake, false, and misleading is’ and ‘any business of the Central Government’. He contended that the law fails to fall under any of the reasonable exceptions under Article 19(2) and has the potential to create a chilling effect on freedom of speech and expression. He further contended that the usage of broad terms such as fake, false, and misleading makes political satirists’ accounts prone to suspension, which would be violative of the fundamental right under Article 19(1)(g) (Freedom to trade and profession). A bench comprising Justice Gautam Patel and Justice Neela Gokhale in the Bombay High Court demanded the Central government show the reasons why such a clause was implemented, and the Central government was directed to file an affidavit for the same.


On April 24, 2023, the Bombay High Court commented that the IT Rules prima facie lack the necessary safeguards against satire, despite the Central government stating that satire will be exempted from the fact check under Rule 3(1)(b)(v). The Central government thereafter comfirmed on the 27th of April that the provision under Rule 3(1)(b)(v) will not be notified until July 5, 2023. The Central Government was further directed to file a compilation of materials relied upon for the passage of the amendment on fact-checking by June 6, 2023. The next date of the hearing is June 8 for final arguments and directions.