In the Napster case, the Court of Appeals for the Ninth Circuit observed: "In the context of copyright law, vicarious liability extends beyond an employer/employee relationship to cases in which a defendant "has the right and ability to supervise the infringing activity and also has a direct financial interest in such activities.
"In the United States of America, the doctrine of contributory infringement is based on the 1911 case of Kalem v Harper Brothers.
The case of Sony Corp v Universal City Studios Inc,[13] commonly known as the Betamax case, gave the United States Supreme Court its first opportunity to comprehensively look into and interpret the rules regarding secondary liability and contributory infringement in context of the 1976 Copyright statute.
The primary issue in this case was whether a VCR manufacturing company could be held liable for copyright infringements done by its customers.
In the court's own words: Vicarious liability is imposed in virtually all areas of the law, and the concept of contributory infringement is merely a species of the broader problem of identifying the circumstances in which it is just to hold one individual accountable for the actions of another[14]But, in this case, the Court held that Sony did not have actual knowledge of the infringing activities of its customers.
At the most it could be argued that Sony had constructive knowledge of the fact that "its customers may use that equipment to make unauthorised copies of copyrighted material.
"[15] The court then relied on the "staple article of commerce" doctrine of patent law and applied it to copyrights.
[16]Since the Betamax was capable of "significant noninfringing uses", Sony was not held liable for contributory infringement.
Contributory infringement has been the central issue in the cases involving peer-to-peer services such as Napster, Aimster, Grokster, and Morpheus.
But, a similar service like Grokster was not held liable for contributory infringement as in this case, a district court, grounding its reasoning on the Sony Betamax decision, held that secondary liability could not be applied to peer-to-peer services.
[21] It was also held that the encrypted nature of the transmission was not a valid defence as it was merely a means to avoid liability by purposefully remaining ignorant.
Lastly, Aimster could also not get benefit of DMCA 'safe harbor' provisions because it had not done anything to comply with the requirements of Section 512.
Thus, it was held that Grokster and Morpheus had no way of controlling the behaviour of their users once their software had been sold, just like Sony did with Betamax.
The proposed amendment would provide that whoever intentionally induces a violation of subsection (a) would be liable as an infringer.
"In the European Union, the European Court of Justice has issued several rulings on related matters, mainly based on the Copyright and Information Society Directive 2001 and Electronic Commerce Directive 2000[30] and focused on what constitutes an act of "communication to the public" or of "making available".
Section 51(b) deals with situations in which the effects of an already existing primary infringement are accentuated by the actions of the defendant.
Due to this wide definition, almost every entity, including ISPs, search engines and online service providers can get the benefit of the safe harbor provisions in the IT Act.
In December, 2016, the Delhi High Court reversed the judgment passed by a single judge bench earlier to hold that unless 'actual knowledge' was proved, an intermediary could not be held liable for contributory copyright infringement.
Super Cassettes had argued that 'place' under Section 51(a)(ii) includes a virtual space similar to the one provided by MySpace.
Therefore, there was a duty on the plaintiff to first identify specific infringing material before knowledge could be imputed to the defendant.
The single judge had interpreted Section 81 to mean that safe harbor under IT Act is not applicable in cases of Copyright Infringement.
To amount to an infringement under Section 51 of the Copyright Act, the authorization to do something which was part of an owner's exclusive rights requires more than merely providing the means or place for communication.
To be held liable for being an infringer on the grounds of authorization, it was necessary to show active participation or inducement.
Therefore, Section 79 is available in cases of copyright infringement also provided the conditions under the Act and Intermediary Guidelines, 2011 are fulfilled.