This article is written by Kusuma Sai, pursuing a Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from Lawsikho.
Table of Contents
Introduction
We all know that technology has been updating day by day. Along with the development of technology, there is the widespread use of the internet and digital networks have been developing. We are aware that there is a huge use of the internet during the COVID-19 pandemic. The number of internet users had increased during this pandemic. The Indian government had imposed a lockdown due to the increase of COVID-19 cases. Before the pandemic situation, there was no huge use of digital licenses but during this COVID-19 pandemic, there is a need for a digital license. In this article, we are going to learn about the digital license agreement.
Definitions
- Digital: Before the internet days, there exists a limited option for the exhibition and distribution of copyrighted content. We are all observing a new revolution as to how copyrighted contents are acquired, exhibited, and distributed. Here the term “digital” describes that it is an electronic technology that generates, stores, and processes data. digital technology is firstly used within new physical communications media such as satellite and fiber optic transmission.
- Licensing agreement: It is a legal contract by which one party who owns certain intellectual properties allows another party to use that intellectual property. The party who owns the intellectual property is called “the licensor”. The party who uses the intellectual property is called “the licensee”.
- Digital content: That means the product or any other digital material available for License through the site. Digital content does not include any promotional videos accessible through the site, nor does it include the Licensor mobile app or any other, which is governed by a separate agreement.
- Royalty: The payment that is made to the licensor for using his/her intellectual property is called “a royalty”.
Types of devices for receiving digital content
Digital content can be received only to the devices mentioned as below:
- Mobile/smartphone.
- Laptop.
- Desktop.
- Tablet PC.
- Digital television.
- Digital music player.
- Digital record system.
- Digital radio.
- Personal digital assistance includes iPhone as well as Blackberry.
- Video game console.
- E-book.
Terms that can be a part of digital content
Here are some of the terms that can be defined and covered under digital content.
- Web: It is a network of interlinked documents and resources residing on the internet. The web uses hypertext protocols and language that are available for display by using browser software.
- Internet: It is a global communication system of computer networks that are approachable by the public which interconnects individual computers and other networks that can be directly or indirectly. It also enables users to engage in the two-way transmission of data over networks in order to transmit and receive content.
- Download: The regaining and fetching the data from a computer where there is access to the internet or other network. The recovery of data to a computer’s random access memory ram or the fetching of data is for storage on a hard disk.
- Caching: The copies of web pages that have already been stored or downloaded in the hard disk of a computer caching. This avoids the need of downloading the same content each time repeatedly. This improves the speed of access to the user who wants to view the content.
- Digital audio broadcasting: It is a technology used for broadcasting audio content by using digital radio transmission.
- Digital multimedia broadcasting: It is a digital transmission system that sends audio-visual broadcast signals to mobile devices. The DMB system takes part with DVB-H.
- Digital video broadcasting: Hand (DVB-H): This system takes part with DMB. It transmits the audio-visual broadcast services to handheld devices.
Methods of licensing
Copyright facilities have access to create content with creativity through licensing. As per India’s Copyright Act, it enables three types of licensing mechanisms. They are as follows:
- Compulsory licensing: It has been introduced to provide the access to the content that would be withheld from the public. Every individual can approach the Intellectual Property Appellate Board (IPAB) in case of any disputes which arise in the future and there will be a fixed fee for obtaining a license.
- Statutory licensing: Compulsory and statutory licensing provisions are triggered in a situation where there is an inaccessible copyrighted work. For example, in case of a failure in the market. This license has been proposed to ensure public access to musical works over FM radio. Due to the failure of the music industry in the market, statutory licensing has been proposed by the Rajya Sabha Parliamentary Standing Committee report on the Copyright (Amendment) Bill, 2010. Contrary to the compulsory licensing, Parliament has introduced the statutory license under the copyright law for a limited purpose. Statutory licensing is an exception as per the Indian copyright law. Because the mechanism authorizes announcers to approach the IPAB for the license directly without the need of negotiating with the copyright owner.
- Voluntary licensing: The copyright owner reaches an agreement with the parties who are interred to provide a license to use the work upon the mutually agreeing terms and conditions.
Legal provisions
There are several entities that operate in the digital ecosystem where we can store the data. Such datasets are of Intellectual Property entities that collect, process, and create data. India amended Section 2(o) of the Copyright Act in 1994 to protect databases. This section has been amended pursuant to the obligations under the TRIPS Agreement. India allows this protection to “compilations of data which exhibit creativity in the selection and arrangement of data as a “literary work”, as reported by the Agreement. In recent policy-making endeavors like Drafting National E-Commerce Policy, 2019 and the Drafting of Non-Personal Data Governance Framework that appears in the domestic copyright law. These two drafts make references to the obligatory sharing of proprietary data.
Exemption
A copyright license is not required where the act is done in relation to copyright work9 which falls within the specified permitted acts. They are as follows:
- Education
- Public Administration.
- Research study.
- Libraries and archives.
- Private study.
- News reporting.
- Review.
- Licensing schemes.
- Criticism work.
- Incidental inclusion.
- The lawful use of computer programs.
- Making of temporary copies.
Avoid infringement
There are two types of technologies that can protect from infringement. They are as follows:
- Digital watermarking: This attaches specific information to the original content data file. This is called a watermark. The distributor or the original creator of the file can check at the watermark of any given file to avoid copying. It embeds the identity of the owner of the copyright into the work so that they can easily identify it in case of infringement.
- Digital fingerprint: It embeds information like email address and purchase location, into each user’s copy of digital content which can be extracted to help in identifying the culprits when there is an infringement.
Clauses involved in the agreement
The clauses that must be included in a digital license agreement are:
- Recitals clause: This clause must include the parties’ names, address,es and related information of the respective parties.
- Acceptance clause: There must be a clause of acceptance in this Agreement. This is one of the important clauses in this digital license agreement. The licensee must accept the terms and conditions that have been put forward by the Licensor. For digital content, there is a link or a button named “I Agree”. The Licensee who is using the digital content must click this button. For example, if you are a user of Amazon Prime, before login there is an option that says “I Agree”. By clicking that the users can get access to login and proceed to create an account.
- General description service clause: In every agreement, there must be a clause regarding the services provided by the licensor to the licensee. The Licensor must describe their services in deep so that the licensee can easily get to know about the services provided by the licensor without referring to the others. The Licensor will have sole control over the services, all features, terms, and other aspects.
- Distribution modes clause: For every digital content sharer there must be a certain mode to distribute the content. There should be a specific mode to share the content. The Licensor must provide the mode to use the services or content by the Licensee. For example, if there is a music developer, he can share his/her content through digital in the form of an app or a website. Distribution mode can be referred to as digital purchase, digital rental, non-transactional access, and ad-supported access.
- Rights granted clause: The licensee can advertise, distribute and promote the content according to the terms mentioned. The licensee has the right to know whether it is an exclusive license or a non-exclusive license. This grant clause shall also identify the specific restrictions that the licensee must follow while exercising the rights granted. The licensee should not subtitle or dub the licensed content. The licensee must not use licensed content through a licensed platform. There is no right to edit or after the licensed content. All residual rights of the licensed content shall vest absolutely with the licensor. The licensee has the right to claim the damages that occurred due to licensor.
- License fee payment: This is one of the important clauses in the digital license agreement. The licensee shall pay the fee as prescribed by the licensor. The mode of payment can be through banking, Google Pay, Phone Pe, and card/Debit, or Credit. There will be no cash payment for digital content. The fee must be paid on or before using the digital content. After the payment, the Licensor can grant permission to the Licensee to use the digital content. For example, Aha is one of the digital platforms. Before login to this, it shows the icon named “Subscribe”. It means first the payment should be done. After the payment, we get access to that. The Licensor can specify the time limit for the Licensee for the payment of a fee.
- Term clause: The term clause shall consist of the term of license. That means the license shall be granted for a particular period. For example, while we are creating an Amazon Prime account there will be a subscription and that shall contain three months, six months, or one year. As per the example, the term of the license can be of three months, six months, or one year. The licensee must renew on completion of the term. If the payment is not done, then the licensee shall not have access to the digital content.
- Account setup and maintenance clause: This clause specifically describes that the Licensor shall maintain the account without any issues. The licensor can limit the number of users for one particular licensee. For example, Amrutha is an account holder of Amazon Prime. She got access to use the digital content. She can share her account with a maximum of 10 members. According to the example, the licensor can limit the number of users. Any act was done by the licensee, the licensor can cancel the account of the licensee.
- Taxes clause: The licensor will be solely responsible for collecting the taxes and paying to the appropriate taxing authorities. The licensee will be responsible for the taxes as levied by the applicable taxing authorities. Any charges toward the stamp duty shall be payable under the applicable laws be done by the licensee.
- Amendment clause: The licensor has the right to make amendments to this agreement. The licensor has the sole discretion to make the changes over the time to this agreement. Amendments shall be made in Policies, terms and conditions, and guidelines as referred to in this digital content agreement.
- Representation and warranties clause: The licensor represents and warrants that it holds all right, title, and interest in and to the digital content offered for License on the site and is the sole right holder in respect of such digital content. And exercise by the Licensee of the rights granted hereunder shall not infringe the copyright of any third party copyright holder. If a third party claims that the digital content infringes its patent, copyright or trade secret or any similar intellectual property right, the licensor will defend the licensee against that claim at the licensors’ expense and pay all damages that a court finally awards, provided that the licensee promptly notify the Licensor in writing of the claim, and the licensee allows the licensor to control, and the licensee cooperates with the licensor in, the defense of any related settlement negotiation. The Licensor does not represent or warrant and expressly disclaims any warranty that;
- Any information provided by the digital content will be accurate
- The digital content will be error-free or accessible at all times
- Defects will be corrected
- The digital content or the server that makes the digital content available, are free of viruses or another harmful component
- The use or the results of the use of the digital content will be correct, accurate, timely
- That the digital content will be supported on all computer or software systems.
It is expressly understood by all users that the digital content may from time to time be inaccessible or may not provide all features as a result of multiple factors which may or may not be within the Licensors’ control. It is further acknowledged and agreed by the licensee that the licensor may add, subtract, amend, modify and remove digital content available on the site at any time, and from time to time, in its sole discretion, without any notice to the licensee. The Licensor disclaims any liability as a result of any user’s inability to access or use the digital content at a particular time, location, on a particular device, or using a particular wireless provider.
The Licensor does not warrant that the digital content and deliverables will meet the licensee needs or be free from errors, that the operation of the digital content will be uninterrupted, as to the results that may be obtained from the use of the digital content, or as to the accuracy, reliability or content of any information or products provided through the digital content.
- Notice clause: This clause shall include, upon the changes/amendments made in the agreement, a notice of changes will be effective upon completion of thirty (30) days. A prior notice of 30 days will be given to the licensee. The changes to this agreement will be effective on the completion of 30days.
- Delivery of content clause: The duty of the licensor is to deliver the content correctly to the Licensee. There should be no technical issues. The content should be delivered in a proper manner without any bugs.
- Sub-titles clause: If there is any video digital content there must be sub-titles to each video in respective languages. For example, Mani Kumar is a Telugu user. He is intended to watch a Tamil movie or video. For his better understanding, the Licensor must provide him subtitles in his respective language.
- Title withdrawal clause: If the licensee misuses his rights or license, consents, or permission the Licensor can withdraw the title from the licensee. The Licensor has the sole authority to withdraw the title from the licensor with written notice of 30 days.
- Ownership: The licensee can retain the ownership rights in case of copyrights and also the rights and interest in the title. Suggestions can be provided by the licensee to the Licensor in the feedback form.
- Indemnification clause: The licensor can indemnify any breach by the licensee of representations, warranties, obligations, etc. The licensee can indemnify the licensor for any losses from the third party for infringement claims resulting from the use of the licensed technology.
- Termination clause: If either the party is in breach of this agreement and fails to cure such breach within 30 days following written notice from the other party.
- Limitation of liability clause: The licensee accepts sole and complete responsibility for;
- the selection of the digital content to achieve intended results.
- the use of any work product or materials produced using the digital content.
- the results obtained from the digital content.
The licensor will not be liable to the licensee or any third-party for any of the following:
- loss of profit
- reputational harm
- indirect, special, punitive, consequential
- incidental damages
- loss of data or information
These can be based on a claim or action of contract, strict liability, breach of any statutory duty, warranty, indemnity or contribution, negligence, even if the Licensor has been advised of the possibility of any of such damages. The total liability of Licensor under this Agreement arising from licensee of any digital content shall be limited to the license fee paid by the licensee for such digital content. The licensee hereby agrees that this license is granted to the licensee without any other warranty.
- Confidentiality: The licensee shall maintain the information confidential. Without the permission of the licensor, the licensee should not provide any information related to digital content to the public.
- Language: The language used in this agreement should be understandable by both parties. The licensor and licensee must use language which is understandable.
- Assignment clause: The licensee shall not assign, transfer or sublicense any of the licenses granted by the licensor for using the digital content, which can be direct or indirect, without the express written consent of the Licensor. Any assignee shall continue to retain services and assume all rights and obligations under this agreement.
- Dispute resolution clause: If any disputes arise between the parties then they can refer to IPAB or through negotiation. If the issue has not been resolved then they can go for arbitration.
- Governing laws and venue: The interpretation and enforcement of this agreement shall be determined by Indian law. The venue for the arbitration will be decided by the arbitrators.
Conclusion
Copyright has survived as a legal right in India since 1957. Many jurisdictions have recognized the need to modernize copyright for a digital era. A review of the Copyright Act should appreciate the economic rationale behind licensing. India has consumed over 75 exabytes of data over 16 billion DVD’S worth of data in 2019. Consequently, while the Copyright Act contains various licensing mechanisms, not all of them may be suited for the digital sphere. As technology is increasing, there is an option in mobile called screen recorders. The Licensee cannot record the digital content. To avoid such type, there should be a licensing agreement for every digital content.
References
- www.ecommerceknowhow.com
- www.louisianafilmchannel.com
- https://videodirect.amazon.com/home/agreement?ref_=avd_hm_ft_la
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