Digital Content, Divided Control: The Ownership Illusion

Introduction

In the digital age, content knows no borders, but ownership remains trapped in grey zones, Copyright wars shatter creativity, and the law still stays in its ambiguous zone. Infringers wage a silent war that slowly unfolds - where echoes of ownership grow cold.

Over-the-top Platforms came to the rescue of people during the quarantine phase, bringing the industry to a boom. The global market size of the digital platform was $0.45 trillion in 2024, attracting around 3.7 billion consumers and an estimated revenue of $300 billion. Whether it be shows, movies, or sports, the digital platform provides an array of entertainment to consumers.

However, while we Netflix and Chill, the service providers face the legal battles of ownership, let it be the Tattoo artist bringing the copyright infringement against Netflix for it featuring its work in the Tiger King Series or let it be actor Dhanush suing the platform for unauthorised use of behind-the-scenes footage of his movie “Naanum Rowdy Dhaan”.

The main issue is a rise in copyright infringement with the rise in creative freedom and the rise of digital consumerism. Creators create, but they often lose the ownership, or due to procedural delays, have to surrender it to infringers. Leading to a core conflicting question of ownership and access.

Copyright Exhaustion in the Digital Age : Myth or Misfit

The doctrine of copyright exhaustion, often called the first-sale doctrine, allows a lawfully owned copyrighted item, like a book or DVD, to be resold, lent, or given away without the permission of the copyright holder. In the contemporary world, this concept is elementary; after purchasing a book, the owner may resell or share it. But in the digital realm of streaming services, the proposition is not that simple. Movies, music and e-books are digital properties that are rarely sold; rather, the owner ‘licenses’ them under stringent conditions restricting the user rights. Access to the digital property is subject to limitations that prohibit its transfer or resale.

In Indian laws, the concept is not expressly mentioned, but copyright exhaustion is inferred by Sections 14 and 19 of the Copyright Act, 1957. The sections govern the rights of copyright owners and license transfers. The United States court in the case of Capitol Records, LLC vs. ReDigi Inc., ruled that it is unlawful and violative of the exhaustion principle to resell used digital audio files, as no physical copy is provided. However, the European Court of Justice had a different opinion in UsedSoft GmbH vs. Oracle International Corp., suggesting that exhaustion might be applied to some digital properties by allowing the software license to be resold in certain situations. Such conflicting rulings suggest that the intangibility of digital content casts doubts on contemporary agreements of copyright.

It is important to understand that the streaming companies use ambiguity to trap users within their ecosystems. Digital properties not being easily transferable or resalable, creates disparity among customers who pay full price but have fewer rights than those who purchase physical media. Critics argue that copyright exhaustion favours businesses, making it a myth in the digital age. However, coding the loss of digital content hinders innovation and disrupts the economy. The question persists whether licensing arrangements guarantee sustainability of the creative sector or should consumers and customers have more control and rights over their digital purchases?

The Power Play OTT Platforms and IP Monopoly

Over-The-Top (OTT) service platforms have established control over digital properties because of belligerent licensing agreements that restrict producer authority. In addition to perpetual licensing and territorial limitations, these agreements contain provisions giving exclusive control to the platforms to distribute, alter or curate content in the digital realm using algorithms. Small creators, independent musicians, filmmakers, or local content providers face risk from the OTT giants. To stay relevant, these endangered groups of artists and creators face the dilemma of either forgoing their Intellectual Property or retaining it at the cost of remaining invisible in the competitive market.

As the creators and platforms have such dissimilar unequal bargaining power, Section 19A of the Copyright Act rarely applies, making the right of the creator to terminate licensing under certain circumstances ineffective. The European Union's Article 13 on the Copyright Directive aims to guard the intellectual property rights of owners globally by holding the platforms accountable for copyright infringement, despite its inconsistent application and bias towards corporate interests. Although the United States Digital Millennium Copyright Act grants platforms significant takedown authorities. The safe harbour provisions compromise fair usage and ensnare authors in an unfamiliar web of conflicting and automatised content warnings.

Further ramifications of the power dynamics occur as language and regional content which are crucial, exclusive and distinct to India’s cultural environment, often fall in conflict with platforms' algorithms, which favour big-budget, well-known and expensive movies imposing western philosophy. Platform recommendation algorithms have the potential to marginalize and hide the work of small artists. An important question is brought up by the monopolistic hold of OTT platforms: do these internet behemoths encourage or inhibit creativity? A comprehensive strategy could prevent platforms from turning into cultural censorship by using transparent algorithmic curation or enforcing equitable license terms.

Beyond Dynamic Injunctions : From Reactive to Proactive

The initial phase of copyright infringements got their remedy as injunction orders by the court, limiting the perpetrators from using registered content. However, as a loophole, the infringing parties started using mirror websites, to deal with it and save the purpose of the injunction, courts introduced Dynamic injunction. Where the earlier granted injunctions could be extended and applied to mirror websites when brought to the notice of the concerned court. Indian courts, taking insights from the High Court of Singapore, first introduced it in UTV Software Communication Ltd. & Ors. v. 1337x.to & Ors, 2019 SCC OnLine Del 8002.

However, the issue persisted as raised in the case of Star India Pvt Ltd v. IPTV Smarter Pro & Or, The right holders claimed for time-sensitive events such as broadcasting and live streaming of games, filing infringement ex-post still would cause irremediable damage to the Intellectual Property rights. To deal with it, the Delhi High Court introduced one of the judgements of its kind by introducing Superlative Injunction. The remedy effectively increases the applicability of injunctions to rogue mobile applications that were not considered previously, and the new regime does not require submitting affidavits and evidence to the court for its limited period of operation in time-sensitive events.

The Superlative Injunction has allowed rights holders to play a proactive role in protecting their rights. But the question is, allowing such liberty and leniency in the procedural aspect and utmost trust in the right holders, does it guarantee protection, or would it become an unsound privilege for the right holders to gain a monopoly and control the market, as described earlier in the blog?

A Charter for Tomorrow : Finding the Gaps and Restoring Balance

Section 14 of the Indian Copyright Act defines and outlines the exclusive rights of copyright holders, and Section 19 governs the mode of assignment of Copyright. Still, there remains an ambiguity regarding rights post-selling the copyright for both parties and the consumer.

Consumption of rights of an Intellectual Property Right post-sale or legal transfer of title, limits the then-owner from controlling or preventing the further sale of goods bearing the said intellectual property right; this is known as the Doctrine of Exhaustion of IPR. However, negligence of this principle in the digital platform is the major cause of major infringement cases. The fact that this seemingly minor lapse is also a substantial dispute in international law.

In Capitol Records v. ReDigi, the United States Court of Appeals decided that reproduction of digital media, even for reselling, comprises infringement, while the European Union contrastingly held that the software’s copyright owner cannot prevent a perpetual licensee who downloaded the software from the internet by selling his "used' licence in UsedSoft GmbH v Oracle International Corp. India should choose and adhere with one of the practices for the timing to shape itself to tackle an upcoming regime of infringements. Moreover, for the upcoming years of IP matters, Arbitration and Mediation should be preferred over the traditional bureaucratic wrangling, promoting transparency and speedy disposal.

Conclusion

As someone who regularly streams music and binge-watches television, I’m amazed at how streaming has made art both so accessible and so inaccessible. Although we purchase subscriptions, the content is not ours; creators put their all into their work, only to have platforms make decisions. Copyright laws are stuck in the pre-digital era; they need to achieve contemporary relevance. It is crucial for the law to adapt itself to protect the rights of the users and the spirit of innovation, along with protecting the interests of the digital competitive market. The customers, who are the driving force of the digital market, are being treated as tenants and marginalised creators dishonouring their interests and integrity. The rights are long foregone in the age of streaming wars across various digital platforms. The future lies in the hands of legislators to create proactive and adaptive laws that restore the integrity and protect the interests of those who create and appreciate art in the digital age.

Author: Taskin Akhtar, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.