TMT CASE LAW: National Stock Exchange of India Ltd v. Meta Platforms, Inc. & Ors
DATE OF JUDGEMENT: 16 July 2024
BRIEF FACTS |
In a case involving impersonation and trademark infringement, the National Stock Exchange of India Ltd. (“NSE”), sought legal intervention against the wrongful circulation and publication of false and misleading advertisements on social media platforms owned, operated and controlled by various social media intermediaries, including Meta Platforms, featuring fabricated videos of Mr. Ashishkumar Chauhan, Managing Director and CEO of the plaintiff, generated using sophisticated AI technology to imitate the voice and facial expressions. These deep fake videos falsely portrayed Mr. Chauhan endorsing stock-picking services and encouraging viewers to join a WhatsApp group for investment tips, with an intention to defraud the viewers.
PLAINTIFF’S ARGUMENT |
NSE sought removal of such videos on the grounds that:
The fabricated videos made unauthorised use of Plaintiff’s trademark ‘NSE’, misleading the viewers to believe that the content was endorsed by NSE.
The videos were false and misleading, falsely implying NSE’s endorsement of stock-picking services, deceiving investors and damaging NSE’s credibility.
The social media intermediaries failed to prevent continued circulation of deep fake videos and were negligent in promptly removing such content despite being notified, violating their obligation under Information Technology Act, 2000 (“IT Act”) and Rule 3(1)(b) and 3 (2) of Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“IT Rules 2021”).
KEY ISSUES |
The primary legal issues in the case included:
Deepfake Videos and Misleading Content: Whether the unauthorized use of NSE's registered trademark in the AI-generated deepfake videos misled investors into believing that the content was officially endorsed by NSE, potentially causing financial harm to investors and brining disrepute to NSE.
Intermediary Liability: Whether social media platforms like Meta and others failed to comply with their legal obligation under the IT Act and IT Rules 2021, which require due diligence to be undertaken by intermediaries and to take down content which is patently false, untrue or misleading in nature, within prescribed timelines.
HIGH COURT’S DECISION |
The Hon’ble High Court while emphasising the duty of intermediaries under IT Rules 2021, and in particular, Rule 3 (1) (b) of the IT Rules 2021, noted that intermediaries are required to exercise due-diligence to prevent the hosting, sharing or dissemination of information that infringes on intellectual property rights or misleads users. The rule mandates that intermediaries promptly remove or disable access to infringing content within 36 hours of a Court order or notification from the government.
The Hon’ble Bombay High Court granted interim relief to NSE and ruled that NSE had established a strong prima facie case of trademark infringement and directed social media platforms, including Meta and WhatsApp, to remove the infringing content flagged by the NSE, within 10 hours of receiving complaints from NSE. Additionally, the Court directed the intermediaries to disclose to the Court, the information about the unknown perpetrators involved in circulating fraudulent content.
CONCLUSION |
The National Stock Exchange of India vs. Meta Platforms Inc. case is a landmark decision addressing the growing concerns surrounding deepfake technology, misinformation and the responsibility of social media intermediaries. The outcome of this case may set a precedent for holding social media companies more accountable for content moderation. It may also prompt legislative amendments to enhance safeguards against AI-driven fraud and cybercrime. This case is a significant step toward ensuring digital accountability and protecting the integrity of financial markets from emerging cyber threats.
Moreover, this case underscores the importance of investor protection in an increasingly digital world. The rapid spread of misinformation through social media platforms poses a significant risk to public trust in financial institutions. The judgment serves as a warning to fraudsters and a call to action for regulators and tech companies to enhance their compliance mechanisms.
In case of feedback, suggestions, or queries, please reach out to the C&M team on
Comments