A quick summary of the implications of Indian law on VoD platforms

1. Legal Anatomy of a VoD Platform in India
1. Introduction
India has, over the last two years, seen an explosion in video on demand (or “VoD”) platforms, launched
by a variety of players ranging from some of the world’s leading entertainment and media players to an
exciting array of start-ups. Indian law’s inability to play catch up has resulted in these companies adopting
a bewildering mix of legal and contractual strategies, a situation that does not seem to be rectifying itself.
This note summarises some of the legal and contractual complications that arise in the context of video
on demand platforms. Do note that while many of these complications plague audio on demand
platforms as well, notable differences do exist.
2. Foreign Investment into VoD
India’s foreign exchange laws permit multinational corporations to set up wholly owned subsidiaries
(subject to restrictions under the Companies Act, 2013) that run and manage VoD platforms. The law also
allows global private equity, venture capital, and strategic investors to invest in VoD platforms.
Standard reporting requirements would apply in respect of such investments but ought not to prove a
stumbling block for most acquisitions or investments.
3. Content Acquisition
Most VoD platforms in India do not distribute their own content. The few that distribute only their
content do so along with acquired content. As such, questions around structuring licensing arrangements
continuously arise. Unlike in more mature markets, negotiating standards have not yet crystallised in
India. Below are some of the trickier aspects of negotiating content acquisition for a VoD platform.
a. Grant of rights
Copyright’s forever expanding ‘bundle of rights’ poses a preliminary hurdle to a content
acquisition agreement. Most licensors of content would like to restrict the grant of rights to a
particular platform. Most VoD platforms would like wider rights to cover any expansion in business
or changes in technology.
b. Subtitles & Translation Rights
Again, most VoD players would like the right to create subtitles and dub the content into local
languages. Licensors, on the other hand, are keen to ensure that these translations and dubbing
(if any) are of a certain quality and that they can offer the translations and dubbed versions to
other licensees in other jurisdictions. This often gives rise to complex structures involving
approvals by the licensor, sharing of costs, and in some cases, sharing of revenue from any
derivative content by the licensor.
c. Copyright Societies
Indian copyright societies are waking up from a rather long period of inactivity and sharpening
their attempts at enforcement of rights, particularly in light of 2012’s amendment to the Copyright
Act, 1957. This is evidenced by a slew of recent judicial decisions involving copyright societies.
Typically, an exclusive licensee would undertake to clear any dues payable to a local copyright
society.

2. d. Representations & Warranties
Representations and warranties in a content acquisition agreement tend to be fairly standard.
Licensors tend to guarantee that they have all the rights required to authorise the distribution of
content and that the distribution of content will not lead to any lawsuits against the distributor.
The VoD platform tends to provide representations and warranties around digital security,
maintenance of DRM systems, and covering for “spillage”.
e. Indemnities
For the vast majority of content acquisition deals, indemnities tend to be rather wide, broad, and
open ended. Limitations on liability, a staple of commercial deals in other sectors, are not as
popular in content acquisition deals.
f. Digital Rights Management
Digital Rights Management systems are fairly standard and adopted across the board by
traditional VoD platforms. The rapidly maturing Indian market has recognised the need to adopt
some of the latest DRM technologies to prevent unauthorised redistribution. However, some of
the more technologically advanced platforms, including those based on blockchain, struggle to
adapt these standards to the world of immutability.
g. Governing Law & Dispute Resolution
In cross border content acquisition deals, governing law tends to a bone of contention. American
licensors tend to prefer the application of American law, particularly the laws of California. Indian
VoD platforms ought to prefer the application of the slightly less extortionary Singapore or English
law, both laws that have a mature IP regime and globally accepted concepts of damages. US law
ought to be resisted as far as possible. However, if unavoidable, it must be noted that the laws of
Washington D.C. and New York City have a far better record in adopting an even-handed approach
to damages (as opposed to the laws of California).
Arbitration is generally preferable from the perspective of maintaining confidentiality and
enforcing any decision. However, licensors tend to resist arbitration of disputes on account of an
antiquated understanding of the grant of interim remedies by arbitral tribunals.
4. Censorship
Indian censorship laws are mired in a patriarchal morality that would have made Queen Victoria proud.
However, they do apply to VoD platforms and censor certification is mandated by Indian law for any
content disseminated by these platforms. The inconsistency between the unbridled powers of the
regulator and its interplay with the constitutional guarantee of equality and freedom of speech and
expression has not yet been tested in the modern era. Regardless, the law as it stands requires regulators’
blessings prior to widespread dissemination.
Many players do not conform to these censorship laws and assume the risk of regulatory action.
5. Pornography, Obscenity & Sedition
Similar to Indian censorship laws, India’s laws on pornography, obscenity and sedition are of Victorian
vintage. They include:
• The Indian Penal Code, 1860
• The Young Persons (Harmful Publications) Act, 1956
• The Unlawful Activities (Prevention) Act, 1967

3. • The Indecent Representation of Women (Prohibition) Act, 1986
• The Information Technology Act, 2000
These laws collude to set standards that would bar much international content and render them obscene
or seditious. Recent judicial trends indicate that courts are reluctant to prosecute on the basis of these
antiquated laws and apply a more modern standard to what may be legally distributed in India. However,
only a comprehensive judicial challenge to these antiquated laws would reveal whether they conform to
the constitutional scheme.
VoD players in India appear to be operating under the presumption that the relaxed approach to
enforcement that has been adopted by the regulator will continue.
6. Clickwrap Agreements
Many VoD platforms enter into clickwrap agreements with viewers and users. These are enforceable, as
long as they are not unconscionable or unreasonable.
7. Payments
Licensees tend to tie up with some of the larger digital payments platforms to structure payment
solutions. PayTM continue to be the most popular, although smaller rivals like RazorPay appear to be
catching up. For international actors, payments introduce several layers of tax complexities and highly
structured solutions are not uncommon.
While multiple players are considering the use of cryptocurrencies on their VoD platforms, none of the
larger players enable the use of cryptocurrencies as a form of payment at this moment.
8. Insurance
Errors and omissions insurance is available in India and global insurers do provide global coverage that
extends to India. Given the relative low costs of insurance and the high risks associated with running a
VoD platform in India, we actively advise all clients to obtain appropriate forms of insurance.
9. Data Protection & Data Security
India’s data law is in a state of flux, caught between the old law, a comprehensive new law, and an
extremely progressive Supreme Court judgement. We advise clients to take a proactive approach to
privacy and data protection and to design their data architecture with global standards.
On account of the threat of IP litigation in the event of a data breach, we see VoD platforms adopt cutting
edge anti-circumvention and anti-hacking technologies. Market standard in data security closely rival
global standards.
10. Future of the market
VoD platforms have opened a whole new “market” for Indian and global content. Given the size of the
population, the explosion of internet and mobile penetration and the significant increase in disposal
income for a wide section of society, VoD players in India are primed to grow rapidly.
The fragmented nature of this large market, the absence of significant barriers to entry, and the explosion
of innovation and investments into VoD indicate that we will see considerable consolidation in the
market, both horizontally and vertically. Parties that are in the market would also be well advised to
consider the impact of competition law on its business models.

4. Given the clear dichotomy between market standards and the law, we also expect to see the
establishment of a self-regulatory organisation that can impose an element of discipline in the Indian VoD
market.
Do reach out to our TMT Group, should you have any comments or question.
Mathew Chacko Aadya Misra Aishwarya Todalbagi
mathew@spiceroutelegal.com aadya.misra@spiceroutelegal.com aishwarya.todalbagi@spiceroutelegal.com