Hon’ble High Court of Delhi judgement in the matter of Digital Collectibles Pte Ltd and Ors. vs. Galactus Funware Technology Private Limited and Anr.

An interesting case before the Hon’ble High Court of Delhi, where the central aspect revolves around the Online Fantasy Sports (OFS), exploring the exponential increase of its use in India. The Hon’ble High Court of Delhi in its judgement elaborates on what are OFS games and whether the use of attributes of a player, breaches the individual’s right to privacy and right of personality.

OFS games are online games that allow players to create and manage their own sports teams based on real-life players and their profiles. Players can compete with each other in events that are centered around real-world events, be they national or international. To enter and be able to play the OFS game, players usually must pay an entry fee, after which they can use their skills to progress in the games and win prizes.

There is no standard format or sport for OFS games, it depends on the developer themselves. Some OFS games, such as the ones in the present case, only permit entry by way of Non-Fungible Tokens (NFT); they are unique digital identifiers recorded on a blockchain that cannot be copied or subdivided.

Recently, the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules 2023, were promulgated, which widen the scope for operation of online gaming in India, aiming to regulate online gaming through a self-regulatory model.

Facts of the case

Plaintiff 1 is engaged in the development of an online market, where third-party users can buy, sell, and exchange officially licenced ‘Digital Player Cards’ of cricket players, who have provided the right and permission to use their names and images solely to Plaintiff 1, operating its business under the brand name “Rario”. To identify it as legitimate and original, it uses a special software code encoded in Digital Player Cards with official licenses. Along with Plaintiff 1, there are Plaintiff No. 2 to 6, who are well-known Indian cricketers.

Mobile Premier League (“MPL”) is a brand name of Defendant No. 1 and Defendant No. 2 carries on its business under the brand name “Striker”, which is listed on MPL mobile application. The defendants operate under the brand name “Striker Club” which is accessible through their website and mobile application.

The defendant’s platform provides accessibility to third-party users, where they can buy, sell, and trade Digital Player Cards, utilising the NFT technology, which authenticates the Digital Player Cards. It is noteworthy that both Plaintiff No. 1 and Defendant No. 2, uses the players’ name and initials, however, Plaintiff No. 1 has the license from Plaintiff No. 2 to 6 for utilisation of their attributes, which to the contrary is used by Defendant No. 1 without procuring any license for utilisation of the attributes of the Plaintiff No. 2 to 6.

Issue at hand

The Plaintiffs have prayed for relief of permanent injunction from estopping the Defendants from utilising the player marks and other attributes of Plaintiff 2 to 6 on account of passing off, unfair competition, breach of personality rights, unjust enrichment and tortious or unlawful interference with the economic interest of the plaintiffs. Apart from the prayer for permanent injunction, the plaintiffs have also demanded relief of rendition of accounts and damages.

What is the Delhi High Court ruling?

The Hon’ble High Court of Delhi elaborated on the issues of passing-off, where it has recognised the right to publicity for an individual and at the same time has stipulated that this right is not unrestricted and cannot be overemphasized. Taking its view from the legal position established with respect to the right of publicity in the US and the UK, it has stated: –

“Where a significant creative component has been added to a celebrity’s identity, it would amount to permissive use and would not fall within the purview of violation of the right to publicity.”

The Hon’ble High Court of Delhi through reference of various judgements, held that:

“Use of celebrity names, images for the purpose of lampooning, satire, parodies, art, scholarship, music, academics, news and other similar uses would be permissible as facets of right of freedom of speech and expression under Article 19(1)(a) of the Constitution of India and would not fall foul to the tort of infringement of the right of privacy.”

Furthermore, the Hon’ble High Court of Delhi stated that the player names and performance data used by Striker, which include information about a player’s real-world match performance, are publicly accessible in the public domain and can be used by anybody. This includes the players themselves. As a result, the player cannot grant a third party an exclusive license to use such publicly available information.

The Hon’ble High Court of Delhi remarked that the plaintiffs could not assert that they had sole authority to employ NFT technology, which can be free of cost. To guarantee security and authenticity as a way of proving ownership of its cards and to maintain a record of transactions on a blockchain, the defendants deployed NFT technology. A review of the Digital Player Cards used by the Defendants on the Striker platform reveals that the cards in question make no mention of endorsements or affiliations with specific players. Furthermore, they make no claims that the players have formally authorized or autographed the cards.

Additionally, the NFT Player Cards made available by Striker only feature artwork and don’t include a player’s actual photo. The Hon’ble Court of Delhi noted that a collector or a player’s fan would be less likely to purchase such a card as memorabilia when other NFTs featuring real photographs or videos of athletes are available for purchase on the Rario platform. It cannot be stated that the defendants are claiming any endorsement from a player or advertising its game based on the personality of a player because the Digital Player Cards are available for all current players who are eligible for selection.

The Hon’ble Court of Delhi further noted that apart from the issues at hand, the application for exemption from advance service as submitted on behalf of the plaintiff was not legitimate because the defendants had already been operating their business for almost six months and the granting of an ex-parte injunction order would seriously hurt their business. The defendants are direct competitors of Plaintiff No. 1 in the OFS industry.

It was therefore held by the Hon’ble High Court of Delhi that even when convenience and irreparable injury are balanced, all the criteria go against the plaintiffs and in favour of the defendants. As a result, if an injunction were to be granted at this point, Defendant No. 2’s business would be forced to close, resulting in enormous financial losses for both Defendant No. 2 and the Striker platform’s users.

Compliance with the High Court ruling:

In pursuance of the landmark judgement in K.S. Puttaswamy vs. Union of India[1], the scope of the right to privacy enshrined under Article 21 ‘Protection of Life and Personal Liberty’ has been expanded. One such newly created avenue is the right to personality and right to publicity mentioned in the cases of ICC Developmentvs. ARVEE Enterprises and Anr[2].; D.M. Entertainment Pvt. Ltd. vs. Baby Gift House and Ors[3]. and Titan Industries vs. M/s. Ram Kumar Jewellery[4].

It involves the freedom from being subjected to unwanted exposure of one’s individuality as well as the right to privacy, independence, and these other rights. It also includes the right to stop one’s likeness and image from being used for commercial purposes without permission or payment. Regardless of whether corporate entities are considered to be legal persons in the perspective of the law, personality or publicity rights are specific and traceable solely to “individuals” and not to corporate bodies.

In the case of ICC Development (International) Ltd. vs. Arvee Enterprises and Ors[5], when the plaintiff contended that they were the exclusive owner of the commercial “identity” or “persona” of ICC Events, and they were the owners of all publicity rights for ICC Cricket events involving a commercial purpose, the Hon’ble Delhi High Court rejecting the contention, pronounced the judgement which still forms the backbone of right to publicity cases, and quoted, as below-

“The right of publicity has evolved from the right of privacy and can inhere only in an individual or in any indicia of an individual’s personality like his name, personality trait, signature, voice, etc. An individual may acquire the right of publicity by virtue of his association with an event, sport, movie, etc. However, that right does not inhere in the event in question, that made the individual famous, nor in the corporation that has brought about the organization of the event.

Any effort to take away the right of publicity from the individuals, to the organiser {non-human entity} of the event would be vocative of Articles 19 and 21 of the Constitution of India. No persona can be monopolised. The right of Publicity vests in an individual and he alone is entitled to profit from it.”[6]

While Indian courts are considering the idea of recognising personality rights, the government has acknowledged the urgent necessity to also shield the general public from deceptive and misleading advertising and endorsing of goods backed by such personalities/celebrities. In support of this goal, the Consumer Protection Act of 2019 amendment was passed, which places penalties on endorsers of consumer products and aims to prevent deceptive marketing of goods.

The Advertising Standards Council of India (ASCI) in its Code of Self-Regulation[7] has also recognised the likelihood of misappropriation and exploitation of well-known personalities in advertisements. As there is no specific statute relating to the right of publicity in India, the right of publicity is recognised with reference to other related statutes such as the Indian constitution, intellectual property-related laws, competition law and through precedents.

Decision:

• The Hon’ble Court determined that the plaintiff’s application to be exempt from advance service was not legitimate in light of the defendants’ almost six-month operation of their game and the fact that the defendants are the plaintiff’s No. 1 direct competitors in the OFS industry. The grant of an ex-parte injunction order would have severely hurt their business.
• The Hon’ble Court further acknowledged that the balance of convenience was in the defendant’s favour because granting an injunction would force the closure of defendant no. 2’s business and result in significant financial losses for both defendant no. 2 and the Striker platform’s users.

Hence, the Hon’ble Court held that the plaintiffs had failed to make out a case for grant of interim injunction.

Present Scenario

As recent as on 11^th of May 2023, the Digital cricket collectible platform named Rario and five Indian cricketers have approached the division bench of the Hon’ble High Court of Delhi, praying to halt the production and distribution of Non-fungible Tokens (NFTs) bearing their likenesses and names by online fantasy sports (OFS) companies Striker and MPL. Cricketers, such as Harshal Patel, Mohammed Siraj, Umran Malik, Shivam Mavi, Arshdeep Singh, and Rario appealed the single judge’s ruling of April 26 to the Division Bench.

The single-judge denied their plea for an interim injunction against MPL & Striker. The defendants Striker and MPL as well as the intervenor All India Gaming Federation were also briefly heard by the Hon’ble Court. The case was assigned for further consideration on May 23 by the division bench of the Hon’ble Court, which ordered both parties to submit written submissions within a week. The bench will address the appellants’ request for an interim injunction prohibiting the use of players’ NFTs on that day.

[1] ((2017) 10 SCC 1)

[2] 2003 VIIAD Delhi 405, 2003(26) PTC 245 Del, 2004 (1) RAJ 10

[3] 2002 CS(OS) 893, 2010

[4]2012 (50) PTC 486 (Del)

[5]2003 VIIAD Delhi 405, 2003(26) PTC 245 Del, 2004 (1) RAJ 10

[6]2003 (26) PTC 245

[7] Advertising Standards Council of India’s Code of Self-Regulation, 1958

Authored by - Vatsal Gaur, Surbhi Kapoor, Akshay Vasantgadkar

King Stubb & Kasiva,
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