In IndiaMart Inter Mesh Limited v. Open AI Inc. & Ors, the Calcutta High Court engaged with the question of whether a generative AI system such as ChatGPT should be treated as an intermediary or as an originator under the Information Technology Act, 2000 (IT Act). The case exposes the strain in applying the current IT Act framework to systems that generate content in response to user prompts.

The petitioner, IndiaMart Intermesh Limited (IndiaMart), runs an internet-based B2B marketplace that lists buyers and suppliers for a range of products. The respondent, OpenAI, operates "ChatGPT Search", an online chat interface through which its users can ask questions and the tool provides conversational responses with links to relevant websites.

The petitioner's complaint was that ChatGPT Search was deliberately bypassing the IndiaMart platform for listings accessible on the platform and providing the seller's website or link directly, whereas it linked listings on similar platforms. The petitioner inter alia argued that ChatGPT falls within the IT Act definition of "intermediary" under section 2(1)(w), read with section 79 and the IT Rules, 2021 and that under Rule 3(1)(n) of The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (IT Intermediary Rules), it was not allowed to permit any kind of discrimination when performing a search-engine-like function. The respondent disputed being characterised an intermediary and having any obligation under Rule 3(1)(n). On the contrary, its position was that the response of ChatGPT was that of an "originator".

Section 2(1)(w) of the IT Act defines an "intermediary", in relation to any electronic record, as a person who, on behalf of another, receives, stores or transmits that record, or provides a service in respect of it, and includes search engines and online marketplaces. Section 2(1)(za), defines an "originator", as a person who sends, generates, stores or transmits an electronic message, or causes it to be sent, generated, stored or transmitted, and excludes intermediaries.

The characterisation of ChatGPT as an intermediary or an originator matters because an originator is responsible for the content attributed to it under Section 11. Conversely, Section 79 gives intermediaries protection from liability for third-party content, provided that they do not initiate the transmission, select the receiver, or select or modify the content, and that they observe due diligence and follow conditions stipulated under the IT Intermediary Rules (including Rule 3(1)(n) which the petitioner relied on to claim that ChatGPT must not discriminate).

The Court stated that whether ChatGPT falls within the definition of an intermediary or an originator is a complicated and vexed question of law and fact, which can only be adjudicated in a final suit after hearing technical, scientific and expert evidence. However, for the purpose of the interim application, the Court, prima facie treated ChatGPT's generative qualities as bringing it within the scope of an originator. It distinguished conventional search engines from large language models: the former index, rank, and list websites that may contain relevant information in response to user queries, while large language models go functionally beyond by scouring data on the internet, applying algorithms, and producing synthesized responses to user queries. At the same time, the Court acknowledged that there was a strong argument for ChatGPT to be treated as an intermediary because any response it generates always depends on a user prompt.

Ultimately, the Court held that, even if ChatGPT were assumed to be an intermediary, the petitioner had not established a breach of any substantive legal right. IndiaMart had alleged trademark dilution, disparagement and unfair trade practice. The Court held that mere referential use of IndiaMart's name to identify it in a response did not meet that threshold for trademark dilution. It further held that publication of the kind required to sustain disparagement, trade libel or injurious falsehood claims was absent in this case. Further, it held that even if there was an element of unfairness, that was not legally wrong, as the respondent could not be compelled to do business in the manner which is most convenient to the petitioner. In the absence of a prima facie case, and with the petitioner also failing to establish balance of convenience or irreparable injury, the interim application was dismissed.

Notably, the Court acknowledged that generative AI does not fit neatly into the IT Act framework as the Act was drafted before the advent of such systems. It called for legislative intervention to create distinct liability for AI platforms which recognises and distributes liability across developers and users in proportion to their control and participation. The Court also said that this exercise may require re-examining whether the law should adopt a function-specific or entity- specific approach to concepts such as "intermediary" and "originator".

Reports suggest that legislation may be moving in this direction as an official from the Ministry of Electronics and Information Technology (MeitY) recently commented that a new legislation specific to AI systems may soon be in the works.

Takeaways

IndiaMart v. Open AI is among the first Indian rulings to engage directly with whether large language models like ChatGPT should be treated as an intermediary or an originator under the IT Act. While the Court found prima facie case to view it as an originator, the outcome turned less on that classification and more on IndiaMart's failure to show that any of its legal rights had been infringed.

This being an application for interim relief, the classification question itself remains open for final adjudication. However, the Court's recognition of the limitations of the existing legal framework to address the issue and the need for legislative intervention to create a new classification is telling and may serve as a useful signal to policy makers.