How Dashverse-Mohalla Tech Settlement Could Set a New Precedent for Indian AI and UGC Ecosystem

A brief legal tussle over copyright infringement – now resolved – between Dashverse and Mohalla Tech is likely to provide an operational playbook for the Indian social networking ecosystem, now largely pivoting to AI-generated content including microdramas.

Dashverse, which operates microdrama platform Dashreels, moved Delhi High Court against Mohalla Tech (Moj and Sharechat parent) and 38 individual platform user accounts/John Doe in April this year over copyright infringement.

Mohalla Tech was ordered to provide Basic Subscriber Information (BSI) for defendants 2 to 38 within two weeks, which the company complied with. The court also directed the company to take down newly discovered infringing links within 36 hours.

Last month, the court disposed of the case following Dashverse’s request to withdraw the lawsuit, an action to which Mohalla Tech did not object.

Final binding terms directed by the court are: all blocked infringing links must remain permanently blocked, a 36-hour takedown protocol mechanism, and state that upon failure to comply with the 36-hour window, Dashverse retains the right to seek fresh legal remedies.

Dashverse did not respond to Entrepreneur India’s request for a statement.

A Mohalla Tech spokesperson told Entrepreneur India in a statement: “At Mohalla Tech, we hold intellectual property rights in the highest regard and are fully committed to maintaining a safe, compliant creative ecosystem. We take proactive measures to address copyright concerns and strictly adhere to all applicable intermediary guidelines. Aggrieved rights holders can seamlessly report unauthorized uploads or raise claims for rapid resolution directly through our dedicated Moj Copyright Portal or our Help Contact Page.”

Even as Dashverse and Mohalla Tech appear to have resolved the issue amicably along with paving the way for a 36-hour mechanism, copyright infringement remains a contentious issue, especially when it comes to social networking platforms hosting user-generated-content (UGC), leaving some grey areas unaddressed.

Also, the development shows how intermediary laws are still accepted as a solution for infringement related problems. Dashverse’s acceptance of the notice and takedown mechanism where notices are sent by them seeking takedown of infringing content on Moj, is an affirmation of intermediary laws.

Copyright Decree

Back in 2023, Pocket FM and Kuku FM reached a settlement over a copyright violation-related case. The two audio streaming giants tussled over publishing audio summaries of a few books which one of the parties had exclusive rights to. 

As far as UGC goes, a 2016 case between Super Cassettes Industries Ltd. (T-Series) and MySpace Inc saw the Delhi court giving relief to the intermediary, though was directed to take down infringing upon content within 36 hours of receiving the same. 

Gunjan Paharia, Founder and Managing Partner at ZeusIP Advocates LLP, tells Entrepreneur India there is no blanket duty under current law.

“In MySpace v. Super Cassettes, the judges made it clear, intermediaries aren’t required to pre-screen everything on their platforms. Rights-holders actually need to point out the exact spots before any action kicks in. That’s the idea behind Section 79, and Shreya Singhal narrowed down “actual knowledge” even further,” Paharia added.

Paharia further elaborates the Shreya Singhal case: “Back in 2012, two women in Maharashtra got arrested for a Facebook post and a “like” during a city shutdown. They were booked under Section 66A of the IT Act, in essence, a law that made sending “offensive” or “annoying” messages online a crime. Shreya Singhal, a law student, challenged this, and the Supreme Court struck the provision down, ruling it was too vague and a threat to free speech.”

The judgment also addressed Section 79(3)(b), which deals with platforms’ legal shields for user content. Before this, anyone could send a notice to a platform claiming some content was illegal and potentially place the platform at risk. After the ruling, platforms have to remove content only if there is a court order or government direction, not just because someone complains.

There is a qualification in copyright law, though. The Delhi High Court’s MySpace ruling means that if a rights-holder sends a notice with specific links, that is enough.

So copyright cases operate somewhat differently.

The 36-hour window may seem a reasonable window, especially from a legal perspective, but it may not necessarily be quick in the digital world.

Sonam Chandwani, Managing Partner at KS legal & Associate tells Entrepreneur India: “Within those 36 hours, content can be downloaded, edited, reposted and circulated through multiple accounts and platforms. By the time the original link is removed, several new copies may already be available elsewhere.”

“This naturally brings us to the question of proactive filtering. From the perspective of a copyright owner, it is difficult to justify why a platform should repeatedly remove the same content after receiving complaints if technology is available to identify substantially identical material at the point of upload. Fingerprinting, hash matching and other content recognition systems can certainly play an important role here,” she continues.

Chandwani further notes that the burden continues to remain heavily on the copyright owner. Someone has to find the infringing content, identify the links, identify the accounts, establish ownership and approach the platform or the court. Once one link is removed, another can appear almost immediately. In the world of user generated content, this can become a never ending exercise.

The problem becomes particularly serious when the same content is repeatedly uploaded by different users.

Fingerprinting Mechanisms & Challenges

At a global scale, larger studios and entertainment companies deploy digital fingerprint and forensic watermarking technology to protect their IP, and have some sort of automated copyright enforcement, and so on. These companies, however, need to work in tandem with the global tech infrastructure providers and digital platforms, like Facebook and Google (YouTube) to actually implement these mechanisms at scale.

Are these systems foolproof? It works to a large extent given these hosting platforms are quick to take down any copyright content from such larger studios. Beyond occasional content slips, there are multiple instances of these systems triggering erroneous penalties and unfair takedowns.

For Indian social networking platforms, the playbook could be similar. Though, a lot of content from these platforms get distributed on global social networks, and vice versa.

Chandwani puts this into perspective: “… I would be cautious about saying that courts should simply require platforms to block everything automatically. Copyright infringement is not always as straightforward as matching two files.”

“There can be licences, permissions, criticism, parody, commentary, transformative use and other legitimate uses of copyrighted material. An automated system cannot always understand that context. If the law moves too aggressively towards mandatory filtering, there is a real risk that platforms will simply over block content to protect themselves.”

She also calls for a middle ground where a platform has been repeatedly notified about the same copyrighted material, or where there is a clear pattern of repeat infringement, the expectation on that platform to take stronger preventive measures will inevitably increase. The larger and more sophisticated the platform, the stronger that expectation is likely to be.

UGC & AI Curveball

The likes of Sharechat, Pocket FM and others have conventionally hosted user generated content and are now pivoting to a lot of AI-created materials for their microdrama push. The new regime, which pretty much is here to stay, now poses a new structural challenge, making it a bit more complex from a legal perspective.

With a mammoth user base and probabilities of algorithms mistakenly pushing a copyright-infringing content, the takedowns even within the 36-hour window could have reached millions.

Paharia captures this fundamental velocity gap: “While copyright infringement spreads across the internet at machine speed, enforcement still proceeds slowly, one manual complaint at a time. A recommendation algorithm can put an infringing video in front of ten million viewers before anyone at the rights-holder’s office even sees a warning email. The rules we have at present were simply not built for this.”

Paharia points us out to the European Union’s approach wherein they have moved to proactively filtering Article 17 of the Digital Single Market Directive. This is something India could consider at some point to settle such challenges.

“Article 17 reversed the traditional approach. If you run a large platform carrying extensive user uploads, the law treats you as if you are publishing that material yourself, forcing you to obtain licences or block works you have been notified about,” Paharia explains. “Discussion in that direction is under way as part of the Digital India Act consultations, where people have started re-examining broad safe harbour protections.”

As Chandwani points out, the real focus for modern IP holders has fundamentally shifted: “The emphasis is shifting from compensation after the damage has occurred to stopping the damage quickly and preventing the same infringement from recurring. Technology has to carry some of that burden.”

Pragmatism & Road Ahead

The Dashverse-Mohalla Tech settlement highlights the shift in the digital ecosystem. For instance, a quicker legal resolution is far more valuable than a long-drawn case seeking harsher punitive measures, including financial penalties. And it kind of makes sense too. 

Paharia observes that seeking court orders is far more a practical solution: “In practical terms, a viral clip has commercial value for maybe three weeks at most. Court cases extend over years. By the time you finally get a ruling, the thing you wanted to protect is already worthless. That is why companies just settle—that is not surrender, it is pragmatism. A permanent block on identified links and a system for reporting new ones within 36 hours actually solves the issue.”

Paharia also highlights how such suits are increasingly used as tactical leverage: 

“Once a licence runs out but the catalogue is still online, the rights-holder loses almost all leverage. Emails alone do not change the position. But if you get an early court order to block the content, everything shifts, suddenly, parties become willing to negotiate within a few weeks. One sees the same pattern repeatedly. The licence expires, the content does not disappear, someone files a lawsuit and pushes for urgent court action, and it usually ends with a deal, a new licence, often on better terms.”

Chandwani concurs on why damages claims fall flat in digital piracy: “A copyright owner has to establish the extent of the infringement and connect that to an actual financial loss. Millions of views do not automatically translate into millions of rupees in damages. A company may spend years litigating when what it really wanted was for the content to stop being available.”

With only a handful of Indian social networking platforms investing in such mechanisms or installing one with the word go, it’s likely such cases are likely to be taken to court for settlements. That said, the cases like Dashverse vs Mohalla Tech show a new set of challenges headed towards the Indian ecosystem. Sure, courts can be approached but as we’ve mentioned above, it could be cost and time-intensive, and also dependence on automated patrols could not be very effective either.