Is ChatGPT An Intermediary Under IT Act? Calcutta High Court Prima Facie Says No

The Calcutta High Court has, in a case examining how generative AI platforms fit within the Information Technology Act, prima facie held that ChatGPT ought to be treated as an “originator” rather than an “intermediary.”

The observations came in IndiaMart InterMesh Ltd's suit against OpenAI, where the classification of ChatGPT became central after the B2B platform argued that the AI tool was omitting links to IndiaMart in response to certain user queries while allegedly providing links for rival platforms.

IndiaMart argued that ChatGPT qualifies as an intermediary under Section 2(1)(w) of the Information Technology Act, 2000, which would bring it within the framework of the Information Technology Rules, 2021. OpenAI, in response, argued that ChatGPT functions as an “originator” under Section 2(1)(za) of the Act.

Justice Ravi Krishan Kapur noted that the statutory framework itself predates generative AI.

“The IT Act was drafted long before the advent of generative AI and its definition reflects a world where only humans or legal entities could “originate” messages. “Originator” as defined above means a person who sends generates stores or transmits any electronic message or causes any electronic message to be sent, generated, stored or transmitted to any person but does not include an intermediary.,” the court observed.

The court then distinguished ChatGPT from conventional search engines, noting that search engines typically crawl the internet, rank websites, and present them in response to user queries.

Large language models, however, function differently.

“However, there is a fundamental difference in the manner in which LLM's operate. They scour through volumes of data available on the internet, apply their algorithms to the same and then generate responses to facilitate user queries. These responses are direct and synthesized. There is a broader application of independent processes exercised by the LLM. In such circumstances, it cannot be prima facie called a search engine, since its functioning goes much beyond the same,” the court observed.

Justice Kapur noted that ChatGPT goes beyond retrieving existing material and is capable of generating new outputs such as poems, research projects, and drawings through its own computational processes.

"In many ways, the responses on ChatGPT are uncertain and therein also lies the originality. It does not simply reproduce materials but acts as a generator of electronic records. In that sense, it is not a passive conduit.", It noted.

On that reasoning, the court said ChatGPT prima facie appeared closer to an originator than a passive intermediary.

“In such circumstances, ChatGPT has an element of newness, uniqueness and originality in its results which ought to bring it within the definition of an 'originator' rather than an 'intermediary',” Justice Kapur held.

At the same time, the court acknowledged the competing argument that ChatGPT's outputs are dependent on user prompts, with users supplying the intent and the AI platform executing the request.

Despite that, the bench concluded: “.Despite the above issues, prima facie, ChatGPT ought to be treated as an “originator” rather than an “intermediary”."

The court, however, made clear that the issue remains open for final adjudication.

“The question of whether ChatGPT falls within the definition of an 'intermediary' under section 2(1)(w) or an 'originator' under section 2(za) of the IT Act is a complicated and vexed question of both law and fact. There is much debate on this aspect and the same can only be adjudicated upon at the final hearing of the suit after technical, scientific and expert evidence has been adduced,” the court said.

Justice Kapur also indicated that the current legal framework may ultimately require legislative intervention.

“The difficult legal issue is that generative AI systems do not fit neatly into the 2000 framework because the IT Act was drafted before modern AI systems existed and this would ultimately require legislative intervention (not only through Government Advisories) where distinct liability is created for AI platforms, which recognizes and distribute liability across developers and users in proportion to their control and participation over the system,” the court observed.

The court made these observations while dismissing IndiaMart's interim application against OpenAI, holding that the company had failed to establish any prima facie legal right to compel visibility for its platform on ChatGPT.