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Andhra Pradesh Tax Case
Parliament Attack Case
SMC Pneumatics (India) Pvt. Ltd. v. Jogesh Kwatra
The Bank NSP Case
SONY.SAMBANDH.COM Case
State of Tamil Nadu Vs Suhas Katti
Nasscom vs. Ajay Sood & Others
Bazee.com case
Pune Citibank MphasiS Call Center Fraud

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SONY.SAMBANDH.COM CASE

India saw its first cybercrime conviction in 2013. It all began after a complaint was filed by Sony India Private Ltd, which runs a website called www.sony-sambandh.com, targeting Non-Resident Indians. The website enables NRIs to send Sony products to their friends and relatives in India after they pay for it online. The company undertakes to deliver the products to the concerned recipients. In May 2002, according to the cybercrime case study, someone logged onto the website under the identity of Barbara Campa and ordered a Sony Colour Television set and a cordless headphone. She gave her credit card number for payment and requested the products to be delivered to Arif Azim in Noida. The payment was duly cleared by the credit card agency, and the transaction was processed. After following the relevant procedures of due diligence and checking, the company delivered the items to Arif Azim. At the time of delivery, the company took digital photographs showing the delivery being accepted by Arif Azim. The transaction closed at that, but after one and a half months the credit card agency informed the company that this was an unauthorized transaction as the real owner had denied having made the purchase. The company lodged a complaint about online cheating at the Central Bureau of Investigation which registered a case under Section 418, 419 and 420 of the Indian Penal Code. The matter was investigated, and Arif Azim was arrested. Investigations revealed that Arif Azim while working at a call centre in Noida gained access to the credit card number of an American national which he misused on the company’s site. The CBI recovered the colour television and the cordless headphone, in this one of a kind cyber fraud case. In this matter, the CBI had evidence to prove their case, and so the accused admitted his guilt. The court convicted Arif Azim under Section 418, 419 and 420 of the Indian Penal Code – this being the first time that cybercrime has been convicted. The court, however, felt that as the accused was a young boy of 24 years and a first-time convict, a lenient view needed to be taken. The court, therefore, released the accused on probation for one year. The judgment is of immense significance for the entire nation. Besides being the first conviction in a cybercrime matter, it has shown that the Indian Penal Code can be effectively applied to certain categories of cyber crimes which are not covered under the Information Technology Act 2000. Secondly, a judgment of this sort sends out a clear message to all that the law cannot be taken for a ride.

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Analysis: CBI v. Arif Azim

Published by muskan bansal on 17/07/2020 17/07/2020.

Also known as Sony Sambandh Case.

Introduction:

In the concerned case, the petitioner CBI has filed the case against the defendant Arif Azim, a call center employee, on the grounds of cybercrime committed by him. This case deals with the Information Technology Act, 2000 and India Penal Code, 1862. It being one-of-its-kind in the field of cybercrime, holds the importance of national level, as India saw its first cybercrime conviction in this case.

A complaint was filed by Sony India Ltd, which runs a website named www.sony.sambandh.com . Which enables NRIs to send the Sony products to their friends and family in India by making an online payment. Under the identity of Barbara Campa, someone logged onto the website. Also ordered a Sony Color Television set and a cordless headphone. The payment by the user was done using the Credit Card. She requested to deliver the product to Arif Azim in Noida. The payment was duly cleared by the credit card agency. The products deliver to Arif Azim by completing the necessary procedures. That are require for the record like clicking of pictures for the evidence of the acceptance of the delivery.

The transaction was closed at that. But after one and a half months, the Credit Card agency informed the company. That the transaction was done by an unauthorized person. As the real owner refused having made the transaction.

Thereupon, the company complained to the CBI, which register the case under Section 418, 419, 420 of Indian Penal Code. After the investigation, it was revealed that Arif Azim while working at a call center in Noida. He got access to the details of the Credit Card Number of an American National. So he used to make the unauthorized purchase of Sony products on the website.

The Color Television and the cordless headphones were recovered by the CBI, and Arif Azim was arrested.

Whether the Indian Penal Code can be applied to cybercrimes.
Whether the punishment should be grave or lenient.

Rule of Law

Under indian penal code.

1. Section 418 of Indian Penal Code states “Cheating with knowledge that wrongful loss may ensue to person whose interest offender is bound to protect”

Whoever cheats with the knowledge that he is likely to cause unjust harm to a person whose interest in the transaction to which the cheating relates, has been obliged to protect, either by statute or by a legal contract, shall be punished with the imprisonment of either description for a period that may extend to three years, or with fine, or both.

2. Section 419 of Indian Penal Code states “Punishment for cheating by personation”

Whoever cheats by personation shall be punished with fine, or imprisonment of either description for a term which may extend to three years, or with both.

3. Section 420 of Indian Penal Code states “Cheating and dishonestly inducing delivery of property”

Anyone who cheats and thus dishonestly induces the deceived person to deliver any property to any person or to make, alter or destroy the whole or any part of a valuable security or anything that is signed or sealed and that can be converted into a valuable security shall be punished with the imprisonment of any description for a term of up to seven years, and shall also be liable to fine.

Under the Information Technology Act

Section 66 of the Information Technology Act, 2000 deals with the computer-related offenses and the punishment for committing such offenses.

Section 66C of IT ACT defines- “Punishment for identity theft”

Identity theft means the phenomenon of stealing another person’s identity. A person committing identity theft shall be punished with imprisonment up to 3 yrs, or fine up to Rs.1 lakh, or with both.

The court, based on evidence of witnesses and material before it found Arif Azim guilty of an offense under Section 418, 419, 420, of Indian Penal Code and convicted him for cyber fraud and cheating. However, the court felt that a lenient punishment should be given considering it to be the first time conviction of cybercrime criminal and the accused has no past criminal record and was a 24-year old young boy. Keeping same in the mind, the accused was ordered the release on probation for one year. Also, it was held that all types of crimes, be it cybercrime, are covered under the India Penal Code.

The decision is of utmost significance for the country as a whole. Aside from being the first in the case of cybercrime, the conviction has shown that the Indian Penal Code can be implemented and applied specifically to other types of cyber-crimes not protected by the Information Technology Act 2000. Second, a decision of this nature sends out a strong opinion to everyone that the law can’t be taken for a ride.

Shariaaa · 18/07/2020 at 10:35 AM

Very helpful and nicely written:))

Muskan Bansal · 18/07/2020 at 8:09 PM

Thank you Sharia, glad you liked it.

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Landmark Cyber Law cases in India

Post author By ashwin
Post date March 1, 2021

By:-Muskan Sharma

Introduction

Cyber Law, as the name suggests, deals with statutory provisions that regulate Cyberspace. With the advent of digitalization and AI (Artificial Intelligence), there is a significant rise in Cyber Crimes being registered. Around 44, 546 cases were registered under the Cyber Crime head in 2019 as compared to 27, 248 cases in 2018. Therefore, a spike of 63.5% was observed in Cyber Crimes [1] .

The legislative framework concerning Cyber Law in India comprises the Information Technology Act, 2000 (hereinafter referred to as the “ IT Act ”) and the Rules made thereunder. The IT Act is the parent legislation that provides for various forms of Cyber Crimes, punishments to be inflicted thereby, compliances for intermediaries, and so on.

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However, the IT Act is not exhaustive of the Cyber Law regime that exists in India. There are some judgments that have evolved the Cyber Law regime in India to a great extent. To fully understand the scope of the Cyber Law regime, it is pertinent to refer to the following landmark Cyber Law cases in India:

Shreya Singhal v. UOI [2]

In the instant case, the validity of Section 66A of the IT Act was challenged before the Supreme Court.

Facts: Two women were arrested under Section 66A of the IT Act after they posted allegedly offensive and objectionable comments on Facebook concerning the complete shutdown of Mumbai after the demise of a political leader. Section 66A of the IT Act provides punishment if any person using a computer resource or communication, such information which is offensive, false, or causes annoyance, inconvenience, danger, insult, hatred, injury, or ill will.

The women, in response to the arrest, filed a petition challenging the constitutionality of Section 66A of the IT Act on the ground that it is violative of the freedom of speech and expression.

Decision: The Supreme Court based its decision on three concepts namely: discussion, advocacy, and incitement. It observed that mere discussion or even advocacy of a cause, no matter how unpopular, is at the heart of the freedom of speech and expression. It was found that Section 66A was capable of restricting all forms of communication and it contained no distinction between mere advocacy or discussion on a particular cause which is offensive to some and incitement by such words leading to a causal connection to public disorder, security, health, and so on.

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In response to the question of whether Section 66A attempts to protect individuals from defamation, the Court said that Section 66A condemns offensive statements that may be annoying to an individual but not affecting his reputation.

However, the Court also noted that Section 66A of the IT Act is not violative of Article 14 of the Indian Constitution because there existed an intelligible difference between information communicated through the internet and through other forms of speech. Also, the Apex Court did not even address the challenge of procedural unreasonableness because it is unconstitutional on substantive grounds.

Shamsher Singh Verma v. State of Haryana [3]

In this case, the accused preferred an appeal before the Supreme Court after the High Court rejected the application of the accused to exhibit the Compact Disc filed in defence and to get it proved from the Forensic Science Laboratory.

The Supreme Court held that a Compact Disc is also a document. It further observed that it is not necessary to obtain admission or denial concerning a document under Section 294 (1) of CrPC personally from the accused, the complainant, or the witness.

Syed Asifuddin and Ors. v. State of Andhra Pradesh and Anr. [4]

Facts: The subscriber purchased a Reliance handset and Reliance mobile services together under the Dhirubhai Ambani Pioneer Scheme. The subscriber was attracted by better tariff plans of other service providers and hence, wanted to shift to other service providers. The petitioners (staff members of TATA Indicom) hacked the Electronic Serial Number (hereinafter referred to as “ESN”). The Mobile Identification Number (MIN) of Reliance handsets were irreversibly integrated with ESN, the reprogramming of ESN made the device would be validated by Petitioner’s service provider and not by Reliance Infocomm.

Questions before the Court: i) Whether a telephone handset is a “Computer” under Section 2(1)(i) of the IT Act?

ii) Whether manipulation of ESN programmed into a mobile handset amounts to an alteration of source code under Section 65 of the IT Act?

Decision: (i) Section 2(1)(i) of the IT Act provides that a “computer” means any electronic, magnetic, optical, or other high-speed data processing device or system which performs logical, arithmetic, and memory functions by manipulations of electronic, magnetic, or optical impulses, and includes all input, output, processing, storage, computer software or communication facilities which are connected or related to the computer in a computer system or computer network. Hence, a telephone handset is covered under the ambit of “computer” as defined under Section 2(1)(i) of the IT Act.

(ii) Alteration of ESN makes exclusively used handsets usable by other service providers like TATA Indicomm. Therefore, alteration of ESN is an offence under Section 65 of the IT Act because every service provider has to maintain its own SID code and give its customers a specific number to each instrument used to avail the services provided. Therefore, the offence registered against the petitioners cannot be quashed with regard to Section 65 of the IT Act.

Shankar v. State Rep [5]

Facts: The petitioner approached the Court under Section 482, CrPC to quash the charge sheet filed against him. The petitioner secured unauthorized access to the protected system of the Legal Advisor of Directorate of Vigilance and Anti-Corruption (DVAC) and was charged under Sections 66, 70, and 72 of the IT Act.

Decision: The Court observed that the charge sheet filed against the petitioner cannot be quashed with respect to the law concerning non-granting of sanction of prosecution under Section 72 of the IT Act.

Christian Louboutin SAS v. Nakul Bajaj & Ors . [6]

Facts: The Complainant, a Luxury shoes manufacturer filed a suit seeking an injunction against an e-commerce portal www.darveys.com for indulging in a Trademark violation with the seller of spurious goods.

The question before the Court was whether the defendant’s use of the plaintiff’s mark, logos, and image are protected under Section 79 of the IT Act.

Decision: The Court observed that the defendant is more than an intermediary on the ground that the website has full control over the products being sold via its platform. It first identifies and then promotes third parties to sell their products. The Court further said that active participation by an e-commerce platform would exempt it from the rights provided to intermediaries under Section 79 of the IT Act.

Avnish Bajaj v. State (NCT) of Delhi [7]

Facts: Avnish Bajaj, the CEO of Bazee.com was arrested under Section 67 of the IT Act for the broadcasting of cyber pornography. Someone else had sold copies of a CD containing pornographic material through the bazee.com website.

Decision: The Court noted that Mr. Bajaj was nowhere involved in the broadcasting of pornographic material. Also, the pornographic material could not be viewed on the Bazee.com website. But Bazee.com receives a commission from the sales and earns revenue for advertisements carried on via its web pages.

The Court further observed that the evidence collected indicates that the offence of cyber pornography cannot be attributed to Bazee.com but to some other person. The Court granted bail to Mr. Bajaj subject to the furnishing of 2 sureties Rs. 1 lakh each. However, the burden lies on the accused that he was merely the service provider and does not provide content.

State of Tamil Nadu v. Suhas Katti [8]

The instant case is a landmark case in the Cyber Law regime for its efficient handling made the conviction possible within 7 months from the date of filing the FIR.

Facts: The accused was a family friend of the victim and wanted to marry her but she married another man which resulted in a Divorce. After her divorce, the accused persuaded her again and on her reluctance to marrying him, he took the course of harassment through the Internet. The accused opened a false e-mail account in the name of the victim and posted defamatory, obscene, and annoying information about the victim.

A charge-sheet was filed against the accused person under Section 67 of the IT Act and Section 469 and 509 of the Indian Penal Code, 1860.

Decision: The Additional Chief Metropolitan Magistrate, Egmore convicted the accused person under Section 469 and 509 of the Indian Penal Code, 1860 and Section 67 of the IT Act. The accused was subjected to the Rigorous Imprisonment of 2 years along with a fine of Rs. 500 under Section 469 of the IPC, Simple Imprisonment of 1 year along with a fine of Rs. 500 under Section 509 of the IPC, and Rigorous Imprisonment of 2 years along with a fine of Rs. 4,000 under Section 67 of the IT Act.

CBI v. Arif Azim (Sony Sambandh case)

A website called www.sony-sambandh.com enabled NRIs to send Sony products to their Indian friends and relatives after online payment for the same.

In May 2002, someone logged into the website under the name of Barbara Campa and ordered a Sony Colour TV set along with a cordless telephone for one Arif Azim in Noida. She paid through her credit card and the said order was delivered to Arif Azim. However, the credit card agency informed the company that it was an unauthorized payment as the real owner denied any such purchase.

A complaint was therefore lodged with CBI and further, a case under Sections 418, 419, and 420 of the Indian Penal Code, 1860 was registered. The investigations concluded that Arif Azim while working at a call center in Noida, got access to the credit card details of Barbara Campa which he misused.

The Court convicted Arif Azim but being a young boy and a first-time convict, the Court’s approach was lenient towards him. The Court released the convicted person on probation for 1 year. This was one among the landmark cases of Cyber Law because it displayed that the Indian Penal Code, 1860 can be an effective legislation to rely on when the IT Act is not exhaustive.

Pune Citibank Mphasis Call Center Fraud

Facts: In 2005, US $ 3,50,000 were dishonestly transferred from the Citibank accounts of four US customers through the internet to few bogus accounts. The employees gained the confidence of the customer and obtained their PINs under the impression that they would be a helping hand to those customers to deal with difficult situations. They were not decoding encrypted software or breathing through firewalls, instead, they identified loopholes in the MphasiS system.

Decision: The Court observed that the accused in this case are the ex-employees of the MphasiS call center. The employees there are checked whenever they enter or exit. Therefore, it is clear that the employees must have memorized the numbers. The service that was used to transfer the funds was SWIFT i.e. society for worldwide interbank financial telecommunication. The crime was committed using unauthorized access to the electronic accounts of the customers. Therefore this case falls within the domain of ‘cyber crimes”. The IT Act is broad enough to accommodate these aspects of crimes and any offense under the IPC with the use of electronic documents can be put at the same level as the crimes with written documents.

The court held that section 43(a) of the IT Act, 2000 is applicable because of the presence of the nature of unauthorized access that is involved to commit transactions. The accused were also charged under section 66 of the IT Act, 2000 and section 420 i.e. cheating, 465,467 and 471 of The Indian Penal Code, 1860.

SMC Pneumatics (India) Pvt. Ltd. vs. Jogesh Kwatra [9]

Facts: In this case, Defendant Jogesh Kwatra was an employee of the plaintiff’s company. He started sending derogatory, defamatory, vulgar, abusive, and filthy emails to his employers and to different subsidiaries of the said company all over the world to defame the company and its Managing Director Mr. R K Malhotra. In the investigations, it was found that the email originated from a Cyber Cafe in New Delhi. The Cybercafé attendant identified the defendant during the enquiry. On 11 May 2011, Defendant was terminated of the services by the plaintiff.

Decision: The plaintiffs are not entitled to relief of perpetual injunction as prayed because the court did not qualify as certified evidence under section 65B of the Indian Evidence Act. Due to the absence of direct evidence that it was the defendant who was sending these emails, the court was not in a position to accept even the strongest evidence. The court also restrained the defendant from publishing, transmitting any information in the Cyberspace which is derogatory or abusive of the plaintiffs.

The Cyber Law regime is governed by the IT Act and the Rules made thereunder. Also, one may take recourse to the provisions of the Indian Penal Code, 1860 when the IT Act is unable to provide for any specific type of offence or if it does not contain exhaustive provisions with respect to an offence.

However, the Cyber Law regime is still not competent enough to deal with all sorts of Cyber Crimes that exist at this moment. With the country moving towards the ‘Digital India’ movement, the Cyber Crimes are evolving constantly and new kinds of Cyber Crimes enter the Cyber Law regime each day. The Cyber Law regime in India is weaker than what exists in other nations.

Hence, the Cyber Law regime in India needs extensive reforms to deal with the huge spike of Cyber Crimes each year.

[1] “Crime in India – 2019” Snapshots (States/UTs), NCRB, available at: https://ncrb.gov.in/sites/default/files/CII%202019%20SNAPSHOTS%20STATES.pdf (Last visited on 25 th Feb; 2021)

[2] (2013) 12 SCC 73

[3] 2015 SCC OnLine SC 1242

[4] 2005 CriLJ 4314

[5] Crl. O.P. No. 6628 of 2010

[6] (2018) 253 DLT 728

[7] (2008) 150 DLT 769

[8] CC No. 4680 of 2004

[9] CM APPL. No. 33474 of 2016

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Cyber Case Study: Sony Pictures Entertainment Hack

by Kelli Young | Nov 8, 2021 | Case Study , Cyber Liability Insurance

In the final months of 2014, Sony Pictures Entertainment (SPE)—a well-known entertainment company responsible for producing and distributing a myriad of famous movies—experienced a large-scale cyber incident. A foreign hacking group infiltrated SPE’s network via malware, compromising the company’s digital operations and accessing a wide range of sensitive employee data, private emails and upcoming films. The incident led to major disruptions, leaked information and significant controversy surrounding an upcoming movie premiere.

The Sony Pictures Entertainment hack—which was formally attributed to North Korea as an attempt to prevent SPE from releasing a political comedy film centered around assassinating the nation-state’s leader—has since become known as one of the worst cyber incidents in the entertainment industry’s history, showcasing the importance of safeguarding company data and intellectual property. In hindsight, organizations can learn various cybersecurity lessons by reviewing the details of this incident, its impact and the mistakes SPE made along the way.

The Details of the Sony Pictures Entertainment Hack

In June 2014, SPE released the first trailer for a comedy movie titled “The Interview” to the public, stating an October 2014 release date. The film’s plot focused on two Americans who run a popular talk show getting recruited by the Central Intelligence Agency to interview Kim Jong-un—North Korea’s political leader—and assassinate him in the process.

From there, the film’s distribution was rescheduled for Dec. 25, 2014.

On Nov. 24, 2014—approximately one month before the movie was set to be released—SPE’s network was compromised by a foreign hacking group known as the Guardians of Peace (GOP) via an advanced form of malware. This malware was able to evade SPE’s antivirus software and came equipped with a digital backdoor that allowed the cybercriminals to repeatedly enter the company’s network. Upon logging into their workplace devices that morning, SPE employees were met with a daunting message from the GOP. This message stated that the cybercriminals had stolen several terabytes of SPE’s sensitive data and intellectual property, wiped the original copies from all company technology and planned to release this information if SPE failed to meet their demands. Initially, the GOP demanded money in exchange for the restoration of SPE’s data.

At this time, SPE did not respond to the cybercriminals’ demands. But the company’s network was still largely compromised, causing them to shut it down temporarily. It took several days for IT professionals to repair SPE’s damaged technology, forcing employees to conduct tasks without their workplace devices and significantly disrupting digital operations. Employees had to resort to using old fax machines, issuing paper checks, writing on whiteboards and scheduling exclusively in-person meetings while the company’s network was down.

Even after SPE regained access to its network, the GOP maintained a hidden entry point through the malware’s digital backdoor. As a result, the cybercriminals proceeded to leak the company’s information to both the media and the general public over the next several days. This leak included thousands of current and past employees’ personal records (e.g., names, addresses, contact information, network credentials, Social Security numbers, insurance plans and salary data), as well as a variety of private emails between SPE employees and film executives. Further, the GOP posted five of SPE’s films on digital sharing sites—four of which hadn’t been released yet. Consequently, these movies were illegally downloaded millions of times. At this point, the GOP’s demands changed. In exchange for preventing further data leaks, the cybercriminals demanded that SPE cancel the distribution of “the movie of terrorism”—which was assumed to be referring to “The Interview.”

On Nov. 28, 2014, several media organizations released initial details regarding the ongoing hack to the public. During this time, the media began speculating whether North Korea was responsible for the incident. However, the nation-state denied involvement. Despite the leaked information, SPE pressed forward with its film release plans. That is, until Dec.16, 2014, when the GOP called out “The Interview” by name and used increasingly violent language to demand the film’s distribution be canceled. The cybercriminals’ message referenced the Sept. 11, 2001, terrorist attacks and threatened to cause physical harm at any theater that screened the film. This threat prompted the FBI to launch an official investigation of the incident and led SPE to cancel the movie’s release the following day.

Yet, on Dec. 19, 2014, the Obama administration claimed that shelving the film was a mistake and doing so would only reward the GOP’s unacceptable behavior. The U.S. Department of Homeland Security also confirmed that there was no evidence of any actual plot to cause harm at theaters planning to show the film. As such, SPE announced that it had reversed its decision on Dec. 23, 2014, and released the movie two days later to over 300 independent theaters that were willing to screen the film. Because many large theater chains still refused to show the movie, SPE also decided to release it during the opening weekend on several video-on-demand platforms, such as YouTube and Google Play. The GOP’s threats ceased following the movie’s distribution.

After completing its investigation of the incident, the FBI confirmed that North Korea was likely responsible, seeing as the malware’s code was written in Korean and the hackers’ IP addresses were traced back to the nation-state. Nevertheless, North Korea still denies being involved.

The Impact of the Sony Pictures Entertainment Hack

SPE faced several consequences following the large-scale incident. These include the following:

Recovery costs SPE is estimated to have spent at least $35 million in the process of recovering from the hack, consisting of expenses related to informing impacted employees and U.S. authorities of the incident, hiring IT professionals to recover the company’s compromised technology, conducting an internal investigation of the hack and implementing improved cybersecurity measures to prevent future incidents.

Lost revenue Apart from recovery costs, the incident likely contributed to reduced revenue for several of SPE’s film releases. First, the mixed distribution of “The Interview” between independent theaters and online platforms due to the hack somewhat diminished the movie’s box office success, seeing as SPE lost any revenue that would have been made from large theater chains screening the film. While the movie grossed $40 million in digital rentals, it only generated $12.3 million in box office ticket sales—representing a relatively small overall profit against a $44 million budget. In addition, the GOP’s leak of four other SPE films on digital sharing sites before their theatrical releases probably minimized those movies’ box office ticket sales, considering some individuals subsequently downloaded and viewed these films early (and for free).

Reputational damages Following the incident, SPE faced widespread criticism. In terms of cybersecurity, the company experienced scrutiny for failing to utilize various measures that could have helped protect against the hack. Although IT experts confirmed that the GOP’s malware would have been difficult for even the most sophisticated companies to stop, SPE’s protocols for safeguarding its sensitive data, email systems and intellectual property were inadequate. The company’s valuable records were stored in poorly protected locations with obvious file names (e.g., “Computer Passwords”). Further, SPE’s company email settings allowed for up to seven years’ worth of messages to remain within the network, giving the GOP access to a plethora of communications. Regarding SPE’s overall reputation, the GOP’s leak of private emails painted the company badly on various fronts. Some of these emails disclosed the details of sensitive company matters (e.g., ongoing negotiations with other film studios), while other messages revealed offensive comments that SPE executives had made about members of the entertainment industry— including high-profile actors, producers and directors. These emails likely minimized SPE’s reliability across the entertainment industry.

Legal ramifications Lastly, the incident carried numerous legal issues for SPE. Company employees whose records were exposed during the hack filed a class-action lawsuit against SPE, totaling nearly $8 million. This total includes $2.5 million to reimburse employees for potential identity theft concerns, $2 million to offer employees fraud protection services and $3.5 million in additional legal fees. The incident also motivated the Obama administration to update federal regulations to ensure that national officials better respond to cybercrimes involving international parties.

Lessons Learned from the Sony Pictures Entertainment Hack

Several cybersecurity takeaways can be gleaned from the SPE hack. Specifically, the incident emphasized these critical lessons:

Basic security measures can’t be ignored. In the aftermath of the hack, SPE prioritized bolstering a range of their digital protection protocols, especially related to threat detection and email security. Many of these basic measures could have helped mitigate the damages that resulted from the incident. Simple security steps for all organizations to consider include:

Utilizing various forms of threat detection software (e.g., network monitoring systems, endpoint detection products and patch management tools) and updating this software on a routine basis
Installing email filters and firewalls to minimize cybercriminals’ access capabilities
Developing an effective email retention policy to ensure messages are deleted after an appropriate period of time (typically no more than three years)
Instructing employees to refrain from sharing sensitive data or discussing confidential company details over email

Sensitive data and intellectual property require proper safeguards. One of SPE’s biggest downfalls related to the incident was failing to adequately protect its most sensitive data and intellectual property. There are many ways for organizations to keep such information better safeguarded, such as:

Storing sensitive data and intellectual property in safe and secure locations
Encrypting all confidential workplace records and giving them discreet file names
Restricting employees’ access to sensitive data and intellectual property on an as-needed basis
Requiring employees to utilize multi-factor authentication before accessing sensitive data or intellectual property
Segmenting workplace networks to prevent cybercriminals from gaining access to all sensitive data and intellectual property after infiltrating a single system or device
Conducting routine data backups in a secure, offline location

Cyber incident response plans are vital. When SPE’s network was shut down, its employees struggled to cope and faced significant operational disruptions. This scenario highlighted the value of having a cyber incident response plan in place. This type of plan can help an organization establish timely response protocols for remaining operational and mitigating losses in the event of a cyber incident. A successful incident response plan should outline potential cyberattack scenarios, methods for maintaining key functions during these scenarios and the individuals responsible for doing so. It should be routinely reviewed through various activities—such as penetration testing and tabletop exercises—to ensure effectiveness and identify ongoing security gaps. Based on the results from these activities, the plan should be adjusted as needed.

Targeted, state-sponsored attacks must be considered. Seeing as North Korea was likely responsible for this incident, it’s critical for organizations to be aware of the potential for future targeted attacks or other cyber-related losses stemming from political conflicts. Depending on their specific operations, organizations should evaluate their likelihood of being involved in incidents with foreign attackers and adjust their basic security measures, data protection protocols and cyber incident response plans as needed.

Proper coverage can provide much-needed protection. Finally, this breach made it clear that no organization—not even a major entertainment company—is immune to cyber-related losses. That’s why it’s crucial to ensure adequate protection against potential cyber incidents by securing proper coverage. When securing such coverage, organizations must clearly understand key policy terminology and conditions, particularly as they relate to physical destruction and cyber warfare.

This may entail confirming whether the policy covers physical damage to technology amid cyber incidents (also known as bricking), as well as reviewing policy definitions for “cyber warfare” and “cyber terrorism” to better comprehend how coverage could assist in such circumstances. Organizations should work with trusted insurance professionals when evaluating their policies and navigating coverage decisions.

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Important Cyber Law Case Studies

1.Pune Citibank MphasiS Call Center Fraud Some ex-employees of BPO arm of MPhasiS Ltd MsourcE defrauded US Customers of Citibank to the tune of Rs 1.5 crores. It was one of those cyber crime cases that raised concerns of many kinds including the role of "Data Protection". The crime was obviously committed using "Unauthorized Access" to the "Electronic Account Space" of the customers. It is therefore firmly within the domain of "Cyber Crimes". ITA-2000 is versatile enough to accommodate the aspects of crime not covered by ITA-2000 but covered by other statutes since any IPC offence committed with the use of "Electronic Documents" can be considered as a crime with the use of a "Written Documents". "Cheating", "Conspiracy", "Breach of Trust", etc. are therefore applicable in the above case in addition to the section in ITA-2000. Under ITA-2000 the offence is recognized both under Section 66 and Section 43. Accordingly, the persons involved are liable for imprisonment and fine as well as a liability to pay damages to the victims to the maximum extent of Rs 1 crore per victim for which the "Adjudication Process" can be invoked.

2.SONY.SAMBANDH.COM CASE India saw its first cybercrime conviction in 2013. It all began after a complaint was filed by Sony India Private Ltd, which runs a website called www.sony-sambandh.com, targeting Non-Resident Indians. The website enables NRIs to send Sony products to their friends and relatives in India after they pay for it online. The company undertakes to deliver the products to the concerned recipients. In May 2002, according to the cybercrime case study, someone logged onto the website under the identity of Barbara Campa and ordered a Sony Colour Television set and a cordless headphone. She gave her credit card number for payment and requested the products to be delivered to Arif Azim in Noida. The payment was duly cleared by the credit card agency, and the transaction was processed. After following the relevant procedures of due diligence and checking, the company delivered the items to Arif Azim. At the time of delivery, the company took digital photographs showing the delivery being accepted by Arif Azim. The transaction closed at that, but after one and a half months the credit card agency informed the company that this was an unauthorized transaction as the real owner had denied having made the purchase. The company lodged a complaint about online cheating at the Central Bureau of Investigation which registered a case under Section 418, 419 and 420 of the Indian Penal Code. The matter was investigated, and Arif Azim was arrested. Investigations revealed that Arif Azim while working at a call centre in Noida gained access to the credit card number of an American national which he misused on the company's site. The CBI recovered the colour television and the cordless headphone, in this one of a kind cyber fraud case. In this matter, the CBI had evidence to prove their case, and so the accused admitted his guilt. The court convicted Arif Azim under Section 418, 419 and 420 of the Indian Penal Code - this being the first time that cybercrime has been convicted. The court, however, felt that as the accused was a young boy of 24 years and a first-time convict, a lenient view needed to be taken. The court, therefore, released the accused on probation for one year. The judgment is of immense significance for the entire nation. Besides being the first conviction in a cybercrime matter, it has shown that the Indian Penal Code can be effectively applied to certain categories of cyber crimes which are not covered under the Information Technology Act 2000. Secondly, a judgment of this sort sends out a clear message to all that the law cannot be taken for a ride.

3. The Bank NSP Case One of the leading cybercrime cases is the Bank NSP case is the one where a management trainee of the bank was engaged to be married. The couple exchanged many emails using the company computers. After some time the two broke up and the girl created fraudulent email ids such as "indianbarassociations" and sent emails to the boy's foreign clients. She used the bank’s computer to do this. The boy's company lost a large number of clients and took the bank to court. The bank was held liable for the emails sent using the bank's system.

4. Andhra Pradesh Tax Case Dubious tactics of a prominent businessman, from Andhra Pradesh, were exposed after officials of the department got hold of computers, used by the accused in one of the many cyber fraud cases in India. The owner of a plastics firm was arrested and Rs 22 crore cash, was recovered from his house by sleuths of the Vigilance Department. They sought an explanation from him regarding the unaccounted cash within 10 days. The accused submitted 6,000 vouchers, to prove the legitimacy of trade and thought his offence would go undetected but after careful scrutiny of vouchers and contents of his computers, it was revealed that all of them were made after the raids were conducted. It was later revealed that the accused was running five businesses under the guise of one company and used fake and computerised vouchers to show sales records and save tax.

5.SMC Pneumatics (India) Pvt. Ltd. vs. Jogesh Kwatra In India's first case of cyber defamation, the High Court of Delhi assumed jurisdiction over a matter where a corporation's reputation was being defamed through emails and passed an important ex-parte injunction. Amongst the many cyber cases in India, in this case, the defendant Jogesh Kwatra being an employee of the plaintiff company started sending derogatory, defamatory, obscene, vulgar, filthy and abusive emails to his employers as also to different subsidiaries of the said company all over the world with the aim to defame the company and its Managing Director Mr. R K Malhotra. The plaintiff filed a suit for permanent injunction restraining the defendant from doing his illegal acts of sending derogatory emails to the plaintiff. On behalf of the plaintiff, it was contended that the emails sent by the defendant were distinctly obscene, vulgar, abusive, intimidating, humiliating and defamatory in nature. Counsel further argued that the aim of sending the said emails was to malign the high reputation of the plaintiff all over India and the world. He further contended that the acts of the defendant in sending the emails had resulted in an invasion of the legal rights of the plaintiff. Further, the defendant is under a duty not to send the aforesaid emails. It is pertinent to note that after the plaintiff company discovered the said employee could be indulging in the matter of sending abusive emails, the plaintiff terminated the services of the defendant. After hearing detailed arguments of Counsel for Plaintiff, Hon'ble Judge of the Delhi High Court passed an ex-parte ad interim injunction, observing that a prima facie case had been made out by the plaintiff. Consequently, in this cyber fraud case in India, the Delhi High Court restrained the defendant from sending derogatory, defamatory, obscene, vulgar, humiliating and abusive emails, either to the plaintiff or to its sister subsidiaries all over the world, including their Managing Directors and their Sales and Marketing departments. Further, Hon'ble Judge also restrained the defendant from publishing, transmitting or causing to be published any information in the actual world, as also in cyberspace, which is derogatory or defamatory or abusive. This order of Delhi High Court assumes tremendous significance as this is the first time that an Indian Court assumes jurisdiction in a matter concerning cyber defamation and grants an ex-parte injunction restraining the defendant from defaming the plaintiff by sending derogatory, defamatory, abusive and obscene emails either to the plaintiffs or their subsidiaries.

6. Bazee.com case CEO of Bazee.com was arrested in December 2004 because a CD with objectionable material was being sold on the website. The CD was also being sold in the markets in Delhi. The Mumbai Police and the Delhi Police got into action. The CEO was later released on bail. This opened up the question as to what kind of distinction we draw between Internet Service Provider and Content Provider. The burden rests on the accused that he was the Service Provider and not the Content Provider. It also raises a lot of issues regarding how the police should handle cybercrime cases.

7. State of Tamil Nadu Vs Suhas Katti The Case of Suhas Katti is notable for the fact that the conviction was achieved successfully within a relatively quick time of 7 months from the filing of the FIR, making it one of the notable cyberlaw cases in India. Considering that similar cases have been pending in other states for a much longer time, the efficient handling of the case which happened to be the first case of the Chennai Cyber Crime Cell going to trial deserves a special mention. The case is related to the posting of obscene, defamatory and annoying message about a divorced woman in the Yahoo message group. E-mails were also forwarded to the victim for information by the accused through a false e-mail account opened by him in the name of the victim. The posting of the message resulted in annoying phone calls to the lady in the belief that she was soliciting. Based on a complaint made by the victim in February 2004, the Police traced the accused to Mumbai and arrested him within the next few days. The accused was a known family friend of the victim and was reportedly interested in marrying her. She, however, married another person. This marriage later ended in divorce, and the accused started contacting her once again. On her reluctance to marry him, the accused took up harassment through the Internet. On 24-3-2004, a Charge Sheet was filed, u/s 67 of the IT Act 2000, 469 and 509 IPC before The Hon'ble Addl. CMM Egmore by citing 18 witnesses and 34 documents and material objects. The same was taken on file in C.C.NO.4680/2004. On the prosecution side, 12 witnesses were examined, and entire documents were marked as Exhibits. The Defence argued, in this cyber crime case, that the offending emails would have been given either by the ex-husband of the complainant or the complainant herself to implicate the accused as accused alleged to have turned down the request of the complainant to marry her. Further, the defence counsel argued that some of the documentary evidence was not sustainable under Section 65 B of the Indian Evidence Act. However, the court relied upon the expert witnesses, and other evidence produced before it, including the witnesses of the Cyber Cafe owners, and came to the conclusion that the crime was proved. Ld. Additional Chief Metropolitan Magistrate, Egmore, delivered the judgement on 5-11-04 as follows: "The accused is found guilty of offences under section 469, 509 IPC and 67 of the IT Act 2000, and the accused is convicted and sentenced for the offence to undergo RI for 2 years, under 469 IPC, and to pay a fine of Rs.500/- and for the offence u/s 509 IPC sentenced to undergo 1 year simple imprisonment and to pay a fine of Rs.500/- and for the offence u/s 67 of the IT Act 2000 to undergo RI for 2 years and to pay a fine of Rs.4000/-. All sentences to run concurrently." The accused paid the fine amount, and he was lodged at Central Prison, Chennai. This is considered as the first case convicted under section 67 of the Information Technology Act 2000 in India.

8. Nasscom vs. Ajay Sood & Others In a landmark judgment in the case of National Association of Software and Service Companies vs. Ajay Sood & Others, delivered in March, '05, the Delhi High Court declared 'phishing' on the internet to be an illegal act, entailing an injunction and recovery of damages. A cybercrime case study has been conducted on the same. Elaborating on the concept of 'phishing', in order to lay down a precedent in India, the court stated that it is a form of internet fraud where a person pretends to be a legitimate association, such as a bank or an insurance company in order to extract personal data from a customer such as access codes, passwords, etc. Personal data so collected by misrepresenting the identity of the legitimate party is commonly used for the collecting party's advantage. The court also stated, by way of an example, that typical phishing scams involve persons who pretend to represent online banks and siphon cash from e-banking accounts after conning consumers into handing over confidential banking details. The Delhi HC stated that, even though there is no specific legislation in India to penalize phishing, it held phishing to be an illegal act, by defining it under Indian law as "a misrepresentation made in the course of trade, leading to confusion, as to the source and origin of the email causing immense harm, not only to the consumer, but even to the person whose name, identity or password is misused." The court held the act of phishing as passing off and tarnishing the plaintiff's image. The plaintiff, in this case, was the National Association of Software and Service Companies (Nasscom), India's premier software association. The defendants were operating a placement agency involved in headhunting and recruitment. In order to obtain personal data, which they could use for purposes of headhunting, the defendants composed and sent emails to third parties, in the name of Nasscom. The high court recognised the trademark rights of the plaintiff and passed an ex-parte ad interim injunction restraining the defendants from using the trade name or any other name deceptively similar to Nasscom. The court further restrained the defendants from holding themselves out as being associated with or a part of Nasscom. The court appointed a commission to conduct a search at the defendants' premises. Two hard disks of the computers, from which the fraudulent e-mails were sent by the defendants to various parties, were taken into custody by the local commissioner appointed by the court. The offending emails were then downloaded from the hard disks and presented as evidence in court. During the progress of the cyberlaw case in India, it became clear that the defendants, in whose names the offending e-mails were sent, were fictitious identities created by an employee on defendants' instructions, to avoid recognition and legal action. On discovery of this fraudulent act, fictitious names were deleted from the array of parties as defendants in the case. Subsequently, defendants admitted to their illegal acts and the parties settled the matter through the recording of a compromise in the suit proceedings. According to the terms of compromise, the defendants agreed to pay a sum of Rs1.6 million to the plaintiff as damages for violation of the plaintiff's trademark rights. The court also ordered the hard disks seized from the defendants' premises to be handed over to the plaintiff who would be the owner of the hard disks. This case achieves clear milestones: It brings the act of "phishing" into the ambit of Indian laws, even in the absence of specific legislation; it clears the misconception that there is no "damages culture" in India for violation of IP rights. this case reaffirms IP owners' faith in the Indian judicial system's ability and willingness to protect intangible property rights and send a strong message to IP owners that they can do business in India without sacrificing their IP rights.

9. Cyber Attack on Cosmos Bank In August 2018, the Pune branch of Cosmos bank was drained of Rs 94 crores, in an extremely bold cyber attack. By hacking into the main server, the thieves were able to transfer the money to a bank in Hong Kong. Along with this, the hackers made their way into the ATM server, to gain details of various VISA and Rupay debit cards. The switching system i.e. the link between the centralized system and the payment gateway was attacked, meaning neither the bank nor the account holders caught wind of the money being transferred. According to the cybercrime case study internationally, a total of 14,000 transactions were carried out, spanning across 28 countries using 450 cards. Nationally, 2,800 transactions using 400 cards were carried out. This was one of its kinds, and in fact, the first malware attack that stopped all communication between the bank and the payment gateway.

10. Tampering with Computer Source Documents In a case of manipulation, Tata Indicom employees were taken into custody in relation to the tampering of the electronic 32-bit number (ESN) that is programmed into cell phones. The theft was for Reliance Intercom. In a verdict on a later date, the court said that since the source code was manipulated, it calls the use of Section 65 under the Information Technology Act.

11. BSNL, Unauthorized Access In a leading cybercrime case, the Joint Academic Network (JANET) was hacked by the accused, after which he denied access to the authorized users by changing passwords along with deleting and adding files. Making it look like he was authorized personnel, he made changes in the BSNL computer database in their internet users’ accounts. When the CBI carried out investigations after registering a cybercrime case against the accused, they found that the broadband Internet was being used without any authorization. The accused used to hack into the server from various cities like Chennai and Bangalore, amongst others. This investigation was carried after the Press Information Bureau, Chennai, filed a complaint. In the verdict by the Additional Chief Metropolitan Magistrate, Egmore, Chennai, the accused from Bangalore would be sent to prison for a year and will have to pay a fine of Rs 5,000 under Section 420 IPC and Section 66 of the IT Act.

12. BPO Fraud In another incident involving MphasiS, India, four call centre employees gained the PIN codes, from four of the MphasiS’s client, Citi Group, in spite of not being authorized to do so. Various accounts were opened in Indian banks, under false names and within two months, they managed to transfer money to these accounts from Citigroup customers accounts using their PINs and other personal information. This cyber fraud case occurred in December 2004, but it wasn’t until April 2005 that the Indian police were able to identify the individuals to make an arrest. It was made possible with a tip provided by a U.S. bank when the accused tried to withdraw cash from these fake accounts. From the $426,000 that was stolen, only $230,000 were recovered. The accused were charged under Section 43(a), unauthorized access involved to carry transactions.

13. Bomb Hoax Mail In an email hoax, sent by a 15-year-old boy from Bangalore, the Cyber Crime Investigation Cell (CCIC) arrested him in 2009. The boy was accused of sending an email to a private news company saying, “I have planted 5 bombs in Mumbai, you have two hours to find them”. The concerned authorities were contacted immediately, in relation to the cyber case in India, who traced the IP address (Internet Protocol) to Bangalore.

14. A Look-alike Website A 9-person crime, was registered under Sections 65, 66, 66A, C and D of the Information Technology Act, along with Sections 419 and 420 of the Indian Penal Code. Under the complaint of this cyber fraud case in India, a company representative in the business of trading and distribution of petrochemicals in India and abroad had filed the report against the 9 accused of using a similar looking website to carry on the trade. The accused ran a defamation campaign against the company, causing them crores of rupees of loss from their customers, suppliers and even producers.

15. Cyber Terrorism Since the changes were carried out in the Information Technology Act in Mumbai, this case of cyber terrorism was its first project. A threat email had been delivered to the BSE and NSE, at 10:44 am on Monday. With the MRA Marg police and the Cyber Crime Investigation Cell (CCIC) working together on the cyber crime case, the accused has been detained. The IP address had been traced to Patna, Bihar. When checked for any personal details, two contact numbers were found, which belonged to a photo frame maker in Patna.

Personal Cases

Cyber Police has arrested a Husband for misusing his wife’s FB account, in a cyber case in India. He hired an ethical hacker to hack into his wife’s FB account so that he can find pieces of evidence regarding her bad character.
Using the trojan or malware, a woman’s webcam was accessed to capture her private videos and posted on an illegal website. The incident came into light when the Mumbai resident appeared for an interview.
The cyber fraud case of duplication of a SIM card was registered with the police when a businessman from Ahmedabad caught wind of it. He registered a complaint under the cyber and financial crime since the defrauders had submitted fake documents with the mobile company to gain the businessman’s personal details.
In a social media related cybercrime complaint, a famous Gujarati singer claimed that her photos were being used by an unknown man, saying they were married and had a child together.
To gain personal revenge, an ex-boyfriend, working as a software engineer, posted his ex’s personal phone number on a 24*7 dating service helpline, was arrested in a leading cybercrime case.

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Case study cyber law - SONY.SAMBANDH.COM CASE

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Case Study: A Critical Analysis of Restructurings by Sony Corporation

Restructuring is considered to be the corporate management term of reorganizing an organisations ownership, operations, legal and other structures within in order to make the company more profitable and more organized with its needs to be successful. There are many reasons for why restructuring includes the changes of the owner ships or the organisational structure , or a reaction towards a crisis or a change such as a change in the financial position , the company becomes bankrupt or it repositions or it bought out.

Sony had restructured themselves approximately five times over nine years. They have reorganized operation systems, they have restructured management teams, and they have added structures in the purpose to make profits. Due to all their problems they faced, Sony tried to correct them by changing structures and even eliminating some to try solving the problems.

Sony has restructured itself firstly by restructuring of electronics business, It has created the Ten-Company Structure, Sony also Unified-Dispersed Management Model, it also announced another round of organisational change of the board, Sony announced another restructuring exercise in 2001 and lastly in 2003 to reorganize Sony back to a seven business entity.

With regards to restructuring of Sony’s management, they felt that the “Group” structure was redundant therefore the new structure was to regroup the electronics business into eight companies. This restructuring exercise focused on the products that formed the “Others” group. Each of these divisions had their own goals and each division was responsible for all of its operations. The process was reduced from a number of six layers to minimum of four layers following the restructuring

Secondly in January 1996, they announced a new Ten-Company structure which replaced the eight company structure that was implemented in 1994. Under this new structure the Customer Audio and Video Company was split into three new companies namely: The show Companies, like the Home AV Company and the Personal AV Company. Then there was another new company called the Information Technology Company that was formed to enable more focus on Sony’s business interests in the IT and PC industry.

Thirdly Sony did some restructuring and created a Unified-Dispersed Management model. Sony’s electronic business was the focus of restructuring efforts therefore in April 1999 Sony announced changes in the organisational structure. The company wants to take advantage of the opportunities that are offered by the internet which is aimed at streamlining the business operations. Sony’s key business divisions were therefore reorganized into a network business. This concerned the drop of ten divisional companies into three network companies namely: Sony Computer Entertainment Company, the Broadcasting and Professional System Company, and Core Technology and Network Company.

By splitting the Sony headquarters in two separate units during the Unified-Dispersed Management it was aimed to reinforce the management capability of Sony’s demarcate roles of headquarters and the recently created network companies. In response to Sony’s financial problems they proclaimed that they were reshuffling their top management team and carry out ways that did cut some major cost exercises. Their manufacturing facilities were reduced and this resulted in an elimination of 17,000 jobs.

The restructuring that took place within the years was when the organisational board of directors were reorganized. During the month of May, the year of 1998, Sony transformed their work of its board of directors and it recognized and added some new positions such as the CO-Chief Executive Officer. Idei reshuffled the management system to facilitate quicker decision making and to improve the efficiency of Sony, it also got reshuffled in order to provide a greater role of clarity to the managers. This system separated the individual’s responsibilities for policies that were made to identify the responsibilities for the business operations.

The Fourth restructuring that took place was another round or organisational restructuring. Sony announced another round of organisational restructuring in March 2001 which was intended to transform into a Personal Broadband Network Solutions company, as a result of launching a wide variety of products and services under the broadband brand, this allowed the consumers across the world to gain access. Sony’s headquarters were also revamped into a Global Hub center under the new structural framework, this determined and showed that the roles were to devised into the whole companies management strategy.

Lastly In 2003 Sony announced another major restructuring exercise in order to strengthen its corporate value. Following this announcement Sony was reorganized into seven entities. These business units were given the power to structure short-term and long-term strategies. This restructuring was said to be carried out over a period of three years.

Why do you think Sony restructured itself as often as it did?

The purpose of restructuring Sony’s electronics business was intended to improve the company’s actual focus on the potential products and focus on the decision making process that would make the company more reactive to the changing environment within the market and then make decisions on those changes. This divisional company structure was the beginning of the company within a company system. Management restructuring took measure to reduce the company’s reliance on a single leader.

During this period of the Ten-Company Structure restructuring implication, changes in the marketing division, which belonged to the previous organisational set up, which created three new marketing groups for the company. The analyst said that because they consolidated Sony’s Japanese marketing operations in order to separate its universal procedures and processes so that the company could operate in a much more focused approach.

Centralizing all the R&D efforts of Sony was conducted during the restructuring of the Ten-Company Structure. The previous R&D structure was recreated and three new corporate laboratories were then established. Namely: Architecture Laboratory, Product development Laboratory and System & LSI Laboratory. In addition a new 021 laboratory was established in order to conduct a long term Research & Development for future technology products. This change was done in order to separate responsibilities and make it easier to manage.

The restructuring of the organisational structure aimed to achieve three main objectives which were: to strengthen the electronic business, to make and ensure that Sony’s three subsidiaries were private and to strengthen the overall management capabilities. The restructuring was intended to enhance the shareholder’s value through the creation of Value Management. This structure aimed at decentralizing the worldwide operations of the company.

The restructuring of the board of directors was intended make sure that Sony’s management was more responsive. Sony then again started announcing another change to the board of directors, he established yet another new position of co-chief executive officer. Idei reshuffled this management system again in order to make easy and speedy decisions, and to improve the company’s efficiency and provide the managers with much more clarified roles.

The fourth restructuring done of the organisational structure was implemented so that Sony could try becoming the leader within the media and technology industry and using the broadband era to accomplish that. This fourth restructure of the company concerned the designing of new headquarters to the functions as a hub for Sony’s strategy. Which in return would strengthen the electronic business and facilitate network based content distribution.

The fifth restructuring of reorganizing the business entities was aimed to try and create a much stronger corporate value. The fact that Sony reorganized the business entities to seven business , which consisted of four network companies and three business groups, this allowed the company to separate their long and their short-term strategies.

The actual mission of Sony is to secure the growth of the business in a sustainable manner, while at the same time constantly improving the company’s profitability. Therefore all the restructuring that was done was intended to reach a leading position in attractive markets and to focus on securing competitive share of electronic consumer goods. They also wanted to improve the company’s efficiency and cut costs in operation.

Looking at the restructuring that was done each one had a purpose and a reason why it was implemented and therefore because of its financial problems and other concerns it faced it was only natural for a business to implement certain strategies to try resolve to the problem. Although some businesses would not have gone through the same extent as Sony of continuing to restructure, they did however have their reasons and aimed to become better.

To what extent did Sony’s restructuring efforts centralize or decentralize decision-making within Sony.

Decentralized decision making is any process where the decision making authority is distributed throughout a larger group. It also means that a higher authority is given to lower level functionaries, executives, and workers. This can be in any organization of any size, from a governmental authority to a corporation. Centralized decision making is whereby a top manager retains most decision- making power to him/her self.

During the restructuring or the organisational structure from an eight divisional company to a ten-company structure, the decision making was centralized. Meaning the top manager, Norio Ohga, made the decisions on his own. Ohga’s made decision to centralize the R&D efforts of Sony and to revamp them and to create three new corporate laboratories. Other decisions made while centralized was the restructuring of the electronic businesses. Ohga’s aim at restructuring the electronic businesses was to enhance the company’s focus on potential products and make the decisions process for company more reactive to the changing market environment.

Ohga’s responsibility at this point was to run all the companies activities. He wanted them to report to him as if they were reporting to the shareholders once a year at a shareholders meeting. Ohga’s role will be to then review the strategies and examine the points he feels should be questioned and then provide advice where necessary. The main goal of the new system of a centralized decision making was to ensure that the decisions been made will at the end of the day strengthen the company.

With the Unified-Dispersed Management Model this restructuring effort of a new structure was aimed at decentralizing the universal operations. The company’s headquarters gave the network companies the authority to function as an autonomous entity in their corresponding businesses. Therefore to help more functional and operational independence, the company headquarter also relocated the support functions and the R&D labs to each network company.

In order to further boost the Sony’s electronic business, the management team created Digital Network Solutions under the purview of headquarters. The role of the Digital Network Solution was to produce a network business model by mapping out the strategies and develop the necessary technologies to exploit the opportunities offered by the internet. If decision making was centralized this decision would not have been made due to the fact that it would rely on one person to decision if it should be implemented or not.

Therefore a lot of decisions were implemented while been decentralized. This was because each business unit was experiencing different problems and with decisions making been decentralized they took matters in their own hands and implemented decisions accordingly. The main reason to create a DNS was to try and develop a network base that could provide the customers with digital and financial services. This decision helped Sony reach to their customers in more than one way and it saved them time.

With Decentralization it allowed Sony to take advantage of division of labor by involving them in the decision-making process within the organization. This enables the employees to improve their performances by trying to help the company improve unproductive areas immediately without the approval of top of the organization.

How culturally diverse do you think the different Sony businesses were, for example, consumer electronics, entertainment, insurance, etc?

The “business case for diversity”, theorizes that in a global marketplace, a company that employs a diverse workforce (which includes both men and women, people of many generations, people from ethnically and racially diverse backgrounds etc.) is better able to understand the demographics of the marketplace it serves and is thus better equipped to thrive in that marketplace than a company that has a more limited range of employee demographics.

A company that supports the diversity of its workforce can help improve the employee satisfaction rate, increase productivity and retention. This portion of the business case, often referred to as inclusion, as it communicates how an organization uses its various significant diversities. For example if your workforce is diverse but you employees do not take advantage experiences they learn then the company cannot monetize the benefits of having background of diversity offered.

With Sony the three sections each experience different work place differences. This is because each person with in their sections has their own experiences and a unique group identity. An organization’s culture tends to determine the extent to which it is culturally diverse. Therefore looking at Sony consumer electronics they count two-thirds of Sony’s revenue.

The cultural difference is mainly different only based on their locations and relationships that are formed within the different groups. The Current Sony Corporation has a unique history and the culture is firmly rooted within the relationship of her founders, Masaru Ibuka and Akio Morita . Ibuka and Morita are both characterized with business talents and are devoted electrical engineers. They both gave the company their insight and their visions for the company and identified ways that the company could make operations much easier and less complicated.

Ibuka gave suggestions to the engineers involved in projects from on the transistor radios to Walkmans. This created an umbrella strategy that Sony operates under, whereby the top management gave the company a general direction and try to develop and improve the company’s vision/idea. Therefore, although there is a intended direction, the actual product development is emergent and created greater flexibility for the company.

Research and development within Sony is very different from other companies with its greater flexibility. There is also the strong position system such as the adviser and trainee relationship . All this can be classified as the culture of the company in which the strategy is formed to be a combined behavior. With a strong visions and importance human resource, one can clearly identify the mission statement policies of the managers.

What do you think the dominate corporate culture is and why?

A corporate culture is the total sum of the values, customs, traditions, and meanings that make a company unique. Corporate culture is often called “the character of an organization” , since it embodies the vision of the company’s founders. The values of a corporate culture influence the ethical standards within a corporation, as well as managerial behavior. There are four different types of Corporate Cultures namely: The Power Culture, the Role Culture, the Task Culture and the Person Culture. The Power Culture is whereby an organisation revolves around and is dominated by an individual or a small group. The Role culture is whereby an organisation relies on committees, structures, logic, rules and analysis. A small group of senior managers make the decisions. They rely on systems, procedures and rules to control the organisation. The Task Culture is whereby an organisation is geared to tackling identified projects or tasks. The teams may be multidisciplinary and adaptable to each situation. Lastly the Person Culture is whereby an individual is the central focus and any structure that exists is to serve their individual needs. This may occur when a group of people decide that it is in their own interests to join forces and share work space, equipment, administrative support etc.

Looking at the above definitions the case study shows that Sony has more of a Task Culture. This is feature of organisations which are involves extending research and development activities, in order for them to be more dynamic. Sony is continually subjected to change within the environment and therefore had to create temporary task teams in order to meet the company’s future needs. The Information and expertise are considered to be the skills that are of valued within the company.

The fact that Sony restructured their selves so many times indicates that they were diverse enough to implement changes that they thought would help the company solve their financial problems . Sony revamped their R&D activities in order to establish and conduct research and development for future oriented projects. The concept of ‘ virtual companies ’-temporary groups was also introduced by Sony and consisted of people from different divisions for lunching the hybrid products.

Sony’s restructuring of the management models were aimed at achieving three objectives namely: strengthening the electronic business, privatizing three Sony subsidiaries and strengthening the management capabilities. The restructuring also intended to enhance the shareholder’s value through the creation of Value Management . At Sony there are close connection between the departments, functions and specialties, communication and integration.

These are the ways that the organisation can foresee and adapt to the changes much more quickly. That is why Sony decided to decentralize the decision making. Influences within the team culture are based on the expertise and the up-to-date information, which is where the culture is most in tune with results. Sony was indeed a Task Culture because the staff member’s felt very motivated due to the fact that they were empowered to make some decisions within their teams, they also felt valued by the company because they may have been chosen within that team and given the duty to bring the task to a successful at the end of the day.

Sony’s management team worked as a group the entire time and each problem they faced they tried to come up with solutions that would benefit the company. Over a nine year period Sony had been restructured up to five times. Sony’s main aim was to integrate the talents by placing common goals and priorities in order to increase and be well prepared in the competitive market. Sony has the potential to be innovative with the international operations and the competitively strong because of their culture, this is because they were the first Japanese companies to set up a main branch in the United States.

Another reason why the Sony Group is A Task Culture is because it focused on the employees. Sony’s human capital was considered to be the major asses, especially the engineers in the Research & Development departments. By been the leader within the industry is a tough tasks and is crucial for the firm to remain constant with their innovation from the engineers. Sony is an international corporation, therefore they bring together a large pool of talents and they implement the best of strategies for the organization .

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Sony and PRINCE2 Agile® Case Study

Project management
Project planning
Project progress

June 26, 2017 |

7 min read

This Case Study shows how Sony used PRINCE2 Agile® to manage the development and delivery of enhanced functionality for their file-based workflow programme. The driver behind the project was the need to be more responsive to customers’ demands.

As Sony was already a PRINCE2®-aligned organization and wanted to adopt a Scrum-based agile approach, PRINCE2 Agile was chosen as the project management method.

This case study is also available to read in Japanese (PDF, 754KB) .

Introduction

The organization.

Sony Corporation is a multinational organization with its headquarters in Japan. The business includes consumer and professional electronics, gaming, entertainment, and financial services and is one of the leading manufacturers of electronic products for the consumer and professional markets.

The Media Solutions Department is part of Sony Professional Solutions Europe and delivers broadcast equipment, software and media solutions into organizations across Europe. The Media Solutions Department has three key business areas:

live production, incorporating studios, outside broadcast vehicles and production facilities
news, covering newsroom editors, agency newswire systems and playout systems
content management and archive solutions.

Summary of the project and its outcomes

This Case Study shows how Sony used PRINCE2 Agile® to manage the development and delivery of enhanced functionality for their file-based work flow programme. The driver behind the project was the need to be more responsive to the Media Solutions Department’s customers’ demands.

The system was built around Sony’s Media Backbone Conductor and Navigator products. An infrastructure with base functionality was delivered in the early phases of the project and Sony wanted to continue the development of the product with enhanced features and services. They identified a requirement for a more flexible way of selecting the next features to be developed that would ensure that the needs were always assessed and prioritized.

What was the problem?

Keeping pace with change .

The initial phases of the project involved a long design period, followed by delivery and then deployment of the software. This was usually three to six months after the requirements had originally been agreed, during which time some had changed.

The need for process and technology transformation was driven by the need to realize the benefits of the true end-to-end file-based operation. It was very important to keep all stakeholders involved and part of the process. This included prioritizing features with the user community, measuring return on investment (ROI) and introducing changes in a controlled manner. Key to the success of this project has been the creation of a culture of continuous improvement.

It was essential to improve the sharing of content and automate some of the processes to free up valuable user time for core production activities.

The proposed solution

As Sony had identified a need to be able to respond to user requirements faster, they decided to consider an agile-based methodology.

The solution had to ensure that:

new developments are always relevant to the current business needs
there is flexibility to reprioritize future software deliveries without the need to raise change requests and seek top management approvals.

Project Governance

The project followed the PRINCE2 governance structure and had a project board with user, supplier and business representation, see Figure 2.1. The structure illustrates how local role names can be mapped onto the overall PRINCE2 governance framework, retaining customer/business supplier representation. For example, the Director of Technology effectively approved decisions around the backlog and was ultimately responsible for acceptance of the product.

Figure 2.1 Project governance structure

Communications, progress and issue reporting were strongly based on the management by exception principle and PRINCE2 reporting guidance. End stage and highlight reports were still used as communication channels between the project manager and the project board.

Aims and objectives

The major objective for the Media Solutions Department was to reduce project delivery time and reduce project risk by increasing product quality. The aims of this work were to create and adopt a workable agile approach under PRINCE2 and to prove it on a real project.

Sony already had PRINCE2 elements in place and delivery teams familiar with agile development. The approach was to combine the two, using the PRINCE2 Agile approach, to make sure that the strengths of PRINCE2 were not lost in using agile: in particular, the governance, communication and quality management aspects.

The adoption of a PRINCE2 Agile approach has been phased into the organization, partly through training and partly through adoption and implementation of the method.

We started by involving the delivery project managers, but then realized that all the stakeholders across the business needed to be engaged to achieve the desired improvements and flexibility in delivery.

The approach required more user involvement during development than the previous development method, but provided better business value because the solutions solved the business problems of the user stakeholders. Frequent demos took place involving the user stakeholders which encouraged discussion of the product features during development. The user acceptance process was much easier than in previous projects as the users were already familiar with the products and had been involved in their evolution through the project.

The development team used automated tools to support agile activities such as backlog management (Figure 4.1), progress tracking (Figure 4.2, sprint report) and Kanban boards (Figure 4.3).

Figure 4.1 Backlog velocity chart

Figure 4.2 Sprint report

Figure 4.3 Kanban board

The project used the PRINCE2 Agile guidance about contracts to help build agreements with their clients based on throughputs rather than end products alone. Traditional fixed price and scope or time and materials contracts were not suitable, so a new model based on throughput of functionality was established. Developer estimates based on planning poker sessions fed directly into this mechanism, and the customer was directly involved in the sessions to ensure confidence and integrity in the process.

Sony has been a PRINCE2-aligned organization for some time and is used to delivering predominately hardware/software application solutions in a traditional design, build, and commission approach.

We quickly realized the limitations of this process, as our software offerings became more customizable and projects started to exceed a three to six month turnaround. Therefore we needed to look at:

the end-to-end lifecycle
how we identify agile-based opportunities, and when agile might not be applicable
contracts for agile projects
manage the sprints of specification and delivery
supporting a continuously evolving live environment through new services, changes in workflows, partners or integrated systems.

One of the key challenges was setting up a commercial and legal framework which supported the scope not being fixed until the start of each sprint, and without the overhead of using the existing change control process. This was addressed by using an agile approach to building agreements based on throughputs.

What was the biggest success factor?

From a Sony prospective, PRINCE2 Agile has enabled us to better manage the changes delivered to the users. The methodology has allowed us to reduce the overheads of change requests/impact assessments and to focus on delivering exactly what is needed and ultimately supporting the acceptance of the delivery and faster release back into the operation.

Benefits already realized

The project has already resulted in reduced delivery costs because of:

less upfront design
simpler contracting of projects
shorter time to completion, roll out
minimized rework
reduced administration through the use of automation tools.

All of which have contributed to increased customer satisfaction because of:

better customer engagement during the project
better alignment to business needs
more of the required features being delivered.

Lessons learned

1. Initially we took the decision that going agile would be mainly for project managers involved in product delivery and our in-house development teams. This proved to be far from reality. It is key to involve everyone from account management and sales, bid teams, architects, support, legal and procurement teams, so that the entire lifecycle can be assessed.

2. All parts of the organization need to understand the agile approach, not just the delivery project managers.

3. Sales and bid managers, support managers and engineers, need to agree on how to sell the approach and then support the solution as more features are being developed.

Axelos’ view

Combining the governance strengths of PRINCE2 with the flexibility of agile delivery was the driving force behind AXELOS’ development of PRINCE2 Agile. The Sony experience is a very good example of how the benefits of both PRINCE2 and agile can be brought together to provide a delivery solution that matches the project environment.

As experienced PRINCE2 users, Sony recognize the need for good project governance and have retained the strengths of PRINCE2’s controls but adapted for agile working. Agile was identified as the appropriate delivery approach to improve delivery times and engage with users. The synthesis PRINCE2 and agile has provided a delivery approach that is already realizing benefits.

About the author

Yucel Timur is Head of Project Management for Sony Professional Solutions Europe, with over 15 years’ project delivery experience in the Broadcast and Media Industry. Yucel has built a Project Management group that is delivering a variety of complex projects across Europe. As Sony’s solutions have become more customizable, the Project Management group continues to adapt processes, techniques and skills to improve project delivery and quality. This supports Sony with the objective of always being at the forefront of delivering solutions into the broadcast industry and is leading the way in providing feature rich tools and applications to customers across the globe.

For more information, visit pro.sony.eu

Camilla Brown has 15 years’ experience in software product development and solution delivery in the broadcast and media industry. During the last few years, Camilla has ventured into the world of project management while still holding on to agile software development processes, bringing change to the way Sony delivers some of its professional solutions.

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Case Study: A Critical Analysis of Restructurings by Sony Corporation

Why do you think Sony restructured itself as often as it did?

To what extent did Sony’s restructuring efforts centralize or decentralize decision-making within Sony.

How culturally diverse do you think the different Sony businesses were, for example, consumer electronics, entertainment, insurance, etc?

What do you think the dominate corporate culture is and why?

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Sony and PRINCE2 Agile® Case Study

Introduction

Summary of the project and its outcomes

What was the problem?

The proposed solution

Project Governance

Aims and objectives

What was the biggest success factor?

Benefits already realized

Lessons learned

Axelos’ view

About the author

COMMENTS