March 29, 2007 | By Kurt Opsahl

Court Clarifies Service Providers' Immunity From State IP Claims

Section 230 of the Communications Decency Act of 1996 is an amazingly powerful federal law, protecting interactive computer services by ensuring that the soapbox is not liable for what the speaker has said. Section 230's immunity to state law claims (typically defamation, but including all other lawsuits based on state laws) allows for many of the online services you know and love, including user product reviews, online auction feedback, internet dating services, message boards, classified ads, usenet -- the list goes on and on.

But Section 230 does not provide complete protection, exempting "intellectual property" law from its reach. The term "intellectual property" was not defined, leading to the question of whether state laws that are similar to traditional intellectual property are covered. Today, the Ninth Circuit emphatically answered that question, "constru[ing] the term 'intellectual property' to mean 'federal intellectual property,'" such as copyrights, patents and federal trademarks. Perfect 10, Inc. v. CCBill, LLC, __ F.3d __ (9th Cir. 2007). The Ninth Circuit reversed the District Court's ruling on Perfect 10's right of publicity claims, reasoning that:

"Because material on a website may be viewed across the Internet, and thus in more than one state at a time, permitting the reach of any particular state's definition of intellectual property to dictate the contours of this federal immunity would be contrary to Congress's expressed goal of insulating the development of the Internet from the various state-law regimes."

This means that Section 230 can protect service providers from claims that the users of their services violated state laws, such as the right of publicity, trade secrets and state trademark laws. This is great news for service providers, and great news for free speech, since it allows service providers to provide the platform upon which others may speak, while leaving the responsibility where it properly lies -- upon the author.

As for the federal intellectual property rights, the Digital Millennium Copyright Act provides a safe harbor for copyright claims. The Ninth Circuit decision clarified a number of factors of the DMCA safe harbor, importantly noting that "[t]he DMCA notification procedures place the burden of policing copyright infringement--identifying the potentially infringing material and adequately documenting infringement--squarely on the owners of the copyright." The Court of Appeals remanded the case back to the District Court to see whether CCBill qualified.

This is not going to be the last ruling on the subject. Perfect 10 has filed numerous lawsuits trying to hold everyone from search engines to credit card companies liable for other people's use of Perfect 10's pornographic photographs.


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