Immunity for Interactive Computer Service Providers under Section 230 of the Communications Act for Information Originating from Third Parties

What Is Section 230 Immunity?

In 1996, as part of the Communications Decency Act, Congress immunized computer service providers from liability for information that originates with third parties.¹

Why Was Section 230 Necessary?

Prior to the passage of Section 230, interactive and computer service providers faced potential liability for content created by third parties because of two inconsistent decisions.

In Cubby, Inc. v. CompuServe, Inc.,² CompuServe -- an online general information service that featured electronic bulletin boards -- was sued by an individual who alleged that a publication available on one of CompuServe's bulletin boards defamed him. The court analogized CompuServe to a distributor of third-party information, such as a library, book store, or news vendor, finding that once CompuServe agreed to carry a particular publication, it had little or no control over the editorial content. Because of the heightened standard of liability applicable to distributors, the court held that CompuServe could only be held liable if it "knew or had reason to know" of the allegedly defamatory statements. Because the plaintiff presented no evidence establishing this requisite level of knowledge on CompuServe's part, the court granted summary judgment to CompuServe.

In Stratton Oakmont, Inc. v. Prodigy Servs. Co.,³ on the other hand, the court concluded that Prodigy could be liable for an allegedly defamatory message that an unidentified user had posted on a Prodigy bulletin board. While the court accepted the Cubby court's ruling that a distributor may not be held liable unless it had notice of the allegedly defamatory content, it held that Prodigy was not the equivalent of a mere distributor. Because Prodigy had advertised that it exercised control over third-party content, the court concluded that Prodigy had "opened it[self] up to greater liability than CompuServe and other computer networks" by failing to remove the alleged defamatory material. Prodigy, the Stratton court held, was more akin to a traditional publisher, such as a newspaper, because it exercised editorial control over its content. The Stratton thus held, incongruously, that liability could be imposed if the interactive computer service sought to exercise control, while no liability was imposed when the interactive computer service failed to exercise control, as in Cubby.

Because of the uncertainty caused by these two decisions and because of a fear that the burgeoning medium of electronic bulletin boards, message boards, and communication might be threatened if companies decided to shut down such sites rather than be exposed to liability, Congress passed Section 230.

Section 230 Requirements

In passing Section 230, Congress sought to make clear that it is "the policy of the United States . . . to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State regulation."⁴

Section 230 contains three important subparts. Together, the three subparts have established almost universal immunization for information service providers that are sued for content created by a third party.

Under Section 230(c)(1), "[n]o provider or speaker of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider." As discussed below, most courts construing this section have concluded that it provides broad "distributor-like" immunity, as did the court in Cubby.

Section 230(c)(2), commonly referred to as the "Good Samaritan" provision, provides protection for interactive computer services that take steps to control content, like Prodigy in the Stratton case: "[n]o provider . . . of an interactive computer service shall be held liable on account of [] any action voluntarily taken in good faith to restrict access to or availability of material that the provider . . . considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable."

Finally, Section 230(c)(3) broadly preempts inconsistent state law: "[n]othing in this section shall be construed to prevent any State from enforcing any State law that is consistent with this section. No cause of action may be brought and no liability may be imposed under any State or local law that is inconsistent with this section."

Leading Cases

The first case to consider the application of Section 230 is also the leading case in this area, Zeran v. America Online, Inc.⁵ In Zeran, the plaintiff was the victim of a hoax that advertised that he was selling offensive t-shirts on America Online, Inc. ("AOL"). He sued AOL, claiming that once he notified it of the hoax, AOL had a duty to remove the defamatory posting, to notify subscribers of the message's false nature, and to screen future postings for defamatory material. The Fourth Circuit disagreed, holding that Zeran's attempt to impose liability for AOL's distribution of the defamatory messages was foreclosed by Section 230.

The court stated that Congress passed Section 230 to promote the rapid and continued development of the Internet unfettered by regulation and lawsuits. It found that Section 230 still allowed any victim to pursue the responsible party, but that "Congress made a policy choice, however, not to deter harmful online speech through the separate route of imposing tort liability on companies that serve as intermediaries for other parties' potentially injurious messages." The court found that imposing tort liability on interactive computer services would have a chilling effect because "[i]t would be impossible for service providers to screen each of their millions of postings for possible problems. Faced with potential liability for each message republished by their services, interactive computer service providers might choose to severely restrict the number and type of messages posted."

Although Zeran argued that Section 230 only eliminated publisher liability, leaving distributor liability intact, and that AOL was liable because it knew about the defamatory material, the court rejected this argument. The court found that if the interactive service provider was required to investigate each and every complaint, the sheer number of postings would "create an impossible burden in the Internet context," thus creating almost limitless liability for interactive service providers. The court thus concluded that the immunity granted by Section 230 foreclosed the lawsuit.

A trio of cases, where the line between the interactive service provider and the content provider is much closer, demonstrates the broad immunity granted by Section 230. In Blumenthal v. Drudge,⁶ the plaintiffs sued columnist Matt Drudge and AOL for an allegedly defamatory article Drudge wrote and then published on AOL's Web site about one of President Clinton's top aides. Instead of acting as a mere conduit for users to get to the "Drudge Report," AOL and Drudge had a licensing agreement under which the Drudge Report was available to all AOL members on AOL's proprietary network for one year. Thus, AOL was essentially "hosting" the Drudge Report on its proprietary network.

Under the terms of the hosting agreement, Drudge was to create, edit, update, and otherwise manage the content of the Drudge Report, while AOL retained the right to "remove content that AOL reasonably determine[d] to violate AOL's then standard terms of service." AOL also advertised that the Drudge Report would appear on the AOL site, paid Drudge $3,000 per month for licensing the Drudge Report to AOL, and urged potential customers to sign up.

Despite the fact AOL paid Drudge for the content, advertised the availability of the content to the general public, had the ability to edit the content, and provided the content exclusively to its members, the court unequivocally held that AOL could not be held liable as a content provider: "AOL was nothing more than a provider of an interactive computer service on which the Drudge Report was carried, and Congress has said quite clearly that such a provider shall not be treated as a 'publisher or speaker' and therefore may not be held liable in tort. . . . Congress has made a different policy choice by providing immunity even where the interactive service provider has an active, even aggressive role in making available content prepared by others."

A similar result was reached in Ben Ezra, Weinstein & Co. v. America Online, Inc.⁷ There, AOL hosted two stock-quote providers on its proprietary network. These services allegedly published false and defamatory information about the plaintiff's stock. The plaintiff argued that AOL was both an interactive computer service and an information content provider by virtue of its participation in the creation and development of the stock quote information.

The facts in Ben Ezra showed that AOL occasionally corrected errors in the stock quotations. The court held that "such communications simply do not constitute the development or creation of the stock quotation information." This is because "[i]mposing liability on Defendant for the allegedly inaccurate stock information provided by ComStock would 'treat' Defendant as the 'publisher or speaker,' a result Section 230 specifically proscribes."

Finally, in John Doe v. Franco Productions, et al.,⁸ the court held that those engaging in Web site hosting activities are immunized by Section 230 from liability arising out of their involvement, via those activities, in the dissemination or publication of information originating from third parties.

In Franco, the plaintiffs were intercollegiate athletes who, without their permission, were videotaped in varying states of undress in lockers, showers, and rest rooms. The resulting video tapes were sold by varying means, including on Web sites hosted by the defendants. The defendants were not accused either of creating the videotapes in question, or the objectionable content depicted on the Web sites at issue. Rather, the plaintiffs alleged that the defendants hosted these Web sites, provided "the template or architecture of the Web sites" and "materials related to credit card transactions necessary to the sale [of] the illegal videotapes."

The court rejected the plaintiff's attempt to hold the Web site hosts responsible for the content. It held that Section 230 "creates federal immunity against any state law cause of action that would hold computer service providers liable for information originating from a third party," including Web hosting activities: "[t]he court reiterates its previous holding, finding GTE, and now similarly PSINet, service providers whose immunity or status as service providers under the CDA is not vitiated because of their Web hosting activities, whether viewed in combination with their roles as service providers or in isolation. Immunity under the CDA is not limited to service providers who contain their activity to editorial exercises or those who do not engage in Web hosting, but rather, 'Congress . . . provided immunity even where the interactive service provider has an active, even aggressive role in making available content prepared by others.' Plaintiffs do not allege that GTE or PSINet themselves sold or offered for sale the videotapes at issue. Plaintiffs simply allege that GTE and PSINet, as Web hosts, provided a medium through which others could sell or offer for sale the videotapes at issue. However, by offering Web hosting services which enable someone to create a Web page, GTE and PSINet are not magically rendered the creators of those Web pages. As such, plaintiffs' new characterization of GTE and PSINet as Web hosts neither prevents these defendants from being deemed service providers protected by immunity under the CDA nor makes them content providers unprotected by the CDA's immunity."

Departing from the vast majority of cases which have broadly applied Section 230 immunity to bar cases against interactive computer services, a California intermediate court rejected Zeran and its progeny in Barrett v. Rosenthal.⁹ In Barrett, the court held that Section 230 immunity did not apply when the individual republishing the statements knew or had reason to know of the falsity of the material being disseminated. According to the Barrett court, "distributor liability would [generally] not require a service provider to review communications in advance of posting them but only to act reasonably after being put on notice that the communication is defamatory." As a result, once the service provider receives notice (from the allegedly defamed individual) of falsity, it must either undertake adequate steps to ascertain the veracity of the statement, remove it, or face potential liability. On April 15, 2004, the California Supreme Court voted to grant review of the Barrett case.

Are There Any Limitations on Section 230 Immunity?

Section 230 does not "impair the enforcement" of any federal criminal statute,¹⁰ does not "limit or expand" intellectual property law,¹¹ and does not "limit the application" of the Electronic Communications Privacy Act or any similar state statute.¹²

The exception that has been most often used is Section 230(e)(2), which provides that "[n]othing in this section shall be construed to limit or expand any law pertaining to intellectual property."¹³

In Gucci America, Inc. v. Hall & Assoc.,¹⁴ the complaint alleged that Mindspring hosted another defendant's Web page, that Mindspring was informed that the other defendant was using Mindspring's services to aid in trademark and unfair competition, and that Mindspring failed to take any action to stop it. Mindspring maintained that Section 230 immunized it from liability for information posted on the Web site because it was an interactive computer service and the other defendant was the information content provider of the content at issue.

The plaintiff agreed that Mindspring was an interactive computer service and the other defendant was the information content provider of the content at issue. It argued, however, that Mindspring was not immune because Section 230 specifically provided that "[n]othing in this section shall be construed to limit or expand any law pertaining to intellectual property."¹⁵ The court noted that under existing trademark law, publishers might, under certain circumstances, be held liable for trademark infringement. Accordingly, it held that immunizing Mindspring from the plaintiff's claims would "limit" the laws pertaining to intellectual property and refused to grant its motion to dismiss.¹⁶

Courts deciding these cases, however, have apparently not focused on the potential argument that trademark claims are not "intellectual property" claims. While the cases are legion grouping trademark under the rubric of intellectual property, and there is a United States Patent and Trademark Office, trademarks are, in many respects, fundamentally different from intellectual property. Patent and copyright laws are designed to foster and reward innovation and invention.¹⁷ By contrast, the purpose of trademark protection is to avoid consumer confusion and to protect the goodwill of the trademark owner's business.¹⁸

They also differ historically. Congress's power over patents and copyrights is derived specifically from Art. I, Section 8, cl. 8 of the Constitution (the "Intellectual Property Clause"), which authorizes Congress to "promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their inventions and discoveries." Trademark, however, is merely a branch of unfair competition law and was recognized by the common law prior to the Constitution. Moreover, federal legislation with respect to trademarks is authorized under the Commerce Clause, not the Intellectual Property Clause.¹⁹

Congress did not define "intellectual property" in Section 230 or elsewhere in the Communications Decency Act. In at least one major statute, however, where Congress did define the term, it specifically defined it to exclude trademark.²⁰

It is, nevertheless, clear that Congress did intend Section 230 to have a very broad sweep with respect to other causes of action. The Gucci decision would appear to leave ISPs with a Hobson's choice when notified of a client that is allegedly violating trademark laws: take down the Web site containing the allegedly offensive material, and risk inviting a lawsuit from the client if the material did not violate trademark laws, or leave the Web site running and risk being forced to defend a lawsuit alleging violations of trademark law. Albeit in a different context (defamation), the Fourth Circuit's reasoning in Zeran is equally applicable to claims of trademark infringement:

Whenever one was displeased with the speech [or products] of another party over an interactive computer service, the offended party could simply "notify" the relevant service provider, claiming the information to be legally [actionable]. In light of the vast amount of speech [or products] communicated through interactive computer services, these notices could produce an impossible burden for service providers, who would be faced with ceaseless choices of suppressing controversial speech [or products] or sustaining prohibitive liability.²¹

Indeed, the Zeran court noted "[e]ach notification would require a careful yet rapid investigation of the circumstances surrounding the posted information, a legal judgment concerning the information's [actionable] character, and an on-the-spot editorial decision whether to risk liability by allowing the continued publication of that information."²² Given the historical and constitutional underpinnings of trademark law, and Congress' intent that ISPs should not be forced to make on-the-spot decisions that could expose them to potential liability, there is more than sufficient justification to include trademark claims within the coverage of Section 230.

Current Landscape

To be sure, Section 230 preserved the right to pursue the responsible party. To that end, numerous individuals and entities have initiated defamation and other suits against parties that posted material on Internet chat rooms and bulletin boards.²³ What Section 230 makes clear, however, is that such liability does not extend to the information service providers that provide this third-party content.

¹47 USC Section 230.

²776 F. Supp. 135 (SDNY 1991)

³1995 NY Misc. LEXIS 229, 23 Media L. Rep. 1794 ( Nassau Cty. May 26, 1995).

⁴47 USC Section 230(b)(2).

⁵129 F.3d 327 (4th Cir. 1997).

⁶992 F. Supp. 44 (DDC 1998).

⁷206 F.3d 980 (10th Cir. 2000).

⁸2000 U.S. Dist. LEXIS 8845 (ND Ill. June 21, 2000), aff'd on other grounds, 347 F.3d 655 (7th Cir. 2003).

⁹9 Cal. Rptr. 3d 142 (Cal. Ct. App. 2004).

¹⁰47 U.S.C. Section 230(e)(1).

¹¹47 U.S.C. Section 230(e)(2).

¹²47 U.S.C. Section 230(e)(4).

¹³135 F. Supp. 2d 409 (SDNY 2001).

¹⁴Id. at 412 (citing 47 U.S.C. Section 230(e)(2)).

¹⁵See also Ford Motor Co. v. GreatDomains.com, Inc., No. 00-CV-71544-DT (ED Mich. Sept. 25, 2001) (denying ISP's motion to dismiss under Section 230 because "[t]his language [Section 230(e)(2)] unambiguously precludes application of Section 230's grant of immunity to the facts of this case. If, as alleged by Plaintiffs, Great Domains has violated federal trademark laws, Section 230 cannot be construed to limit adjudication of those laws."); Perfect 10, Inc. v. CCBill, LLC, No. CV 02-7624 (CD Cal. June 22, 2004) (holding that Section 230 did not apply to right of publicity and state law trademark claims because right of publicity is an intellectual property right).

¹⁶Aronson v. Quick Point Pencil Co., 440 U.S. 257, 262 (1979); Duraco Prods., Inc. v. Joy Plastic Enterprises, Ltd., 40 F.3d 1431, 1446 (3d Cir. 1994).

¹⁷Park 'N Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 198 (1985).

¹⁸United States v. Steffens, 100 U.S. 82, 93-94 (1879) ("Any attempt, however, to identify the essential characteristics of a trade-mark with inventions and discoveries in the arts and sciences, or with the writings of authors, will show that the effort is surrounded with insurmountable difficulties. The ordinary trade-mark has no necessary relation to invention or discovery").

¹⁹See, e.g., 11 USC Section 101(35A) (excluding trademarks from the definition of Intellectual Property for purposes of the Bankruptcy Code); accordIn re Gucci, 126 F.3d 380, 394 (2d Cir. 1997) (noting that "protection of trademarks [was] deliberately not conferred" by Congress when it defined "intellectual property" in the Bankruptcy Code); but see 15 USC Section 4711(7) (defining intellectual property to include trademark); 19 USC SectionSection 2411 & 2901 (same).

²⁰Zeran, 129 F.3d at 333.

²¹Id.

²²See 47 USC Section 230(b)(5) ("It is the policy of the United States . . . to ensure vigorous enforcement of Federal criminal laws to deter and punish trafficking in obscenity, stalking, and harassment by means of computer").

²³See, e.g., SPX Corp. v. Doe, 253 F. Supp. 2d 974 (ND Ohio 2003) (suit against individual for posts to Yahoo! bulletin board); Rocker Management LLC v. Does 1 through 20, 2003 U.S. Dist. LEXIS 16277 (ND Cal. May. 28, 2003) (same).