Technology Can Cap Internet Facilitators' Liability

Advances in Internet technology have increased facilitators' capacity to ameliorate Internet bad acts automatically. Failure to employ such technology may result in more liability for Internet facilitators for preventing bad acts online.

Internet facilitators allow such services as e-mail, instant messaging, peer-to-peer trading, blogs, broad Internet access, chat rooms, intranets, interactive websites and other electronic communications. They also grease the cables of e-commerce companies by providing various goods and services transactions.

These transactions may result in defamation, copyright infringement, trade-secret and confidentiality breaches, harassment (including at work), criminal accountability and loss of attorney-client privilege.

Global Reach Complications

The nature and extent of Internet bad acts are exacerbated because Internet sites are accessible beyond national borders, and no international Internet behavior code exists. User-generated content may constitute a substantial portion of an Internet facilitator's site content and the international legal community relies on standards set by multilateral treaties.

In the past, Internet facilitators could avoid secondary liability for not stopping bad actors that used the facilitators' services with one of two defense types. If charged with vicarious liability, Internet facilitators could show they had no ability to supervise those engaged in bad acts using the facilitator's Internet assets; if charged with contributory liability, they could show no knowledge of bad Internet acts involving their Internet assets (see, MGM v. Grokster, 545 U.S. 913 (2005)).

Safe Harbor

But as Internet technology increasingly allowed automated action for Internet facilitators to prevent bad acts by third parties using their sites, the United States implemented a statute with a “safe harbor” provision that protects websites and Web providers from secondary liability for certain bad acts, such as copyright violations by users on a facilitator's Internet asset. The most wide-ranging safe harbor provision is offered in Title II of the Digital Millennium Copyright Act of 1998 (DMCA), Pub. L. No. 105-304, 112 Stat. 2860 (codified at 17 U.S.C. '101 et seq.) (http://1.usa.gov/vvSvKc).

Though the question of interpreting this part of the statute has yet to reach the Supreme Court, a variety of lower courts have interpreted it broadly and applied it to entities providing Internet access. Particularly, the court in ALS Scan, Inc. v. RemarQ Cmtys., Inc., 239 F.3d 619, 626 (4th Cir. 2001) found a newsgroup website met the definition, and the court in Corbis Corp. v. Amazon.com, Inc., 351 F. Supp. 2d 1090, 1100 (W.D. Wash. 2004) found Amazon.com fits the definition.

Still, the safe harbor requires that Internet facilitators eligible for secondary-liability indemnification not have “actual knowledge” of infringing material. The nearly universal use of Internet technology providing actual knowledge of a facilitator's site content and the site's related transactions may be used by plaintiffs to pierce safe harbor provisions and require the Internet facilitator to forfeit safe-harbor protections.

Catching Bad Actors

Internet technology exists for an Internet facilitator to limit an Internet user's bad acts. The most important technologies are automatic Internet-user monitoring systems, “Net Nannies” and Internet tracking software.

Automatic Internet-user monitoring systems, such as screen-capture utilities and key-logger software, record all information sent to an Internet facilitator's site. These monitoring systems can feed captured data to software tools that will prevent Internet users from taking certain actions to facilitate bad acts, such as installing malware and distributing unlawful spam.

For more than 10 years, Net nanny software has been providing Internet facilitators a Web filter to avoid inappropriate use. Net nannies can stop distribution of unlawful images, deny access to Internet users the Internet facilitator deems undesirable and generally censor unacceptable behavior automatically.

Existing Internet-user tracking software can usually narrow an Internet user's location to within several hundred feet without requiring user permission. This occurs by sending the target a message, and then using message bounce-back time, the Internet user's IP address and Google Map software. User location knowledge can allow Internet facilitators to prevent bad acts, such as allowing a site user to send goods into a state that has deemed such goods contraband.

In combination, automatic Internet-user monitoring systems, Net nannies and Internet tracking software can remove unlawful or unacceptable content, and can send the bad actor an electronic notice of a violation committed. Internet technology may also mete out sanctions automatically, such as automatically baring a bad actor's access.

EU Action

While Internet technology may change Internet facilitators' U.S. liability, such changes may be blunted in Europe by local law. The European Union (EU) has attempted to deal with Internet facilitator liability with the E-Commerce Directives, which grant liability exemptions to passive Internet facilitators (see, Directive 2000/31/EC, arts. 40-58, 2000 O.J. (L 178) 1 (EC), http://bit.ly/m2yZkc). The E-Commerce Directives exemptions apply only if Internet facilitators do not “collaborate” with a user in illegal acts and require expeditious action to remove access to any illegal information upon receiving notice of illegal activities.

While the directives are binding on member states, they allow implementation to be designed by member states in their jurisdictions. The directives do not address Internet technology and so, use or failure to use such technology is not a factor in assessing Internet facilitator liability.

But the result of integrating monitoring and control technology integration into the E-Commerce Directives is unclear, which three cases considering YouTube's liability for user copyright infringement that parallel Viacom International Inc. v. YouTube, Inc. in Spain, Germany and Italy demonstrate. The countries are EU members and subject to the E-Commerce Directive, yet the cases have resulted in a YouTube victory in Spain, but losses in Germany and Italy.

Advances in Internet technology have increased facilitators' capacity to ameliorate Internet bad acts automatically. Failure to employ such technology may result in more liability for Internet facilitators for preventing bad acts online.

Internet facilitators allow such services as e-mail, instant messaging, peer-to-peer trading, blogs, broad Internet access, chat rooms, intranets, interactive websites and other electronic communications. They also grease the cables of e-commerce companies by providing various goods and services transactions.

These transactions may result in defamation, copyright infringement, trade-secret and confidentiality breaches, harassment (including at work), criminal accountability and loss of attorney-client privilege.

Global Reach Complications

The nature and extent of Internet bad acts are exacerbated because Internet sites are accessible beyond national borders, and no international Internet behavior code exists. User-generated content may constitute a substantial portion of an Internet facilitator's site content and the international legal community relies on standards set by multilateral treaties.

In the past, Internet facilitators could avoid secondary liability for not stopping bad actors that used the facilitators' services with one of two defense types. If charged with vicarious liability, Internet facilitators could show they had no ability to supervise those engaged in bad acts using the facilitator's Internet assets; if charged with contributory liability, they could show no knowledge of bad Internet acts involving their Internet assets ( see , MGM v. Grokster , 545 U.S. 913 (2005)).

Safe Harbor

But as Internet technology increasingly allowed automated action for Internet facilitators to prevent bad acts by third parties using their sites, the United States implemented a statute with a “safe harbor” provision that protects websites and Web providers from secondary liability for certain bad acts, such as copyright violations by users on a facilitator's Internet asset. The most wide-ranging safe harbor provision is offered in Title II of the Digital Millennium Copyright Act of 1998 (DMCA), Pub. L. No. 105-304, 112 Stat. 2860 (codified at 17 U.S.C. '101 et seq.) (http://1.usa.gov/vvSvKc).

Though the question of interpreting this part of the statute has yet to reach the Supreme Court, a variety of lower courts have interpreted it broadly and applied it to entities providing Internet access. Particularly, the court in ALS Scan, Inc. v. RemarQ Cmtys., Inc. , 239 F.3d 619, 626 (4th Cir. 2001) found a newsgroup website met the definition, and the court in Corbis Corp. v. Amazon.com, Inc. , 351 F. Supp. 2d 1090, 1100 (W.D. Wash. 2004) found Amazon.com fits the definition.

Still, the safe harbor requires that Internet facilitators eligible for secondary-liability indemnification not have “actual knowledge” of infringing material. The nearly universal use of Internet technology providing actual knowledge of a facilitator's site content and the site's related transactions may be used by plaintiffs to pierce safe harbor provisions and require the Internet facilitator to forfeit safe-harbor protections.

Catching Bad Actors

Internet technology exists for an Internet facilitator to limit an Internet user's bad acts. The most important technologies are automatic Internet-user monitoring systems, “Net Nannies” and Internet tracking software.

Automatic Internet-user monitoring systems, such as screen-capture utilities and key-logger software, record all information sent to an Internet facilitator's site. These monitoring systems can feed captured data to software tools that will prevent Internet users from taking certain actions to facilitate bad acts, such as installing malware and distributing unlawful spam.

For more than 10 years, Net nanny software has been providing Internet facilitators a Web filter to avoid inappropriate use. Net nannies can stop distribution of unlawful images, deny access to Internet users the Internet facilitator deems undesirable and generally censor unacceptable behavior automatically.

Existing Internet-user tracking software can usually narrow an Internet user's location to within several hundred feet without requiring user permission. This occurs by sending the target a message, and then using message bounce-back time, the Internet user's IP address and Google Map software. User location knowledge can allow Internet facilitators to prevent bad acts, such as allowing a site user to send goods into a state that has deemed such goods contraband.

In combination, automatic Internet-user monitoring systems, Net nannies and Internet tracking software can remove unlawful or unacceptable content, and can send the bad actor an electronic notice of a violation committed. Internet technology may also mete out sanctions automatically, such as automatically baring a bad actor's access.

EU Action

While Internet technology may change Internet facilitators' U.S. liability, such changes may be blunted in Europe by local law. The European Union (EU) has attempted to deal with Internet facilitator liability with the E-Commerce Directives, which grant liability exemptions to passive Internet facilitators (see, Directive 2000/31/EC, arts. 40-58, 2000 O.J. (L 178) 1 (EC), http://bit.ly/m2yZkc). The E-Commerce Directives exemptions apply only if Internet facilitators do not “collaborate” with a user in illegal acts and require expeditious action to remove access to any illegal information upon receiving notice of illegal activities.

While the directives are binding on member states, they allow implementation to be designed by member states in their jurisdictions. The directives do not address Internet technology and so, use or failure to use such technology is not a factor in assessing Internet facilitator liability.

But the result of integrating monitoring and control technology integration into the E-Commerce Directives is unclear, which three cases considering YouTube's liability for user copyright infringement that parallel Viacom International Inc. v. YouTube, Inc. in Spain, Germany and Italy demonstrate. The countries are EU members and subject to the E-Commerce Directive, yet the cases have resulted in a YouTube victory in Spain, but losses in Germany and Italy.