Last month, the Sixth Circuit ruled that website operators are not liable for content provided by others (User Generated Content or UGC) because of Section 230 immunity under the Communications Decency Act in the Jones v. Dirty World Entertainment decision.

Based on the history of the CDA, that should be no surprise. However, internet lawyers were watching this case closely because a federal judge let a defamation case go to trial and this could have created a hole in the CDA defense.  Alas, the court of appeals ruled the way most experts expected and the world can return to normal.

We posted about the trial court’s decision before.  Last summer, a jury found TheDirty.com “encouraged the development of what is offensive” and was therefore liable for the defamatory posts about former Cincinnati Bengals cheerleader Sarah Jones. The jury awarded Jones $38,000 in actual damages and $300,000 in punitive damages.

As a refresher, Section 230 of the CDA provides: ”[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” Because the websites are not the publisher or speaker, the sites can’t be liable for defamation. Most courts immediately dismiss website operators from defamation suits when the claim is based on UGC.

Jones sued Dirty World Entertainment Recordings which owns TheDirty.com. The site, as expected, immediately filed a motion to dismiss the complaint because the claims were based primarily on the UGC. The trial judge denied the motion arguing the defendant purposefully seeks out and encourages defamatory content. The court wrote “the very name of the site, the manner in which it is managed, and the personal comments of defendant Richie” shows that the site “specifically encouraged development of what is offensive about the content.”

The court of appeals said the trial court erred when it held The Dirty was the “creator” or “developer” of the offensive content and when the trial court allowed a “encouragement test” that would cause a website to lose the CDA immunity.

The Sixth Circuit instead implemented the more accepted material contribution test requiring evidence the website operator was “responsible, in whole or in part, for the creation or development” of the defamatory content.  Based on this test, the appellate court found the website did not “author” the statements, pay for the content and did not require defamatory content to use the site.  The court also confirmed there was no liability for selecting the content or refusing to edit the content.

What does it mean?

The CDA has been a very effective tool for website operators.  Imagine if Facebook or YouTube could be sued for defamation.  Those sites would not exist.  With the good, comes the like of The Dirty.  There is an old saying that “bad facts make bad law.”  That almost happened in this case. TheDirty.com asks people to “submit dirt.” The submission form has entries for the “dirt,” and provides a link to upload photographs.  More reputable websites, don’t have this feature.  But, if The Dirty is protected, then you should have no worries that your more mainstream site will also be protected.  If there is going to be any changes to allow for liability for those who “encourage” defamation, the change will have to come from the state house and not the court house.

 

TheDirty.com is not exactly deserving of sympathy.  Much like Playboy and Hustler pushed the boundaries of the First Amendment in the past, rumor sites like TheDirty.com are pushing the limits of Section 230 immunity for online defamation under the Communications Decency Act.

A judge and jury in Kentucky apparently have had enough.  This week, a jury found TheDirty.com “encouraged the development of what is offensive” and was therefore liable for the defamatory posts about former Cincinnati Bengals cheerleader Sarah Jones. The jury awarded Jones $38,000 in actual damages and $300,000 in punitive damages.

As a refresher, Section 230 of the CDA provides:  “[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”  Because the websites are not the publisher or speaker, the sites can’t be liable for defamation.  Most courts immediately dismiss website operators from defamation suits when the claim is based on user generated content known as UGC.

Although subjects of defamatory posts hate the CDA, the law is good.  There would be no Google, YouTube, Twitter of Facebook if these sites had to defend, let alone be held liable for, each defamatory post by their users.

Jones sued Dirty World Entertainment Recordings which owns TheDirty.com.  The site, as expected, immediately filed a motion to dismiss the complaint because all claims were based on the UGC.   The trial judge denied the motion arguing the defendant purposefully seeks out and encourages defamatory content.   The court wrote “the very name of the site, the manner in which it is managed, and the personal comments of defendant Richie” shows that the site “specifically encouraged development of what is offensive about the content.”  Therefore, the summary judgment was denied.  With TheDirty.com as a defendant, it is not surprising the jury ruled in favor of Jones.

If you have had the unfortunate reason to visit TheDirty.com, you know the judge is correct in that they do everything they can to encourage defamatory and offensive content. I have argued before that the CDA should be amended to allow for claims against sites like this that encourage defamation.  I always thought the change would come through the legislative process rather than judicial fiat.  Not surprisingly, TheDirty.com is appealing. You can read more about the case here.

What does it mean?

If you run Facebook, the local newspaper site, or a community site regarding butterflies, you still have nothing to worry about.  If you purposefully run an inflammatory site, you need to pay attention to what the court of appeals does with this case.

TheDirty.com asks people to “submit dirt.”  Their submission form has entries for the “dirt,” and provides a link to upload photographs.  The court seized on the fact that in response to the post about Jones, the site operator wrote “I love how the Dirty Army has a war mentality.”  Facebook and the Christian Science Monitor website don’t do this.

The CDA is usually a slam dunk defense for websites that are sued over UGC.  Plaintiffs first tried to argue the sites actually “created” the content.  Now, plaintiffs will argue the sites are “encouraging” the defamation.  While a good policy, I am not sure it will hold up on appeal without a change to the statute by Congress.

So, what about sites like RipOffReport and PissedConsumer.com?  Is the next line of attack that they “encourage” defamatory content?  I would not be surprised if a plaintiff is making that argument right now in response to a motion to dismiss.

We will keep our eye on the appeal.

Although the Governor called a special session extending the Texas Legislative session, the topics to be addressed are political ones and not the ones we have been tracking.  We can therefore wrap-up our watch of the three bills we were monitoring.

First, bring out your dead!

HB 318/SB 118 social media passwords

A bill that would have prohibited employers from demanding social media passwords from its employees and applicants garnered much attention, was passed by the house, but then died.  Texas will not join about a dozen other states who have passed similar laws to provide what I think is a solution to a non-existent problem.  I seriously doubt that between now and 2015, employers will run amok demanding social media passwords — especially with the pro-employment attention Texas has been getting (shameless plug for my hometown).  The National Conference of State Legislatures has a good page on the efforts by various states.

HB 1989 service by social media

This bill also generated attention, but did not get very far.  It would have allowed judges to authorize service of a lawsuit via social media.   The existing rules allow judges to authorize substituted service when necessary which could include social media assuming certain due process protections are in place.  This bill would have given judges more comfort with the idea, but its death does not mean it can’t still be done.   This Outside Counsel article by Michael Lynch suggests service of process via social media may become more common without extra rules or laws.

The lone survivor

Only SB 94 was passed and will become law on September 1, 2013.  It allows for private civil lawsuits against websites that allow advertisements for what the law calls “compelled prostitution,” better known as sex trafficking.  As explained in my initial post, there is a serious legal question of whether the Texas law would run afoul of Section 230 of the Communications Decency Act which generally shields website operators from liability for user generated content.  Hopefully, it is a purely academic discussion and this law is little used because of the lack of necessity.  If a website is sued, it will make for an interesting defense.

The Legislature now focuses on redistricting – expect some fireworks and perhaps another escape.

Yesterday, I had the privilege of taking part in a “Business and Technology Roundtable” with Congressman Ted Poe.  The event was put on by SEMPO, HiMA and Google and was attended by marketing firms, well-known Houston brands and small business owners.  The focus of the conversation centered on online marketing.

As the only lawyer in the room, I had to play devil’s advocate and take the position of the pro-privacy crowd and asked why do we need behavioral online tracking.  My goal was to arm the Congressmen with some information to fight Do Not Track legislation if that was the position the marketers in the group wanted to him to take.  Most everyone said they did the first line analytics only and did not engage in continuous tracking, so the dominant response was that consumers could turn off the cookies and opt out.  I did not have time to ask if anyone in the room could tell me exactly how to do this, let alone how I would explain this to my retired mother who just started emailing five years ago.

To the participants’ credit, I don’t think passage of Do Not Track legislation would impact any of their marketing strategies.  In case the Congressman reads this or if you are curious, you can read my five-part series on Do Not Track beginning here, here, here, here and here.

There are alarmists on both sides of the issue.  I have been advocating for the industry to self regulate for some time to no avail.  Telling people they won’t get their Facebook for free anymore (not reality) or they will see irrelevant banner ads (not a disincentive for consumers) isn’t going to cut it when more and more people are getting the creepy feeling from banner ads that follow them.

This was all a prologue to my main point.  We only had an hour and with two minutes to go there was an open question about what we would like him to do for us as our Congressmen.   With the limited time, I hit patent reform because it stifles innovation and a start-up community that could be the spark plug for employment and our economy.  He invited us to send him any further comments and so I took him up on the offer with this letter.  Congressman Poe Letter

February 8, 2013

The Honorable Ted Poe
1801 Kingwood Drive, Suite 240
Kingwood, TX 77339
 

Re: Business and Technology Roundtable Follow-Up

 To The Honorable Ted Poe:

Thank you for taking the time to learn more about the Houston technology and internet marketing scene at the roundtable lunch yesterday. At the end of the discussion, you asked about federal legislative issues important to us. I briefly mentioned patent reform in my limited time and therefore won’t rehash those comments again. You also invited us to provide you with any additional concerns we wished to share with you in writing. I am taking you up on this offer and offer a few additional matters. Although written on firm letterhead, the viewpoints are my own and not reflective of the law firm’s or any of its clients.

 Communications Decency Act Reform

 The Communications Decency Act, and specifically Section 230 (47 U.S.C. §230(c)) which provides immunity for website operators for defamation-based claims, has fostered innovation and prevented questionable litigation from killing web-based forums. Like many good laws, however, it has spawned business of questionable utility not worthy of Congressionally-created protections. I am speaking of websites that have a sole purpose to solicit gossip, defamation and shaming. I’ve had one too many conversations with fathers whose daughters have been slandered on sites riddled with deplorable commentary. I’ve had to explain to them how filing a suit against the website is an uphill battle because of Section 230. The only option is often to engage in multi-layered litigation to try and unmask the anonymous cowards who provide the content on these sites who usually have no money to pay for their misdeeds. Meanwhile, the purveyors of these sites try to attract eyeballs by pushing salacious details about private individuals that translate into advertising dollars. Many of these same sites offer “reputation restoration” services that masks as extortion to have the insulting materials removed.

 The CDA works for sites like Google, Facebook and even has a place for reputable consumer review sites despite the gripes of many businesses. Section 230’s immunity could be curtailed for any sites that exist primarily to solicit defamatory, offensive or personal information about private citizens. This would not create additional regulations or burdens for new businesses. It would simply take away Congressionally-created protections for the undeserving. Obviously, the carve out would have to be carefully drafted and narrowly tailored to only address the truly bad actors. The courts appear to want carve out such an extension, but are facing difficulty with the current language in Sections 230. See, e.g., Jones v. Dirty World Entertainment Recordings, LLC, 2:09-cv-00219-WOB (E.D. Ky.) and Hare v. Richie, Case No. 11-CV-3488 (D.C. Md.).

Open Data

As you know, “Big Data” is big business. The Federal Government controls as much data as anyone. There is an enterprising start-up community that can make use of that data to help address inefficiencies in the Government and address societal ills. The website www.data.gov is a step in the right direction. Invite the start-up community to hackathons and other events that will encourage them to make use of the treasure trove of government data that will benefit the government and spur economic growth with new business ideas. You will find the young start-up community hungry for opportunities to make use of the available government data for good that could also create private enterprise. Imagine if you gave the tech world’s brightest an incentive to make the most of the government’s data like the private sector has done with search.

 Regional Competition

Texas Governor Perry may be focused on competing with California for entrepreneurs. When it comes to educated and creative talent, Harris County is more likely competing with Austin than Silicon Valley. Houston does have a budding technology start-up community. While we may not have the natural amenities Austin or San Francisco can offer, we have a business community ripe for innovation. Two of the biggest issues facing the country are energy independence and a sustainable health care system. So, why isn’t Houston a city that attracts a more robust start-up community to work with these well-developed industries?

 Although not well-known, there is an organic start-up community tackling these and other issues. Houston, however, has an image problem – both as it relates to talent and venture capital. While the onus to attract talent and venture capital is more on local and state government, there are certain projects worthy of whatever federal support may be available. Initiatives that make Houston a more livable and attractive city such as light rail, mass transit, space research and technology and other related projects will attract the creative class. While “spending” is toxic these days, targeted investments in Houston’ infrastructure will attract the private enterprise that will make Houston even a greater place to live.

 Make no mistake, Houston has a vibrant community with the likes of Start-Up Houston, the Rice Technical Alliance, the Houston Technology Center’s venture with NASA, Surge and too many individuals and organic co-working spaces and groups promoting and encouraging growth to name. The concern is that once companies reach a certain level of success, they have to go to Austin or California to attract the necessary talent or capital. Certain investments in the City of Houston can keep and attract the necessary talent and capital to stay right here. I would encourage you consider another roundtable discussion with some of the start-up ambassadors for the region to learn more.

 Bridging the Digital Divide

Enhancing Houston’s position in the region includes efforts to bridge the digital divide. Is our current education system producing a technologically-savvy workforce? HISD is considering providing lap tops to every student. There are civic-minded people in Houston willing to provide training and mentoring for young students so they are ready for today’s economy. Programs like these could use federal support. Having a workforce ready for today’s jobs will attract and keep new companies in Houston.

For the most part, when it comes to technology and the internet, the federal government has done the right thing – primarily stayed out of the way which has kept the cost of entry very low and allowed for innovation. Your position on SOPA, for example, is spot on – any new “regulations” need to be carefully considered. Before any new regulation gets added, let’s be sure the cure is not worse than the ill any legislation aims to address. With that said, there are some things the Federal Government can do to help the start-up community, further foster innovation lifting employment and the economy. Thank you for your time yesterday and for inviting further comments such as these.

Sincerely,

 Travis Crabtree

 

 

After looking at the most popular posts from 2012 in our last edition, today we look at what are likely going to be the big trends for 2013 in internet and marketing law.  

Privacy and COPPA – Although this issue is not likely to dominate the general business population, privacy and COPPA will continue to dominate the media’s coverage of internet law issues — just look at Instagram’s latest dustup.  Right before the new year, the FTC officially passed their COPPA regulations.  Although the changes have been in the works for almost a year, it will take a while for companies covered by the Children’s Online Privacy Protection Act – generally websites targeted or directed to users under 13 – to comply.  Surprisingly, respected folks like Nickelodeon have had COPPA issues and the FTC is watching the mobile app industry

Cyber-Security – An issue likely to catch people off guard is cyber security legislation that may be written broad enough to cover more than just the major telecoms.  Last year, efforts like the Cyber Intelligence Sharing and Protection Act (CISPA) and the Cybersecurity Act of 2012 failed to become law.  Both the CSA and CISPA drew critics mainly related to personal privacy.  The President may simply act by executive order.  The business question remains how broad will any laws be, what sites and service providers will have to comply, what will that mean and how much will that cost?  For more, David Gewirtz outlines the 14 Global Cybersecurity Challenges for 2013 on ZDNet.

Software and Tech Patent Reform – Whenever a programmer finds out I am a lawyer, I instantly get a tirade about our broken patent system.  I’m guessing Apple, Samsung and Motorola would agree.  In the well-covered battles,, the only winners appear to be the lawyers.  Although I don’t practice patent law (it is not a field where one dabbles, so I leave that to my colleague David Henry), I have a hard time deciphering what was to be learned from those expensive battles and what developers should do.   Maybe there is some hope for sensible patent reform

Amending the Communications Decency Act – The CDA is the law that prevents people from suing the likes of Yelp and RipOff Report for reviews generated by users.  It certainly makes sense not to allow lawsuits against Facebook and Google for defamation from other people’s content which would cripple those services.  But online defamation remains a hot issue and more people are fighting back.  I’m not sure if there will be any changes as the law is applied to consumer review sites, but what about loosening the law as it applies to sites whose whole sole purpose is to slander and then extort?  Sites that call people whores with photos and run SEO’ed pure gossip sites of private individuals, but then offer “reputational protection” services for a fee to remove the materials.  I purposefully don’t mention names or link to them so you won’t go check them out.  Instead, if you are interested, go to a good advocacy group like CiviliNation.   

The New Advertising Model – The FTC may push harder on Do Not Track legislation that could interrupt behavioral or targeting online advertising this year.  Facebook and everyone else is still trying to figure out mobile marketing.  I waxed philosophically at the end of last year about where advertising and user generated content may be going.  (Are the YouTube commercials you can’t escape getting longer and do I want to wait to see a 30 second video I am already skeptical about?)  Kirk Cheyfitz of PandoDaily says the best online ads of 2012 were not sctually ads.  There are bright minds trying to figure this out and I expect by the end of the year, we will talking about one of them and a new product, service or idea we haven’t heard of before.

The State of Texas may find out and it may be more applicable to your site than you think.  In early filing for the 2013 legislative session, Democratic state Senator Leticia Van de Putte proposed a bill aimed at stopping at stopping human trafficking.  The entire text is here.

It allows for human trafficking victims to bring civil suits against the wrongdoers including websites, that allow advertisements promoting the compelled sex trade.  Specifically, it states a website can be liable if it:

publishes an advertisement that the [website] knows or reasonably should know constitutes promotion of  prostitution or aggravated prostitution and the publication of the advertisement results in compelling prostitution with respect to the victim. 

The Bill and Section 230

I’ll parse through the language below, but first I want to discuss how this law may interact with Section 230 of the Communications Decency Act.  Section 230 provides the operators of websites with immunity from any suits caused by the content created by others.  It states:

no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.

It usually shields sites from defamation claims, but it has been applied to almost all claims that stem from the content  created by others.

So what happens if a website simply allows anyone to create ads, specifically adult services ads without having any say as to the content?  Would the CDA trump this Texas proposal?  Online adult listing companies have already prevailed on several related suits in MissouriWashington and Illinois.  If Texas passes the law, it is likely to legislate its way into a lawsuit. 

Numerous local and state officials have attempted to crack down on at least one known adult-listing service without much success.  The passage of the law in Texas could be a symbolic statement increasing the fervor for Congress to make changes to the CDA.  The CDA already expressly excludes liability for federal criminal laws including child pornography.  Thus, Congress could carve out a similar exemption as it relates to human trafficking.

The Language of the Texas Bill 

If the proposed law were to survive CDA and other challenges, it could present some interesting trial issues.  First, you have to parse through the definitions.  “Promotion of prostitution” is essentially pimping for one person.  “Aggravated promotion of prostitution” is running a pimping enterprise of more than one prostitute.  So, to be liable, the media company would have to know, or reasonably show know, that the advertisement is for promotion of prostitution (i.e., pimping). 

A successful plaintiff would not have to show, however, that the website operator knew the pimp was engaging in “compelling prostitution.”  Compelled prostitution means that through force or threat of force, you force someone to commit prostitution or cause a minor to commit prostitution–the human trafficking aspect.

While crass, the law essentially means that an advertisement for a “reputable pimp” who does not engage in “compelling prostitution” would be OK.  But, if you think that the advertising pimp is “reputable” and they turn out not to be because they force people or use minors, the website would be in trouble. 

Also interesting is that if you are the actual prostitute and you advertise, then the media company cannot be held liable because you are not engaging in “promotion of prostitution.”   

How would this apply to my site?

You may be thinking that I don’t run an adult classified listing site, so while interesting, I don’t care.  If you run any interactive site that allows for user generated content or messages, you may want to think again.  Under this provision, “advertisement” is defined to include communications that promote a commercial service on websites “operated for a commercial purpose.”  Read broadly, that could apply to every website that makes any money regardless of whether you accept classified listings or allow users to advertise, as we normally think of the term, on your site.  In other words, the “advertisement” that creates liability, could be a comment a user posted on your blog that makes some money.

So, if a pimp takes to Facebook and posts a free message promoting human trafficking, could Facebook be held liable?  Their liability would all come down to what did Facebook know or should it have known?

Human trafficking is a serious issue.  According to reports, adult classified that may involve adult trafficking is also serious business.  Without action from Congress, any efforts by Texas or other states to crack down on online advertising is likely to lead straight to the courthouse.