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The Web is Not a Legal Quagmire

But Recent Court Cases Give Netizens Goose Pimples

If you're a Web provider, publisher, author, or developer and you peruse the popular press, your sleep is probably punctuated by kafkaesque nightmares in which legions of lawyers swoop down upon you in some sort of horrific CourtTV remake of The Birds. Between October and December 1995, Prodigy settled a potential $200 million defamation lawsuit, a judge ruled Netcom On-Line Communication Services, Inc. could be a contributory copyright infringer for messages posted by a subscriber, and CompuServe Inc. paid over $500,000 to settle a copyright class action brought by major music publishers. Either the fall of 1995 was a just an unlucky legal season or it scared the bejesus out of you. Which should it be? Let's plow through the punditry for some solutions to the potential liabilities for online defamation and copyright infringement.

The ABCs of Defamation

Defamation, whose tenets are long-standing but vary slightly from state to state, is the publication to a third party of a false statement which injures the reputation of the statement's subject. Most states classify certain categories of statements presumptively defamatory. These include statements accusing another of a crime, of having a communicable disease, of being unchaste, of having committed serious sexual misconduct, or of being incompetent professionally. While the time-tested "truth is a complete defense" axiom applies, you don't demonstrate it. Rather, your accuser must substantiate the statement's falsity. Opinions, which aren't true or false, aren't often actionable for defamation. The line between fact and opinion is fine, however, and prefacing a defamatory statement with "I think" won't save you.

To determine defamation, you must also analyze the statement and its subject. If your libelant is a private person and your utterance or writing entails a personal matter, he needn't prove you knew the statement was false, but in some states he must prove actual damage to his reputation. If your libelant is a public person or your statement concerns a public matter, your accuser must demonstrate either you knew the statement was false or you acted in reckless disregard for the truth. Acting recklessly means, for example, you entertained serious doubts about your statement's veracity. Public people generally include celebrities and private people who thrust themselves into a particular public controversy. If you repeat or republish another's libelous statement, you can be liable as if you were the statement's originator.

Defamation By the Masses

You can see the definition of defamation doesn't require publication via any particular media so online libel shouldn't surprise anyone. What makes online defamation so different and dangerous is the complicated "what if" ways in which it can occur and the power it provides the masses. In our ordinary lives, it's difficult to defame anyone because few people publish their revelations via print, radio, or television. That throwaway thought you toss off to your best friend about your mother can't hurt her. On the Internet, however, you are always potentially speaking to 30 million listeners. Participating in an online chat on your home PC feels so intimate and private but its power is the same as saying it on Larry King Live. The answer is to analyze the continuum of liability for defamation and determine where you feel comfortable dwelling.

Loads and Loads of Liability

On one end of the liability spectrum is complete liability. If you personally write a statement accusing another of a crime ("you're a thief!") and publish the statement on your personal Web page, include it in an online newsletter, post it to a bulletin board service (BBS) (remember, post = publication), or type it at a chat room, you can be subject to a suit for defamation. In his online journal, CyberWire Dispatch, Brock Meeks, said the Suarez Corporation Industries was a "shell company for a direct mail marketing scam." Suarez sued Meeks for defamation. Meeks said his definition of a "scam" is "getting one thing while I asked for another," but my dictionary defines it as "a fraudulent or deceptive act," arguably, a crime. Meeks luckily settled his suit simply by paying Suarez's court costs of $64 and signing a settlement agreement which didn't require an apology or admission of guilt.

Meeks is an acclaimed author. His legal fees for this $64 suit were $30,000; contributors paid $7,000, his law firm ate the remainder. If you're not so socially prominent, contributors and counsel will not be so selfless. An anthropologist in Australia sent a message to a small, 23,000 member, science anthropology BBS, accusing another anthropologist of pedophilia with a local boy named Puppy. The defendant couldn't defend himself for lack of funds and the court awarded the defamed scientist $40,000. Two members of SportsNet, a sports memorabilia BBS, broadcast a personal argument about a proposed visit to New York and some Knicks tickets to all subscribers. A Wisconsin state court is now considering whether such statements were defamatory.

As Meeks says, "If you're stupid enough to shoot from the hip with a lot of crazed flaming, you might very well find yourself embroiled in a libel suit." Online and Internet service providers should help by providing features to delete unread messages to save us all from our own puerile and petty late-night keyboard rantings. AppleLink has menu features which will tell you who has read your mail and will remove the mail from their inbox and your outbox. If someone is affronted by something you type, respond immediately. Meeks said someone from Suarez sent him a message expressing anger at Meeks' report. Meeks ignored it. Big mistake. A potential plaintiff often wants merely an audience or an acknowledgment of their position or unhappiness. Studies show, for example, most complaints filed against attorneys are not for incompetence, but for failure to return repeated phone calls. And, an apology can save you millions. Prodigy was able to settle its $200 million lawsuit merely by saying it was sorry. Erich Segal was wrong; life does mean having to say you're sorry. It may bruise your ego but it's cheaper than a court battle.

Not a Byte of Liability

On the other end of the liability spectrum is no liability. If you are an online or Internet service provider or BBS, you should be designated a distributor. Distributors, like bookstores, libraries, and newsstands, with no editorial control over content, are not liable for defamatory statements, unless they knew or should have known of the statements. A federal court in New York in 1991 ruled CompuServe a distributor with no liability for defamatory messages posted to one of its BBSs. A state court in New York in 1995, however, ruled Prodigy was not a distributor, but a publisher potentially liable for defamatory statements (accusing a securities investment firm of "100% criminal fraud") sent by a subscriber to Prodigy's Money Talk BBS. The Prodigy case has caused considerable concern among anyone who works on the Web.

A careful critique of the Prodigy court opinion should not only allay service providers' fears but also give guidance for both content and service providers. The Prodigy court ruled CompuServe and BBSs should be designated distributors but that Prodigy's own content-control policies and marketing materials had pushed it into the publisher category. In its attempt to differentiate itself from other service providers, Prodigy likened itself to a "responsible newspaper." It touted its family values-based software screening technology and manpower and exercise of editorial and content control designed to "reflect the culture of the millions of American families" it served. The judge decided that a service provider can't play the GOP-family values card to entice customers but reject it at the courthouse. Prodigy settled by saying sorry without admitting liability.

Site and service providers, and content providers to some degree, should be able to designate themselves distributors and avoid defamation liability by disclaiming the evidence (listed at the court wielded against Prodigy. Don't monitor your BBS, service, site, or guest book. Don't analogize yourself to a newspaper (unless you are one); clearly state you're simply a newsstand. Don't mention family values; it's passe anyway. Do you have a place on your site or page to post comments, favorite recipes, letters to the editor, thoughts about Microsoft? Don't read or monitor these postings. Don't write a list of content guidelines for postings or messages. Don't refuse to post and don't delete insulting, harassing, grossly repugnant, or bad taste messages. Don't use software to screen postings or files uploaded or downloaded. If you have a bulletin board leader, just let her regulate flow, don't allow her to enforce any guidelines (which you'll make clear you don't have anyway). Do insert a disclaimer on your personal page, BBS, site, or service saying you don't have control over content posted to your page by others or sent via your service by others. Do clearly state messages sent are the opinion of the sender, not you. If you're notified of an allegedly defamatory statement, do consider deleting it. Notification negates your normal distributor insulation from defamation liability. Finally, do consider posting a policy at your office describing these procedures and potentials for online defamation.

The Endless What If's

Many intriguing "what ifs" remain but they can be addressed, and you can negate or lessen your liability, by adhering to the dos and don'ts we describe and by extrapolating from the online defamation court cases. What if you maintain a FAQ written by others? In the summer of '94, Lani Teshima-Miller, who maintains a tattoo FAQ, was contacted by a lawyer representing a San Francisco tattoo artist who felt defamed by a review in her FAQ. She altered the review slightly and said, "my behavior since that incident has changed dramatically." She screens reviews, phones for details, and is particularly careful of negative reviews. Most importantly, she provides rebuttal space for shops who feel slighted (adhering to the always respond motto) and she includes a disclaimer saying postings are the personal opinions of reviewers. What if someone hacks into your site and adds a defamatory statement or alters an existing statement to make it defamatory? Unless you knew of the libel or acted recklessly, you shouldn't be liable. The CompuServe court implied strongly that even if you're informed of unauthorized access of your site, unless you're clearly notified of the defamatory statement itself, you will not be liable. You can probably provide extra, though not necessarily required, protection by employing available tools and technology to guard your site or service from unwarranted intrusion. You probably must prove neither you nor your employees wrote the libelous statement and so should retain a backup copy of all materials posted to your page. If you disagree with our dos and don't, comprehend clearly and feel comfortable with the level of risk to which this subjects you and your company.

No case has yet addressed the issue of jurisdiction. Meeks was sued in Cuyahoga County, Ohio, hometown of the libelant, and his attorneys didn't challenge the court's jurisdiction over Meeks, a Washington, D.C. resident. The SportsNet case continues in Wisconsin, while the defendant is a New York resident. In the CompuServe case, the plaintiff also sued the individual BBS and its publisher, both San Francisco residents. I question whether defendants can be successfully sued in states in which they have no connections other than their online one. The trend is towards libelants suing where they are located, not where you live, but this remains to be definitively decided by a court.

Hey, But, I'm Innocent!

Unfortunately for anyone who toils online, unlike defamation, copyright infringement has no fault component. As one court succinctly said, "it does not matter that Defendant . . . may have been unaware of the [online] copyright infringement." You can be liable for copyright infringement, and can pay significant sums, but less than what you'll pay if you're a willing participant, even if you're an innocent infringer. In real life, defendants are rarely virtuous. Both Playboy Enterprises, Inc. and Sega Enterprises, Ltd., for example, successfully sued BBSs for copyright infringement of their magazine photographs and video games, respectively, caused by unlawful uploading and subscriber downloading of their products. Unauthorized uploading and downloading of copyrighted works violate the copyright's owner's exclusive rights to copy, distribute, and display publicly their works. While language in both cases implies BBSs can be copyright infringers for merely supplying mechanisms by which subscribers infringe copyrighted works, careful critique of both cases demonstrates the courts thought the defendants weren't so sinless. Both courts strongly suggested the defendants knew about, actively encouraged, and even participated in the illicit online profit making.

The lawsuit which concerns all Web workers is the recent case by the copyright owners of the works of L. Ron Hubbard (the oxymoronic Religious Technology Center), founder of the wacky but well-financed Church of Scientology, against apparently blameless Netcom. The good news? Relying upon the Playboy and Sega cases, the court ruled that, as a matter of law, a standard difficult to establish, BBSs and service providers cannot be liable as direct copyright infringers when the infringing acts, unauthorized making, distributing, and displaying copies, are caused by their subscribers. The changes to the Copyright Act in the recently-proposed White Paper would, if passed into legislation, conflict with this court's ruling and subject BBSs and service providers to strict liability for direct copyright infringement, sans intent or guilt. We'll keep you updated on the progress of the passage of this bill. The bad news? The court concluded that Netcom could be a contributory copyright infringer if it was notified about the infringing activity and had the time and the ability to both check out and cancel the infringing message. The better news? While the court requested additional evidence on the contributory infringement claim, it ruled that plaintiffs aren't likely to prevail on it.

CompuServe appears to be the other innocent infringer. It recently settled a class action copyright suit brought by major music publishers. It agreed to pay $568,000 and future royalties on songs (about seven cents apiece) downloaded from its music forums to avoid extensive litigation, but did not admit any liability. While CompuServe apparently had clean hands, the resulting royalty payment is fair compensation to music publishers for consumers who are downloading free music and saving the cost of a CD and a trip to Tower Records.

How can a Web operator such as yourself preclude an action for direct or contributory copyright infringement? Most copyright lawsuits involve large-scale distribution of copyrighted works. Few copyright owners will take the time and expense of dragging you through federal court, where all copyright claims are heard, for a few infringing copies. So, if you locate an infringing file on your site or service, delete it but don't panic. Should you go trolling through your site searching for possibly pirated material? If you have an area where users can upload and download material, you might scan for sound file formats every month or so because music publishers are notoriously litigious. If you find infringing material, delete it. If you own a personal page or site, you can protect yourself almost entirely by not including an area by which subscribers or visitors can upload and download files. If you're a BBS or service provider, the cases so far suggest you will only be liable for contributory copyright infringement if you have knowledge of the infringing activity and materially contribute to it. Therefore, if you're notified of a claim of copyright infringement, investigate it immediately. Search for a copyright notice in the work and considering canceling the message. Above all, try not to clash with the Church of Scientology. Whatever they preach, it doesn't appear to be include turning the other cheek.

Predictions of Doom and Gloom

News sources seem to satisfy their quotidian predictions of doom and gloom by either reporting potential multi-million dollars lawsuits against content or service providers or predicting the imminent death of Apple Computer, Inc. If you carefully analyze the cases, however, you shall see that courts are not subjecting content or service providers to outrageous liability claims or damages. Generally, unless you are a publisher yourself or you act recklessly, you shouldn't be sued successfully for either online defamation or copyright infringement. The proposed changes in the Copyright Act and the new Telecommunications bill may change all that, and we'll keep you posted on their progress. Meanwhile, follow our lists of dos and don't and hopefully, the only time you'll see a black robe is if you choose to wear one.


Cubby, Inc. v. CompuServe, Inc. , 776 F. Supp. 135 (S.D.N.Y. 1991)

CyberWire Dispatch by Brock Meeks

Frank Music et al. v. CompuServe, Inc.

It's in the Cards, Inc. v. Fuschetto, 535 N.W.2d 11 (Wisc. 1995)

Playboy Enterprises, Inc. v. Frena, 839 F. Supp. 1552 (M.D. Fl. 1993)

Religious Technology Center and Bridge Publications, Inc. v. Netcom On-Line Communication Services, Inc. , Dennis Erlich, and Tom Klemesrud, November 21, 1995 

Sega Enterprises, Ltd. v. MAPHIA, 857 F. Supp. 679 (N.D. Ca. 1994)

Stratton Oakmont, Inc. v. Prodigy Services Corporation

Courtesy of Marie D'Amico of Digital Media.

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