The World Wide Web and the new world of litigation: a basic introduction.

• Author: Brady, Michael J.

If legislatures, courts and policy makers fail to distinguish among the differing roles of ISPs, irrational liability decisions may be the result

THE rise of the Internet has challenges for the judiciary: they now will be required to apply laws that were written for the tangible world of paper and telephone to the new world factual setting created by computers. Can the old doctrines be boldly lifted and applied to the new concepts? This is the challenge.

It is vitally important to any intelligent discussion of Internet-related law that the participants understand the fundamentals of Internet transmission and the relationships between the parties. It also is important for the participants to understand the different services--World Wide Web, e-mail, Usenet--that collectively comprise what the end user perceives as the "Internet."

CONTENT CREATION V. DISTRIBUTION

There is a fundamental distinction between the entities that create Internet content and those that merely distribute it or provide access to content. With a few exceptions--for example, issues involving jurisdiction and applicable law--the Internet does not provide significant new legal challenges for content providers. Although there are some state-level common law issues, such as defamation, privacy, torts, etc., the substantive bodies of law that have generated the most reported litigation to date are typically federal and statutory--copyright, trademark, patent, etc. Conventional application of existing legal doctrines usually will be reliable in determining the liability of content providers. The Internet merely introduces problems of scale by amplifying content providers' potential scope of liability.

Most of the more significant unsettled Internet liability issues involve the vicarious or secondary liability of service providers or distributors. This introduces the classic "deep- pockets" policy concern. To what extent is it fair to impose secondary liability to ensure that a plaintiff can find a solvent defendant? The Internet introduces several unique considerations to the standard tort liability calculus.

First, there is the strong public policy consideration of maintaining free access to information. Lawmakers and courts are justifiably concerned about hampering the limitless potential benefits of friction-free Internet commerce and information exchange. Second, imposition of liability on service providers introduces problems of scale. If vicarious liability is aggressively imposed, it is difficult to articulate a legal standard that would not impose liability on every entity involved in the transmission of the offensive or illegal material. Finally, in order to preserve innovation, legislation must be flexible and minimal in order to provide needed technological and legal standardization while preserving the delicate balance between the private entities that comprise the Internet.

Since a service providers' liability for subscriber-generated content typically involves the degree of control that the provider can exercise over that content, some of the key issues are:

* What is a "copy" in the digital realm?

* How transient is the material (i.e., does the provider host content or merely pass digital data through its network)?

* Was the material posted by a subscriber, or was the material automatically forwarded by another provider's subscriber?

* How much similar material is present (i. e., is it feasible to monitor large volumes of data)?

* Is it possible for the provider to determine that a particular item of content is offensive or illegal (e.g., is the message unreadable or encrypted)?

* Should the fact that provider has voluntarily undertaken to monitor or screen content increase its liability?

LEGISLATIVE DEVELOPMENTS

In the United States, Congress attempted to respond to these concerns in late 1998 with the passage of the Digital Millennium Copyright Act (DMCA).(1) Although the DMCA is limited to copyright, it is likely an indicator of the nature of future Internet-related legislation in other substantive areas. The DMCA simultaneously increases copyright protection for content providers and establishes "safe harbors" against liability for service providers. It thus resolves two issues common to most Internet-related liability: (1) how do existing statutes apply to new technology, and (2) who should be held liable for violations of those statutes?

The DMCA

* Implements the World Intellectual Property Organization (WIPO) treaties, which increase copyright protection. A stand-alone bill previously failed owing to bitter opposition from service providers.

* Provides reciprocal international copyright protection for all signatory nations.

* Introduces civil and criminal liability for circumvention of anti-copy and anti-unauthorized use technological measures, with exceptions provided for fair use, reverse engineering, security testing, and other similar uses.

* Mandates anti-copying circuitry on new video cassette recorders.

* Requires the U.S. Copyright Office to conduct studies evaluating possible technological solutions to infringement and issue a report within one year.

* Implements the Online Copyright Infringement Liability Limitation Act, which reduces potential liability for service providers. A stand-alone bill previously failed owing to bitter opposition from content providers.

* Eliminates potential liability of service providers for transitory communications, system caching, information stored by direction of users, and information location tools. To be eligible, a service provider must (1) adopt a reasonable policy for terminating the service of repeat infringers and (2) must accommodate and not interfere with "standard technical measures" to prevent infringement.

* Establishes a procedure whereby a copyright owner can obtain an order from a U.S. district court requiring the service provider to disclose the identity of an infringing subscriber.

* Explicitly states that service providers are not responsible for monitoring content if that monitoring would violate a user's statutory or constitutional rights to privacy.

* To escape liability for infringing material stored at the direction of a subscriber--for example, a user's web page--the provider (1) must not have knowledge that the material infringes, (2) if the provider has the fight and ability to control the activity, it must not receive a direct financial benefit from the infringement, and (3) the provider must promptly remove or block access to the material upon proper notification.

The DMCA also contains various other miscellaneous provisions relating to the webcasting of sound recordings and limits on liability for nonprofit and educational institutions.

In sum, the DMCA appears to be a fair and balanced apportionment of liability for online copyright infringement. It has answered many of the critical issues in this area. It addresses the three concerns outlined above in that it does not significantly hamper the growth of the Internet by unfairly apportioning liability, it intelligently differentiates between types of service providers, and it is minimal and flexible. Although Internet copyright issues are far from settled, at least the courts no longer will be asked to decide the larger policy-driven issues, but instead will be left to perform a more mechanical application of the statute to facts.

Although we have a general belief in states' rights, Internet-related issues inherently cross state lines and demand uniform national legislation. It is logical that copyright issues would be resolved first, as all content on the Internet is inherently potentially protected intellectual property. In order to have value on the Internet, that intellectual property must be capable of rapidly being copied elsewhere. We believe that other Internet-related liability issues in the United States also will be resolved with national legislation in the near future.

RISK MANAGEMENT

1. Service Providers

   At least as far as copyright liability is concerned, service providers should pursue a public "hands-off" policy, but they should quickly and privately respond to complaints to the extent possible. For some providers, such as web site hosting companies, this might mean immediate notification of the web page author that the provider has received a complaint about the web page and that the provider will temporarily block the page unless the author responds immediately. All service providers should carefully draft the terms of their service agreements to shield themselves from liability in such situations.

   For other providers, such as Usenet server operators, monitoring content or responding to notices of infringement is simply not feasible. Public acknowledgment of this fact would seem to be the prudent course of action. For example, Newscene, a large Usenet news provider, has a novel strategy for limiting its liability. On its home page--http://www.newscene.com (visited April 1, 1999)--Newscene prominently displays a hyperlink entitled "content disclaimer." The linked page provides, in part:

   It is possible for illegal messages to be posted to any group on Usenet and Newscene has no way of monitoring or controlling this. Newscene is not in a position to determine what is illegal as Newscene does not monitor the content nor is qualified to judge what is illegal. If you feel a customer of Newscene is using the service for illegal purposes, please contact the appropriate law enforcement officials. If you feel a customer of Newscene is using the service to violate copyright laws please contact the copyright holder directly. If Newscene is presented with a court order to remove messages, cancel an account, remove a newsgroup, or log a customer's activity, then Newscene will have no choice but to comply with the court order. Let it be known then that Newscene is not the censor, but rather the court who issues the order is the censor. This hands-off approach is not only sensible but...