I. Introduction
Companies big and small that do business through the Internet face continual legal challenges regardless of their industry and regardless of how their businesses use the Internet. In 1996, Congress passed the Communications Decency Act (“CDA”), which provides a critical immunity shield to these businesses if key conditions are met. However, statutory immunity has not stopped waves of litigation by plaintiffs who seek to hold businesses responsible for a variety of damages. Thus, litigating this immunity remains a major cost center for Internet-based businesses and those who meet and serve their customers through it.
Colloquially known by its section number in Title 47 of the U.S. Code, Section 230 allows the Internet to continually grow by shielding businesses from most federal claims and preempting conflicting state claims. It provides that an “interactive computer service” (“ICS”) has immunity from lawsuits stemming from information provided by third parties. While Section 230 has enabled the generation of trillions of dollars in global wealth and commerce, each year it is tested in courtrooms throughout the country.
Courts steadfastly affirm that Section 230’s immunity applies to virtually all forms of third-party content published by platforms of all types (e.g., social media, e-commerce), even if that content is blatantly false, unlawful, or posted with a malicious intent to deceive or harm others. Given the wide-ranging application of Section 230’s immunity clause to companies that constitute a significant portion of the economy, business lawyers should monitor its current applications and its future scope.
Attempts by Florida and Texas to weaken or circumvent these protections have been unsuccessful. Section 230 remains relatively unchanged from when it was enacted, despite the ever-expanding nature of the Internet’s role in business. The only significant amendment to Section 230 involved a new exception to immunity established by the Fight Online Sex Trafficking Act, which resulted from the combination of a bill that originated in the House of Representatives of the same name and a bill that originated in the Senate named Stop Enabling Sex Traffickers Act. The intention of these bills was to provide an exception for the victims of human trafficking whose suffering was enabled by online platforms. However, the resulting legislation has failed to bring about meaningful successes in this fight and is rarely litigated in comparison to other aspects of Section 230.
Unfortunately, modification of Section 230 has become a popular rallying cry of many politicians in Congress. From 1996 to 2021, there were eighty-four legislative bills introduced to modify or repeal Section 230, most of which can be categorized as “performative media policy” that has recently “shifted from bipartisan, policy-focused law to Republican partisan bills intended as a gesture of support for President Trump, who had attacked the clause believing that it permitted platforms to moderate against his interests.” Continued polarization of Internet policy and instability of Section 230’s future presents a challenge to policy makers and businesses alike.
The developments addressed in this survey relate to the following business law and marketing topics: the use of surreptitious terms and conditions (Part II.A), liability for hijacked accounts (Part II.B), the liability of print-on-demand services for intellectual property infringement (Part II.C), the availability of immunity for one who reposts content (Part II.D), and the availability of immunity for businesses that facilitate the sharing of devices used to circumvent restrictions imposed by the Clean Air Act (Part II.E). Part III of this survey concludes with a discussion of near-term challenges to Section 230’s continued efficacy and survival as a cornerstone of Internet policy.
II. Recent Jurisprudence
A. Browsewrap
The issue of browsewrap, language that seeks to establish a contract or license governing the access or downloading of content from a website by posting language on a website or a hyperlink to another page, and its efficacy in binding website users to terms and conditions, was litigated in Weeks v. Interactive Life Forms, LLC. In this case, the plaintiff purchased a device from the company’s website that purported to help him “perform better” and “last longer” during sex. Weeks alleged that there was no such improvement (despite extensive use) and sued for damages. The company sought to enforce arbitration, which was required in the website’s terms of service.
The court refused to enforce arbitration based on the location of the terms of service and the fact that it was unlikely to put customers on notice of the terms. In discussing the notice given to consumers, the court reasoned that:
Near the bottom of the page is a section inviting the user to submit his or her email address “to receive our latest news [and] promotions!” Beneath that appears a menu in white text against a dark gray background containing links to portions of the website, as well as links to Interactive’s social media profiles and other links. Finally, at the very bottom of the page, in a much smaller typeface, in gray text against a black background, appears a link labeled “terms of use,” sandwiched between similar links for the “sitemap” and “privacy policy.” … [W]e cannot imagine how this tiny, inconspicuous link would put a reasonably prudent consumer on inquiry notice of the terms of use.
The court reemphasized that consumers cannot be held to comply with terms and conditions of a website “simply by using the website and without taking any affirmative steps to confirm knowledge and acceptance of the terms of use.” The court refused Interactive Life Forms’ request to break from the precedential rulings in Sellers v. JustAnswer LLC, Long v. Provide Commerce, Inc., and Nguyen v. Barnes & Noble Inc.
B. Highjacked Accounts
Apple co-founder Steve Wozniak sued YouTube over an account hijacking scheme that has affected several tech titans and top-tier social media influencers. In a modern twist on a scam as old as the Internet, the perpetrators broke into YouTube accounts with large numbers of followers, transferred ownership to themselves, and posted videos using the likeness of recognizable figures, such as Wozniak, to dupe those who are easily duped into transferring bitcoin to the scammer’s account. “The scam has existed on YouTube since at least October 2018 and has been replicated many times in substantially the same form. In the process, millions of people have viewed the scam videos, resulting in the loss of millions of dollars of bitcoin and other cryptocurrencies.” Seventeen victims of the scam joined Wozniak as plaintiffs and stated multiple causes of action. The trial court dismissed the case, based on Section 230 immunity.
The appellate court, however, analyzed six arguments against Section 230 immunity separately. For various reasons, the appellate court affirmed the lower court’s ruling with respect to negligent security, negligent design, negligent failure to warn, knowingly selling and delivering scam ads and recommendations to vulnerable users, and wrongful disclosure and misuse of the plaintiff ’s personal information. However, the appellate court found that the trial court erred when denying the plaintiffs’ leave to cure defects in the pleading of a cause of action related to YouTube’s alleged creation or development of information materially contributing to scam ads and videos. This allegation relates to the failure of YouTube to remove verification badges of hijacked accounts even though the company was aware that the accounts were compromised, which, according to several plaintiffs, led them to believe in the legitimacy of the accounts and the free bitcoin currency being offered. Thus,
YouTube has allowed the scam to continue, despite its own stated policies that it does not allow scams or other deceptive practices that take advantage of the YouTube community. Defendants have both the human and technological capabilities to implement reasonable security measures that would prevent hijacking of popular channels and quickly detect and remove scam videos. Despite having the means to stop or limit the proliferation of the scam, defendants have declined to do so.
C. Print-on-Demand Services
Some years seem to bring about an inordinate number of decisions affecting a single niche sector of e-commerce. Last year, the genealogy industry suffered a series of damaging defeats that threatened the entire business model. Recently, the print-on-demand industry was the focus of several cases.
In Atari Interactive, Inc. v. Printify, Inc., the plaintiff sued for copyright infringement stemming from the sale of items bearing the videogame maker’s logo and other intellectual property. After securing a temporary restraining order, Atari’s claim was dismissed by the court for being unable to show a likelihood of success at trial. The court agreed with the defendant’s argument that it was a “passive facilitator” or “intermediary” that merely passes along orders from merchants that operate storefronts on platforms, such as Etsy and Instagram, to other companies that actually print, quality check, and ship the goods. This ruling, of course, does not preclude Atari from pursuing the merchants that sell and profit from the theft of its intellectual property. However, it provides an example of a successful defense based on disaggregation of the supply chain.
The defendant in Canvasfish.com, LLC v. Pixels.com, LLC, however, was more than a mere husbanding agent of merchants and printers. The plaintiff is owned by artist Derek DeYoung, who paints fish on canvas. The plaintiff ’s suit, which alleged trademark infringement, survived the defendant’s motion to dismiss based partially on the allegation that Pixels.com is a vertically integrated supplier that, unlike Printify, “does sell, manufacture, and print the same type of goods that are directly covered by Canvasfish’s registered service mark.”
In yet another suit by a fish artist alleging infringement of intellectual property against a print-on-demand company, plaintiff Joseph Tomelleri sued SunFrog, LLC for coopting four of his illustrations. However, the suit was dismissed due to insufficient pleading, and is unlikely to be refiled because the defendant closed its business. This is an indication that the legal environment of the print-on-demand business, much like genealogy businesses, such as Ancestry.com, may soon become commercially nonviable due to litigation expense and compliance costs.
D. Section 230 Immunity When Reposting
Recent decisions have addressed the applicability of Section 230 to retweeting/reposting content. A pair of decisions with very similar sets of facts reached disparate outcomes, hinging on one dispositive factor—whether the person reposting the content editorialized or added information to the shared content.
In Banaian v. Bascom, a student hacked into his high school’s website and modified a teacher’s page in a way that insinuated the teacher sought out sexual liaisons with students and their parents. A screenshot of the website was tweeted and the teacher sued those who retweeted it. The New Hampshire Supreme Court found that Section 230 protected the defendants who simply retweeted the picture.
However, in Marvin v. Lanctot, those who shared a post were denied Section 230 protection. The facts of the case are remarkably similar to the facts of Banaian, in that scandalous information was shared about a high school hockey coach’s alleged abusive behavior that included hazing, sexual harassment, and exposing himself to minor children. Members of the community shared the post and editorialized by adding encouragement for those who spoke up. The Lanctot court found that the encouragement added to the original post constituted a material addition thereto, resulting in denial of Section 230 immunity.
E. Clean Air Act “Defeat Devices”
In United States v. EZ Lynk SEZC, the federal government brought a civil suit against corporate and individual defendants for violating Section 203 of the Clean Air Act by facilitating the sharing of “defeat devices,” which allow users to bypass emissions controls that are installed in vehicles by manufacturers. These bypass devices allow pickup trucks to “roll coal” and spew plumes of black smoke in protest of environmental regulations and allow sports cars to reach peak performance by shedding the limitations placed on their engines. Section 203 bans the use of these devices and the government has exercised its rights to prosecute certain violators criminally. However, in EZ Lynk SEZC, the government proceeded civilly, seeking to hold the defendants liable for the defeat device apps, which are hosted on its servers. The government’s allegations enabled the defendants to seek immunity under Section 230, which the court granted over the government’s objection. Of course, had the government proceeded criminally instead of civilly, Section 230 would not have applied because Section 230 provides that it has no effect on criminal law.
Interestingly, the court rejected the government’s argument that the company’s “likes,” “loves,” and other positive reactions to postings on social media by users of its defeat devices negated its claim to immunity under Section 230 because the company did not “directly and materially” contribute to the illegal acts.
