There are so many legal issues in Episode 15 that it’s hard to know where to begin, so I’m going to start at the end: porn. Pied Piper is competing against nemesis Endframe for a $15 million contract from the online porn company Intersite. If Pied Piper wins the contract it will allow Pied Piper to stay afloat and avoid being absorbed and obliterated by Endframe.
Episode 15 was not explicit about the terms of the deal. Does Pied Piper plan to license its technology for deployment on Intersite’s current platform, or is Pied Piper offering to host/store and serve Intersite’s content? Based on Pied Piper’s website I assume that Pied Piper plans to compress, host and serve content provided by its regular users and its business customers—starting with Intersite’s pornographic content. Are there any legal issues Pied Piper should consider before launching this business model and jumping into bed with Intersite? Of course there are! Some are porn related and others are common to every internet company dealing with user-provided content. The good news is that Pied Piper can use similar, and widely-implemented strategies for dealing with all its user content (whether pornographic or not) to shield itself from a lot of potential grief.
Adult Content Issues
First, for the porn laws. Federal criminal laws regulate production and distribution of “obscene” and/or sexually explicit material. I can’t address the obscenity laws here, and please don’t ask me to explain what qualifies as obscene. (Even a Supreme Court Justice like Potter Stewart was reduced to saying “I know it when I see it.”) Anyway, even if Intersite’s content is just sexually explicit and not obscene, Pied Piper may have cause for concern. Federal law imposes significant recordkeeping requirements on anyone who “produces” visual depictions of “sexually explicit conduct” (which is pretty much all visual porn involving real people). “Producers” of such material must make sure that all the models/performers are over 18—and must keep the records to prove it—or face criminal penalties.
Could Pied Piper be a porn “producer,” (and have a bunch of recordkeeping obligations), just for compressing and hosting Intersite’s content? Probably not. Generally speaking, a “producer” is someone who creates, publishes, etc., sexually explicit material. But a producer is also someone who posts explicit material on, “or otherwise manages” the explicit content of a computer site or service. That might get close to what Pied Piper is doing. However, the law clarifies that if someone’s activities are limited to the types of things Pied Piper does (hosting, storage, and formatting), and the person does not play any role in selecting or altering the explicit content, then the person is not a “producer.” So under Pied Piper’s current business plan, it won’t become a porn “producer,” or have to worry about the recordkeeping requirements. But if Pied Piper becomes any more involved with Intersite’s content (for example by handling licensing or managing Intersite’s user-facing website), it might unwittingly become a porn “producer” under the law. Lesson: Pied Piper should avoid managing, selecting or altering, Intersite’s content, and consult a lawyer before doing anything more than hosting and compression.
Universal User Content Issues
Aside from porn-related laws, Pied Piper needs to consider legal issues common to all internet companies that deal with user content. For example, what if content uploaded by one of Pied Piper’s regular users, is defamatory? Could Pied Piper be sued for defamation? What if one of Pied Piper’s regular users uploads pirated music, or Intersite doesn’t get a proper license for some of its videos? Could Pied Piper be sued for copyright infringement?
Two federal laws help answer these questions. Section 230 of the Communications Decency Act addresses the first question. This law immunizes “interactive computer services” companies (“ICS companies”) from state law claims based on content provided by users. ICS companies are companies like Pied Piper (or Twitter, WordPress, Yelp, and many others) that provide online services while their users provide most or all of the content. These companies generally can’t be found liable for state law claims, like defamation and invasion of privacy, based on the content provided by their users. This is great news for Pied Piper!
Even better, Pied Piper shouldn’t encounter one of the problems other ICS companies sometimes run into when they try and claim immunity. ICS companies lose their Section 230 immunity if they are “providers” of the offending content. A “provider” is someone “responsible, in whole or in part, for the creation or development of” the offending content. Therefore, plaintiffs sometimes try to claim that an ICS company is really a content “provider” because the company somehow helped its users develop their offending content, or encouraged, solicited, or specially profited from the offending content. In contrast, under Pied Piper’s current business model, it doesn’t help create user content, or know or care if users upload outrageous and potentially defamatory content versus totally boring, safe content. The lesson is similar to the one above: as long as Pied Piper stays content neutral, and does not have any involvement with creating users’ content, it should be very safe under Section 230.
However, Section 230 immunity doesn’t cover everything. It doesn’t immunize Pied Piper against federal criminal laws, including federal obscenity and porn laws like those discussed above. More importantly, it won’t immunize Pied Piper against intellectual property claims like copyright, trademark, or patent infringement claims.
This is where the Digital Millennium Copyright Act (“DMCA”) comes in. It contains “safe harbors” that limit service providers’ liability for copyright infringement based on users’ content. If Pied Piper complies with all of the requirements of the law, it should be protected from copyright lawsuits based on Intersite’s or other users’ content. To get the safe harbor protections, Pied Piper will have to do things like implement a proper DMCA “notice and takedown” system in which copyright owners can notify Pied Piper of any infringement and Pied Piper will act “expeditiously” to remove the content. Pied Piper will also need have a system to terminate repeat offenders, a counter-notice procedure for users to respond to allegations that their content is infringing, clear notice to its users of the policies, and an address for receiving notices registered with the Copyright Office. Similar to Section 230, and the porn law, Pied Piper also needs to avoid becoming involved with its users’ content. This means it shouldn’t promote, comment on, modify, solicit or “like” (Erlich) infringing content. Based on Pied Piper’s current business model, it shouldn’t have trouble following these rules. It just has to make sure it properly implements all the requirements.
Although Section 230 and the DMCA safe harbors won’t protect Pied Piper from every kind of lawsuit, these laws should shield Pied Piper from a lot of potential threats… at least until next episode.