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Trustworthy Information Systems Handbook: Appendix E, V.A.

Liability for Records/Information Contained on Web Site: Copyright

Web sites may be held liable for intellectual property infringement and other harms caused by their users. A single bad user could cause liability ranging into the millions of dollars. The potential legal risks inherent in owning and maintaining a web site are copyright infringement (direct, contributory, or vicarious) and defamation. Web sites planning to permit users to exchange content should implement a number of techniques to manage their potential risk. In addition, a president, officer, and shareholder in a defendant corporation may be personally liable for the activities of the company, since he or she is active in the day-to-day operations of the company. See Religious Technology Center v. Netcom On-Line Comm, 907 F. Supp 1361 (ND Cal 1995).

For example, in Comedy III Productions, Inc. et al v. Class Publications, Inc. et al (1996 US Dist LEXIS 5710 April 30, 1996), the defendant violated plaintiff's trademarks in the Three Stooges by selling unauthorized products on its Internet web site. In addition, Playboy Enterprises has initiated a number of lawsuits against web sites that post its copyrighted pictures, or that allow a subscriber to the web site to upload such pictures to the web site. For example, in Playboy Enterprises, Inc. v. George Frena, 839 F Supp 1552 (1993), the defendant operated a subscription computer bulletin board service which distributed unauthorized copies of plaintiff's photographs. On the web site, subscribers could log-on and browse pictures, and download pictures and store them on their personal computers. In addition, subscribers could upload material on the web site so that all other subscribers could view the material. The defendant admitted that the pictures were displayed on his web site, but claimed that he did not place them there; they were uploaded by a subscriber. The defendant did not know about the pictures until he was served complaint papers, at which time he removed the photographs and began monitoring the web site to prevent additional photographs from being uploaded. The court held that the defendant is responsible for material that is on his web site and infringes on another's copyright, even if the defendant did not place the material on the web site and did not have knowledge that such material so infringed. See also Playboy Enterprises, Inc. v. Webbworld, Inc., 991 F Supp 543 (ND TX 1997); Christopher Scanlon v. Gil Kessler et al, No 97 Civ 1140, 1998 US Dist Lexis 10201 (SDNY July 10, 1998). Further, an operator of a computer bulletin board service may become liable for copyright infringement if it takes affirmative steps to cause copies to be made. For example, if a bulletin board service encourages people to upload documents, and it screens all documents and moves them to the appropriate generally available files, it may be held liable for things posted on its web site by others. See Playboy Enterprises Inc v. Russ Hardenburgh, Inc., 982 F. Supp 503 (ND Ohio 1997).

The Digital Millennium Copyright Act (("DMCA") (17 U.S.C § 1201 et seq; passed by Congress in 1998) makes changes in United States copyright law to address our current digitally networked environment. The DMCA provides for a limitation on "online service providers" liability for monetary damages and injunctive relief with respect to copyright infringement in certain circumstances. It adds a safe harbor to the current United States copyright law. Online service providers are defined as those entities that link users to the Internet and facilitate the transmission of digital data that is translated into another party's copyrighted work. The DMCA provides a safe harbor from liability for online service providers if their online system complies with the procedures and certain requirements set forth in the DMCA, which include the following: (1) the organization meets the definition of an online service provider, (2) the organization engaged in covered activities, and (3) the organization meets the conditions in the DMCA for material, parties to transmission, and procedures. To qualify for the limitation, the material that is transmitted online must be made available by someone other than the online service provider, and the online service provider cannot modify the material. In addition, the online service provider cannot have actual knowledge of any copyright infringement and must cooperate with the processes to disable access and limit harm to the copyright owner in the event of infringement. The safe harbor does not apply to copyrighted material the online service provider may place online itself or through independent contractors, such as on its home page; such material is subject to a traditional copyright analysis under current law.

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Appendix E

TIS Handbook last updated July 2002, Version 4.