eBay Victorious (Again), Yahoo Attacked (Again), as the Auction Wars Continue
by Hillel I. Parness[1]
In November 2000, both eBay and Yahoo! received two very different decisions regarding their liability for the activities of third parties using their respective Internet auction services. On November 7, in Stoner v. eBay,[2] a suit brought against eBay under the California Business and Professions Code for violations of the California Penal Code prohibition against the sale of bootleg sound recordings, the Superior Court for San Francisco County ruled that section 230 – the Good Samaritan provision – of the Communications Decency Act, protected eBay from liability for users’ offering for sale purportedly illegal music recordings. The court found that eBay is a “service provider” under the CDA, and therefore cannot be treated as a “publisher or speaker” of anything posted by “information content providers” – in this case sellers of purportedly bootleg music over eBay. As this author has noted,[3] Stoner was a landmark decision in two important ways: (i) it extended the application of the protection provided by the Good Samaritan to “service providers” beyond the subject matter it was intended to address – online defamation and offensive speech – to other forms of speech, in this case factual auction listings; and (ii) it extended the definition of “service provider” to eBay, which is a tailored internet destination, rather than a more broad-based portal or traditional “internet service provider.”[4]
In stark contrast, on November 20
the County Court of Paris, France, in League
Against Racism and Antisemitism v. Yahoo! Inc., ordered Yahoo to remove
from its U.S. site (www.yahoo.com) all auctions of Nazi
Memorabilia, and all materials presenting arguments apologizing for, or
contesting the reality of, Nazi war crimes, in light of the French law against
such actions,[5] despite the
fact that Yahoo’s French portal (www.yahoo.fr) was in compliance, and
over Yahoo’s argument that the French court should recognize its immunity as a
service provider under the CDA. Yahoo
has since put new screening procedures into place regarding Nazi memorabilia,
and brought suit in the U.S. for a declaratory judgment that the French court
was without power to order Yahoo as it did.
As this author recognized, the French Yahoo decision brings into
question many of the fundamentals U.S. ISPs have taken for granted, in no small
part because of the Good Samaritan provision of the CDA – service provider
immunity, predictable susceptibility to suit, and freedom of speech.[6]
January 2001 brought something of an
instant replay for each of these companies.
On January 18, the California Superior Court for San Diego County ruled
that eBay was not liable for purported violations of the California Business
& Professions Code for the alleged sale of counterfeit sports memorabilia.[7] This case began with an April 2000 class
action complaint by purchasers of sports items on eBay for, among other things,
unfair competition by eBay under the California Business Code for not providing
certificates of authenticity to purchasers, and “misrepresenting the forged
collectibles offered for sale in eBay auctions.” In October 2000 the court granted eBay’s demurrer with leave to
amend, specifically ordering plaintiffs to “plead around the 47 U.S.C. 230 safe
harbor immunity raised in defendant eBay, Inc.’s demurrer. The ‘safe harbor’
immunity found in Business & Professions Code § 17502 is a question for the
trier of fact regarding ‘good faith.’”[8] Plaintiffs filed an amended complaint, in
which they specifically characterized eBay as an “information content
provider,” pleading that eBay was not entitled to Good Samaritan immunity
because it is not a “service provider” under the CDA, and because the auction
information posted by eBay “does not concern a publication of obscene or
otherwise similarly objectionable materials.”[9] On January 18, 2001, the court sustained
eBay’s demurrer without leave to amend – because “the causes of action have not
factually pled around the immunity,” “Causes of action one and three of
plaintiffs’ second amended complaint are barred by the 47 U.S.C. § 230 safe
harbor immunity raised in defendant eBay, Inc.’s demurrer.”[10]
Just as the San Francisco court did
in Stoner v. eBay, the San Diego
court in Gentry accepted eBay’s
arguments that (i) it is a “service provider” as defined by the CDA, and (ii)
that it is entitled to immunity under the Good Samaritan provision, on the theory
that posting third-party information about items available for purchase,
despite the fact that eBay purportedly makes a commission on each sale
constitutes “speech” for purposes of CDA immunity. Together, these cases are broadening the scope of CDA protection
for Internet-based businesses from liability for the actions of third parties –
as long as the “service provider’s” activity can be classified as speech (not a
difficult task on the text-based Internet), it can receive immunity. This so long as the activity does not spill
over into the areas covered by Intellectual Property [or criminal] law, areas
specifically excluded by the CDA.[11]
While eBay was being handed another
victory, in was reported that another lawsuit was brought in France over Nazi
materials on Yahoo. This time, suit was
brought by a group of Holocaust survivors – the Association of Deportees of
Auschwitz and Upper Silesia – against Yahoo chairman Tim Koogle, for
“justifying war crimes and crimes against humanity.”[12] From reports on the lawsuit, it seems clear
that the plaintiffs were motivated by what they saw as Yahoo’s callous response
to the previous lawsuit – putting in place new restrictions on Nazi materials,
while at the same time denying liability, denying that the policy change was
related to the first French lawsuit, and challenging the authority of the
French court through a suit filed in a California U.S. District Court on
December 21, 2000.[13]
The issues brought to light in the
eBay and Yahoo suits have broad application not only to other auction sites,
but to all Internet companies, especially those that seek worldwide recognition
and an international audience. As time
goes on it seem that, on the one hand, the large Internet companies – whether
termed “service providers,” ISPs or otherwise – will continue to seek an
expansion of the protection provided under the Good Samaritan provision of the
CDA,[14]
while at the same time an increasing number of international challenges will
arise, where the plaintiffs, as well as the courts, seek to hold the ISPs
liable for violations of their countries’ laws, irrespective of the protections
these companies may have under U.S. law.
[1] © 2001 Hillel I. Parness. Hillel I. Parness, J.D. Columbia 1995, focuses on intellectual
property and Internet-issues litigation.
His prior articles on digital music and e-commerce issues, which have
appeared in IP Law Weekly, E-Commerce Law Weekly, Digital Music Weekly, IP Worldwide,
TheLAW.com, and Cyberspace Lawyer,
are reprinted at http://www.hiplaw.com.
[2] Order, Stoner v. eBay, Inc., No. 305666 (Cal. Super. Ct. Nov. 7, 2000) (copy on file with author).
[3] See Hillel I. Parness, “Storm Warning to Good Samaritans: Sail Clear of the Safe Harbor,” Cyberspace Lawyer (Dec. 2000) at 20 (also available at www.hiplaw.com).
[4] As it turns out, the four decisions prior to Stoner that addressed the Good Samaritan provision of the CDA all did so with regard to America Online, Inc., the leading commercial provider of Internet access.
[5] See Interim Order, League Against Racism and Antisemitism v. Yahoo! Inc., (Cty. Ct. Paris, Nov. 20, 2000) (English translation available at http://www.cdt.org/speech/001120yahoofrance.pdf) (“Interim Order”) at 4. The author is relying on this translation for his understanding of the Interim Order.
[6] For more information, see Hillel I. Parness, “French Revolution: Ramifications of the French Yahoo Decision,” TheLaw.com (Jan. 23, 2001) (available at www.thelaw.com and www.hiplaw.com).
[7] Telephonic Ruling, Gentry v. eBay Inc., No. 746980 (Calif. Super. Ct., San Diego Cty. Jan. 18, 2001) (available at http://www.krausekalfayan.com/ebrulin2.htm).
[8] Telephonic Ruling, Gentry v. eBay (Oct. 11, 2000) (available at http://www.krausekalfayan.com/ebruling.htm) ¶ 1.
[9] Second Amended Complaint, Gentry v. eBay (Oct. 16, 2000) (available at http://www.krausekalfayan.com/ebaysac.htm) ¶ 95.
[10] Jan. 18 Ruling ¶ 1.
[11] As the author noted, what was so shocking about the Stoner decision is that it eBay – which was sued under state law (California anti-counterfeiting statute) – was immunized for the auction of bootleg music over its network, while Napster – which was sued under federal copyright for illegally facilitating the exchange of bootleg music – was found liable in federal court, and ineligible for protection under the safe harbors of the Digital Millennium Copyright Act.
[12] See Reuters, “Lawsuit accuses Yahoo of justifying war crimes,” Jan. 22, 2001 (available at http://news.cnet.com/news/0-1007-200-4560537.html) (quoting plaintiffs’ attorney Charles Korman); The Florida Times-Union, “French Holocaust survivors file new suit against Yahoo,” Jan. 24, 2001.
[13] Complaint, Yahoo! Inc. v. La Ligue Contre Le Racisme Et L’Antisemitisme, C00-21275 (N.D. Cal. Dec. 21, 2000) (available at http://www.cdt.org/speech/international/001221yahoocomplaint.pdf) (“Yahoo Complaint”).
[14] As this author noted, however (“Storm Warning to Good Samaritans,” supra), that protection is not supposed to be available when the cause of action is grounded in Intellectual Property. In such cases the safe harbors of the Digital Millennium Copyright Act take over, which have seen much more narrow application in the few cases to have considered them, such as Napster.