United States: A Benefit For Internet Service Providers

The Digital Millennium Copyright Act, signed into law in late 1998, limits the liability of Internet and Online Service Providers in some instances. The law is intended to overturn cases in which Internet Service Providers (ISPs) were held liable for copyright infringement even though they were not responsible for actually posting the infringing material. The court had treated them like traditional publishers who have absolute liability for the material contained within their publications.

The so-called Online Copyright Infringement Liability Limitation Act exempts ISPs from liability for claims of copyright infringement when the claims are based solely on the providers transmitting or providing connections for materials through a system or network controlled by the ISP or by reason of the ISP's permitting storage of material in the course of such transmitting or route, provided the ISP take certain specified steps. The ISP is also immunized from allegations of contributory infringement if the liability is based solely on the ISP's provision of material on its network so long as the ISP is not aware of the fact that the material is infringing or of the infringing activity. When it learns of the problem, the ISP must expeditiously remove the material, and the ISP must not receive any financial reward from the infringing activity. The ISP must also establish a policy and procedure for terminating the rights of those who repeatedly display or transmit infringing material.

These limitations on liability apply only if the service provider has designated an agent for purposes of receiving notification of claimed infringements and the ISP provides contact information regarding that agent to both the Copyright Office and through the service provider's publicly accessible website. It is, therefore, essential for online service providers to designate agents for the purpose of receiving notification of claimed infringement as expeditiously as possible. The Copyright Office has established regulations for this purpose, and the posting can be accomplished with little difficulty.

The Act exempts an ISP from liability for claims for removing material or disabling online access to material based on knowledge or reasonable belief that such material is infringing. This exemption from liability is available to the ISP whether or not it ultimately appears that the material is, in fact, infringing material so long as the ISP acts in good faith. This "safe harbor" was inserted in the law at the request of ISPs since they feared retaliation from those whose materials were removed or barred from access when it was ultimately determined that the material was not infringing.

As a means of deterring frivolous claims of infringement, the Act imposes liability on one who "knowingly and intentionally" misrepresents that online material or activity is infringing. If one is responsible for knowingly providing incorrect notice regarding infringement, then that party will be liable for any damages, including costs and attorneys' fees incurred by the alleged infringer, copyright owner or service provider.

This legislation also deals with issues raised by lawsuits alleging that hyperlinking one web page to another constitutes trademark infringement, copyright infringement and dilution of the famous site owner's mark. Accordingly, the law provides that if certain procedures are followed, an ISP is not liable for monetary damages for contributory or vicarious infringement for merely referring to a location by the use of a hypertext link.

The Online Copyright Infringement Liability Limitation Act provides Internet Service Providers with a safe harbor from liability so long as they follow the proper steps. Designation and identification of an agent, as well as verification that the ISP's policies and procedures conform with the law, are essential.