United States: Posting Service Entitled To Broad Immunity Under CDA

The US Court of Appeals for the First Circuit agreed with the district court that posting service immunity under the Communications Decency Act (CDA) should be "broadly construed," and that the act of posting complaints was in itself sufficient consideration for grant of an irrevocable nonexclusive license. Small Justice LLC v. Xcentric Ventures LLC, Case Nos. 15-1506; 16-1085 (1st Cir., Oct. 11, 2017) (Barron, J). 

Massachusetts lawyer Richard Goren and his company, Small Justice (collectively, Goren), sued Xcentric Ventures, the owner of RipoffReport.com, for copyright infringement, libel, interference with a contract and violation of Massachusetts' unfair competition statute. The Ripoff Report permits customers to "post free complaints, called 'reports,' about companies and individuals whom [sic] they feel have wronged them in some manner." 

Goren's claims all pertained to a dispute arising from two reports that Christian DuPont authored and posted on the Ripoff Report that were highly critical of Goren, who had provided legal representation on an unrelated matter adverse to DuPont, the defendant in that matter. In the two postings, DuPont leveled a number of criticisms at Goren's character and conduct. In response, Goren filed suit in Massachusetts state court, under Massachusetts state law, for libel and intentional interference with prospective contractual relations. DuPont did not defend the lawsuit, and Goren, after first voluntarily dismissing those counts of the state court complaint that sought money damages, successfully obtained a default judgment. The state court also transferred to Goren "all rights in and to ownership of the copyright" for each of the two reports that DuPont had posted, which Goren assigned to himself and then to Small Justice.

Goren next filed the present lawsuit in federal court in Massachusetts against Xcentric, the owner of the Ripoff Report. Goren claimed that Small Justice had ownership of copyright to a declaration and to the two DuPont reports, and asserted copyright infringement. Xcentric moved to dismiss the complaint, which the district court granted in part. Specifically, the district court found that the CDA at 47 USC § 230 shielded Xcentric, an interactive computer service provider, from liability for information provided by another content provider. The district court rejected Goren's argument that, by holding itself out as the copyright holder and by having "directed" internet search engines to list the postings, Ripoff Report itself became the information provider.

At the conclusion of discovery, the district court granted Xcentric summary judgment on the copyright infringement claim, finding that Goren's claim failed because DuPont had "transferred copyright ownership to Xcentric by means of an enforceable browsewrap agreement. Specifically, the district court concluded that DuPont made that transfer pursuant to the Ripoff Report's terms and conditions, which provided (in part) that a user of the site agreed to "grant to Xcentric an irrevocable, perpetual, fully-paid, worldwide exclusive license to use, copy, perform, display and distribute" the user's posting. Even though DuPont may not have seen the full terms and conditions prior to submitting his postings (given the configuration of the website), the district court concluded that DuPont was on inquiry notice of those terms and conditions "because of the vertical scroll bar to the right of the text box, which was captioned 'Terms and Conditions', and because of the 'conspicuously visible' hyperlinks at the bottom of each page in the submission process to the website's 'terms of service.'" The district court subsequently modified the judgment to find that the browsewrap license failed to meet the requirements for the transfer of an exclusive copyright license but did grant an irrevocable non-exclusive license. This distinction did not, however, change the outcome. Goren appealed.   

The First Circuit reviewed the dismissal of the libel and tortious interference claims de novo and affirmed. The Court explained that the CDA's § 230 immunity is to be liberally construed, noting that Congress has expressed a "policy choice not to deter harmful online speech through the route of imposing tort liability on companies that serve as intermediaries for other parties' potentially injurious messages." Applying de novo review again, the First Circuit also affirmed the copyright decision, rejecting Goren's argument that the license "contract" failed because no consideration was given to DuPont. The Court noted that while consideration is necessary to support an irrevocable license grant, the "performance can itself constitute consideration sufficient to establish a binding contract." Thus the act of actually posting the complaints was sufficient consideration under these circumstances.

Finally, the Court determined that it need not address whether a browsewrap agreement may satisfy the exclusive license writing requirement of 17 USC § 204. This remains an open issue in the First Circuit.

Posting Service Entitled to Broad Immunity Under CDA

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