Internet Lawyer Blog

Pursuant to Section 230 of the Communications Decency Act, no provider of an interactive computer service may be treated as the publisher of information provided by another information content provider. See 47 U.S.C. § 230(c)(1). The term "interactive computer service" means any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server, including specifically a service or system that provides access to the Internet and such systems operated or services offered by libraries or educational institutions.

Generally, holding a website operator as the publisher of an allegedly libelous statement by a third party violates the Act. See Zeran v. America Online, Inc., 129 F.3d 327 (4th Cir. 1997), cert. denied, 524 U.S. 937 (1998). Accordingly, the standard pursuant to Zeran is that when an online service provider receives a retraction demand regarding statements the service provider did not write, the demanding party should be re-directed to the third-party originator (i.e., the person who originally wrote the defamatory statement).

California's Retraction Statute under Cal. Civ. Code § 48a states that:

1. In any action for damages for the publication of a libel in a newspaper, or of a slander by radio broadcast, plaintiff shall recover no more than special damages unless a correction be demanded and be not published or broadcast, as hereinafter provided. Plaintiff shall serve upon the publisher, at the place of publication or broadcaster at the place of broadcast, a written notice specifying the statements claimed to be libelous and demanding that the same be corrected. Said notice and demand must be served within 20 days after knowledge of the publication or broadcast of the statements claimed
to be libelous.

2. If a correction be demanded within said period and be not published or broadcast in substantially as conspicuous a manner in said newspaper or on said broadcasting station as were the statements claimed to be libelous, in a regular issue thereof published or broadcast within three weeks after such service, plaintiff, if he pleads and proves such notice, demand and failure to correct, and if his cause of action be maintained, may recover general, special and exemplary damages; provided that no exemplary damages may be recovered unless the plaintiff shall prove that defendant made the publication or broadcast with actual malice and then only in the discretion of the court or jury, and actual malice shall not be inferred or presumed from the publication or broadcast.

3. A correction published or broadcast in substantially as conspicuous a manner in said newspaper or on said broadcasting station as the statements claimed in the complaint to be libelous, prior to receipt of a demand therefor, shall be of the same force and effect as though such correction had been published or broadcast within three weeks after a demand therefor.

4. As used herein, the terms "general damages," "special damages," "exemplary damages" and "actual malice," are defined as follows:

(a) "General damages" are damages for loss of reputation, shame, mortification and hurt feelings;

(b) "Special damages" are all damages which plaintiff alleges and proves that he has suffered in respect to his property, business, trade, profession or occupation, including such amounts of money as the plaintiff alleges and proves he has expended as a result of the alleged libel, and no other;

(c) "Exemplary damages" are damages which may in the discretion of the court or jury be recovered in addition to general and special damages for the sake of example and by way of punishing a defendant who has made the publication or broadcast with actual malice;

(d) "Actual malice" is that state of mind arising from hatred or ill will toward the plaintiff; provided, however, that such a state of mind occasioned by a good faith belief on the part of the defendant in the truth of the libelous publication or broadcast at the time it is published or broadcast shall not constitute actual malice.

A defamatory statement is one that injures the reputation of another. The common-law torts of libel and slander punish the publication of statements that are both defamatory and false. Generally, a libelous statement is a false and defamatory statement published in writing. A slanderous statement is a false and defamatory statement expressed orally. False and defamatory oral statements broadcasted over the radio or television are now widely considered libel, rather than slander. In some cases, money damages may be awarded to compensate the victim of libel or slander for the reputational injury caused by publication of the false and defamatory statement.

However, in recent years there has been significant tension between the common-law protections of reputation and the mandate of the First Amendment to the Constitution that "Congress shall make no law . . . abridging the freedom of speech, or of the press. . . ."

To ensure that debate on public issues remains "uninhibited, robust and wide-open," New York Times v. Sullivan, 376 U.S. 254, 270 (1964), the United States Supreme Court has found that the First Amendment limits the circumstances under which a speaker or publisher may be punished for making false and defamatory statements: "Neither lies nor false communications serve the ends of the First Amendment . . . [b]ut to insure the ascertainment and publication of the truth about public affairs, it is essential that the First Amendment protect some erroneous publications as well as true ones." St. Amant v. Thompson, 390 U.S. 727, 732 (1968).

As such, in order to recover for libel or slander, a plaintiff must establish not only that: (1) defendant published a defamatory statement; (2) statement was made about the plaintiff; and (3) the statement was demonstrably false; but a plaintiff must also prove that the statement was made with "fault."

The degree of fault plaintiff must establish depends on whether the plaintiff is a public official or public figure, or a private figure. A public official or public figure must establish constitutional "actual malice" (i.e., publication with knowledge of falsity or subjective awareness of probable falsity). A private figure need only demonstrate that the wrongdoer/defendant was "at fault" in publishing the false statement at issue and a showing of negligence is sufficient in most states.

For more information see: New York Times Co. v. Sullivan, 376 U.S. 254 (1964); St. Amant v. Thompson, 390 U.S. 727, 732 (1968); Gertz v. Robert Welch, 418 U.S. 323, 347 (1974); Philadelphia Newspapers v. Hepps, 475 U.S. 767, 768 (1986); and Milkovich v. Lorain Journal Co., 497 U.S. 1 (1990).

The issue of online service provider liability comes up often in today's high-tech world. In order to promote free discussion and private investment in the Internet, the United States Congress immunized providers of "interactive computer service[s]" against liability arising out of content provided for publication by any other "information content provider." See Section 230 of the Communications Decency Act of 1996, 47 U.S.C. § 230. This section does not limit the application of intellectual property laws or criminal laws, but it protects Internet service providers and website operators against a broad range of tort, contract, and other claims arising out of content created by third parties.

Section 230(c)(2)(A) states that "[n]o provider or user of an interactive computer service shall be held liable on account of...any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected."

Section 230(c)(2)(B), provides immunity for "any action taken to enable or make available to information content providers or others the technical means to restrict access to [such material]." The immunity offered under Section 230(c)(2) is also referred to as the "Good Samaritan" protection.

Generally, most courts have applied the protection of Section 230 broadly, ruling that ISPs (e.g., AT&T, TimeWarner, AOL) and those operating websites enjoy immunity from liability. Stated otherwise, as long as the material complained of was written by a third party, rather than an agent or employee of the ISP or website, the ISP or website is immune from liability. In addition, the operator of a website may choose to exercise control over the content of its site by removing or editing content provided by third parties without becoming liable as the "publisher" of the third-party statements.

In 1998, the U.S. Court of Appeals for the Fourth Circuit held that even if a publisher or website is put on notice that it is distributing a libelous statement posted by a third party, it cannot be held liable for failure to remove the statement. The court also held that the scope of Section 230 extends to "any cause of action that would make service providers liable for information originating with a third-party user of the service." See Zeran v. America Online, Inc., 129 F.3d 327, 330 (4th Cir. 1997), cert. denied, 524 U.S. 937 (1998).

In New York Times Co. v. Sullivan, 376 U.S. 254 (1964), the United States Supreme Court ruled that the First Amendment limits common-law defamation claims brought by public officials. The Court held that to recover for publication of a defamatory falsehood, a public official must prove that the challenged statement was "of and concerning" the public official plaintiff, that the statement was false, and that the defendant acted with "actual malice." The Court defined "actual malice" as publication with knowledge that the statement was false or with reckless disregard of whether the statement was false or not.

Later, the Supreme Court extended the standard announced in New York Times Co. v. Sullivan to defamation cases brought by "public figures." Public figures include individuals who voluntarily inject themselves into public controversy, as well as those who are involuntarily thrust into the limelight, even if only with respect to a particular activity or incident.

A private-figure defamation plaintiff can recover damages based on the defendant's negligence (or a more speech-protective standard, under the law of some states). In no instance, however, can a private-figure plaintiff recover damages for defamation without a showing of fault amounting to, at least, negligence. Any lesser standard, the Supreme Court concluded, would unduly burden free speech. Gertz v. Robert Welch, Inc., 418 U.S. 323, 347 (1974). And, at least when the speech relates to an issue of public concern, a private-figure plaintiff must bear the burden of proving falsity; the defendant speaker is not obligated to prove the truth of the challenged statements. Philadelphia Newspapers, Inc. v. Hepps, 475 U.S. 767, 768 (1986).

A defamatory statement is one that injures the reputation of another. The common-law torts of libel and slander punish the publication of statements that are both defamatory and false. Money damages may be awarded to compensate the victim of libel or slander for the reputational injury caused by publication of the false and defamatory statement.

A libelous statement was traditionally a false and defamatory statement published in writing. A slanderous statement is a false and defamatory statement expressed orally. False and defamatory oral statements broadcast over radio or television are now widely considered libel, rather than slander.

Click here to review Sections 44-48 of the California Civil Code.

To reconcile the tension between libel law, which punishes speech, and the First Amendment guarantee of freedom of speech, the Supreme Court has limited the circumstances under which a publisher may be punished for making false and defamatory statements.

A libel plaintiff must prove that the challenged statement is false; the publisher does not have the burden of proving truth.

A plaintiff that is a public official or a public figure can only recover for libel if he/she/it can prove that the defendant published the defamatory statement either with knowledge that the statement was false or with serious subjective doubt about the truth of the statement.

A private figure plaintiff must prove, at a minimum, that the defendant was negligent in publishing the allegedly defamatory falsehood.

Courts have long distinguished among those who publish or republish a defamatory statement, those who deliver or transmit material published by a third party, and those who merely provide facilities used by a third party to publish defamatory material.

"Publishers," such as newspapers, magazines, and broadcasters, control the content of their publications and are, accordingly, held legally responsible for any libelous material they publish.

"Distributors," such as bookstores, libraries, and newsstands, cannot be held liable for a statement contained in the materials they distribute unless they knew or had reason to know of the defamatory statement at issue. Distributors are under no duty to examine the publications that
they offer for sale or distribution to ascertain whether they contain defamatory statements.

Common carriers, such as telephone companies and Internet service providers, which do no more than provide facilities by which third parties may communicate, cannot be held liable for defamatory statements communicated through those facilities unless they have participated in preparing the defamatory material.

Section 230 of the Communications Decency Act immunizes the provider of an "interactive computer service" from being held liable as the publisher or speaker of any information provided by "another information content provider." With only a few exceptions, courts have interpreted Section 230 broadly, immunizing publishers from liability for freelance content, bulletin-board postings, and other third-party content. Also, click here for more information.

No other country enjoys defamation laws that are as speech-protective as those of the United States. A number of U.S. publishers have been sued for libel in foreign jurisdictions based on statements published on their websites, which are accessible worldwide.

Many states have retraction statutes that protect writers and publishers by requiring that a potential libel plaintiff give notice before filing suit to allow the publisher and/or the writer to issue a clarification, correction, or retraction, if warranted. Depending on the state, publishing a retraction that conforms to the statutory requirements can reduce the damages available to the plaintiff or even bar a libel claim completely.

It is not clear that all categories of online "publication" fit within the definitions of such statutes. However, courts have indicated that the closer an online publication is in form and content to a protected "traditional" printed publication, the more likely the online publisher will be protected under the retraction statute. Similarly, the more broadly the statute is written, the more likely "new" media publishers will be able to argue successfully that the statute applies to them.

Courts have ruled that an electronic version of a print original does not constitute "republication." Archived copies of original publications are likewise part of the original publication (and not separate "republications").

In the recent years, politically-motivated hackers have made sensitive information available to bloggers and mainstream media at unprecedented rates. For example, Wikileaks released leaked Afghan war logs and government diplomatic cables. Anonymous individual hacked and released emails from the computer security firm HBGary. A college student gained access to and released emails from Sarah Palin's Yahoo account. LulzSec hacked into and publicly released confidential data belonging to Sony and others. Most recently, the Antisec movement hacked into over 70 police departments and released confidential emails and other files.

A this time, some important questions to ask ourselves would be as follows:

1. What are some applicable legal issues when publishing information obtained by hackers?

2. Is there any limit on the type of information that may or may not be published?

3. Is it necessary to revise the laws that protect sensitive information?

Please contact our offices if you are facing similar legal issues.

The United States government recently filed suit against 17 financial companies, including, but not limited to, the largest domestic banks, for selling Fannie Mae and Freddie Mac mortgage-backed securities worth billions of dollars that turned bad when the housing market collapsed.

Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co., and Goldman Sachs Group Inc. were some of the financial firms which were targeted by the lawsuits. Also, European banks including the Royal Bank of Scotland, Barclays Bank, and Credit Suisse were also included in the recent lawsuit.

These complaints were filed by the Federal Housing Finance Agency. This agency oversees Fannie and Freddie which purchase mortgage loans and securities issued by lenders. The total price of the mortgage-backed securities sold to Fannie and Freddie equals $196 billion.

At this time, the federal government has not disclosed the amount of damages it is seeking against the aforesaid entities. However, it is speculated that it seeks to cancel the securities sales and to be compensated for the lost principal, interest payments, and the associated legal fees. It is generally expected that the parties settle legal disputes in the near future and before reaching the trial.

This epic battle between the federal government and banks is a by-product of the lack of regulation in the mortgage industry which has caused significant distress to the public. As we all know, many Americans faced or are facing foreclosure of their homes. This matter begs the question as to what happened to capitalism and the American dream? Is this the end or just the beginning of our financial crisis?

Please stay tuned for more news and analysis of this important topic on future blog posts.

Facebook Inc., which is currently considered the world's largest social network, plans more acquisitions so to improve its site design, keep services more reliable and advance its mobile features to compete with Twitter and Google which are active in the same arenas.

Facebook's director of corporate development, Vaughan Smith stated that, the company aims to make approximately 20 purchases in year 2011 which is up from 10 last year and one in 2009.

It is important for our blog readers to know that Facebook obtains income from advertising and takes certain commission when software developers sell virtual goods on its website. As we know, Facebook is a closely-held company and it does not disclose its financials. Based on my research, the company is seeking to generate $2 billion or more in earnings before interest, taxes, depreciation and amortization in 2011.

Also, Facebook was able to raise more than $2 billion from investors, including $1.5 billion from an investment led by Goldman Sachs Group, Inc. sometime on or about January 2011.

Experts in the field believe that the future of all computing is mobile. Hence, it is probably high-tech company's (e.g., facebook, google, twitter) top priority. For example, Snaptu, which is a mobile startup Facebook acquired earlier this year, was purchased for approximately $60 million.

I believe that mobile computing will be changing applicable technology and certain state and federal laws. Issues such as privacy, security, intellectual property, e-commerce, and constitutional law will arise in the near future. I also believe that Facebook's future is promising due to the substantial financial backings by optimistic investors. However, the future of technology is uncertain and as we know, the legal system must catch up with the rapid changes.

In April 2010, David Kernell faced trial for "hacking" into then-Alaskan Governor Sarah Palin's personal email account.

In November 12, 2010, David Kernell was indicted (i.e., a grand jury believed there was sufficient evidence to place him on trial on federal charges). Thereafter, a jury convicted him of two charges. First, computer fraud. Second, obstruction of justice. David Kernell's defense was that his conduct was a prank. However, the jury was not pursuaded and he was sentenced to one year and one day in federal prison with a recommendation to spend his time in a halfway house.

This case is illustrative of the types of crimes an email hacker may face including: (1) Wire Fraud; (2) Computer Fraud; (3) Identity Theft; and (4) Obstruction of Justice.

Wire fraud involves the use of a computer, television, telephone, or radio to obtain property or money from another person by and through deception or trickery. Even though taking money is common through Internet scams, however, stealing personal and confidential information also constitutes wire fraud. One important requirement for wire fraud is that the emails, telephone calls, or wire transmissions have to go between two or more states or countries.

Computer fraud is similar to wire fraud but it only applies to computers. In addition, it requires some kind of "interstate" connection. The law applies only to computers used:

(i) By or for financial institutions (e.g., banks, credit unions); and/or
(ii) In a manner that has an effect on interstate or foreign commerce, or communications in the United States.

Identity theft happens when a person uses fraud, deception, or trickery to obtain and utilize someone else's personal data or information. Generally, such information is used by the culprit (i.e., thief) to obtain funds, but it may not be the case at all times.

Obstruction of justice includes numerous actions. Generally, it happens when there is interference with a legal process or an official investigation. For example, David Kernell was charged with this crime since he allegedly attempted to delete evidence from his computer related to his hacking activities prior to federal investigators were able to obtain it.

Related Links:

1. Identity Theft, Privacy & Security Information and Resources from the U.S. Federal Trade Commission (See http://www.ftc.gov/bcp/menus/consumer/data/idt.shtm)

2. Fight Back Against Identity Theft (See http://www.ftc.gov/bcp/edu/pubs/articles/naps03.pdf)

3. KnoxNews: See http://www.knoxnews.com/news/2010/nov/12/prosecutors-palin-hacking-push-prison-time

A rise in attacks by hackers in 2011 is showing limits of an older generation of security software from Symantec Corp. (www.symantec.com) and McAfee Inc. (www.mcafee.com) and is placing pressure on these high-tech companies to upgrade products.

These and similar companies are seeking to keep up with cloud computing and the growth of workers plugging mobile devices into networks. According to Johannes Ullrich, a researcher at the SANS Technology Institute (www.sans.edu), none of the recent attacks tied to hacker groups such as Anonymous and Lulz Security could have been repelled by traditional antivirus programs or firewall software.

George Kurtz, who is the current chief technology officer at McAfee, now part of Intel Corp. (www.intel.com), expressed his concern by comparing the current predicament to a "security Armageddon" which is also of great concern for end users and customers.

Mall owners are harnessing digital technology to stem an erosion in their tenant base by online retailing and to promote shopper attendance to their centers.

Hammerson which is a leading European real estate company in London, United Kingdom (http://www.hammerson.com) plans to use a system which tracks shoppers to its malls by using signals from their mobile phones. Australia's Westfield Group, Ltd. (http://www.westfield.com) plans to set up a virtual mall. Also, the Simon Property Group, Inc. (SPG) of Indianapolis (http://www.simon.com) and Paris-based Unibail-Rodamco SE (UL), are seeking to encourage consumers to add new smartphone applications.

On July 20, 2011, according to the leaders of the Senate Armed Services Committee, the Defense Department has failed to deliver to Congress a report on cyber warfare policies which may clarify the legal authorities and rules of engagement to be used in the event of a cyber attack.

Senators Carl Levin, a Michigan Democrat, and John McCain, an Arizona Republican, in a letter to Defense Secretary Leon Panetta wrote as follows:

"The continued failure to address and define the policies and legal authorities necessary for the Pentagon to operate in the cyberspace domain remains a significant gap in our national security that must be addressed."

The aforesaid senators stated that by law, the Pentagon was to report to Congress by March 1, 2011 on its cyber warfare policies, outlining a number of "critical questions" that must be addressed in the new battlefield of cyberspace.

To read the letter click here.

Google, Inc., which is currently the world's largest Internet search company, lost its bid to seal legal documents in a patent-infringement lawsuit filed sometime in 2010 by Oracle, Corp. (ORCL). Google's attempt to seek protection of portions of a transcript related to expert witnesses under the attorney-client privilege was futile.

The United States District Court stated that:

The document is "an incomplete draft of an e-mail message" and "never was sent to anyone." Thus, the document is not a communication of any type, much less a communication protected by the attorney-client privilege."

Case Name: Oracle America, Inc. v. Google, Inc.
Case Number: 3:10-cv- 03561
Court Location: U.S. District Court, Northern District of California (San Francisco)

Apple, Inc. (AAPL)'s patent complaint which seeks to block imports of Samsung Electronics Co.'s Galaxy S mobile phone and Galaxy Tab computer will be reviewed by the International Trade Commission (ITC). See also http://www.usitc.gov

The ITC, which is a quasi-judicial agency in Washington, D.C., arbitrates such trade disputes and announced on August 1, 2011 that it has instituted an investigation. The commission, which may take between 15-18 months to complete the review, has the authority to block imports of products which infringe upon United States patents.

See more on www.bloomberg.com

According to the FBI, fourteen individuals were arrested on July 19, 2011 based on charges related to their alleged involvement in a cyber attack on PayPal's website (www.paypal.com) as part of an action claimed by the group Anonymous. In addition, two more defendants were arrested on other cyber-related charges.

Read more on http://www.fbi.gov/news/news_blog

The FBI is in the beginning stages of its probe of News Corp. (NasdaqGS: NWSA) as investigators evaluate whether United States charges can be brought over claims employees hacked into a rival's website and sought access to phone records of victims of the 9/11 attacks, a person who is familiar with the facts recently mentioned.

The Federal Bureau of Investigation plans to permit the Scotland Yard take the lead on a parallel investigation already under way in Britain. The FBI is not planning to mount an aggressive investigation into allegations that News Corp.'s payments to U.K. police officers a decade ago violated a U.S. overseas bribery law, said the officials, who prefer not be identified since they are not permitted to discuss the Justice Department's investigation.