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Hepp v. Facebook et al., IP claims carved out from Section 230, and what it means for startups
Last month, Engine joined an amicus brief in a case at the intersection of intermediary liability and intellectual property law. In Hepp v. Facebook, a plaintiff argued photos of her were taken and posted without her consent, in violation of Pennsylvania’s right of publicity law. And on the theory that state right of publicity claims constitute “intellectual property,” she sought to hold Facebook, Reddit, Imgur, and other platforms liable for those user-generated posts.
Under § 230 of the Communications Decency Act, websites can host and moderate the content their users post without facing liability for what is shared. But a carve-out in § 230 excludes intellectual property claims. The Hepp case attempts an end-run around the liability framework Congress laid out by trying to position state right of publicity laws within that IP carve-out. The district court rejected that argument. But had the court adopted plaintiff’s theory, it would have frustrated § 230’s structure and purpose. For startups or anyone running a website that hosts user-generated content—whether it’s a comments section, photo sharing, user reviews, etc.—it would have meant learning 50 different state laws and monitoring all user posts for any potential violations. That would quickly become an impossible task for any startup seeking to operate at scale. The Third Circuit will hear the appeal in Hepp later this year.
A brief primer on Section 230, the IP carve-out, and state laws around right of publicity.
Section 230 of the Communications Decency Act (“CDA”)—specifically § 230(c)—allows Internet companies and websites to host and moderate content without being held liable for what their users share or post. It states that “[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” Courts have routinely interpreted the statute in light of Congress’s intent to “maintain the robust nature of Internet communication” and “preserve the vibrant and competitive free market . . . for the Internet and other interactive computer services.” As such, § 230 often operates to prevent litigation against Internet companies and websites over what users say. And when such litigation is filed, § 230 often provides the basis for early dismissal in what would otherwise be a drawn-out and costly court proceeding that could easily bankrupt startups.
However, § 230 does not apply to all user-generated content. In § 230(e), the law expressly excludes certain criminal, intellectual property (“IP”), electronic communications privacy, and sex trafficking claims. Therefore, Internet companies and websites may still be liable for what their users say and share if, for example, the company or website would be liable under federal criminal or copyright law.
To understand the Hepp case, you also have to know a bit about right of publicity laws. These laws, rooted in notions of privacy, prevent various unauthorized uses of a person’s name, images of them, etc. In the U.S., right of publicity is governed by state law—sometimes statutory, sometimes common law. Each state’s law is different; for example, the causes of action have different elements, the laws vary on who is eligible and what about a person can be protected, and some sound in tort while others sound in property. In Pennsylvania, for example, to state a claim for “unauthorized use of name or likeness,” a plaintiff must prove their name or likeness has commercial value, it was used by another for a commercial or advertising purpose, and it was used without their consent.
Hepp v. Facebook et al.
In the fall of 2019, Philadelphia-based newscaster Karen Hepp filed suit against Facebook, Imgur, Reddit, and others alleging violations of her right of publicity. She had found photos of her taken by a convenience store security camera were being used—without her consent—in online advertisements for dating websites and erectile dysfunction products. And she alleged those images were available on Facebook, Imgur, and Reddit. Her complaint alleged these platforms were liable for violating Pennsylvania’s right of publicity laws.
In response, those defendants moved to dismiss, arguing that § 230(c) barred the claims. But the plaintiff argued that § 230 immunity did not apply, as the statute carves out and excludes IP claims. Per plaintiff’s theory, the definition of “intellectual property” encompasses right of publicity, and when Congress wrote § 230, it meant to exempt both federal IP claims (patent and copyright) as well as IP claims brought under state law.
The district court granted defendants’ motion to dismiss. In reaching that conclusion, the court first confirmed that Facebook, Imgur, and Reddit meet § 230’s definition of an “interactive computer service,” and that the plaintiff was seeking to hold them liable as though they were the ones posting or creating the content in question—even though the photos were created and posted by independent third parties. As such, the court concluded those defendants met the requirements for immunity under § 230.
Turning next to the IP carve-out, the court considered whether plaintiff’s claims being based on right of publicity changed the conclusion. While similar arguments have been made before, the district court noted that this specific question—of whether § 230 immunity extends to right of publicity claims—is a matter of first impression in the Third Circuit.
The district court considered the structure and overall purpose of § 230. It explained how § 230 “was enacted, in part, to maintain the robust nature of Internet communication and, accordingly, to keep government interference in the medium to a minimum.” And it would defeat that purpose to allow non-uniform state laws which could be construed by a plaintiff as IP to dictate the contours of § 230. The court also looked to other courts resolving similar arguments, and called out the Ninth Circuit’s reasoning (the only appellate court to rule on the issue) as persuasive. That court has held § 230 preempts state right of publicity claims. Ultimately, the district court in Hepp held that the IP carve out in § 230(e) preserves only federal IP claims.
The plaintiff appealed to the Third Circuit, arguing that the district court’s logic was faulty and anachronistic. Engine joined an amicus brief filed by the Electronic Frontier Foundation last month urging the Third Circuit to affirm. In our brief, we argue that for purposes of § 230, “intellectual property” should be understood to mean federal IP law. Indeed, were the court to construe § 230 to carve-out disparate state right of publicity laws, it would upend the statutory intent and frustrate innovation and competition. Importantly, we explain how startups would be the first to lose out.
What Hepp v. Facebook et al. means for startups.
The full implications of this case will continue to play out on appeal, but the district court’s decision is a valuable confirmation of the scope and purpose of § 230, whereas a reversal by the Third Circuit would raise substantial barriers—particularly for startups and small websites.
Section 230 is sometimes referred to as the 26 words that created the Internet, and it continues to be vital to startups and innovation. Because of § 230, nascent Internet companies can launch without facing liability for the things their users do. Indeed, few startups would be able to afford the cost and risk of liability over user-generated speech. But also, § 230 allows startups, larger companies, and websites to moderate content—before § 230, courts had held that engaging in any content moderation (for example, screening to remove facially offensive content) meant a company could be liable for all user posts. That created a strong disincentive against moderation, which § 230 corrected.
If Hepp had been decided differently, or if the Third Circuit disagrees with the district court, it would create substantial challenges for startups, smaller tech companies, and even blogs with comments sections. All of those entities would suddenly be liable for what their users do, as it could implicate rights of publicity. It would mean that nascent companies would have to learn 50 different state laws. If any of those laws protected the name or likeness of, e.g., local celebrities, startups would also have to learn all those identities. And then they would have to monitor all user posts for potential violations. The beauty of the current law is that it allows smaller companies to innovate and launch without incurring those costs. Otherwise, they would have to hire teams of lawyers and content moderators; they would have to purchase and maintain expensive, yet imperfect, filtering technology; and investors would shy away from them, wanting their money to go to innovation and building businesses instead of legal fees.
The reality of legal exposure is another critical component, and the high costs of litigation would compound the problems of any change in the law. Right now, cases like Hepp, where a plaintiff seeks to hold an Internet intermediary liable for user speech, are routinely resolved on motions to dismiss. That can cost a defendant up to $80,0000, which is still a lot of money for a startup. But if legal changes shifted resolution even to summary judgment, it would cost an order of magnitude more—up to $500,000—to resolve these cases. The mere fact of such high legal costs would impede startup success. Even one (frivolous) case over a user’s post would be enough to bankrupt a company with limited resources.
Another layer at issue in Hepp, which is also critical to any small business, is predictability in the law. Right now, startups can understand and predict their legal exposure for user-generated, allegedly IP-infringing content relatively well—in light of uniform federal patent and copyright law. For example, the Digital Millennium Copyright Act sets out the notice-and-takedown framework for addressing claims of copyright infringement online. It makes sense to exclude such copyright claims from the purview of § 230, because other federal laws provide a relatively clear path to resolution. Expanding the definition of “intellectual property” in § 230, as argued in Hepp, would create substantial ambiguity. Indeed, as the district court explained in Hepp, its holding “preserves the scope of [§ 230] immunity within a predictable body of federal law as opposed to a diverse state law on the subject matter.”
Finally, the issues in Hepp have implications for competition. While large platforms, like Facebook, have sophisticated technology, can hire scores of lawyers and moderators, and can afford legal defense—startups cannot. If the law were to change, and the baseline expectation for any website hosting user content involved high costs and substantial legal exposure, it would entrench incumbents and make it much harder for startups to compete.
Disclaimer: This post provides general information related to the law. It does not, and is not intended to, provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.
