Section 230 Does Not Immunize Against State Intellectual Property Claims: Third Circuit Establishes New Precedent

Introduction

In the landmark case Karen Hepp v. Facebook, Inc., Imgur Inc., Reddit Inc., Giphy Inc., and WGCZ S.R.O. (20-2725 & 20-2885), the United States Court of Appeals for the Third Circuit addressed a pivotal question regarding the scope of Section 230 of the Communications Decency Act (CDA). The appellant, Karen Hepp, a seasoned newscaster, alleged that her likeness was used without consent in online advertisements by Facebook and other platforms, thereby violating her right of publicity under Pennsylvania state law. The crux of the matter was whether Section 230, particularly its intellectual property carve-out in §230(e)(2), shielded the defendants from these state-law claims.

Summary of the Judgment

The Third Circuit Court reversed the dismissal of Hepp's state-law claims against Facebook, deciding that Section 230 does not immunize defendants against claims pertaining to state intellectual property laws, such as the right of publicity. The District Court had previously dismissed Hepp's claims under Section 230, interpreting §230(e)(2) as not encompassing state-level intellectual property claims. However, the appellate court found that §§230(c) and (e)(2) allow state intellectual property claims to proceed, thereby not precluding Hepp's case against Facebook.

Analysis

Precedents Cited

The judgment extensively discussed several key precedents to elucidate the scope of Section 230:

Universal Communication Systems, Inc. v. Lycos, Inc. (1st Cir. 2007) - Held that Section 230(e)(2) applies to state intellectual property claims.
Perfect 10, Inc. v. CCBill LLC (9th Cir. 2007) - Contrarily interpreted Section 230(e)(2) as limited to federal intellectual property laws.
Atlantic Recording Corp. v. Project Playlist, Inc. (S.D.N.Y. 2009) - Supported the inclusion of state intellectual property laws within the §230(e)(2) carve-out.
ZACCHINI v. SCRIPPS-HOWARD BROADCASTING CO. (1977) - Provided a foundational understanding of the right of publicity as an intellectual property right.

Additionally, the dissent referenced the First Circuit's reasoning in Perfect 10 and emphasized the lack of a circuit split, arguing that the exception should remain narrow.

Legal Reasoning

The majority interpreted §230(e)(2) of the CDA broadly, affirming that "any law pertaining to intellectual property" encompasses state-level rights like the right of publicity. This interpretation was grounded in:

Textual Analysis: Legal dictionaries, including Black's and McCarthy's, explicitly include right of publicity within the scope of intellectual property.
Statutory Context: §230(e)(2) uses inclusive language ("any law pertaining to intellectual property"), supporting a broad interpretation.
Policy Considerations: Incorporating state intellectual property laws aligns with the pro-free-market objectives of Section 230, facilitating the protection of property rights that underpin market exchanges.

The dissent, however, argued that incorporating diverse and non-uniform state intellectual property laws into §230(e)(2) would contravene Congress's intent to provide a clear and consistent immunity shield, potentially leading to a "floodgate" of litigation and impeding the development of internet platforms.

Impact

This judgment significantly narrows the protective scope of Section 230 by allowing state intellectual property claims to proceed against internet service providers. Potential impacts include:

Increased Litigation: Platforms may face more lawsuits based on varied and potentially overlapping state intellectual property laws.
Censorship Pressure: To mitigate legal risks, companies might adopt more stringent content moderation practices, possibly stifling free expression.
Legal Uncertainty: The divergence from the Ninth Circuit's stance introduces uncertainty regarding the applicability of §230(e)(2) across different jurisdictions.
Precedential Shift: As the first circuit court to take this stance, it may influence other circuits to reevaluate their interpretations of Section 230.

Complex Concepts Simplified

To better grasp the judgment, it's essential to demystify some legal terminologies and concepts:

Section 230 of the Communications Decency Act (CDA): A federal law that provides immunity to online platforms from liability for user-generated content.
§230(c): The provision granting "Good Samaritan" immunity, shielding platforms from being treated as the publisher of third-party content.
§230(e)(2): The carve-out specifying that Section 230 immunity does not apply to intellectual property laws, allowing such claims to proceed.
Right of Publicity: A state-level intellectual property right that protects individuals from unauthorized commercial use of their name, likeness, or other identifiable aspects of their persona.
Intellectual Property: Legal rights that protect creations of the mind, including trademarks, copyrights, patents, trade secrets, and rights of publicity.

Conclusion

The Third Circuit's decision in Karen Hepp v. Facebook et al. marks a transformative interpretation of Section 230, particularly the intellectual property carve-out. By asserting that state intellectual property claims, such as the right of publicity, are not shielded by Section 230's immunity provisions, the court has opened a new avenue for plaintiffs to hold internet platforms accountable for unauthorized commercial use of their likenesses. While the judgment underscores the protection of individual property rights within a free-market framework, it introduces complexities and potential challenges for online service providers in balancing content moderation with legal compliance. This ruling may catalyze legislative reviews to clarify the boundaries of Section 230, ensuring that the statute's foundational objectives of fostering a vibrant and free internet remain intact amidst evolving digital landscapes.