“[T]he Internet represents a brave new world of free speech … [it] is fundamentally different from traditional forms of mass communication in at least three important respects. First, the Internet is capable of maintaining an unlimited number of information sources …, Second, the Internet has no “gatekeepers”–no publishers or editors controlling the distribution of information …. Finally, the users of the Internet are also its producers. But every person who taps into the Internet is his [or her] own journalist. In other words, the Internet has shifted the focus of mass communication to the individual …” [1]


I. Introduction


In 1992, the Hard Rock Café Licensing Corporation appealed to the Seventh Circuit to find Concession Services Inc. (CSI), the operator of Chicago-area flea markets, liable for contributory trademark infringement. [2] Private investigators hired by Hard Rock to search for counterfeit merchandise had discovered Mr. Iqbal Parvez selling counterfeit Hard Rock t-shirts from stalls in CSI’s Tri-State Swap-O-Rama and Melrose Park Swap-O-Rama. [3] The court applied tort law principles to find liability only in cases where the operator knew or had reason to know that the infringing activity was taking place. [4] Although CSI would have been liable if it had known or should have known that Parvez was selling Hard Rock t-shirts, it had no affirmative duty to ferret out or prevent such illegal activity. [5]


Nine years later, in 2001, Gucci America, Inc., the high-end fashion apparel and accessory house, sued Mindspring Enterprises for contributory trademark infringement and unfair competition, because the web hosting service hosted a website advertising jewelry sold under the Gucci trademark. [6] Mindspring had not responded to Gucci’s two emails notifying Mindspring of the infringement. [7] Similarly, in 2008, eBay Inc. was sued for claims that “live bidding” at its “carefully screened” third party auction houses was safe. [8] The plaintiff claimed that eBay’s own marketing representations were false, and that vendors employed shill bidders to increase product costs. [9]


Should web hosts like Mindspring and online auction houses like eBay be held to the same standard as CSI, a brick-and-mortar flea market operator? Or does the Internet require special treatment due to its higher value as a vast source of information, communication, and social networking? On one hand, the Internet is a developing resource that the free market could shape without governmental regulation. [10] Additionally, it is likely technologically infeasible for Mindspring or eBay to screen every vendor and product that passes through its virtual universe. [11] On the other hand, consumers deserve protection from false and deceptive marketing practices of those who take advantage of the Internet’s lack of accountability. [12]


Congress provided a partial (and vague) answer to this question when it enacted § 230 of the Communications Decency Act (CDA). [13] § 230 provides a safe harbor for Internet service providers (ISPs) from liability for third party actions. [14] The intent of § 230 was to encourage the growth of the Internet [15] and to provide protection for those “Good Samaritans” who take measures to screen or filter indecent or otherwise offensive content. [16] § 230 has been applied to immunize ISPs from an array of civil actions, including false representations, fraud, and unfair business practices. [17] The exact scope of § 230’s reach is yet unclear, however, as courts have found that it does not provide blanket immunity for false or deceptive marketing practices. [18]


An investigation into the legislative history of the statute, and the case law that followed its enactment, sheds light on the future of § 230’s protection against marketing liabilities. The legislative history and case law suggest litigation strategies that are likely to be effective for plaintiff consumers and defendant website hosts and auction houses. Because recent cases show that courts may shield ISPs and forum websites for some actions but not others under the CDA, [19] the CDA succeeds to some extent in balancing consumer’s and ISP’s needs on the Internet. However, Internet commerce needs additional solutions to protect consumers while at the same time fostering the growth of the virtual market. This paper discusses some strategies for balancing consumer and ISP interests, through both governmental and private regulation….


Amy J. Tindell