LEGAL BRIEFS

The legal issues affecting the adult Webmasters have been analyzed, and over-analyzed, ad nausem. However, little has been written about the unique legal concerns of adult hosting companies.LEGAL BRIEFS

The legal issues affecting the adult Webmasters have been analyzed, and over-analyzed, ad nausem. However, little has been written about the unique legal concerns of adult hosting companies. This article is intended to provide a reasonably comprehensive legal checklist identifying the key areas of concern for hosts that accept adult Website clientele.

DMCA COMPLIANCE

Of critical concern to any hosting company is strict compliance with the dictates of the Digital Millennium Copyright Act (“DMCA”).1 While an exhaustive review of the specific requirements of the DMCA – which must be followed to the letter – is beyond the scope of this article, a few basics are worth mentioning:

1. Designate an Agent for receipt of DMCA Notices.
In order to take advantage of the “Safe Harbor” provisions of the DMCA, which provides certain defenses to claims of copyright violation by hosting companies, every host must designate an agent who is made available for receipt of DMCA Notices by copyright claimants. Your attorney can act as the Designated Agent. No matter who is selected, a form must be filed with the United States Copyright Office, along with a $30.00 fee, identifying the name, address and email address of the Agent who is designated for receipt of DMCA Notices. In addition, the name and address of the Designated Agent must be listed on the host’s Website, preferably in a conspicuous place such as a well-marked “Legal” page.

2. Set forth your Notice and Takedown procedure.
All hosting companies should develop a written procedure which tracks the requirements of the DMCA, setting forth what happens when the company receives a notice under the DMCA of alleged copyright infringement. Again, certain actions must be taken within specified time periods in order to take advantage of the Safe Harbor provisions of the DMCA. Accordingly, your Notice and Takedown procedure should be developed with the assistance of a skilled Internet, intellectual property lawyer. The Notice and Takedown procedure also should be included on the host’s legal page, and not buried within the fine print of the host’s Terms of Service.

3. Respond to Notices, and honor your policies.
It is one thing to post well-written procedures and designations, but it is entirely another thing to meticulously honor your own policies, as a routine business practice. Many hosting clients have learned the hard way that copyright violations are taken very seriously in the law, and by the courts. Some attorneys make their living by suing hosts, ISPs and AVSs for copyright violations. One copyright infringement claim can be an expensive lesson for a small hosting company, and if a sufficient number of images are involved, such a claim may drive a company out of business.

It is important to note that not all copyright infringement claims constitute valid DMCA Notices. Specific requirements apply to the form and substance of a Notice under the Digital Millennium Copyright Act. For example, the Notice must set forth that the claimant has a good faith belief that the content at issue violates the claimant’s copyright. While it is an appropriate business practice to respond to all claims of intellectual property infringement, the provisions of the DMCA are only invoked upon service of a proper Notice. It is advisable to have your attorney review all intellectual property infringement notices in order to recommend an appropriate response.

DEVELOP AN ACCEPTABLE USE POLICY

An Acceptable Use Policy, or AUP, is critical for the legal operation of a hosting business. An AUP is even more important if a host accepts controversial content such as adult Websites or online gambling businesses. The law surrounding host liability for content residing on its servers is about as clear as mud, but appears to be expanding to the detriment of the hosts. While Section 230 of the Communications Decency Act provides a form of immunity against civil claims for information passing through the computer system of an Internet access provider, the contours of this immunity are still being developed and interpreted by the courts.

One thing is clear: A host does not have immunity from criminal prosecution for illegal content maintained on its servers. Section 230 immunity only applies to civil claims, and not to criminal charges. Representative Robert Goodlatte (R-Va) introduced the Online Criminal Liability Standardization Act of 2002 in February, seeking to provide a defense to criminal, as well as civil liability, however this Bill has languished in the Subcommittee on Crime since its introduction.2 Representative Goodlatte introduced this Bill in response to criminal charges brought against an ISP in Buffalo, New York, which resulted in a criminal conviction for providing access to child pornography. These charges caused grave concern within the hosting community given the difficulties in reviewing huge amounts of hosted content, which changes on a daily basis.

At least one state, Pennsylvania, passed a specific law imposing criminal liability upon hosts or ISPs who fail to remove illegal content after notice from law enforcement.3 That law was recently used against WorldCom, which was ordered to remove access to a large number of Websites suspected of containing illegal content.4

The unsettled nature of the law surrounding host liability for illegal content brings us back to the implementation of an AUP. A hosting company is not required to accept any client, and its destiny is completely under the host’s control. Each company can identify its own particular comfort zone when it comes to the content of sites hosted on its system. Do you allow your adult Web clients to display images of degradation, menstruation, simulated rape or other fetishes? What about child modeling, online gambling, hacking or password trading sites? Hosts might also think twice about certain forms of hate speech or bomb assembly instructions. While none of these content types are per se illegal everywhere in the world, they fall within a gray area, forcing the hosts to consider the legal implications of vicarious liability associated with such content. With the assistance of competent counsel, hosts can develop an AUP which clearly defines the acceptable use of the host’s services.

Beyond the content issues, the AUP should contain limitations of liability for downtime, system problems or hacking. Standard legal terms such as a venue selection clause, arbitration provision, attorneys fee term and integration clause should also be considered as part of the AUP. For those hosts providing co-location services, a separate co-location agreement is appropriate. While none of these agreements will provide a magic answer to the liability concerns facing hosts of adult content, they can provide a basis for terminating or denying service to clients involved in content beyond the bounds of the host’s comfort zone.

KNOW YOUR CLIENTS

Gone are the days when a host could turn a blind eye to the content uploaded to its servers, and claim ignorance if there is a problem. The recent decision in the Perfect 10, Inc. v. Cybernet Ventures, Inc. case5 illustrates the end of that approach. The content residing on the host’s servers should be reviewed and evaluated by an officer of the company, its attorney, or both. This is not to say that it is practical or advisable to monitor every page of every hosted Website. However, just like with any business transaction, a host must know with whom it is doing business. Clients should be instructed to notify the host if any substantial change in the nature or character of the hosted site occurs. While such content monitoring adds to the cost of doing business, it may save money in the long run. It appears to be evolving into a required business practice as the law relating to host liability for content continues to develop to the detriment of the hosting industry. In the current legal climate, any attempt to defend a claim of contributory copyright infringement, or other vicarious liability theory, on the basis that the host was ignorant of the content residing on its servers, will likely be rejected by the courts.

Content review must occur at two levels: First, potential customers must have their sites evaluated with compliance with the AUP before being accepted into the system. Second, existing clients must have their content reviewed on a regular basis to confirm continued compliance with the host’s policies. Effective monitoring is the best protection against claims based on the content of the clients’ Websites.

PROMOTION ISSUES

Care must be taken to avoid deceptive or unfair advertising of a host’s services, whether the promotion occurs on the host’s site or elsewhere. Some hosts are so concerned with the content of their clients’ sites that they overlook their own content. Like any other business, a host cannot make unsupported, false or misleading claims regarding its services or products. “Unfair” statements made in promotional materials are illegal under federal law, and pursuant to the laws of every state. Like any other business, hosting companies are allowed to tout their products and services, and express biased opinions regarding their value to the consumer. This is known in the law as mere “puffery.” However, false statements of fact are not allowed, nor are statements which create an unjustified expectation regarding the results that might be achieved by using the hosting company’s services. Thus, if a host advertises that its downtime is .000001%, it should have records to back that up. And, of course, the host’s general counsel should review all promotional statements.

CONCLUSION

While adult Webmasters have their own set of legal concerns to worry about, hosting companies must be attentive to their own unique legal problems. The issues identified above provide a starting point for legal compliance in the hosting industry. As the legal climate for the adult Internet industry continues to become more hostile, legal compliance issues should be moved to the top of the “To Do” list for hosting companies.

1 Title 17, U.S.C.§101, et. seq.
2 H.R. 3716
3 L. N. Bowman & D. McCullagh, “WorldCom Blocks Access to Child Porn,” CNetNews.com (September 23, 2002).
4 Id.
5 213 F.Supp.2d 1146 (C.D. Cal. 2002) [recognizing the potential for vicarious liability against passive access providers of adult materials].

Lawrence G. Walters, Esq., is a partner with the law firm of Weston, Garrou & DeWitt, which maintains offices in Orlando, Los Angeles and San Diego. Mr. Walters represents clients involved in all aspects of adult media. The firm handles First Amendment cases nationwide, and has been involved in significant Free Speech litigation before the United States Supreme Court. All statements made in the above article are matters of opinion only, and should not be considered legal advice. Please consult your own attorney on specific legal matters. You can reach Lawrence Walters at Larry@LawrenceWalters.com, http://www.FirstAmendment.com or AOL Screen Name: “Webattorney”.

LEGAL BRIEFS

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