We've talked in the past about the importance of various "safe harbor" rules that help maintain that liability for any sort of lawbreaking is actually placed on the lawbreaker, rather than any tool provider/middleman used to break the law. In an ideal world, we wouldn't need such safe harbors, because it should be obvious: the person who breaks the law is guilty, while the person who makes tools that are used to break the law is not guilty. That's just common sense... but apparently not common enough. We were already quite troubled by the Supreme Court's surprising and disturbing decision to create a new "inducement" standard
that chips away at the DMCA's safe harbors, but no such "inducement" standard has been applied to Section 230's safe harbors, which protects service providers from most non-copyright law-breaking by users.
Until now, that is.
Eric Goldman points out that in a recent ruling in a lawsuit between the New England Patriots and Stubhub, it appears that a court has suddenly come up with an "inducement" standard for section 230
as well, despite most other court rulings (with one major exception
) giving pretty broad protections to any service provider. In this case, which we've discussed before, the New England Patriots were furious that season ticket holders might resell some of their tickets on StubHub, and even had a court force StubHub to hand over
the names of its users (despite this being a massive privacy violation that also violates StubHub's own terms of service). While an earlier ruling indicated StubHub was protected
by the section 230 safe harbors, this latest ruling says it's not, in part because StubHub knows about, helps and profits from ticket scalping on the site.
This is troubling for a variety of reasons. It still involves putting liability on a party who doesn't
actually break the law. Furthermore, when using a standard that involves looking at whether or not the company profits from the law breaking, you effectively kill all
safe harbors. Any commercial service provider, almost by default, will profit in some way from the law breaking, but that shouldn't make them liable for it. Also, as we've see quite clearly with the inducement standard encroaching on DMCA safe harbors, those on the other side of lawsuits will continue to try to stretch and twist the contours of what counts as "inducement." If this stands, it will create massive potential liabilities
for online service providers, and there will be lots of expensive lawsuits. The end result will be a greatly chilled market for innovation.