The world wide whoa: old trusted protections can't be counted on anymore when it comes to content and liability in the wild Web 2.0

Risk & Insurance,  Sept 1, 2007  by Matthew Brodosky

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Summary

* Fair Housing Council v. Roomates.com, LLC was the first case to establish a Web site can be held liable for user postings.

* This case unhinged liability protections previously included in the Digital Millennium Copyright Act and the Communications Decency Act.

* Experts recommend risk managers check with legal counsel and IT departments about their Web site's purpose, as well as takedown policies and monitoring procedures.

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Silicon Valley is concerned, and when the capital of computing has a headache, every corporation with a Web site should stock up on the aspirin.

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The consternation comes care of a May case in the 9th U.S. Circuit Court of Appeals in California--Fair Housing Council v. Roommates. com, LLC.

"It is the first case that said that the Web site can be held liable for user postings," says Kevin Kalinich, co-national managing director of Aon's financial services group. "It's a fundamental shift in the law."

Of course, the ruling could hurt the most those organizations whose bottom line is anchored to the Internet, such as internet service providers that host other companies' sites and "e-tailers" that sell their wares predominantly online.

But experts say that most anybody with an Internet presence should tread gingerly in this new liability landscape.

"The second you have a Web site, you're going to have an e-media liability," said Kate Nashak, senior vice president, executive risk coverage, with Marsh FINPRO's Philadelphia office, when presenting at a cyberrisk seminar for the Risk and Insurance Management Society's Delaware Valley chapter.

Corporate risk managers could have more hair-pulling in store if their Web sites interact with users and post outside content.

"It could affect any corporation that has a Web site that does anything with the content other than just allow it to be posted by a user," says Kalinich of the appellate court's ruling. "Any way you categorize it, any way you rearrange it, any way you display it, any way you manipulate it, any way you distribute it now could affect the liability of the Web site."

Don't think your corporate Web site has such fancimajig features? It probably does.

Roommates.com has been charged with falling afoul of the Fair Housing Act simply because its Web site provided users (people looking for roommates) with the ability to categorize their roommate preferences along racial, sexual, gender and other lines. The site did not endorse any particular roommate type; nonetheless, the three appellate judges ruled that the Internet company could be liable because of these categories, says Kalinich.

Following the same logic, an e-tailer perhaps could now run afoul of libel or copyright laws if it allows visitors to post product reviews, says Ted Doolittle, a principal out of Integro's San Francisco office.

And your average Joe Schmoe corporate Web site could be liable because of all the bells and whistles that seem to be table stakes in the new "Web 2.0."

The first-version Internet, where visitors were just expected to click and hunt, has given way to Web 2.0, a world where viewers not only navigate a site--they create the content. Think wikis, chat rooms, blogs, file-sharing sites like YouTube, and social networking sites like MySpace and Flickr. It is a new collaborative Web, an ever-changing Web, a competitive Web.

"Content and copyright are king at the moment," said Martin Myers, member of the Insurance Recovery Practice Group at Heller Ehrman's San Francisco law office, at a recent tradeshow session on Web 2.0.

"It seems like today you can't be an in-touch Internet company if you don't have your own company blog," Doolittle points out.

Before Roommates.com, companies could be "in touch" yet safe from liability thanks to a legal framework that made it clear who was liable for protecting copyright and decency. The Digital Millennium Copyright Act and the Communications Decency Act provided the guidelines. The DMCA is relevant to intellectual-property issues, while the CDA has broader applications for how content is monitored and controlled.

Both contain similar notice and takedown provisions, along with other ways for companies to protect themselves if they hosted or operated a site, Doolittle says. For instance, these laws paved the way for Internet-savvy companies to post a privacy policy or user agreement on their sites, disclaiming all responsibility for third-party content and providing a contact for viewers if this material proved so offensive, libelous or plagiarized that it needed to be removed.

The companies' takedown policy would then kick in. Kalinich points out that the big search engines and e-tailers have solid takedown policies. When a visitor complains about third-party content, they can just remove that content and let the outside parties argue.

"In a way it's been easy up until now--there were a clear set of guidelines," says Doolittle. "You could follow these steps and be relatively secure in the knowledge that you're protected."