curve
Image description

In the months leading up to the 2020 US presidential election, legislators from both the Democrat and Republican parties proposed bills to amend or reform Section 230 of the Communications Decency Act of 1996 (CDA). Section 230 of the CDA currently affords internet services operators a “safe harbor,” or immunity from legal claims arising from illegal or offensive content posted by third parties using their services. Section 230 also shields from liability internet operators that screen and block offensive material posted on their platforms.

One of the most discussed proposals has been a reform package introduced by the Department of Justice, which seeks to incentivize further internet platforms to: address illegal content; increase the ability of the government to protect citizens from harmful and illicit conduct; promote open discourse and transparency; and/or promote competition among online platforms that enable ecommerce and free speech.(1) None of the proposed changes to Section 230, however, even if they were enacted into law, would help brand owners combat the sale and distribution of counterfeit goods on ecommerce platforms. Here’s why.

No Expansion of IP Rights. None of the DOJ’s proposed changes expand the statute’s narrow scope when it comes to intellectual property rights protection. Section 230(e)(2) currently states that

Nothing in this section shall be construed to limit or expand any law pertaining to intellectual property.

The DOJ’s reform proposal does not modify this section, leaving brand owners with no additional legal remedies to combat infringements detected on third-party ecommerce platforms. Brand owners may still bring complaints against unauthorized sellers whose operations are detected, but the platforms are still immune from liability under the current language of Section 230.

Focus Remains Primarily on “Speech” Rather than Infringement. The DOJ’s proposed edits to Section 230 are focused on speech-related content and not on infringements. Their proposed edits would make Section 230(2)(A) read:

No provider or user of an interactive computer service shall be held liable on account of— (A) any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be has an objectively reasonable belief is obscene, lewd, lascivious, filthy, excessively violent, promoting terrorism or violent extremism, harassing, promoting self-harm, or unlawful, or otherwise objectionable, whether or not such material is constitutionally protected.

While the proposal does include a catch-all phrase for material that is “…or unlawful, or otherwise objectionable” (arguably including counterfeit goods in that category) it is reasonably clear that the DOJ’s focus is on addressing speech-related content and not intellectual property rights protections. The changes, if made into law, would not grant brand owners any broader enforcement powers against counterfeiters or unauthorized sellers than what is currently available under the law.

New “Bad-Samaritan” Clause Won’t Impact Ecommerce Platforms. Probably the most notable of DOJ’s proposed changes to Section 230 is its proposal to add a “Bad Samaritan” carveout from immunity. The DOJ’s proposed language for inclusion reads:

Subsection (c)(1) [The ‘Good Samaritan’ provision] shall not apply in any criminal prosecution under State law or any State or Federal civil action brought against an interactive computer service provider if, at the time of the facts giving rise to the prosecution or action, the service provider acted purposefully with the conscious object to promote, solicit, or facilitate material or activity by another information content provider that the service provider knew or had reason to believe would violate Federal criminal law, if knowingly disseminated or engaged in.

Any prosecutor will tell you that proving that an ecommerce platform provider “acted purposefully to promote, solicit or facilitate” counterfeit sales in violation of the law is very difficult. Most e-commerce providers respond to consumer or brand owner complaints and will take action to remove counterfeit listings once unauthorized sellers or counterfeit goods have been identified. These activities, at a minimum, will allow ecommerce providers to claim they are acting as “Good Samaritans” under subsection (c)(1) and cannot fall into the “bad Samaritan” carve-out.

While proposed reforms to Section 230 will not help brand owners fight online and offline counterfeiting activities, there are other legislative proposals that have been introduced that do target ecommerce platforms with the intent to reduce online fraud and abuse. The SHOP SAFE Act of 2021 introduced this year in the US House of Representatives, for example, aims to combat the sale of unsafe counterfeit products by incentivizing platforms to engage in best practices for screening and vetting sellers and products, addressing repeat counterfeiter sellers, and ensuring that consumers have relevant information available to them when they make their online purchases. Other proposals by the European Commission in Europe are also seeking to address the problem of sale and distribution of counterfeit goods through online platforms.

The stakes for consumers and brand owners could not be higher so understanding and supporting the right legislative reforms are important. Proposed reforms to Section 230 won’t help combat counterfeits although it may make social media and other communications platforms safer from hate speech and forms of extremism.

(1) https://www.justice.gov/file/1286331/download