E-Commerce Law Week, Issue 388

Yahoo! Wins by Losing in Latest Round of Nazi Paraphernalia Case
Yahoo!'s long-running battle against a French court order requiring Yahoo! to restrict access to Nazi paraphernalia and propaganda in France has been marked by twists, turns, and tactical retreats on both sides for more than five years. At issue is how globally accessible Internet portals deal with content restrictions in foreign countries that would violate the First Amendment in the United States. This issue has been popping up a lot lately, particularly with regard to China and its effort to censor the speech of media outlets and dissidents, and is sure to remain a hot topic in 2006. But the Yahoo! case was the first to bring this issue to the fore, so its seeming dénouement may be instructive on the broader issue. On January 12, the Ninth Circuit, sitting en banc, narrowly decided that Yahoo!'s request for a declaratory judgment that the French court's order violated the First Amendment should be dismissed. The court vote was 6-5, but the majority couldn't agree on a single rationale:  three judges believed dismissal was appropriate for lack of personal jurisdiction over the French defendants, while three others thought the case was not ripe for judicial review. Despite superficial appearances, this case is not really a loss for Yahoo!  All it means is that conflicts over content restrictions are unlikely to be resolved by any neat legal solutions in the near future, but instead will be decided by a murky mix of business considerations and customer sentiment.

FCC Commissioners Signaling Different Approaches on "Network Neutrality"
"Net neutrality" -- the idea that broadband Internet service providers should not be able to restrict their customers' ability to access disfavored content or applications -- is likely to be one of the biggest issues on the legislative and regulatory agenda for both ISPs and content providers in 2006. In September of 2005, the Federal Communications Commission ("FCC") released a policy statement that adopted four "network neutrality" principles for broadband Internet access providers. The FCC even imposed a two-year "net neutrality" condition on the SBC/AT&T and Verizon/MCI mergers. However, recent statements by FCC Chairman Kevin Martin and Commissioner Michael Copps indicate that this apparently unanimous policy position on "net neutrality" may actually hide significant differences among FCC Commissioners. Indeed, that may be why the FCC pointedly noted that the September policy statement was unenforceable. At some point, however, the Commission will need to resolve these differences and decide whether and how it will enforce net neutrality.

First Circuit Muddies the Waters on SOX Extraterritoriality
The applicability of Sarbanes-Oxley Act ("SOX") requirements to overseas companies that issue securities subject to US regulation has generated a lot of controversy, and some backlash abroad. During the second half of 2005, French data protection law increasingly appeared to be on a collision course with the whistleblower hotline obligations of SOX Section 301, and similar issues appear likely to arise in other EU member states. But in early January, the US Court of Appeals for the First Circuit decided in Carnero v. Boston Scientific Corporation that the whistleblower protections of SOX Section 806 do not have extraterritorial effect, which on first blush seems to reduce the risk of collision. However, the First Circuit's reasoning, and its somewhat perplexing suggestion that a different extraterritoriality analysis may apply to SOX Section 301, makes the import of this decision for foreign whistleblower hotlines quite unclear.

Note to Website Operators:  CDA Doesn't Immunize You For Your Own Speech
With court after court upholding the broad immunity granted to "interactive computer services" by section 230 of the Communications Decency Act ("CDA"), it’s helpful to be reminded once in a while that such immunity does, in fact, have limits. To start with, the CDA’s liability shield immunizes website operators only for unlawful content supplied by third parties -- not content created by the website operators themselves. In Cisneros v. Sanchez, the US District Court for the Southern District of Texas rejected a defendant website operator's assertion of section 230 immunity because the plaintiff sought "only to hold Defendant liable for statements he actually authored, not for the statements of others." The court further held that the CDA was "clearly not intended to completely preempt state law, and accordingly, remanded the libel lawsuit to state court.

Cybercafe Monitoring Requirements Take Off
On January 10, the Indian state of Kerala joined the states of Karnataka and Gujarat in requiring cybercafes to verify the identity of Internet users and record their names, home addresses, and visiting times.  The Indian states of Tamil Nadu and Maharashtra also monitor cybercafes on an informal basis, and it appears that other states may follow suit. Ultimately, monitoring requirements could apply to hundreds of millions of Indians, if they use the 200,000+ cybercafes across the country. In Europe, Italy has led the way in serving up monitoring with the coffee by implementing the Decree Law on Anti-Terror Measures ("the Decree") in July 2005. The Decree also requires that Wi-Fi locations demand identification from users. Other countries appear to be following suit, with Switzerland requiring the provision of identification by cybercafe users. In Asia, China has, since 2001, required cybercafes to install special monitoring software, and several other Asian countries also require registration at cybercafes.  Monitoring also occurs across the US, like in Los Angeles, where cybercafes have been required to install video cameras since 2004.

It is entirely unclear whether these monitoring requirements will meaningfully further the goal of preventing terrorism.  But we do not expect this trend to reverse soon, and it remains to be seen whether identification requirements will spread to other means of Internet access, such as the city-wide Wi-Fi networks that are increasingly being deployed.

Questions and comments about E-Commerce Law Week are always welcome. Please send your feedback to Sally Albertazzie.