Inducement Standard For Section 230 Could Put A Significant Chill On Innovation

from the uh-oh... dept

Fri, May 1st 2009 8:30am — Mike Masnick

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.

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Filed Under: inducement, safe harbors, section 230
Companies: stubhub

29 Comments

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Anonymous Coward, 1 May 2009 @ 8:40am

Well, by that logic they should sue Nike.
Scalpers stand and sell tickets outside venues. They then use that money to buy new, comfortable shoes which enables them to stand on the street corners scalping their tickets. Since they would not be able to stand there so long without those comfortable shoes, and since Nike profits from this illegal activity, then Nike is inducing the illegal activity. Also, since the street corner is where the scalper sells his wares, sue the city for inducement since they paved the streets. While you're at it, sue the entertainment since they made (and originally sold) the tickets in the first place!
Seriously, what's happened to common sense these days?
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Chargone, 1 May 2009 @ 9:28am

uncommon
common sense was never terribly common...

but once upon a time people actually had the concept of listening to those who HAD it.

now they don't.

that's my thought.
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INeedADrink, 1 May 2009 @ 9:33am

Foolish
So what are the odds that this would be applied to a bar who profits from getting people drunk, with the knowledge that they will drive.
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Anonymous Coward, 1 May 2009 @ 9:42am

Re: Foolish
The term you're looking for here is "dram shop liability," and it substantially predates section 230.

http://en.wikipedia.org/wiki/Dram_Shop
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lavi d (profile), 1 May 2009 @ 9:42am

Delusions
I just don't understand what parallel universe this judge must inhabit wherein gun, automobile and screwdriver manufacturers are innocent of the crimes committed with their products yet software developers and (legal) service providers are somehow guilty of "inducement".
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AnonCow, 1 May 2009 @ 9:45am

So 20th Century Fox is guilty of inducing copyright violation by not properly securing working copies of X-Men Origins?
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Tgeigs, 1 May 2009 @ 9:58am

Even better
How about courts/government that fine infringers? Hope the feds aren't lining their coffers with fines, otherwise BINGO!, profiting from piracy!
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rwieck, 1 May 2009 @ 10:00am

guns
Turn it over to the NRA. After all, guns are tools used to kill people.
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Anonymous Coward, 1 May 2009 @ 10:23am

of course when ticketmaster is scalping the tickets on its sister site then thats ok. but if you BUY something and sell it then you're the devil.
Welcome to the future, where anything a company does is legal, and anything an individual does is illegal.
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ChurchHatesTucker (profile), 1 May 2009 @ 10:37am

Surprise
So the court decided in a way that ultimately benefits lawyers.

Didn't see that coming...
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Jon, 1 May 2009 @ 10:59am

Not a big sports fan, but why is reselling your tickets, even season passes, illegal? Once you purchase a ticket isn't that ticket your property, which you have the right to resell?
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John Duncan Yoyo, 1 May 2009 @ 11:03am

Re: Delusions
>I just don't understand what parallel universe this judge >must inhabit wherein gun, automobile and screwdriver >manufacturers are innocent of the crimes committed with >their products yet software developers and (legal) service >providers are somehow guilty of "inducement".

But since the Patriots are originally selling the tickets aren't they ultimately the party inducing the resale of tickets.
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Matt Klinker, 1 May 2009 @ 11:07am

Re:
You must be new here - consumers don't get to "own" anything anymore, it's simply a lease.
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Tgeigs, 1 May 2009 @ 11:20am

Re: Re: Delusions
"But since the Patriots are originally selling the tickets aren't they ultimately the party inducing the resale of tickets."

No, no, no, idiot, it's the PRINTERS of the tickets. After all, if they didn't engage in their insidious printing of tickets business, there would be no tickets to resell/scalp/etc.

At what point do we all collectively proclaim ourselves "guilty" with a grin and just go have a beer? Or is that the Irish in me talking?
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DJ, 1 May 2009 @ 11:32am

Re:
Common Sense, UNK-2009, RIP http://www.foxnews.com/story/0,2933,517354,00.html
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DJ, 1 May 2009 @ 11:34am

Re: Foolish
Some states actually DO prosecute. It's fucked up.
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DJ, 1 May 2009 @ 11:39am

Re: Re: Re: Delusions
"it's the PRINTERS of the tickets"

Well then isn't it really the manufacturers of the equipment that THOSE companies use who are to blame? Which, naturally leads us all the way back to Johannes Gutenberg.... Hell let's just sue the cavemen for writing on the fucking walls while we're at it. If those damn cavemen hadn't drawn on their walls, we wouldn't be scalping tickets on street corners in comfortable shoes, now would we?
It's THEIR fault!
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DJ, 1 May 2009 @ 11:42am

Re:
Some states allow you to re-sell the tickets, as long as you are not doing so within a certain distance from the original ticket booth; but Matt's right.
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Tgeigs, 1 May 2009 @ 12:22pm

Re: Re: Re: Re: Delusions
Which brings us all to the REAL truth: this is all the flying spaghetti monster's fault. His noodely attempts at order have fallen apart.
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Anonymous Coward, 1 May 2009 @ 12:48pm

So in the mind of the commenters here, there is no difference between a taxi driver who inadvertently drives a criminal off after a bank robbery and a getaway driver who agreed in advance to be the wheelman for a cut of the profits?

After all, they both drive the criminal away, and they both profit from the criminal's robbery.

- - -

Whether or not scalping should be illegal and whether it's just the market speaking is a tough question. I gather that many artists know that they could sell premium tickets for premium prices and reap the profits. Why not? Maybe they don't want to seem greedy. There have been a handful of articles on here about companies managing (or mismanaging) their reputations through aggressive trademark defense, and so on. Why should artists not want to manage their reputation similarly?

Maybe...just maybe...a few artists actually want fans to have relatively equal opportunities to get good seats. I thought the first half of the dogma here was "Connect with Fans?"

Scalpers screw up an artist's ability to connect with fans in a way that they want. They subvert the business model, and the business model is maximizing long-term profit by not pissing off the fans.

Do any of you remember what it was like trying to get a ticket on Ticketmaster BEFORE they built out their infrastructure and put effective anti-scalper-bot CAPTCHAs on there? You'd go to the site at 10AM on the appointed morning, hit reload once every ten seconds (since the tickets never go onsale at exactly 10, it's 9:59:50 or 10:02 or 10:05 or 10:10...) and then pray that it wouldn't send you back a message that the site was overloaded right in the middle of your purchase. It was terrible. If you were an artist, is this how you'd want your fans treated? Is that the way to connect with fans?

The playing field is equalized somewhat, but scalping is profitable enough that the scalpers have just replaced the bots with human capital. So while things are somewhat better than they used to be, they're still not great.

There are technical, rather than legal, alternatives that might be able to curb scalping - maybe sell tickets without seat assignments and then have an at-the-venue lottery where you find out where you're sitting when you walk in the door, but then you take away a little bit of the fan's ability to make an informed buying decision.

Some artists take extreme measures to curb scalping. Tickets on the recent Tom Waits tour (which is an extreme rarity) required that the ticket-buyer be actually at the venue to pick up the tickets at will call, with identification, and then go in to see the show. This is great, unless you want to give the tickets away as a gift, or if you have a last-minute conflict and want to sell them to a coworker at face value.
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Jason, 1 May 2009 @ 4:38pm

Masnick you missed some key details
Mike you totally left out the emphasis placed on the "material contribution" that consisted of guaranteeing that tickets would be accepted at the gate and processing all payments for the seller with buyers, sight unseen.

It's basically like calling a brothel a safe harbor just because the pros work as free agents.

I am so with Mike on almost everything he puts out, but this one is lacking critical detail. This decision simply does not establish anything near the chilling precedent that this post suggests.
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Anonymous Coward, 1 May 2009 @ 4:48pm

It's basically like calling a brothel a safe harbor just because the pros work as free agents.

But if we criminalize brothels, think of the chilling effect it will have on the hotel industry. Every hotel will be running scared that they will be investigated and shut down because someone might bring a prostitute back there. Even high-end hotels probably host prostitutes all the time.
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Jason, 1 May 2009 @ 4:59pm

Re:
Yeah, but they don't process the payments or guarantee that you're going to get laid.

THAT, is the material contribution that combined with the inducement to utilize a free-love-marketplace *wink, wink* makes it more than just a hotel.
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Anonymous Coward, 1 May 2009 @ 5:09pm

Yeah, but they don't process the payments or guarantee that you're going to get laid.

THAT, is the material contribution that combined with the inducement to utilize a free-love-marketplace *wink, wink* makes it more than just a hotel.

Hotels profit from prostitution too. Are you implying that the Regent Beverly Wilshire doesn't get paid for renting out its rooms, or that the fact that the rooms are so nice don't virtually guarantee that you'll get laid by bringing a prostitute back there? I think not.

Besides which, a lot of legal things go on in "brothels" - hanging out, talking with the girls, napping.

By criminalizing brothels and creating this surprising and false "inducement" standard, you're proposing holding people liable for crimes they didn't even commit. You can't do that. It's just common sense.
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Anonymous Coward, 1 May 2009 @ 8:16pm

Re:
By criminalizing brothels and creating this surprising and false "inducement" standard, you're proposing holding people liable for crimes they didn't even commit. You can't do that. It's just common sense.

There are, in fact, cheap motels that rent rooms by the hour. However, judges aren't convicting them just for that of made up "inducement of prostitution" crimes.
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Anonymous Coward, 1 May 2009 @ 8:19pm

Re: Masnick you missed some key details
It's basically like calling a brothel a safe harbor just because the pros work as free agents.

It's like calling a hotel a brothel because some guy took a hooker there.
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Anonymous Coward, 2 May 2009 @ 6:59am

Re: Poor reading comprehension skills
Before we comment, perhaps we should take the time to be sure that the article in question actually says what we think it says. To the author of #20: This article is not actually about scalping tickets, scalping tickets is only the example. The article is ACTUALLY about properly placing blame on those who actually commit a crime rather than placing it on those who just happen to have deep pockets and are better targets for lawsuits.
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Jason, 4 May 2009 @ 7:37am

Re: Re:
Exactly, and neither is this judge. He made his decision based upon the combination of the inducement and the material contribution. Your post isn't even arguing with mine. I'm not saying the hotels don't sometimes make money from illicit business within their buildings, BUT a corresponding MATERIAL CONTRIBUTION would be if their ads guaranteed sexual favors and they let you put your companion on your room bill. THAT'S material contribution.
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Jeff P, 4 May 2009 @ 11:12pm

I think this could be a start to a very good thing. Maybe I'll be able to attend an event without paying 3X face value for once.

Stubhub/ ebay is who you should get mad at for being so damn money-hungry.

Stubhub has taken control of MLB and NFL tickets. I know at least for MLB when a someone buys season tickets, upon checkout they are directed right to stubhub, where they can scalp all or any tickets.

Stubhub and others are charging astronomical fees; driving up prices beyond affordability for many average fans. It's nearly impossible to get event tickets anymore when they actually go on sale. Tickets are sold by the thousands to those who have the sole intention of turning a profit.

These websites are to blame and it's not a victimless crime. The people who actually care about a team or a band are the ones suffering. The single parent who wants to take the kids to a show is being hurt. It is the fault of the website when they openly promote ticket sales that the damn well know are going to be well above face value in most cases. This is the definition of scalping.

These sites can still be profitable with tougher laws enforced. If the resale limit was 125% face value or so there would be many tickets still sold and the consumer would not get hurt badly. It would not be so enticing for dirty scalpers to rip off average consumers.

We're all consumers. Maybe some don't have a need for high-demand event tickets, but if you went to a store to buy a pair of pants and were told "a website bought every pair available, you can go there and buy some for $400", you wouldn't be very happy.
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