Online ticket reseller fails in internet immunity bid

An online ticket reseller in the US has been denied protection from liability for its users' actions. StubHub lost its claim that it was not responsible for its users breaking anti-touting laws because of evidence that it contributed to their acts.

The US Communications Decency Act (CDA) contains, at Section 230, a protection from prosecution for internet publishers for in relation to the actions of other people on their online services. Web companies have relied on that immunity in US law since 1996.

Designed as a way of protecting the exchange of ideas and free speech online, Section 230 has been used by many internet publishers to defend the existence of bulletin boards, search engines and other online services.

American Football team the New England Patriots sued StubHub over its brokering of the buying and selling of tickets to Patriots games. It banned the resale of tickets except through its own online exchange, and sued the online ticket exchange company for interference with contract and said that StubHub had broken state anti-touting laws.

StubHub argued that it was not to blame if its users' buying and selling broke anti-tout laws because of Section 230. It demanded a summary dismissal of the case on that basis. The Superior Court of Massachusetts disagreed, and said that StubHub could not claim Section 230 immunity.

"There is evidence in the record that StubHub materially contributed to the illegal 'ticket scalping' of its sellers," said the Court. "In effect, the same evidence of knowing participation in illegal 'ticket scalping' that is sufficient, if proven, to establish improper means is also sufficient to place StubHub outside the immunity provided by the CDA."

StubHub had argued that it is no different to newspapers, whose classified ads sections carry adverts for sporting or concert tickets. The Court rejected that comparison.

"The newspaper generally charges a fixed price for the advertisement; its price is not dependent on the amount of the sale," said its ruling. "Newspapers do not affirmatively seek to increase the price charged in the classified ad, especially when doing so may constitute a violation of law."

The court said that a previous case involving classified ads site Craigslist demonstrated that it was possible to advertise services online without being responsible for them.

"[In] rejecting a claim that Craigslist helped to violate the anti-discrimination laws in the Fair Housing Act, [the court] noted that nothing in the service provided by Craigslist encouraged those posting listings for rental or sale properties to add discriminatory preferences in violation of the Act," it said.

The Court also said that a previous case involving flat-share matching service Roommates.com demonstrated that it was possible for an online service provider to be partially responsible for content and therefore to be disqualified from Section 230 immunity.

Roommates.com was found to have enabled discrimination in the use of its service by making users fill in questionnaires whose answers could be used to discriminate against them.

"[The] internet website designed to match people with spare rooms with people looking for a place to live does not merely provide a forum within which users may violate the Fair Housing Act, but actively elicits the discriminatory, illegal content of postings," said the Massachusetts Court.

The Court also made reference to the Grokster case in which a peer-to-peer networking software maker was found to have liability for the copyright-infringing use to which others put its software.

"The Patriots may prove that StubHub induced a breach of contract by improper means if they can show that StubHub intentionally induced or encouraged others to violate [the anti-touting laws], or profited from such violations while declining to stop or limit it," said the Court.

It denied StubHub's demand for a summary ruling in its favour.

Thanks to Eric Goldman's blog for bringing this story to OUT-LAW's attention. There is further analysis of the ruling here by the Citizen Media Law Project.

See: The ruling (11-page/189KB pdf)

Copyright © 2009, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.