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EBay Inc.’s savvy user agreement protects it from liability for defamatory postings on its Web site, an appeal court has ruled. But the court’s decision left vulnerable other online content providers. The Second District Court of Appeal ruled Thursday that a release provision in eBay’s user agreement relieved the company of liability for the comments one user of its auctioneer site made against another. But the court said that a law routinely invoked as a shield by content providers does not immunize eBay against liability for distributing information it knew or had reason to believe was false. The law in question, a provision of the California Decency Act of 1996, has been a first line of defense for content providers. The law “simply cuts the legs off a lawsuit against an ISP or anyone that’s not the actual content provider,” said Lee Tien, staff attorney at the Electronic Frontier Foundation, who filed an amicus brief in a similar case pending before the state Supreme Court. “It’s not just for the elephants, it’s also for the mice who may not know how to write a rock-solid user agreement.” The case arose after Roger Grace, the editor and co-publisher of the Los Angeles legal publication Metropolitan News-Enterprise, purchased vintage magazines on eBay and posted criticisms of the delivery and condition of the material. The seller in turn declared in his postings that Grace was “dishonest all the way!!!!” and should be banned from eBay. Grace responded by suing the auction site for not removing the seller’s accusations. Both parties claimed victory in Grace v. eBay, B168765, and said the California Supreme Court would ultimately decide the liability issue in a separate case pending before it. “We are pleased that our client eBay prevailed in the case and that eBay’s user agreement immunized it from any liability,” said eBay attorney Michael Rhodes, a partner at Cooley Godward. But he said the court’s analysis of the California Decency Act “is erroneous and against the weight of the prior cases within and outside California.” The appellate court concluded that the law “does not clearly and directly address distributor liability and therefore does not preclude distributor liability.” The author of the opinion, Second District Justice H. Walter Croskey, noted that it conflicts with several opinions of the Fourth Circuit U.S. Court of Appeals, including Zeran v. America Online, 129 F.3d 327. In that case, the Fourth Circuit found that the law did not intend to hold distributors liable. Grace said his intent was not to win damages but to “set the law on an even course.” “EBay’s position was to shrug their shoulders and say no matter how scurrilous” a posting on its site, they are protected from liability, Grace said. “I felt it could not be the law. I’m delighted that the court of appeals agrees with that.” Samir Jain, a partner at Wilmer Cutler Pickering Hale and Dorr in Washington, D.C., said the California Supreme Court would decide the question of host liability when it takes up Barrett v. Rosenthal, S122953. In that case, an appellate court also held that the law does not grant absolute immunity to someone who publishes defamatory material from a third party. “That’s the case in California that’s going” to decide the question, said Jain, who represented four companies that filed an amicus brief on behalf of eBay — Amazon.com Inc., America Online Inc., Google Inc. and Yahoo Inc. Even if the Supreme Court finds that the law doesn’t offer complete protection, sites may have recourse to other shields, such as user agreements. However, sites can suffer when they have to resort to such defenses. “If you have to rely on a contract, it’s far more likely to drag on much longer,” said Tien.

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