Online platforms play a significant role in the sharing and exchange of information on a global scale. From social media sites to e-commerce marketplaces, these platforms provide a space to connect, create, and engage with peers, brands, and consumers.

As the volume of content on these platforms continues to grow, however, so do the legal challenges that arise from it, and determining who can be held responsible for infringing content online is one such challenge.

This was the question at the heart of Ratermann v. Pierre Fabre U.S., Inc., a recent Southern District of New York case that delves into some of the complexities of immunity under Section 230 of the Communications Decency Act and its intellectual property exception.

We now examine the court's reasoning in light of contrasting decisions that continue to shape this ever-evolving area of law.

Section 230 of the Communications Decency Act

Section 230 of the Communications Decency Act provides online platforms with immunity from liability for third-party content, allowing platforms to operate with minimal legal risk. Congress’s intent in passing this 1996 legislation was to promote the growth of the internet by encouraging online platforms to provide a forum for speech and free expression without fear of legal repercussions.

Over the years there have been numerous legal challenges to Section 230, with courts interpreting the law and its exceptions in different ways. One of the most significant exceptions is the intellectual property law exception of Section 230(e)(2), which removes immunity for claims of intellectual property law infringement, stating that “[n]othing in this section shall be construed to limit or expand any law pertaining to intellectual property.”

Under this exception, online platforms can be held liable for intellectual property infringement if they: (1) play an active role in creating, editing, or selecting the content; (2) have knowledge of infringing activity taking place on the platform; or (3) fail to act expeditiously to remove or disable access to infringing material once it has knowledge of such activity.

In Gucci America, Inc. v. Hall & Assocs.¹, (2001), the Southern District of New York examined the intellectual property exception of Section 230. In this case, the luxury brand Gucci sued Mindspring Enterprises, Inc., an early internet service provider, for contributory trademark infringement, dilution, and unfair competition, claiming that Mindspring was liable for hosting websites that sold counterfeit Gucci products, which violated Gucci's intellectual property rights.

Mindspring argued that it was immune from liability under Section 230. The court disagreed and denied Mindspring’s motion to dismiss, rejecting Mindspring’s reliance on non-intellectual property case law and noting that the plain meaning of Section 230(e)(2) is unambiguous, and that “[u]nder existing intellectual property law, publishers may, under certain circumstances, be held liable for infringement.”

The scope of this exception has split the circuits. In Perfect 10, Inc. v. CCBill LLC (2007), the Ninth Circuit held that Section 230(e)(2) only applies to federal intellectual property claims, and, because there is no federal statute or case law that recognizes a right of publicity, in that circuit, those types of claims are excluded from the intellectual property exception.

In Hepp v. Facebook (2021), however, the Third Circuit held that Section 230(e)(2) applies to both federal and state intellectual property claims, including a state right of publicity claim under Pennsylvania law, stating that trademark law and the right of publicity are “close analogues,” because they focus “on the right of the individual to reap the reward of his endeavors and [has] little to do with protecting feelings or reputation,” quoting the Supreme Court’s decision in Zacchini v. Scripps-Howard Broad. Co. (1977).

Ratermann v. Pierre Fabre USA, Inc.

In Ratermann v. Pierre Fabre USA, Inc., plaintiff Sarah Ratermann brought an action against several retailers, including Amazon, Walmart, and Ulta Salon, Cosmetics & Fragrance (“Ulta”), alleging violations of her right to privacy and publicity under Sections 50 and 51 of the New York Civil Rights Law, among other claims. Ratermann is a model who claims that the defendants used her likeness in online advertising for certain Pierre Fabre products without her permission. The defendants filed a joint motion to dismiss, claiming that they were immune because of Section 230 from liability under those New York laws.

Plaintiff argued that claims under Sections 50 and 51 are intellectual property claims within the meaning of the provision, and thus the intellectual property exception applies. Ratterman relied, in part, on Hepp and Zacchini for the proposition that trademark law and the right of publicity are closely analogous. The court, however, rejected this comparison, stating that Ratterman’s claims are “entirely distinct from common law right of publicity claims” found in Zacchini and her claims are “not about property at all.”

In its analysis of the intellectual property exception, the court focused on the fact that New York courts have long construed Sections 50 and 51 to provide a statutory right to privacy, not property, stating: “Section 51 . . . created a limited right of privacy, which provided primarily a recovery for injury to the person, not to his property or business. The recovery is grounded on the mental strain and distress, on the humiliation, on the disturbance of the peace of mind suffered by the individual affected . . . it is the injury to the person not to the property which establishes the cause of action. That is the focal point of the statute.”

Ultimately, the court concluded that right of privacy claims did not fall within the intellectual property exception to Section 230. As such, Amazon, Walmart, and Ulta were entitled to immunity under Section 230, and the claims against them were dismissed.

Conclusion

Overall, Ratermann v. Pierre Fabre USA, Inc. highlights the ongoing debate on the scope of Section 230 immunity and the exceptions to that immunity. Section 230 has been widely hailed as a critical protection for online platforms, and while Section 230 remains a powerful shield, its scope is not absolute. Nevertheless, this case shows that a plaintiff may not necessarily succeed if the claims brought against the online service provider are not, according to that circuit, rooted in intellectual property claims.

This was a matter of first impression for the New York federal court, and as the law continues to evolve, courts around the country will no doubt continue to grapple with the challenges posed by the internet and its impact on intellectual property and privacy rights. Unless or until Congress decides to update this controversial statute, we will have to wait and see what other courts conclude.