Third Circuit: Section 230 Does Not Bar Pennsylvania Statutory Right of Publicity Claim Against Facebook

On September 23, 2021 the United States Court of Appeals for the Third Circuit held that Section 230(c) of the Communications Decency Act (CDA), 47 U.S.C. § 230, did not immunize Facebook, Inc. (Facebook) from a Philadelphia news anchor’s Pennsylvania statutory right of publicity claim. Hepp v. Facebook, Inc., Nos. 20-2725 & 2885, 2021 WL 4314426 (3d Cir. 2021). In so ruling, the Third Circuit split with a leading Ninth Circuit opinion holding that internet service providers (ISPs) are immune from all state intellectual property law claims. Federal appellate courts have rarely addressed the applicability of Section 230(c) to state intellectual property law claims, and the Third Circuit’s decision is also noteworthy for its thorough discussion of the issue.

Background

Karen Hepp co-anchors a television morning show on Philadelphia’s Fox affiliate, WTXF, and has been a professional journalist for more than two decades. Sometime in 2017, a New York City convenience store security camera captured a photograph of Hepp without her consent, and the photograph subsequently appeared on numerous internet platforms. On Facebook, the photograph appeared in an advertisement for the dating service FirstMet, alongside text soliciting Facebook users to “meet and chat with single women.” On the social media platform Reddit and on the image-hosting service Imgur, the photograph appeared alongside derogatory and indecent user commentary about Hepp’s physical appearance.

Hepp sued Facebook, Reddit, Inc. (Reddit), and Imgur, Inc. (Imgur), among several other defendants, in the United States District Court for the Eastern District of Pennsylvania, alleging that each had violated Pennsylvania’s statutory and common law right of publicity laws. The Pennsylvania statutory right of publicity, codified at 42 PA. Cons. Stat. § 8316, protects those whose names and likenesses have “commercial value,” which is “developed through investment of time, effort, and money,” id. § 8316(e), by creating a right of action to enjoin the unauthorized use of such name or likeness for a commercial or advertising purpose, and to recover damages for any loss or injuries caused by such use, id. § 8316(a). Pennsylvania common law provides a similar cause of action where a defendant “appropriat[es a plaintiff’s] valuable name or likeness, without authorization” and uses it “to defendant’s commercial advantage.” Eagle v. Morgan, 2013 WL 943350, at *8 (E.D. Pa. Mar. 12, 2013) (internal quotation omitted).

Hepp alleged that Facebook, Reddit and Imgur violated her statutory and common law rights of publicity by “appropriat[ing Hepp’s] likeness, which has commercial value, and us[ing] same for commercial purposes without plaintiff’s written consent.” She alleged further that each company’s actions had caused “serious, permanent and irreparable harm to [Hepp’s] reputation,” which she had built up over her decades-long journalism career. She sought to an injunction requiring each company to remove her image immediately from its service, as well as compensatory damages.

Facebook, Reddit and Imgur jointly moved to dismiss Hepp’s claims, arguing that they were barred by Section 230(c) of the CDA. Congress enacted the CDA in 1996. It states that ISPs, like Facebook, shall not be “treated as the publisher or speaker of any information provided by another information content provider.” 47 U.S.C. § 230(c)(1). The effect is to immunize ISPs from most forms of liability for content originating with third party users of their services. Congress’s policy goal, codified in the text of the CDA, was to “to preserve the vibrant and competitive free market that present exists for the Internet . . . unfettered by Federal or State regulation.” Id. §230(b)(2). The immunity Congress provided, however, is not unlimited; among other exceptions, Section 230(c) shall not be interpreted to “limit or expand any law pertaining to intellectual property.” Id. § 230(e)(2). As a result, ISPs are not immune under Section 230 from laws that “pertain[] to intellectual property.”

In their motion to dismiss, Facebook, Reddit and Imgur argued that Section 230(c) barred Hepp’s statutory claims because the companies qualified as ISPs and it was the companies’ users, and not the companies themselves, that had caused the photograph of Ms. Hepp to appear on their services. They argued further that Hepp’s claims did not fall within the intellectual property exception provided by Section 230(e)(2) because the exception applies only to federal intellectual property law.

The companies relied primarily upon Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102 (9th Cir. 2007), a leading federal appellate court decisions addressing the applicability of Section 230(e)(2) to state intellectual property laws. In Perfect 10, the United States Court of Appeals for the Ninth Circuit held that Section 230(c) barred state law unfair competition and false advertising claims made by an adult magazine publisher against a pair of ISPs. The Ninth Circuit reasoned that it was best to construe the term “intellectual property” in Section 230(e)(2) to refer exclusively to “federal intellectual property” in light of “Congress’s expressed goal of insulating the development of the Internet from the various state-law regimes.” Furthermore, because material posted online may be viewed in any state, according to the Ninth Circuit to do otherwise would be to “permit[] the reach of any particular state’s definition of intellectual property to dictate the contours of this federal immunity.” Id. at 1118.

The district court, quoting extensively from Perfect 10, dismissed Hepp’s statutory and common law right of publicity claims against Facebook, Reddit and Imgur. Hepp appealed. On appeal, the Third Circuit’s analysis of Section 230(e)(2)’s intellectual property exception focused solely on Hepp’s Pennsylvania statutory right of publicity claim against Facebook. In a 2-1 decision, the Third Circuit reversed the district court’s dismissal of that claim and remanded for further proceedings. It upheld the dismissal of Hepp’s claims against Imgur and Reddit on personal jurisdiction grounds, which the district court had not reached. It vacated the district court’s order dismissing Hepp’s common law right of publicity claim, but in so doing “offered no opinion about the Pennsylvania common law claim,” which was “best left to the District Court on remand” because neither Hepp nor Facebook had “focused on it” during the appeal.

The Third Circuit’s Majority Opinion

Writing for the majority, Judge Hardiman, joined by Judge Phipps, analyzed the application of Section 230 in two steps. First, does Section 230(e)(2)’s intellectual property exception encompass only federal intellectual property law, or state intellectual property law as well? And, if it encompasses state intellectual property law, does the Pennsylvania statutory right of publicity law count as a form of “intellectual property”?

Step 1: Section 230(e)(2) Encompasses State Intellectual Property Law

Turning to first to the applicability of Section 230(e)(2) to state intellectual property laws, the majority focused on the language of the text itself. The text of Section 230(e)(2)’s intellectual property exception is terse, referring simply to “any law pertaining to intellectual property,” and does not contain any qualifying language. The majority held that there was no compelling reason not to adhere to “the most natural reading” of this phrase, which in its view encompasses both federal and state laws pertaining to intellectual property. As the court put it, “[s]imply put, a state law can be a ‘law pertaining to intellectual property,’ too.”

It rejected Facebook’s argument that the overall structure of Section 230 “reveals that Congress intended to limit the exclusions from immunity primarily to certain federal statutes, and included state laws only where they are coextensive with federal law.” According to Facebook, in that context, the phrase “any law pertaining to intellectual property” should likewise be understood to refer only to federal intellectual property law. To the majority, however, the evidence from the structure of Section 230 “cut both ways,” because it also suggests that “when Congress wanted to cabin the interpretation about state law, it knew how to do so—and did so explicitly,” and Congress had not made any explicit reference to state law in the intellectual property exception.

The majority was also not persuaded by Facebook’s policy arguments. Facebook argued, for example, that the codified policy provisions in Section 230(b) indicate that “Congress enacted Section 230 to avoid subjecting internet service providers to a web of inconsistent, ‘fettering’ state regulations like the laws governing rights of publicity.” To the court, however, there was no clear tension between preserving state intellectual property claims against ISPs and promoting a vibrant internet marketplace, because “state property rights can facilitate market exchange” as well. And to the extent that Facebook raised policy concerns independent of the statute’s text, such as concerns that the majority’s reading would increase uncertainty about the scope of immunity provided by Section 230(c), the majority dismissed them on the basis that “policy considerations cannot displace the text.”

Step 2: Pennsylvania’s Statutory Right of Publicity is an “Intellectual Property” Law

The majority then turned to whether the Pennsylvania statutory right of publicity law counted as an “intellectual property” law within the meaning of the CDA. To analyze this issue, it conducted a survey of dictionary definitions of the term “intellectual property,” focusing in particular on legal dictionaries. The majority concluded that dictionary definitions for “intellectual property” typically include the right of publicity, either explicitly or implicitly, and therefore it ruled that the Pennsylvania statutory right of publicity is an “intellectual property” law within the meaning of the CDA.

The majority cited to numerous dictionaries that define “intellectual property” to include rights of publicity. For example, Black’s Law Dictionary defines the term to include “publicity rights” and McCarthy’s Desk Encyclopedia of Intellectual Property defines the term to include “the right of publicity.” A third dictionary, The Wolters Kluwer Bouvier Law Dictionary, sets for the following standard: “[t]o have intellectual property in a thing is to have an effective monopoly on its use, such that the property rights holder may enjoin or recover from others who infringe on the rights . . ..” The majority explained that Pennsylvania’s statutory right of publicity meets this standard, because it “provides for property-like relief, including the ability to obtain damages and injunctions against trespassers.”

The majority noted further that several dictionaries, despite omitting explicit references to “rights of publicity,” include trademark laws within their definitions of “intellectual property.” The majority reasoned that such definitions include rights of publicity “by analogy,” in light of the similar functions served by publicity and trademark rights. Quoting from the Supreme Court’s well-known decision in Zacchini v. Scripps-Howard Broadcasting Co., the majority explained that both legal doctrines “secure commercial goodwill” and “also foster the marketplace because they protect consumers’ ability to distinguish between competitors,” and therefore are “close analogues.” Surveying the case law, it further explained that courts have “recognized . . . for over a century” the analogy between trademark law and rights of publicity.

Judge Cowen’s Dissent

Judge Cowen dissented, writing that he would have followed the Ninth Circuit’s holding in Perfect 10 and held Facebook to be immune from Hepp’s statutory right of publicity claim. He argued that the majority’s decision “is the first circuit court ruling to hold that the intellectual property exception applies to state ‘intellectual property laws” and therefore threatened to “open the floodgates” to additional litigation in the future. This, according to Judge Cowen, was exactly why the Ninth Circuit had been correct to exclude state intellectual property laws from the scope of Section 230(e)(2). To do otherwise puts ISPs in an uncertain position, in which they face “the real possibility of being held liable under disparate and often very expansive state law ‘intellectual property’ regimes.

Conclusion

The majority emphasized that its holding is narrow. It explained that “Hepp’s statutory claim against Facebook is about the commercial effect on her intellectual property, not about protected speech,” rejecting Facebook’s argument that requiring ISPs to navigate a “web of inconsistent state law would require them to mitigate legal risks in ways that would have ‘an obvious chilling effect’ on protected speech. Further, it rejected Judge Cowen’s concern that its decision would “open the floodgates,” noting that its determination is limited to the Pennsylvania statute, which provides a right of publicity only for those individuals whose interest in their likeness “is developed through the investment of time, effort, and money.” 42 PA. Cons. Stat. § 8316(e), and it offered no opinion on the rights of publicity laws of other states.

Only time will tell whether the majority or the dissent is correct about the likely impact of this decision. For now, it appears likely that Facebook will seek rehearing en banc, as it recently filed a request for an extension to file its rehearing petition. Should the Third Circuit deny rehearing—or grant it but refuse to vacate the panel’s ruling—it would fall to the Supreme Court to decide whether any tension between this decision and the Ninth Circuit’s in Perfect 10 may eventually require it to weigh in on the scope of the CDA’s intellectual property exception.  

© Arnold & Porter Kaye Scholer LLP 2021 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.