User generated content (“UGC”) has quickly come to dominate the current landscape of online promotions and marketing initiatives. As UGC is generally made available for public viewing without prior screening, its growing prevalence raises liability concerns when the UGC contains third party references or materials. Web site operators/promotion sponsors have broad protections under the Communications Decency Act (“CDA”) and the Digital Millennium Copyright Act (“DMCA”) against liability for infringing UGC, but that protection is not without limits.

Promotion sponsors often want the right to exploit certain UGC beyond posting it online in connection with the promotion. For example, a sponsor may want to incorporate artwork created by entrants in an online contest in a print or television advertisement for a new product or service. Similarly, video submissions entered into a contest tied to a motion picture’s theatrical release may make a great “extras” feature to include in the DVD release of the motion picture. To secure such rights, the official rules for UGC promotions generally accord the promotion sponsor a broad grant of rights to further exploit UGC submissions or require a transfer of ownership in the UGC to the promotion sponsor upon posting. These mechanisms enable the promotion sponsor to utilize the UGC more fully, if it so chooses, but these options also raise the question of whether a transfer of ownership in UGC affects the scope of protection offered to the promotion sponsor under the CDA and DMCA. 

THE COMMUNICATIONS DECENCY ACT

Section 230 of the CDA (47 U.S.C. § 230(c)) sets out the general rule protecting web site operators from liability for UGC that violates a third party’s rights. It provides that “[n]o provider of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” Effectively, Section 230 establishes that interactive computer services are immune from publisher liability for content provided by third parties.

Notably, in determining whether a party is protected under the CDA, the literal language of Section 203 is simply concerned with who “provided” the information; that is, whether the information has been generated by the interactive computer service (e.g., the promotion sponsor) or whether it is UGC. The language of the CDA does not ask, or seem to care about, whether the promotion sponsor has acquired ownership of the UGC or merely a license to use it. As such, whether the UGC is ultimately licensed by a promotion sponsor or owned by a promotion sponsor does not appear to affect the scope of protection available under the CDA.

In a possible twist, that conclusion could be undermined if the promotional sponsor were to edit, modify or adapt the UGC to such an extent that the promotion sponsor becomes the information content provider. See, e.g., Fair Housing Council of San Fernando Valley v. Roommates.com, LLC, 521 F.3d 1157 (9th Cir. 2008). Another twist could arise if the persons who submit the UGC are deemed to be the mere agents of the promotion sponsor. In a relatively recent matter, the company that owns the Subway trademark filed a false advertising suit against the company that owns the Quiznos trademark for UGC that was submitted to an online contest that Quiznos sponsored. In the contest, entrants were reportedly instructed to submit videos depicting Quiznos sandwiches as superior to Subway sandwiches. Quiznos maintains that it is protected from liability under the CDA; Subway alleges that its false advertising claims are a type of intellectual property claim not covered by the CDA and that Quiznos should be held responsible for the allegedly false statements made about Subway in the various UGC submissions. The case, Doctor’s Associates Inc. v. QIP Holder LLC, is scheduled to go to trial in 2009.

THE DIGITAL MILLENNIUM COPYRIGHT ACT

The DMCA (17 U.S.C. § 512) provides a statutory safe-harbor against copyright infringement claims arising out of UGC residing on a web site at the direction of a user. Similar to the CDA, protection under the DMCA extends only to UGC, not to content that the promotion sponsor is responsible for creating or developing. In addition, if the promotion sponsor has the right and ability to control the UGC that appears on the web site, it risks losing DMCA protection if it receives a financial benefit directly attributable to the infringing activity.

The law is still unsettled as to what constitutes the right and ability to control infringing UGC as well as to what constitutes a direct financial benefit from UGC that is posted online in connection with promotions. But see Io Group, Inc. v. Veoh Networks, Inc., No. C06-03926 HRL, 2008, WL 4065872, at *16 (N.D. Cal. Aug. 27, 2008) (stating “the pertinent inquiry is not whether Veoh has the right and ability to control it [sic] system, but, rather, whether it has the right and ability to control the infringing activity.”). It is unlikely that UGC would be deemed to give a direct financial benefit to the web site operator/promotion sponsor, even though the content is posted on a page that also incorporates advertising that generates income for the web site operator/promotion sponsor. But see, e.g., Perfect 10, Inc. v. Cybernet Ventures, Inc., 213 F.Supp.2d 1146 (C.D. Cal. 2002) (subscription fees generated by visitors to a web site featuring infringing content constitute a direct financial benefit). Similarly, it is unlikely that simply using UGC in connection with an online promotion that is intended as a marketing tool for a product or service would be deemed to be a direct financial benefit for the web site operator/promotion sponsor, even though the promotion is designed to lead to increased sales. But it could be more difficult to disclaim a direct financial benefit from infringing UGC in those scenarios if ownership of that UGC was transferred to the web site operator/promotion sponsor when it was submitted to or posted on the web site.

CONCLUSION

In the interest of maintaining the ability to seek protection under the CDA and DMCA for claims arising from UGC, it may be advantageous for the promotion sponsor to obtain a license from the party who creates and submits the UGC to exploit that UGC, rather than obtaining outright ownership of the UGC. Outright ownership of infringing UGC that has been posted in connection with an online promotion could arguably undermine a sponsor’s ability to successfully argue under the DMCA that it has no right or ability to control the UGC that is posted or that it has derived no direct financial benefit from that UGC. Conversely, acquiring outright ownership of UGC would not seem to affect whether, in the first instance, the UGC was “provided by another information content provider” under the CDA.