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The USMCA: State of Play on Internet Intermediary Liability

The USMCA: State of Play on Internet Intermediary Liability

Two important elements of U.S. law that protect internet intermediaries are reflected in the United States-Mexico-Canada Agreement (USMCA, signed November 30, 2018).  Under the first element, section 230 of the Communications Decency Act, online service providers are not considered “publishers” of third-party content that is posted or shared through their sites.  Under the second, the “safe harbor” provisions of the Digital Millennium Copyright Act, online service providers can take certain specified actions to protect themselves from monetary liability for copyright infringement arising from the actions of their users.  Because the USMCA reflects these principles and is likely to be used as a template for future trade agreements, it is reasonable to suppose that current U.S. law on intermediary liability is poised to make inroads around the world.

There will, however, be pushback, and it is possible that the agreement might be modified or that U.S. implementing legislation will introduce refinements.  Organizations dedicated to protecting potential victims of indecent online communication, for example, will seek to limit and/or clarify the section 230-type immunity built into the USMCA.  Similarly, digital content industries consider the incorporation of existing safe harbor provisions to be a missed opportunity to reinforce the effort against online piracy, and they will press for requiring internet intermediaries to be more proactive in policing such theft.

One cannot know at this juncture how these issues will ultimately be resolved, especially given the changeover in the leadership of the U.S. House of Representatives resulting from the 2018 elections.  Nevertheless, the dynamics of the debate – explained below – are important to potentially affected companies.

The Digital Trade section of the USMCA closely tracks Section 230 of the Communications Decency Act.  It provides in Article 19.17(2) that the member states shall not “adopt or maintain measures” that create civil liability for suppliers or users of “an interactive computer service as an information content provider … except to the extent the supplier or user has, in whole or in part, created, or developed the information.”  Note, however, that the agreement also grants immunity for good faith actions taken to limit access to “harmful or objectionable” content, and – in any event – the restriction on imposing liability for indecent content merely confers immunity from civil liability “as an information content provider.”  In other words, the internet service provider cannot be treated as if it supplied the content, but there remains the question of whether it can be held liable for damages under a theory of secondary liability.

Consequently, one can expect organizations dedicated to protecting potential victims of indecent online communication to seek clarification of the extent to which internet providers can be held liable for harms resulting from “knowing” or “reckless” failures to act to prevent abuses on their platforms.

Turning to digital piracy, back when the internet was in its infancy, in 1998, Congress passed the Digital Millennium Copyright Act, which established what is known as “notice-and-takedown.”  Under that approach, if someone uploads a work to a website, the owner of the work may send a notice of copyright infringement to the relevant internet intermediary, pointing to a specific violation and identifying the internet address of the allegedly infringing material.  Once the intermediary receives the notice, it must “expeditiously” disable access to, or remove, the material and inform the entity that posted the material of its action.  If the entity that posted the material believes it has a legal right not to be subject to takedown, it may file a counter-notification.

Upon receipt of the counter-notification, the intermediary must inform the copyright holder that it will restore the status quo ante after ten days unless the intermediary is notified that the copyright holder has “filed an action seeking a court order to restrain the [entity] from engaging in infringing activity.”  By following these and other procedures, the intermediary is shielded from copyright infringement liability for unknowingly posting infringing content.

The USMCA embraces the notice-and-takedown concept and generally requires internet service providers who have not already done so to implement such a system.  There is an exception, however, that preserves Canada’s current “notice-and-notice” system – under that approach, internet service providers are merely required to forward notice of infringement to the host of the pirated material.

Content industries have been seeking greater protection from the USMCA.  They tend to favor what is known as “notice and stay-down,” which requires a more proactive approach from the intermediary than notice-and-takedown.  Under notice and stay-down, when the intermediary receives a notice of copyright infringement, it would be required to search out and delete all copies of the material in question and block that material from being uploaded again.

Content industries believe this is necessary to address the fact that copyright-infringing material can be transferred easily from website to website, thereby putting the content producer in the position of trying to “whack-a-mole” and being forever a step behind the infringer.  As one might expect, however, internet service providers argue that notice and stay-down is overly onerous and would, if legally required, cripple the commercial exploitation of cyberspace.

The debate will go on regarding limitations on the liability of online service providers for indecent or infringing content posted on their platforms, and stakeholders are advised to pay close attention as the relevant provisions of the USMCA are debated and implementing legislation is formulated.  If those provisions are implemented as is, the USMCA would represent a move in the direction of international adoption of current U.S. principles governing the liability of intermediaries for online content.


Dean A. Pinkert is a partner in Hughes Hubbard’s International Trade practice. He is a former Commissioner of the U.S. International Trade Commission. Dean was nominated by President Bush and confirmed by the U.S. Senate in 2007,and was designated Vice Chairman by President Obama in 2014.