Circuit Split Created by Third Circuit’s Interpretation of Section 230’s Intellectual Property Exception in Hepp v. Facebook

By: Alexa J. Elder

Section 230 of the Communications Decency Act was passed by Congress in 1996. Considered by some as the “most important law protecting internet speech,” Section 230 consists of two key provisions.  Subsection 230(c)(1) provides that internet companies shall not be treated as the “publisher or speaker” of content posted on their sites by third-party users. And subsection 230(c)(2) provides internet companies with immunity for “good faith actions” to restrict or remove third-party content. 

The protections afforded under Section 230, however, are not unlimited in scope. Specifically, subsection 230(e) creates five carve-out exceptions to the immunity afforded to an internet company under the Act. One exception, subsection 230(e)(2), titled “No Effect on Intellectual Property Law,” states: “Nothing in this section shall be construed to limit or expand any law pertaining to intellectual property.”  This exception was recently recognized and interpreted by the Third Circuit in Hepp v. Facebook.

The plaintiff in Hepp, Karen Hepp, was a TV newscaster whose picture was taken without her knowledge or consent and used on an ad for a dating app.  The ad was posted on Facebook and other websites including Reddit and Imgur.  Hepp brought suit against the three internet companies raising claims under Pennsylvania’s “right of publicity” statute and common law.

After dismissing two defendants on jurisdictional grounds, the controversy turned to Hepp’s right of publicity claim against the sole remaining defendant, Facebook.  Facebook argued that it was immune from suit under Section 230, while Hepp argued that her claims fell within subsection 230(3)(2)’s exception.  With no guidance at the time from the Third Circuit on this issue, the district court adopted the Ninth Circuit’s approach in the 2007 case of Perfect 10, Inc. v. CCBill LLC.  In Perfect 10, the Ninth Circuit held that subsection 230(e)(2) only applied to federal intellectual property law.  Because there is no federal “rights of publicity” law, the district court determined that the carve-out exception did not apply and dismissed Hepp’s claims. Hepp appealed the decision.

On appeal, the Third Circuit rejected the Ninth Circuit’s approach in Perfect 10 and reversed the lower court’s decision.  In doing so, the Third Circuit determined that the most natural reading of subsection 230(e)(2)’s text encompasses state intellectual property laws. It observed that subsection 230(e)(2) plainly states the exception applies to “any law” pertaining to intellectual property; nowhere does it provide that its availability is limited to federal law claims. Moreover, the Third Circuit reasoned that if Congress wanted to exclude state law claims, it knew how to do so; indeed, as noted by the court, other parts of subsection 230(e) do, in fact, explicitly exclude state law claims. For those reasons, in addition to other policy considerations, the Third Circuit concluded that the subsection 230(e)(2) applied to Helm’s state law claims and remanded the case back to the district court for further proceedings.

Helm creates a clear circuit split between the Third Circuit and Ninth Circuit regarding the scope of subsection 230(e)’s intellectual property exception. Given the recent interests and controversies surrounding Section 230, as for example, liability to social media platforms as discussed in our previously reported article, it may be a split the Supreme Court decides to take up in the future.