What Ripple's lawsuit against YouTube could mean for social media platform content liability

It's not easy to sue a platform like Facebook, Twitter or YouTube. 

I mean, technically, yes – it's easy to whip up a lawsuit and accuse them of all sorts of things. But getting past a motion to dismiss frequently runs you slam-crash-boom into a 1996 federal law called the Communications Decency Act. 

Section 230 of that law includes a "safe harbor" provision that says that "[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider."

What this means as a practical matter is that large platforms like Twitter, Facebook and YouTube – which are putatively neutral providers of third-party content – can't be held liable for crappy things that users post on or through them, unlike, and are treated for the most like neutral content providers. It's just like how you can't sue a telephone company or a megaphone manufacturer for things that someone says on a phone call or via a megaphone. 

Does that 1996 law still makes sense, or should be legislatively or judicially limited given the massive power that these platforms have? Maybe, and I suspect it's just a matter of time before that happens. The law continues to develop in this area – more on that another day, in another post.

While the CDA provides really broad protection from civil liability for content that it makes available via its service, the protection is not unlimited.  The statute has exceptions, including one for intellectual property law, stating "[n]othing in this section shall be construed to limit or expand any law pertaining to intellectual property." 

There's also (sort of) an exception for state law claims, which says:  "Nothing in this section shall be construed to prevent any State from enforcing any State law that is consistent with this section. No cause of action may be brought and no liability may be imposed under any State or local law that is inconsistent with this section." 

And this, friends, is how Ripple Labs and Brad Garlinghouse (usually defendants) are the plaintiffs in a lawsuit against YouTube. When I first saw that Ripple was suing YouTube, I assumed that they were trying a creative workaround to CDA immunity and, whelp, here you have it.  The lawsuit alleges violations of the federal Lanham Act for Trademark Infringement, and for violations of California laws involving what's known as the "right of publicity" and its statutory prohibition against Unfair Competition.

The lawsuit alleges that YouTube has allowed, and profited from, a scam:

"...by knowingly selling paid ads on behalf of the fraudsters who are impersonating Ripple and Mr. Garlinghouse. These ads—-so-called "video discovery ads"—-are designed by YouTube to appear at the top of its search result page alongside organic search results. Such ads were presented to YouTube by the scammers, as ad units and creatives showing the fraud and pointing to the Scams, after YouTube was repeatedly informed of the schemes. YouTube then approved them, uploaded them, endorsed them, and optimized them to attract as many YouTube users and clicks as possible, based on its algorithms and search engine optimization techniques. These advertisements are presented to YouTube users who search for terms such as, among others, "Ripple" and "Brad Garlinghouse"."

When a user clicks on an advertisement, they are (according to the Complaint) taken to an impersonator's YouTube channel and then tricked into sending XRP to a virtual currency wallet in exchange for a promise that the user will receive a multiple of that amount in exchange. Thus, to participate in one of the "giveaways" referenced in the lawsuit, "the viewer is instructed to send between 5000 XRP to 1,000,000 XRP to a specific wallet address" and in return are promised five times that amount in return. 

Setting aside the wisdom of sending virtual currency to an anonymous wallet address and expecting five times the amount in exchange, the lawsuit says that this has led to the loss of "millions of XRP valued at hundreds of thousands of dollars."

When you discovery someone violating your intellectual property rights on a platform like YouTube, the typical remedy is to send what's called a takedown request.  TL;DR: you notify the platform that someone is posting your IP on the platform, the platform investigates, takes it down, and the other side has a chance to respond. There's slightly more to it than that, but that's the general idea. 

According to the lawsuit, "since November 2019, Ripple has submitted 49 takedown demands to YouTube that relate directly to the Scam. An additional 305 takedown demands were served on YouTube in connection with accounts and channels that were impersonating Mr. Garlinghouse or infringing on Ripple's brand, likely for the purpose of monetizing the Scam." That's a ton of takedown requests, and Ripple and Garlinghouse say that YouTube didn't respond to many of them and when it did, it did so "belatedly."

Whatever you think of Ripple or XRP, this lawsuit proceeds with federal and state law claims that, at least facially, may not be subject to CDA safe harbor protections.  So it might be difficult for most people to sue YouTube for crappy things that others say about them on a YouTube channel, but in Count I of the Complaint, the plaintiffs say that YouTube is liable for contributing to violation of its trademarks:  "These fake and/or hacked accounts and their channels prominently display Ripple's trademarks, so that the accounts falsely and misleadingly present to YouTube users as official Ripple accounts."

Plaintiffs say that YouTube has knowledge of the trademark infringement, the means to stop it, and profits from it and, thus, is liable for contributory trademark infringement under the Lanham Act.

Similarly, Mr. Garlinghouse says that YouTube violates his right to publicity under California law by allowing hackers to "appropriate his identity by displaying his name, photo, likeness, and videotaped interviews of him ... Scammers use Mr. Garlinghouse's identity to solicit people to transfer XRP or other cryptocurrencies in furtherance of the Scam." Plaintiffs say that YouTube uses and relies on these fake and accounts to increase traffic and make money by serving ad traffic and "has also sold advertising space directly to the bad actors perpetrating the Scam."

There's an interesting (albeit in the weeds) legal question here, which is whether the CDA exception for state law claims only applies to the enforcement of those laws by the state itself, as opposed to claims made by private citizens. 

Unless the Supreme Court has definitively ruled on that subject – confession, I have not checked, but doubt it – this is an argument that we will surely see raised in an initial motion to dismiss. If Garlinghouse can overcome that argument, it's not without some appeal – why should a platform be able to make money by allowing third parties to traffic in a private person's image, persona, and the like? It may also be possible to frame the right-to-publicity claim as one involving intellectual property rights, thus falling within the IP safe harbor.  

It's an interesting and creative lawsuit, and not like some frothing-at-the-mouth claims we see from time to time against social media platforms, accompanied by people chaining themselves to buildings. Ripple and Garlinghouse actually make a compelling argument that YouTube brings in money by allowing bad actors to traffic in trademarks and personas of others. 

Whether or not you're a fan of Ripple or XRP, this is a case worth watching for the impact that it may have on how social media platforms police themselves and respond to violations of third-party rights. Plaintiffs have deep pockets and are represented by a well-respected law firm with talented litigators. There's a chance for some new law to be made here.