The Law and Economics of Online Republication

Consider the following case: Jerry publishes unlawful content about Newman on Facebook, Elaine shares Jerry’s post, the share automatically turns into a tweet because her Facebook and Twitter accounts are linked, and George immediately retweets it. Should Elaine and George be liable for these republications? The question is neither theoretical nor idiosyncratic. On occasion, it reaches the headlines, as when Jennifer Lawrence’s representatives announced she would sue every person involved in the dissemination, through various online platforms, of her illegally obtained nude pictures. Yet this is only the tip of the iceberg. Numerous potentially offensive items are reposted daily, their exposure expands in widening circles, and they sometimes ‘go viral’.

A new study, forthcoming in the Iowa Law Review (vol. 106), is the first to provide a law and economics analysis of the question of liability for online republication. Its main thesis is that liability for republication generates a spectre of multiple defendants which might dilute the originator’s liability and undermine its deterrent effect. It concludes that, subject to several exceptions and methodological caveats, only the originator should be liable. This seems to be the American rule, as enunciated in Batzel v. Smith and Barrett v. Rosenthal. It stands in stark contrast to the prevalent rules in other Western jurisdictions and has been challenged by scholars on various grounds since its very inception.

The study begins with a systematic analysis of the legal framework. It first discusses the rules applicable to republication of self-created content. Historically, each delivery of unlawful content to a third party was considered a separate publication which gave rise to a new cause of action. This is known as the multiple publication rule. Later on, American courts recognized an exception, applicable to mass communications, whereby numerous deliveries of a single publication can only underlie a single cause of action. The single publication rule was extended to online publication at the turn of the millennium. The study continues with liability for republication of third-party content. At common law, if a person republishes unlawful content already published by another, a new publication occurs, and a new cause of action against that person arises. This rule is subject to several limited exceptions, such as the ‘fair report privilege’. In the absence of legislative intervention, the common law rule—along with its exceptions—could extend to online publications. However, the enactment of §230 of the Communications Decency Act in the United States, as a response to the skewed incentives of online service providers, has also afforded individual republishers of third-party content an almost absolute immunity. This regime is extreme and unique from a global perspective. Other Western jurisdictions employ more generous republisher liability regimes, which usually require endorsement, a knowing expansion of exposure, or repetition. Lastly, irrespective of the republisher’s status, the content originator is liable for all foreseeable consequences of the publication, including those of foreseeable republication by others.

Following the comparative legal analysis, the study offers an economic justification for the American model. This justification hinges on the notion of liability dilution. According to economic theory, efficient deterrence entails internalization by the wrongdoer of the social harm caused by the wrongful conduct. Law and economics literature has already observed that attributing liability for a constant indivisible harm to multiple injurers, where each could have single-handedly prevented that harm (‘alternative care’ settings), might lead to ‘dilution of liability’. As the overall harm is constant, increasing the number of liable injurers reduces the burden incurred by each one, and impairs the incentives to take cost-effective precautions. Several tort doctrines have been defended in terms of preventing liability dilution. Online republication differs from previously analyzed settings, primarily because it does not involve alternative care situations, and because every republication increases exposure and consequent harm. The study concludes, however, that neither alternative care nor constant harm is an indispensable precondition for the applicability of the dilution argument. It then discusses the possible dilution of liability and its impact on deterrence in the context of online republication. Initially, a simple model involving non-overlapping contact lists of average size is used to explain how liability is diluted and when this might lead to under-deterrence. Subsequently, overlaps and variance in size among user contact lists are introduced. The study also examines another potentially unwarranted outcome of liability for republication: a considerable upsurge in administrative costs. Liability for republication is not only unnecessary when the originator is properly deterred; it might also undermine the deterrent effect of the originator’s liability due to dilution. Consequently, the administrative costs cannot be justified in terms of deterrence.

The last part of the study considers the possible limits of the American model. It maintains that the exclusive originator liability rule must be relaxed, and first-order republisher liability should be recognized, when the originator is unidentifiable (anonymous or pseudonymous) or judgment-proof, and when the republisher’s identity or the republication’s audience is unforeseeable. It also discusses quasi-exceptions, namely situations in which imposition of liability on a republisher is justified but cannot be regarded as a true exception to the exclusive originator liability rule. The first is a case of republication accompanied by original, substantial, and unlawful content. The republisher’s liability in such a case is not for the act of republication but for the act of publishing new unlawful content. The second is a case of republication of illegally obtained content. Republication with knowledge that the content was illegally obtained is an independent intentional wrong that needs to be addressed either through tort law, using punitive damages to overcome the dilution of liability, or through criminal law. Lastly, the study addresses possible challenges to the main argument’s underlying assumptions, namely that dilution is a real risk and that it is undesirable. 

Ronen Perry is Professor of Law and Director, Aptowitzer Center for the Study of Risk, Liability, and Insurance, University of Haifa.