Copyright © 2009

Loyola of Los Angeles Entertainment Law Review

919 Albany Street, P.O. Box 15019

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http://elr.lls.edu

ISSN 0273-4249

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TABLE OF CONTENTS

Editorial Board & Staff

Law School Faculty

ARTICLES

Surviving Reality TV: The Ultimate Challenge for Reality Show Contestants

by Jennifer L. Blair

NOTES & COMMENTS

Unmasking the Mask-Maker: Domain Privacy Services and Contributory Copyright Infringement

by Paulo André de Almeida

Winner, Winner, No Chicken Dinner: An Analysis of Interactive Media Ent’mt & Gaming Ass’n v. Att’y Gen. of the U.S. and the Unjustified Consequences of the UIGEA

by Rotem Nicole Moran

Loyola of Los Angeles

Entertainment Law Review

Volume Thirty-One

2010-2011

Number 1

EDITORIAL BOARD

Brandon Wyman

Editor-in-Chief

Matthew Mejia

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ARTICLES

SURVIVING REALITY TV: THE ULTIMATE CHALLENGE FOR REALITY SHOW CONTESTANTS

By Jennifer L. Blair [*]

With the popularity of reality television remaining unabated, precious little attention is given to the effects participation as a contestant on a reality television show may have. Although there is a growing body of work concerning the mental toll reality television takes on its contestants, the legal ramifications of such effects have remained largely unexamined. Even as some producers of such shows acknowledge the effects their programming has on their contestants, many hide behind the contracts contestants signed prior to filming, effectively blocking litigation. Further, a favorite defense of producers is that the contestants are not their employees and thus are not owed common employer-employee duties. Reality show contestants are left with a feeling of being deceived and manipulated by producers hungry for ratings.

I. INTRODUCTION

Sinisa Savija committed suicide by throwing himself in front of a commuter train on July 11, 1997.[1] A month earlier, he was the first contestant kicked off Expedition: Robinson, a Swedish reality television show on which the American television show Survivor is based.[2] His widow, Nermina Savija, told the Swedish newspaper Aftonbladet, “He was a glad and stable person before he went away, and when he came back he told me, ‘They are going to cut away the good things I did and make me look like a fool . . . .’”[3] She also told the Associated Press, “It’s not a game when you choose ordinary people and put them under great pressure, constantly in front of the camera.”[4] Reality show producers, such as Survivor’s Mark Burnett, contend that Savija’s suicide was not connected to the show. Burnett suggests that Savija was mentally ill prior to the show, and that personal issues, such as his separation from his wife and being a refugee, caused his suicide.[5]

Whether Savija’s suicide was directly connected to his elimination from Expedition: Robinson can never be determined. However, his suicide after his distressed comments to his wife highlights an emerging trend within the reality show realm: the damage reality show producers may be causing to contestants’ mental health and physical safety.

Although reality television has been standard programming on many television stations for slightly over a decade, the effects the shows’ productions have on contestants’ mental health and physical safety have stayed largely in the background.[6] Further, given the voluminous contracts contestants must sign before appearing on the shows, litigation has been surprisingly nonexistent. Additionally, because reality show contestants are not covered by acting unions, they enjoy none of the protections professional actors receive.[7]

As reality shows[8] continue to push the limits of television programming in attempts to attract viewers, the health and safety of reality show contestants become important considerations. Part II of this Article argues that reality show contestants should be considered employees of reality show production companies. Part III discusses the effects of reality television on contestants’ mental health, while analyzing the psychological tactics used by producers. Part IV focuses on the safety issues affecting contestants, arising from both production and from other contestants. Part V analyzes potential causes of action against reality television producers. Part VI focuses on reality show contracts, discussing the level of informed consent needed to make the contracts enforceable, as well as issues contestants may have in litigation. Finally, this Article concludes by suggesting steps that reality show production companies should take to ensure that they are properly protecting the health and safety of their contestants.

II. REALITY SHOW CONTESTANTS AS EMPLOYEES

To bring a reality show contestant under the umbrella of employment law, one must show that a reality show contestant qualifies as an “employee” of the production company. According to the Restatement (Third) of Employment Law, three elements must be satisfied to classify an individual as an employee.[9] First, an individual may be classified as an employee if the individual “acts, at least in part, to serve the interests of the employer.”[10] Second, the employer must consent to the employee’s services.[11] The third element is satisfied when “the individual does not render the services as an independent business person because the employer controls the manner and means by which the services are performed.”[12]

The first element—the individual acts to serve the interests of the employer —can be met easily. Reality show producers select contestants they believe will produce high ratings for their shows.[13] While contestants have their own reasons for wanting to participate in a reality show, their participation is based on how well they serve this interest.[14] Therefore, a reality show contestant’s participation in a reality show serves the interests of the show’s producers.

The second element, which requires that the employer consent to the employee’s service,[15] is also satisfied. Would-be contestants go through several rounds of interviews and selection processes before they are chosen to participate on a reality show.[16] Once selected to appear on shows, contestants are typically rushed through the contract process, wherein they sign lengthy contracts prepared by the production companies.[17] Thus, because prospective contestants are handpicked after going through several selection processes conducted by the shows’ producers, one can infer the producers’ consent to the final contestants’ services.[18]

The third element, that the employee is not an independent contractor,[19] is also satisfied. Once the contestants are chosen for a reality show, the producers usually move them into a central location—often some kind of housing—wherein the contestants dwell for the duration of the show’s filming.[20] Typically, the contestants’ “services” are performed almost around the clock; that is, the contestants are almost constantly being filmed.[21] The contestants often have little respite from the filming and must participate in activities mandated by the producers.[22] Therefore, the employers—the reality show’s producers—have near complete control over the manner and means by which the contestants’ services are performed.

There is a caveat to the general rule about the employer-employee relationship. Volunteers are not considered employees.[23] However, an individual is only a volunteer and not an employee if “the individual renders uncoerced services without being offered a material inducement.”[24] “Material inducement” is broadly defined as “the promise of any type of material gain, whether in the form of monetary compensation, some special benefit . . . , or an in-kind payment.”[25] All that is required is that an “employer makes some kind of economic commitment to the employee.”[26] Notably, in-kind benefits include food and shelter.[27] The inclusion of in-kind benefits is important to reality show contestants as most contestants receive “little to no pay for their work,”[28] but do receive food and shelter from production companies.[29] Thus, reality show contestants can be classified as employees because they receive material inducement from the respective show’s producers in the form of in-kind benefits.

Furthermore, reality show contestants should not be considered independent contractors. While there are several factors courts will consider on a case-by-case basis,[30] the determining element is typically the right of employer control.[31] The employer’s right to control the way in which the employee completes his or her work is dispositive. “Where an employer has the right to control only the results or the end sought to be accomplished, and the contracting party independently determines the details and means of accomplishing that result, an independent contractor relationship exists.”[32] For an employment relationship to exist, “assumption of exercise of control must be so persistent and the other party’s acquiescence in that exercise of control so pronounced as to raise an inference that the parties, by implied consent, had agreed that the principal might have the right to control the details of the work.”[33]

Reality show contestants are constantly under the control of their producers once they arrive at the filming location.[34] Indeed, producers keep the contestants in total isolation from the outside world; cell phones, books, CDs, and newspapers are confiscated from contestants upon arrival.[35] Producers defend contestant isolation on the grounds that it “ensure[s] fairness and prevent[s] cheating.”[36] Once filming starts, producers subject contestants to constant filming.[37] Producers also dictate what time contestants will wake up in the morning, where they will spend their day, what they will be doing, the length of time they will perform, when they can eat, when they can return to their temporary home, what they will do once there, and what time they will go to sleep.[38] Hence, reality show contestants are under the producer-employer’s constant control. As such, the contestants should be deemed to be in an employer-employee relationship with the producers and not deemed to be independent contractors.

Hence, reality show contestants can be classified as employees of reality show production companies. First, they meet the three elements required to show that a person is an employee of an employer. Second, they are not volunteers because they receive in-kind payments of food and shelter from producers. Third, they are not independent contractors because they are under the almost constant control of their producers. Consequently, reality show contestants should be regarded as employees, which in turn means that reality show production companies owe them certain duties as their contestant-employees.

III. MENTAL HEALTH AND PSYCHOLOGICAL TACTICS

Reality shows continually push the limits of contestants’ mental health to achieve the ratings they desire. Producers employ several psychological tactics to keep their shows interesting for viewers, often at the expense of their contestants’ mental health.[39] One section of the CIA’s KUBARK interrogation manual, employed during the Cold War, is eerily similar to the methods many reality shows use on their contestants:

[M]an’s sense of identity depends on a continuity in his surroundings, habits, appearance, actions, relations to others etc. Detention permits the interrogator to cut through these links and throw the subject back upon his unaided internal resources . . . . Control of the source’s environment permits the interrogator to determine his diet, sleep pattern, and other fundamentals.[40]

Reality shows use similar tactics to provoke dramatic or extreme behavior from their contestants.[41] Tactics reality shows employ include plying contestants with alcohol,[42] “sleep deprivation, the illusion of imminent harm, the disjuncture of normal time, concentration on apparent irrelevancies, the building up and dashing of hope, and the fostering of distrust and paranoia.”[43]

Examples of such psychological tactics abound among reality shows. Jen Yamola, a contestant on Hell’s Kitchen, said she was “‘locked . . . in a hotel room for three or four days’ before production started.”[44] Further, producers confiscated her books, CDs, cell phone, and newspapers.[45] She was only allowed to leave her room with an escort.[46] During a filming of ABC’s The Bachelor, contestants were forced to wait in vans “while the show’s crew set up for a twelve-hour ‘arrival party.’”[47] Once contestants were allowed out of the vans, they found “there was little food, but bottomless glasses of wine.”[48] On Project Runway, contestants often had to work eighteen-hour days, which usually began around 6:00 a.m. and ended near midnight.[49] Even then, their days were not over: after concluding work, the contestants then had to film “confessionals,” which often lasted into the early morning hours.[50]

Examples of long days, little food, and endless alcohol seem commonplace among reality shows, and producers may sometimes cross the line from psychological tactics into genuine mental cruelty. In one egregious example, producers on the UK’s second season of Survivor told contestants that a close relative of theirs had been flown out to the location.[51] The producers placed the relatives of the remaining five contestants in various points within the tropical location.[52] Contestants were to find the relatives and write down four pieces of information about each one, except that when contestants encountered their own loved ones, they were not allowed to speak to them or touch them.[53] The contestant who won the challenge was permitted thirty minutes to spend with his or her loved one, while the other contestants were not allowed to see or speak to their relatives.[54] Thus, contestants who had spent over a month in an unfamiliar, rugged location with little food, much stress, and undoubtedly overwhelming homesickness were only offered a brief glimpse of their loved ones.[55] After the show, one contestant remarked, “That was a seriously cruel game . . . wasn’t it?”[56]

Another example of psychological tactics used by producers is the giving and withholding of food.[57] Regulating when and what people may eat is a long-used tactic of interrogators: “[t]he withholding and giving of food at irregular times is a method practi[c]ed in prisoner interrogations, designed to disrupt the routine of the subject and undermine [his] sense of normalcy, increasing [his] dependence on interrogators.”[58] For example, on Survivor, food is “used to foster group division and sharpen the drama of the contest.”[59] In one Survivor challenge, the prize was a fully cooked breakfast, including sausage, toast, and cold orange juice.[60] The winner openly wept as he ate the meal, while the other contestants were forced to watch him eat.[61] Producers provide contestants with rice rations based on the Geneva Convention’s minimum calorie intake for prisoners of war,[62] but expect the contestants to find any additional food by fishing or foraging.[63] Limiting food intake and then forcing the contestants to watch another contestant eat a full meal seems particularly cruel and designed to encourage animosity.

Like generations of interrogators, reality show producers employ psychological tactics to push contestants to their outermost mental limits. These tactics are deliberate and calculated, not accidental or random. By continuing to keep contestants off-balance and unsure, producers guarantee they will be able to capture dramatic and extreme behavior to entertain viewers. However, entertaining viewers often comes at the expense of intentionally or negligently causing contestants serious mental and emotional harm from which they may have difficulty recovering.

IV. SAFETY

Because reality show contestants should qualify as employees of reality show producers and networks,[64] the producers owe certain duties to the contestants. At the most basic level, an employer is required to furnish the employee a safe place in which to work and to provide appropriate and safe instrumentalities with which to work.[65] The employer is responsible for making the workplace safe.[66] Specifically, the employer “has a duty to provide its employees with a safe place of work, and a failure to comply with this duty renders the employer liable to an employee who may have sustained injuries as the proximate result of the employer's neglect.”[67] Thus, reality show producers must provide their contestants with a safe workplace, which includes ensuring their safety during challenges and protecting them against possible harm from other contestants.

A. Challenges

As reality television shows compete with each other each year, producers are compelled to test the limits of contestants’ mental and physical acumen to win ratings. Producers put contestants through increasingly outrageous and possibly dangerous challenges in an attempt to curry favor with audiences. Some of these challenges may fall into the abnormally dangerous activities classification. To determine whether a reality show challenge is an abnormally dangerous activity, one should consider several factors:

(a) existence of a high degree of risk of some harm to the person . . . ; (b) likelihood that the harm that results from it will be great; (c) inability to eliminate the risk by the exercise of reasonable care; (d) extent to which the activity is not a matter of common usage; (e) inappropriateness of the activity to the place where it is carried on; and (f) extent to which its value to the community is outweighed by its dangerous attributes.[68]

Thus, challenges such as swimming in a tank with alligators and poisonous frogs, stepping through quicksand, and navigating a junkyard while being attacked by dogs[69] all qualify as abnormally dangerous activities. Each activity carries a high degree of risk of some harm to the contestants and a strong likelihood that the harm to the contestant will be great. Further, use of reasonable care, such as the presence of medical personnel and the use of stunt supervisors, will not eliminate the risk of harm to the contestants. Because reality shows continue to produce ever-more outrageous challenges to gain ratings, it is evident that the activities in most challenges are not commonly performed in real life. Lastly, while some viewers may find the abnormally dangerous challenges entertaining to watch, it is unlikely a court will consider that the pursuit of ratings outweighs the dangerous attributes of the challenges.

Putting up safeguards will not protect producers from litigation, as courts usually find that public policy “does not allow individuals to waive their right to sue for harms caused by dangerous activity.”[70] Even with the voluminous contracts contestants are required to sign, producers cannot require contestants to sign away their rights to sue should they become seriously injured from an abnormally dangerous activity. Producers are faced with a dilemma: produce only safe challenges to protect themselves against lawsuits from injured contestants and potentially lose viewership, or safeguard their abnormally dangerous challenges as much as possible and pay out damages to injured contestants.

Because the primary goal of producers is to gain ratings, it seems unlikely they will water down their challenges to ensure that no court would classify the challenges as abnormally dangerous activities. Rather, it is more likely that producers will risk the safety of their contestants and risk the potential for lawsuits should injuries arise.

B. Other Contestants

Since the reality shows discussed here require contestants to live together for the show’s duration, contestant screening becomes an important part of ensuring the safety of all contestants.[71] However, because reality shows have much smaller budgets than scripted television, the money available to conduct meticulous inquiries on contestants is usually lacking.[72] Thus, some reality shows find themselves needing to rely on the potential contestants to be truthful.[73]

Reality shows require their potential contestants to pass physical and mental health examinations before being selected.[74] Again, however, the efficacy of the examinations depends entirely on each show’s budget.[75] Every contestant is given a “written personality test in mental health,” but in-person psychological tests performed by a doctor, which can cost from $450 to $1000 per contestant, only occur when the budget allows.[76] Further, because reality shows typically want to cast people who will increase viewership, the primary focus of the vetting process is to weed out people who have broken the law, not people who appear to be wild, extreme, or “crazy.”[77]

While the types of checks vary among shows, contestants typically must fill out questionnaires about every place they have lived and worked, as well as any other names by which they have been known.[78] The background checks, the costs of which can range from $400 to $1,000 per contestant, are outsourced to firms that investigate the information on the contestants’ questionnaires.[79]

Depending on the type of show and the funding available to pay for background checks, there are generally three “levels” of investigation.[80] The first level is a simple search of online public records.[81] Because the online information available varies widely between counties and states, most shows pay for a more thorough check.[82] The more thorough check comes in the form of the second level, where investigators are sent to the courthouses “in locations where the potential cast members have resided.”[83] The third level, used by most shows where the contestants are in one location and/or are expected to have physical or sexual contact, involves personally interviewing people who know the contestants.[84]

Despite some shows’ attempts to filter out potential contestants who may be dangerous to other contestants, there are numerous examples of both producers’ failures to investigate contestants’ backgrounds sufficiently and contestants who are not what they appear to be. A recent, high profile example is Ryan Jenkins, a contestant on VH1’s Megan Wants to Marry a Millionaire.[85] After appearing on the show, Jenkins brutally mutilated and murdered his ex-wife.[86] A few days after the murder, Jenkins committed suicide in a hotel room in Canada.[87] A subsequent search of Jenkins’ background turned up a 2007 assault charge in Calgary, which resulted in fifteen months of probation.[88] Producers for the show say they conducted checks on each contestant via an outside firm but offered no explanation why the checks did not turn up the assault charge.[89] Producers also said “they wouldn’t have cast [Jenkins] if they’d ‘been given a full picture of his background.’”[90]

Another example of a failed background check occurred on Fox’s Who Wants to Marry a Millionaire?.[91] A financial investigation revealed that millionaire Rick Rockwell’s[92] former fiancée had filed a restraining order against him.[93] In her 1991 petition for a protective order, Rockwell’s ex-fiancée, Debbie Goyne, alleged that Rockwell hit her, slapped her in the face, and threatened to kill her.[94] Rockwell did not disclose the information to producers, nor did they attempt to investigate. However, a simple public records search would likely have revealed the information.[95] The Rockwell incident highlights that producers should be vigilant in screening their contestants. In hindsight, it seems obvious that a reality show premised on marriage (especially one between two strangers) should have asked potential “millionaires” about all aspects of their relationships, including whether the potential contestant has ever had a domestic violence protective order against him or her.

Justin Sebik, a contestant on CBS’s Big Brother 2, is another example of someone who should have been screened out as a potential danger to other contestants.[96] Before appearing on Big Brother 2, Sebik was arrested in 1996 and later charged with assault and theft.[97] Once on the show, Sebik was routinely intoxicated and was filmed urinating on windows, throwing wine bottles, and physically threatening another contestant.[98] One night while intoxicated, Sebik kissed another contestant, Krista Stegall.[99] Sebik then pulled a knife out of a kitchen drawer, held it to Stegall’s throat and asked, “Would you mind if I killed you?”[100] Producers immediately kicked Sebik off the show,[101] however the evidence is conflicting as to whether producers knew of Sebik’s criminal record.[102]

Sebik’s behavior draws attention to a difficult area for producers: how to handle potential contestants when their background checks “fail to identify what might be a propensity for violence.”[103] Typically, an employer must exercise a duty of reasonable care in hiring employees.[104] This duty “includes the employer’s obligation to conduct a reasonable investigation into the employee’s work experience, background, character, and qualifications.”[105] Whether an employer is liable for harm done by an employee depends on the totality of the circumstances.[106] The totality of the circumstances test includes whether the type of harm caused to the plaintiff “was reasonably foreseeable as a result of the employment, as, for example, where an employer knew or should have known . . . that its employee has violent tendencies or has destructive or dishonest tendencies.”[107] However, “where the record is devoid of evidence that the employee ha[s] any propensity toward violence or that the [employer] knew of that propensity, the employer is not liable.”[108]

Noting the examples above, great tension exists between the depth of the background checks reality shows can afford and the responsibility placed on the shows’ producers to protect contestants from another potentially dangerous contestant. Because reality shows are less expensive to produce than scripted shows, reality shows are popular among networks and production companies.[109] Requiring reality shows to conduct comprehensive background checks for each of their potential contestants will likely raise shows’ production costs.[110] However, producers’ use of psychological tactics to promote extreme behavior by even well-adjusted, “normal” contestants[111] suggests pressure should be placed on networks and producers to exhaust all possible resources when investigating potential contestants. Failure to investigate contestants adequately can—at the least—result in lawsuits alleging negligent hiring.[112]

As of March 2010, while no reality show contestant had experienced death at the hands of another contestant,[113] the possibility still exists given reality shows’ inconsistent investigation methods and budgets.[114] Although investigation practices within the industry may improve with the recent Ryan Jenkins case,[115] they may not improve at all until a contestant experiences serious physical harm or death inflicted by another contestant. Still, akin to the abnormally dangerous challenges discussed above, producers may find it more cost-effective to defend against any arising lawsuits, rather than improve their overall investigation processes.[116]

V. POTENTIAL CAUSES OF ACTION

Reality show contestants who believe they have been harmed by their producers may have several potential causes of action. Likewise, producers should be aware of the types of instances in which these claims arise so they can better protect themselves from liability. Potential causes of action include negligence, false imprisonment, intentional and negligent infliction of emotional distress, and the economic torts of fraud and misrepresentation.

A. Negligence

A contestant who suffers an injury resulting from his or her participation in a reality show may assert a claim of negligence. For example, Krista Stegall, discussed in Section IV above,[117] claimed “CBS was negligent in failing to unearth assault charges against fellow housemate Justin Sebik, who was kicked off the program after holding a knife to her throat.”[118] As with any negligence claim, a reality show contestant must prove “the defendant owed [the contestant] a duty to use reasonable care to prevent such injury, that the defendant breached that duty, that the breach factually and legally caused a foreseeable injury to [the contestant], and that damages occurred as a result.”[119]

B. False Imprisonment

A reality show contestant may also assert a false imprisonment claim. False imprisonment occurs when the defendant “intentionally confines the [contestant] within fixed boundaries if the [contestant] was conscious of the confinement at the time.”[120] False imprisonment likely arises in many reality shows, as confining contestants to a home, apartment, or other type of dwelling is commonplace.[121] In such instances, contestants are not normally allowed to leave the production to return home at the end of each day.[122] Indeed, much of reality television programming focuses not on the technical aspects of the show, but rather on the relationships and conflicts that develop between the contestants.[123]

False imprisonment could arise when contestants express their desire to leave the show entirely or simply leave an aspect of the show’s production. Because contestants are subject to the continuous control of their shows’ producers, they are prohibited from moving about freely, and they must go where the producers direct.[124] Thus, it is possible that each time a contestant expresses his or her desire to leave the location or the show, he or she has a claim for false imprisonment.

C. Intentional and Negligent Infliction of Emotional Distress

A reality show contestant may also have potential claims of intentional or negligent infliction of emotional distress.[125] To prevail on a claim for intentional infliction of emotional distress, a plaintiff must show four elements.[126] First, a contestant must show “extreme and outrageous conduct by the [producers].”[127] Second, a contestant must show that the producers either intentionally or recklessly caused the contestant to endure severe emotional distress.[128] Third, the contestant must show that he or she “actually suffered severe emotional distress.”[129] Finally, the contestant must show the producer’s actions caused the contestant’s severe emotional distress.[130] Because it can be difficult to ascertain whether intentional infliction of emotional distress claims are genuine, courts are wary of such claims and they are among the harder claims to prove successfully.[131]

It is unlikely reality show contestants will be able to establish intentional infliction of emotional distress on the parts of the producers. Most contestants will likely fail to establish the first element, which requires contestants to show extreme and outrageous conduct.[132] According to the Restatement (Second) of Torts, liability is generally found “only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.”[133]

With the exception of reality shows in which producers initially mislead contestants as to the purpose of their show,[134] most contestants know the purpose of the show in which they will be appearing and understand what will be expected of them prior to filming. When producers explain to contestants their shows’ premises and the potentially life changing consequences that may result from appearing on the shows, producers’ conduct is likely removed from the “extreme and outrageous” realm.[135]

To prevail on a negligent infliction of emotional distress claim, a contestant must show that “the [producer’s] conduct in the underlying accident fell below the applicable standard of care; that the [contestant] suffered severe emotional distress; and that the [producer’s] conduct was a cause-in-fact of the [contestant’s] injury.”[136] Like intentional infliction of emotional distress, the producer’s conduct must be “sufficiently outrageous and extreme to be considered atrocious and unreasonable in society.”[137] Further, the conduct must cause the contestant “to be in unreasonable danger of physical injury or cause fear for his or her safety.”[138]

Thus, similar to an intentional infliction of emotional distress claim, it will likely be difficult for contestants to show that producers’ conduct was not only extreme and outrageous, but also that it put the contestants in unreasonable danger of physical injury.[139] While it may be easier for contestants in some jurisdictions to establish that they feared for their safety,[140] it is still generally unlikely a court will find producers’ conduct extreme and outrageous.[141]

D. Economic Torts: Fraud and Misrepresentation

Finally, a reality show contestant may assert claims based on fraud and misrepresentation. A contestant may have a claim for fraud when a producer “makes a false factual representation, knowing it to be false . . . with an intent to induce the [contestant] to act . . . in reliance on the misrepresentation, upon which the [contestant] justifiably relies, causing damage to the [contestant] resulting from such reliance.”[142] While most contestants will not succeed on a fraud claim because producers have informed them at least to some degree of what to expect, contestants appearing in shows where producers have misled them as to the show’s purpose may be able to establish fraud on the producers’ part.[143] However, even if a contestant can show producer fraud, he or she will likely be unable to litigate the claim because of his or her contract with the show.[144]

Thus, reality show contestants may find that they have potential causes of action against reality show producers and networks, including negligence, false imprisonment, intentional and negligent infliction of emotional distress, and the economic torts of fraud and misrepresentation. While contestants might feel producers are liable to them for their emotional, physical, and economic harms, many will find their potential claims thwarted by the contracts they entered into with producers and networks.[145]

VI. CONTESTANT CONTRACTS

As the popularity of reality television programming remains unabated, contestants’ contracts have become longer and more complicated.[146] As Nigel Lythgoe, one of American Idol’s executive producers stated, “Whenever you do a contract, you have to try to anticipate every angle, because you can’t tell what’s going to happen.”[147] Other industry representatives have said that the willingness of contestants to “risk humiliation or even death” makes their contracts longer and more complicated to “err on the side of caution legally.”[148] While reality show producers want to protect themselves from potential litigation, it is questionable whether producers make sure contestants fully understand the implications of not only the contracts they sign, but also the consequences of appearing as reality show contestants.[149]

A. Informed Consent

The basic requirement of reality show contracts is informed consent.[150] Informed consent is established when a consenting party gives his or her “permission, based on knowledge of facts and information.”[151] In terms of agreeing to appear on reality shows, “‘informed consent’ . . . permits one to ask what it is that participants assent to when they agree to appear on a particular program[], and whether program[]-makers provide potential and actual participants with the information required for them to give meaningful consent.”[152] Thus, reality show producers must gain each potential contestant’s informed consent, which they generally attain through standard contractual agreements.[153]

These contracts, however, hamper producers’ ability to get contestants’ informed consent. For example, in 2002, some reality television show contracts were at least fifty pages long.[154] Further, the contracts are largely boilerplate and typically rife with legal jargon instead of plain language.[155] Even so, the language in some these contracts are exaggerated: one of the clauses for CBS’s Survivor gives CBS the right to the contestants’ life stories “in perpetuity and throughout the universe.”[156] The “life story” clause is in a sentence that has over 150 words.[157] Assuming contestants have fully read and understood these lengthy contracts, it is nevertheless difficult for producers to obtain contestants’ informed consent, since doing so may require disclosure of show details. Because so many reality shows center around contestants’ reactions to various planned twists and challenges,[158] informing contestants of everything they will encounter would likely ruin the much-needed reactions. Indeed, some reality shows rely upon the premise that “the participant does not know what is going to happen to [him or her].”[159] Consent issues are further complicated when award money is involved; it is possible most contestants may focus more on the money and less on what they will have to endure to even get a chance at winning the prize.[160] For the foregoing reasons, even under the very best circumstances, one must question whether a reality show contestant’s consent is truly informed.

As a common defense to accusations of producer misconduct and contestant disillusionment, producers remind contestants that the contestants freely choose to participate on reality shows.[161] An attorney whose firm represented CBS in a lawsuit by a former Survivor contestant explained, “When people do participate, they’re told very clearly what rights they’re giving up in exchange for the opportunity to be seen.”[162] However, there is evidence to contradict that statement. One contestant on Big Brother UK explained how “the pace of the selection process and the garnering of consent can bewilder the participant, making them feel powerless, distant from awareness that they control one side of the decision.”[163] In this contestant’s experience, after the first round, the selection process “bec[ame] swift, sudden [and] dizzying”: consent must be given quickly and contestants only have a week “to prepare, . . . leave [their] job[s], and say [their] farewells.”[164] Shortly before that season of Big Brother UK, the producers gave the contestants a speech pejoratively dubbed the “[t]alk of [d]oom.”[165] The stated purpose of the speech gave contestants last minute information about what to expect during and after the show, and reiterated to the contestants that they were about to embark on a life-changing experience.[166] The overall effect was to excite the contestants about their participation while technically fulfilling the producers’ responsibility to inform.[167]

B. Litigation

Reality show contracts also hamper contestants in their litigation efforts. Entertainment attorney Jonathan Anschell puts it succinctly: “No contract can prevent someone from suing. It can prevent them from winning.”[168] Thus, even if contestants have a legitimate claim, they are often stymied by the contracts they signed under the rush of becoming a contestant.[169]

For example, in January 2010, Malena Brush unsuccessfully attempted to challenge a mandatory arbitration provision in her contract with E! Entertainment Television (E!).[170] E! contacted Brush, asking if she would like to audition for a reality show about the making of a girl pop group.[171] E! informed Brush that, if “hired,” she would receive a salary of $1,500 weekly while the show filmed.[172] Brush attended three auditions and was instructed by E! to perform “humiliating activities” at her home as part of the program.[173] The day after the filming at her home, E! sent Brush a limousine to take her to the studio.[174]

When Brush arrived at the studio, network employees confiscated her cell phone.[175] Then they introduced Brush to other people, introducing them as other “‘girl band’ participants” or “recording studio personalities.”[176] In actuality, the other people present were actors who E! paid to “harass, embarrass, heckle, insult, and offend” Brush for the next eight hours.[177] Because the studio had not only picked her up but had also taken her cell phone, Brush could not leave the studio or call anyone for help.[178] In her complaint, Brush alleged the employees demanded she videotape an interview, wherein she was forced to say certain statements before they allowed her to leave.[179] After the incidents, Brush discovered that everything had been taped for an episode of an E! show, Reality Hell.[180]

Brush filed a lawsuit stating numerous causes of action against E!, including fraud, conspiracy, and false imprisonment.[181] E! pointed out that Brush’s contract contained a mandatory arbitration provision and claimed she was “trying to ‘avoid the legal implications’ of her contract” by filing a lawsuit against E!.[182] The judge agreed with E! and ruled that Brush honor her contractual obligations.[183]

Although Brush was not technically precluded from having her claims heard, query whether she should have to abide by a contract that was, at its core, based on the fraudulent misrepresentations of E!. Recall that the definition of informed consent requires the contestant know exactly to whom and for what purpose she is consenting.[184] Brush thought she was consenting to appear on a reality show about a girl pop group.[185] She did not think she was consenting to be mocked, humiliated, and held hostage.[186] Therefore, given the apparent lack of Brush’s informed consent, the court should have found that the contract Brush signed was unenforceable due to E!’s fraudulent misrepresentations, and allowed her to adjudicate her claims.

Other reality show contestants have also brought lawsuits involving their portrayal on their respective shows. Taheed Watson and Ytossie Patterson, two contestants on Fox’s Temptation Island, filed a defamation suit against Fox in 2001.[187] Fox removed both contestants from the show, claiming the couple did not disclose that they had a child together.[188] Watson and Patterson contended they told producers about their child early in the interview process.[189] Producers for the show told them the disclosure of their child was “the wrong answer,” and then coached them not to discuss the child.[190] To support the claim, Patterson said the producers provided her with a phone twice daily to call their child.[191] After being removed from the show, both contestants claimed they received “threats, profanity, epithets, and expressions of moral indignation” from Temptation Island fans.[192] Watson and Patterson admitted they participated on the show to help further their acting and modeling careers, but they received little to no work after Fox removed them from the show.[193] Watson and Patterson eventually settled with Fox out of court.[194]

Assuming Watson’s and Patterson’s claims are true, they highlight another area where producer misrepresentation calls into question the enforceability of reality show contracts. As mentioned above, producers may find themselves needing to rely on contestants alone to be honest about their backgrounds.[195] However, what happens when contestants are honest about their backgrounds, but their honesty is not what producers want to hear? Watson alleged that Fox “needed a ‘good-looking black couple’ at the last minute.”[196] If Fox indeed needed a couple such as Watson and Patterson, producers may have been inclined to overlook their child, coach them to not mention the child, and assure them they would be able to communicate with the child if they agreed to appear on the show.[197] If producers promise a material part of a reality show contract is waivable in return for contestants’ signatures on the contract,[198] producers should not be able to later claim that the contestants’ alleged “violation” of the contract is grounds to terminate their employment.

In some cases, reality show contestants may know very little about the contents of the contracts they sign given their length, the use of boilerplate and legal jargon, and the relatively short time contestants have to review the contracts.[199] Producers may coerce contestants into signing the contracts by draping the legal implications in exaltations of fame and money.[200]

Though not every contestant on a reality show leaves with a sense of wrongdoing on the part of producers, contestants who feel as though producers have committed misconduct toward them run into countless obstacles stemming from their signed contracts.[201] While much of the litigation until now has concerned contestants’ dissatisfaction with their portrayals, one must question for how long and for what types of behavior courts will allow producers’ reliance on contestants’ contracts to obstruct lawsuits.

VII. CONCLUSION

Reality show contestants must be granted greater protection than they currently have. If courts find that reality show contestants are employees of production companies, then the producers of those companies owe their contestants several duties.

First, producers must recognize that some of their tactics to garner ratings may come at the expense of their contestants’ mental health and well-being. While producers should not necessarily be required to abstain completely from many of their mental tactics, they should realize the severity of the harm they may cause and offer contestants after-show counseling to help the contestants cope with their reality show experiences. Indeed, a minority of shows already offer their contestants such after-show counseling.[202]

Second, producers should consider the safety of contestants while on the show, namely by ensuring they conduct thorough background checks of all individuals appearing on their shows. Although conducting thorough background checks will likely raise reality show production costs, producers may find the costs worthwhile considering some of the unstable, untruthful, and sometimes extremely dangerous contestants who have appeared on reality shows.

Finally, if contestants bring lawsuits challenging the practices of production companies, courts should not be so quick to hold that contestants must abide by the contracts’ language. Instead, courts should closely examine the circumstances underlying contracts’ signing to determine whether contestants gave informed consent, which includes examining whether contestants were actually told the complete truth about a show’s premise and their roles on the show. Moreover, courts should not allow producers to engage in fraud or misrepresentation when dealing with contestants while hiding behind their contracts when contestants try to bring lawsuits based on producers’ actions.

While Savija’s suicide may be an outlier in the sphere of reality television, the evidence laid out in this article indicates that the reality show production process can pose real threats to the mental health and physical safety of its contestants. Producers need to recognize these potential threats and take affirmative steps to ensure not only that contestants understand the effects the shows may have on their health and safety, but also to ensure they are protected in as many ways as possible. Without improving or implementing additional safeguards, many contestants will find that the ultimate challenge is surviving their reality television experience.

* B.S. Business Administration, summa cum laude University of South Alabama, J.D. Charlotte School of Law.

1. Luke Benedictus, Big Bother, The Age, Apr. 27, 2003, http://www.theage.com.au/articles/2003/04/26/1051316052306.html.

2. Id.

3. Id.

4. Gloria Hillard, ‘Survivor!’: Questioning Candidates-And the Game, CNN.com, Oct. 21, 1999, http://www.cnn.com/SHOWBIZ/TV/9910/21/survivor/index.html.

5. Id.

6. See infra Part III.

7. Edward Wyatt, On Reality TV: Tired, Tipsy, and Pushed to Brink, N.Y. Times, Aug. 2, 2009, at A1.

8. The analysis in this paper is limited to competition-based reality shows and excludes reality shows that follow people through their daily lives, as well as talent-based reality shows, such as American Idol.

9. Restatement (Third) of Employment Law § 1.01 (2008).

10. Id. § 1.01(a).

11. Id. § 1.01(b).

12. Id. § 1.01(c).

13. Amy Kaufman, Reality TV—Who’s Vetting the Contestants?, The Wrap, Sept. 21, 2009, http://www.thewrap.com/television/article/reality-tv-whos-vetting-contestants-7524.

14. Id.

15. Restatement (Third) of Employment Law § 1.01 (2008).

16. See generally Kaufman, supra note 13.

17. Sam Brenton & Reuben Cohen, Shooting People: Adventures in Reality TV 138 (2003).

18. See generally Kaufman, supra note 13.

19. Restatement (Third) of Employment Law § 1.01 (2008).

20. See e.g., Brenton & Cohen, supra note 17, at 3.

21. See generally id.

22. See generally id. at 118.

23. Restatement (Third) of Employment Law § 1.02 (2008).

24. Id.

25. Id. cmt. b.

26. Id.

27. Id.

28. Wyatt, supra note 7.

29. Id.

30. 19 Samuel Williston & Richard A. Lord, A Treatise On The Law Of Contracts § 54:2 (4th ed. 2001).

31. Id. § 54:3.

32. Id.

33. Id.

34. See generally Wyatt, supra note 7.

35. Id.

36. Wyatt, supra note 7.

37. See generally id.

38. Id.

39. See generally Brenton & Cohen, supra note 17.

40. Id.

41. Id.

42. Wyatt, supra note 7.

43. Brenton & Cohen, supra note 17, at 117.

44. Wyatt, supra note 7.

45. Id.

46. Id.

47. Wyatt, supra note 7.

48. Id.

49. Id.

50. Id.

51. Brenton & Cohen, supra note 17, at 114–15.

52. Id.

53. Id. at 115.

54. Id.

55. Id.

56. Id. at 116.

57. Brenton & Cohen, supra note 17, at 121.

58. Id.

59. Id.

60. Id. at 122.

61. Id.

62. Benedictus, supra note 1.

63. Brenton & Cohen, supra note 17, at 121.

64. See supra Part II.

65. 27 Am. Jur. 2d Employment Relationship § 193 (2010).

66. Id. § 248.

67. Id.

68. Restatement (Second) of Torts § 520 (1977).

69. See NBC, http://www.nbc.com/Fear_Factor/files/index.shtml (last visited Apr. 23, 2010). Many of the stunts outlined on Fear Factor’s website also include “Fear Facts,” which highlight not only the dangers of the challenges, but also the producers’ knowledge of the dangers. For example, in one challenge titled “Swamp Course,” contestants had to collect three skulls from an obstacle course. The first skull was at “the bottom of a fifteen-foot well”; the second skull was “in a pit of quicksand”; and the third skull was behind the rear legs of an alligator. The “Fear Facts” of the “Swamp Course” included: “Most injuries associated with quicksand . . . result from . . . the victims having their limbs pulled from their sockets during a rescue attempt” and “A seven-foot alligator . . . can rip a human arm off in less than three seconds.” Id.

70. Joel Michael Ugolini, So You Want to Create The Next Survivor: What Legal Issues Networks Should Consider Before Producing a Reality Television Program, 4 Va. Sports & Ent. L.J. 68, 77 (2004).

71. See Kaufman, supra note 13.

72. Id.

73. Murder Suspect Raises Reality TV Questions, MSNBC.com, Aug. 21, 2009, http://today.msnbc.msn.com/id/32505557.

74. See, e.g., Eligibility Requirements for CBS’ Pirates Project, CBS.com, http://www.cbs.com/primetime/pirates/documents/CBSs_PIRATES_Casting_App.pdf (last visited Sept. 20, 2010).

75. See Kaufman, supra note 13 (discussing the “problem” of taking money out of casting budgets to run more thorough background checks).

76. Id.

77. Id.

78. Id.

79. Id.

80. Id.

81. Kaufman, supra note 13.

82. Id.

83. Id.

84. Id.; see also Stephen Battaglio, TV Contestants Have Colorful Ties to Past, N.Y. Daily News, Jan. 31, 2003, at 119 (reporting that a “high percentage” of potential contestants for The Bachelor are rejected for having genital herpes).

85. Kaufman, supra note 13.

86. Murder Suspect Raises Reality TV Questions, supra note 73.

87. Kaufman, supra note 13.

88. Murder Suspect Raises Reality TV Questions, supra note 73.

89. Id.

90. Kaufman, supra note 13.

91. Brian Lowry, “Reality” Television Gets Another Blow; Probe Begun, L.A. Times, Apr. 29, 2000, at A13 [hereinafter Lowry, Reality Television].

92. It was also discovered that “Rick Rockwell” was not his real name. See IMDb.com, www.imdb.com/name/nm0734351/ (last visited May 1, 2010).

93. Lowry, Reality Television, supra note 91.

94. Nadya Labi, An Online Paper Trail, Time, Mar. 6, 2000, at 69.

95. See id.

96. Gary Susman, Cutting-Edge TV, EW.com, July 8, 2002, http://www.ew.com/ew/article/0,,312835,00.html.

97. Id.

98. Id.; Brenton & Cohen, supra note 17, at 129.

99. Id.

100. Id.

101. Id.

102. Compare Battaglio, supra note 84 (stating that “CBS didn’t know about the police record of [Justin Sebik]”), with Susman, supra note 96 (stating that CBS “acknowledged that it had known of an arrest for robbery”).

103. Brenton & Cohen, supra note 17, at 129.

104. Am. Jur. 2d, supra note 65, § 393.

105. Id.

106. Id.

107. Id.

108. Id.

109. Ugolini, supra note 70, at 70.

110. See Kaufman, supra note 13.

111. See supra Part III.

112. See Am. Jur. 2d, supra note 65, at § 393 (2010) (stating the underlying requirements for a negligent hiring cause of action).

113. Lisa de Moraes, Reality Show Contestants Willing to Kill in French Experiment, WashingtonPost.com, Mar. 18, 2010, http://washingtonpost.com/wp-dyn/content/article/2010/03/17/AR2010031703594.html.

114. See supra Part IV.B.

115. See supra Part IV.B.

116. See supra Part IV.A.

117. See supra Part IV B.

118. Brian Lowry, Be Sure to Read the Fine Print, L.A. Times, Aug. 20, 2002, at F8 [hereinafter Lowry, Fine Print].

119. 2 Thomas D. Selz et al., Entertainment Law: Legal Concepts and Business Practices § 14:2 (3d ed. 2009).

120. Id. § 14:15.

121. See generally Brenton & Cohen, supra note 17, at 118.

122. See generally id. at 118–19.

123. See generally id. at 118 (”[S]hows can't exist without this measure of control over contestants, liberty and privacy [is] curtailed so that all angles of focus and interaction are pointed inwards, as lines criss-crossing a group dynamic.”).

124. See supra Part II.

125. See generally Ugolini, supra note 70, at 82–83 (stating that in extreme situations, reality show contestants may have grounds to assert lawsuits claiming they suffered emotional distress as result of being duped or ambushed).

126. Selz et al., supra note 119, §14:17.

127. Id.

128. Id.

129. Id.

130. Id.

131. Id.

132. Selz et al., supra note 119, § 14:17.

133. Restatement (Second) of Torts § 46 cmt. d (1965).

134. See infra Part VI.B.; see also Ugolini, supra note 70, at 82 (citing CNN.com, ‘Joe Schmo’ Duped in New Reality Show, August 29, 2003, available at http://www.cnn.com/2003/SHOWBIZ/TV/08/29/television.joe.schmo.reut/) (detailing a Spike TV produced reality show called “Joe Schmo Show” where producers told the contestant he was participating in a show called “Lap of Luxury,” but in actuality, the show “‘was an elaborate hoax, perpetrated on an unsuspecting ‘Joe Schmo’ by a cast of actors and a team of producers, who created scripted lines and rigged competitions to test the unwitting star.”).

135. See Brenton & Cohen, supra note 17, at 139 (discussing the “talk of doom” and in general, producer honesty regarding reality show expectations); cf. Ugolini, supra note 70, at 82 (discussing how reality TV shows that are premised on contestant surprise may constitute “extreme and outrageous” conduct). See generally Stirling Media Research Inst., Broad Standards Comm’n, Consenting Adults? 57 (2000) (discussing informed consent at the outset of reality TV show contracts).

136. 86 C.J.S. Torts § 84 (2010).

137. Selz et al., supra note 119, § 14:18.

138. Id.

139. See generally id. (highlighting the difficulty of succeeding on a negligent infliction of emotional distress claim).

140. See id. (stating that while traditionally the element of physical harm within a negligent infliction of emotional distress claim was difficult to prove, some states like California and Hawaii, have recently allowed juries to determine whether this element has been satisfied).

141. See id. (stating that the threshold for the extreme and outrageous prong of a negligent infliction of emotional distress claim is rather high).

142. Id. at § 14:19.

143. See Ugolini, supra note 70, at 82–84 (discussing the growing trend of lawsuits based on reality TV shows that are premised on contestant surprise).

144. See infra Part VI.B.

145. See infra Part VI.B.

146. Lowry, Fine Print, supra note 118.

147. Id.

148. Id.

149. See Brenton & Cohen, supra note 17, at 139–40 (discussing the discrepancy between what a producer’s “talk of doom” entails and what the contestant understood, especially in regards to the “context in which their words and actions will be situated”).

150. See id. at 137–38; see also Stirling Media Research Inst., supra note 135, at 11.

151. Stirling Media Research Inst., supra note 135, at 11.

152. Id.

153. Brenton & Cohen, supra note 17, at 138.

154. Lowry, Fine Print, supra note 118.

155. Brenton & Cohen, supra note 17, at 138.

156. Survivor Lessons: Essays on Communication and Reality Television 45 (Matthew J. Smith & Andrew F. Wood eds., 2003).

157. Id.

158. See Benton & Cohen, supra note 17 at 54.

159. Id., at 141.

160. Id.

161. Lowry, Fine Print, supra note 118.

162. Id.

163. Brenton & Cohen, supra note 17, at 138.

164. Id.

165. Id. at 139.

166. Id.

167. Id.

168. Lowry, Fine Print, supra note 118.

169. See Brenton & Cohen, supra note 17, at 139–40.

170. ‘Reality Hell’ Star Fights To Keep Case In Court, 22 Andrews Ent. Indus. Litig. Rep. 4 (2010) [hereinafter Reality Hell].

171. Id.

172. Id.

173. Id.

174. Id.

175. Id.

176. Reality Hell, supra note 170.

177. Id.

178. Id.

179. Id.

180. Id

181. Id.

182. Reality Hell, supra note 170.

183. Id.

184. See supra Part VI.A.

185. Reality Hell, supra note 170 (discussing E!’s contact with Brush regarding only a casting opportunity for a “new girl group show” which would be similar to MTV’s Making the Band).

186. Id.

187. Brian Lowry, ‘Temptation’ Parents Defend Suit Against Fox, L.A. Times, Apr. 5, 2001, at D6 [hereinafter Lowry, Temptation].

188. Id.

189. Id.

190. Id.

191. Id.

192. Id.

193. Lowry, Temptation, supra note 187.

194. E-mail from Taheed Watson to Jennifer Blair-Smith (May 6, 2010, 14:28 EST) (on file with author) (referring to the contract signed with Fox as an “iron clad” contract that required mediation in the event of a legal issue).

195. Murder Suspect Raises Reality TV Questions, supra note 73.

196. Lowry, Temptation, supra note 187.

197. Id.

198. Lowry, Temptation, supra note 187 (stating that parties shall not bring an innocent third party “into the mix”).

199. See generally Brenton & Cohen, supra note 17 (stating the importance of using plain English rather than difficult to understand legal jargon within consent forms); see supra Part IV.

200. See generally Brenton & Cohen, supra note 17 (indicating the focus on prize money).

201. See supra Part VI.B.

202. Benedictus, supra note 1.

NOTES & COMMENTS

UNMASKING THE MASK-MAKER: DOMAIN PRIVACY SERVICES AND CONTRIBUTORY COPYRIGHT INFRINGEMENT

“Domain privacy services” are online services that protect the anonymity of their website-operating customers. Typically, the privacy service registers a domain name on behalf of its website-operating customer, and then leases the domain name back to the customer. The customer retains the right to use and control the domain, while the privacy service holds itself out as the true owner through the registrar’s WHOIS database. Copyright-infringing website owners prefer this arrangement to avoid prosecution by forcing aggrieved copyright holders to first contact the listed privacy service, which typically refuses to reveal the identity of the alleged infringer. This Comment argues that privacy services which license domain names to known copyright infringers should be held secondarily liable on a contributory copyright infringement theory. Further, this Comment proposes a new model cease-and-desist letter warning privacy services that this licensing scheme likely violates ICANN rules as well as most privacy services’ own “terms of service” agreements, and likely opens the privacy service to contributory copyright infringement liability.

I. INTRODUCTION

Imagine trying to operate a successful record label or movie studio in a world fraught with widespread illegal file sharing. Imagine that someone has created a website dedicated to distributing your company’s content online for free without your permission. You run a domain ownership query on the unauthorized site at www.WHOIS.org—a phone book-like directory listing of all website operators—to find the name and e-mail address of the person running the site[1] so that you can issue your routine cease-and-desist letter.[2] Instead of displaying the site operator’s contact information, the directory lists something called a “privacy service” as the site owner, and gives you the privacy service’s contact information.[3]

You send numerous e-mail complaints to the privacy service, all of which are ignored, and you have no other way to contact the person running the unauthorized site. Your lawyer tells you that the privacy service is not intimidated by threats or demands of any kind, and the only way to obtain the identity of the person running the unauthorized site is to subpoena the privacy service’s customer records, which requires filing an expensive lawsuit.[4] Meanwhile, new unauthorized sites have appeared on the Internet, and you simply cannot afford to issue a subpoena against every “private” infringer.[5] The privacy service stands between you and the biggest threat to your business—Internet piracy—and there is nothing you can do about it.

After Napster ushered in a culture of online file sharing, many copyright holders faced extinction unless they could successfully assume the burden of policing the Internet for copyright infringement.[6] Those media companies that could afford to hire teams of lawyers to enforce their copyrights developed anti-piracy programs[7] or outsourced the police work to private enforcement agencies.[8] Much of today’s anti-piracy efforts focus on policing illicit uses of complex Peer-to-Peer and BitTorrent technologies,[9] but traditional client-server or website-based commission or facilitation of copyright infringement remains a problem for many copyright holders.[10] “Cyberlockers,” such as Rapidshare, for example, are website-based file sharing services that allow users to post content for retrieval by others, often in exchange for a flat monthly or yearly fee.[11] Despite the relatively simple client-server technology relied upon by Cyberlockers, the sheer number and popularity of these types of sites makes online copyright enforcement very difficult.[12]

The Digital Millennium Copyright Act (“DMCA”)[13] allows copyright holders to send a cease-and-desist letter called a “takedown notice” to suspected infringers or their Internet service providers (“ISP”).[14] Recipients then have the opportunity to respond by removing the infringing content or challenging the allegation contained in the notice.[15] Part of a copyright holder’s day-to-day enforcement includes sending takedown notices to website operators or their ISPs who commit or facilitate copyright infringement.[16] Today, the takedown notice procedure has become less burdensome with the help of digital fingerprinting and automated notice-and-takedown technology,[17] but infringers have become equally resourceful and have found ways to remain anonymous online.[18] When a copyright holder cannot determine the e-mail or physical address of a suspected infringer and cannot contact the infringer’s ISP because of the use of anonymity services or software, the takedown procedure is useless.[19]

The Internet Coalition for Assigned Names and Numbers (ICANN) is a U.S. nonprofit corporation[20] that is widely regarded as the closest thing to a “government” of the Internet.[21] ICANN controls the top level domains of the Internet (.com, .net) and sets policies regarding the sale of “parcels” of the Internet in the form of web domains.[22] ICANN delegates to “registrars”[23] the power to activate and sell domain names through an agreement called the Registrar Accreditation Agreement (“RAA”).[24] Registrars sell the domain names to “registrants” or “registered name holders,” who are the ultimate consumers and owners of the web domains.[25]

Currently, ICANN policy requires that all domain registrants make their personal information—including name and e-mail address—available in each registrar’s publicly-accessible WHOIS database.[26] The RAA charges registrars with maintaining a complete and accurate WHOIS database as a condition of remaining an accredited seller of domain names.[27] This policy is widely criticized because spammers, data harvesters, and even stalkers can freely access the database to obtain any website owner’s personal information.[28] On the other hand, the WHOIS database forces website owners to be accountable for their actions online and aids law enforcement in fighting cybercrime.[29] The WHOIS database is instrumental to intellectual property holders’ enforcement of their rights because it allows them to identify infringers quickly and efficiently.[30]

In response to privacy concerns surrounding the WHOIS database, “domain privacy services” such as Domains By Proxy and WhoisGuard began offering anonymity protection service to website operators.[31] The service works as follows: the privacy service registers a domain name on behalf of its customer and then licenses control of the domain name back to the customer for a fee.[32] The privacy service becomes the registrant and owner of the domain name, while the customer/licensee retains the rights to use and sell the domain name.[33] This licensing scheme is detailed in all privacy services’ Terms of Service (“TOS”) agreements with their customers,[34] and the purpose of the arrangement is to cause the privacy service’s contact information—not the customer’s—to appear in the registrar’s WHOIS database.[35] This arrangement complies with ICANN rules because the privacy service is correctly named as the owner of the domain in the WHOIS database.[36] The end result is that the website operator cannot be identified through the WHOIS database and cannot be contacted directly by anyone except the privacy service.[37]

Many website owners have legitimate reasons for remaining anonymous, but others use the anonymity to operate infringing websites with impunity.[38] Copyright holders cannot send DMCA takedown notices to hidden infringers, and privacy services typically do not respond to allegations of infringement made by aggrieved intellectual property holders.[39] DMCA Section 512(h) allows copyright holders to send pre-litigation subpoenas to “online service providers” to compel release of their infringing customers’ contact information,[40] however the section does not apply to services that do not store infringing content on their servers.[41] Domain privacy services are not subject to these subpoenas because they offer no such file storage functions.[42]

Seemingly, copyright holders seeking to enforce their rights against infringers who use privacy services are limited to either (1) requesting that the privacy service reveal an infringing customer in the name of fairness or (2) compelling release of the infringer’s identity by subpoena through the discovery process.[43] The first option is tantamount to asking the privacy service to vitiate the only service that it provides—a request that would surely be ignored. The second option is untenable because it requires filing a costly lawsuit against every suspected infringer,[44] which requires a case-by-case analysis of whether discovery of an alleged infringer’s identity violates his or her First Amendment right to remain anonymous.[45] Neither option provides any incentive for privacy services to stop harboring infringers or to monitor illicit use of their services.

Without other viable alternatives, an aggrieved copyright holder should consider bringing a contributory copyright infringement action against a privacy service for knowingly assisting certain customers in the commission of copyright infringement. A successful suit would set a valuable precedent for privacy services’ joint liability for copyright infringement, which would deter privacy services from protecting infringers, and encourage them to monitor illicit uses of their services. Part II of this article explores the legal issues and arguments that would likely be raised in such a lawsuit.

Before filing a complaint, however, an aggrieved copyright holder should send a letter to the privacy service demanding release of the alleged infringer’s contact information and warning of the legal consequences for knowingly assisting infringers. A strongly-worded letter containing clear evidence of the infringing activity should influence the privacy service to reconsider its privacy policy in the limited situation where a person’s intellectual property rights are being violated. Part III of this article discusses the legal support for this “demand letter.” Part V contains a sample demand letter that could be adapted and sent to a privacy service as a prelude to litigation.

Today, exposing infringers to liability requires exposing those who intentionally assist them as well. Privacy services and their customers should understand that the law strikes a balance between the right to anonymity and the protection of those harmed by its abuse.[46]

II. DOMAIN PRIVACY SERVICES THAT KNOWINGLY ASSIST CUSTOMERS IN THE COMMISSION OF COPYRIGHT INFRINGEMENT SHOULD BE FOUND LIABLE ON A THEORY OF CONTRIBUTORY INFRINGEMENT

A copyright holder filing an action against an anonymous infringer should also pursue any privacy service that knowingly assists the infringer using a theory of contributory liability. The copyright holder should file a complaint alleging a direct copyright infringement claim against the anonymous infringer as a “Doe” defendant,[47] and the privacy service should be named as an additional defendant and pursued on a claim of contributory copyright infringement.[48] Filing a lawsuit would allow a copyright holder to obtain the identity of the “Doe” infringer through issuing a subpoena in discovery.[49] However, a plaintiff must overcome a First Amendment hurdle before a court can compel release of an anonymous defendant’s identity.[50]

On the merits of the case, contributory copyright infringement requires: (1) direct infringement by a third party[51] and that the defendant (2) knowingly and (3) materially contributed to the direct infringement.[52] Contributory copyright infringement liability is not expressly provided for in the copyright statutes,[53] but the doctrine arose in the brick-and-mortar context, where absentee-landlords and flea market owners were held liable for the infringing activities of their patrons.[54] A defendant privacy service should be expected to vigorously dispute the “material contribution” element, as this case involves cyberspace intangibles such as domain names and Internet anonymity, which are not squarely addressed in the leading contributory infringement cases. In the 21st century, however, the distinction between real space and cyberspace is only minimally helpful, and the analysis turns on how directly or indirectly the secondary infringer assists the primary infringer.[55]

Two complete defenses to contributory copyright infringement have developed amid changes in technology: the DMCA Section 512(a) provides immunity for certain kinds of Internet service providers,[56] and the Supreme Court created a complete defense for makers of products capable of both infringing and non-infringing uses in the seminal Sony-Betamax case.[57] The latter defense protects makers of “staple article[s] of commerce” such as photocopiers, cameras, and recorders.[58] Privacy services should be expected to raise both of these defenses, as well as a third defense based on a First Amendment right to protect the anonymous speech of others.[59] However, the court should reject all of these defenses and impose liability for the reasons discussed below.

A. Direct Infringement by a Third Party

Contributory copyright infringement first requires direct infringement by a third party.[60] This article assumes that a copyright holder has a strong case of direct infringement against the underlying website operator, and will instead focus on the contributory liability of the privacy service. The main purpose of the lawsuit would be to create a precedent for privacy service liability in the copyright context, which would discourage privacy services from protecting customers who they know are abusing the service to commit infringement.

B. The Knowledge Requirement

The second element of contributory copyright infringement requires actual or constructive knowledge of the primary infringement.[61] Knowledge of specific infringement is not required.[62] To prove knowledge, the copyright holder must “provide the necessary documentation to show there is likely infringement;”[63] and “turning a blind eye” by actively taking steps to avoid gaining knowledge of the infringement satisfies the knowledge requirement.[64]

In Arista Records LLC v. Usenet.com, Inc., the United States District Court for the Southern District of New York found that an online newsgroup was explicitly put on notice of its users’ infringement when the plaintiff record label sent multiple cease-and-desist letters to the defendant, and when users admitted to copyright infringement in their communications with the defendant’s technical support staff.[65] In another case, In re Aimster Copyright Litig., the Seventh Circuit held that a defendant file sharing service had knowledge of its users’ infringing activity when the defendant turned a blind eye toward the infringement by encrypting all transferred files so that it would be impossible to know which ones were infringing.[66]

Similar to Usenet, a copyright holder can put a privacy service on notice of its customer’s infringements by sending notices of infringement to the privacy service’s WHOIS address and other addresses listed on the privacy service’s website.[67] Specific links to infringing content and screenshots from the infringing website should be attached to the letter to create the strongest possible evidence of infringement. Such documentation should be strong enough to “show there is likely infringement” and preclude a privacy service from arguing that it was not alerted to the infringement due to weak or insufficient evidence.[68]

The privacy service would likely argue that it does not read e-mails sent to the address published in the WHOIS database; rather, it merely forwards e-mails to its customers,[69] and thus it cannot have knowledge of the infringement. However, privacy services are in fact the registrants of the domains they register on behalf of others;[70] domain owners are expected to keep a working e-mail address under ICANN rules;[71] many privacy services claim to comply with ICANN rules in their TOS agreements;[72] and at least one privacy service claims to provide “world-class” responsiveness to inquiries, complete with “24 by 7 telephone support . . . and a responsive staff eager to answer your questions.”[73] Consistent failure to respond to infringement notices or affirmatively taking a “neutral”[74] position under such circumstances may be viewed by a court as turning a blind eye to infringement[75]—particularly if the privacy service responds to non-infringement-related inquiries or provides technical support for its customers. Like the encryption in Aimster, a privacy service does not insulate itself from knowledge of the infringement by instituting a policy of evading or forwarding all complaints from copyright holders.[76] Accordingly, strong evidence of infringement delivered to all of the privacy service’s advertised addresses should be sufficient to establish at least constructive knowledge of infringement.

C. Material Contribution

The third element of contributory copyright infringement requires “material contribution” to the primary infringement.[77] Material contribution is established when the secondary infringer provides the “site and facilities” for the direct infringement.[78] The most hotly contested issue in a hypothetical suit would be whether a privacy service provides the “site and facilities” for its customer’s infringements by providing domain registration service, an Internet address, technical support, and anonymity protection.

In Fonovisa, Inc. v. Cherry Auction, Inc., the Ninth Circuit held that a swap meet owner provided the “site and facilities” for copyright infringement by providing “space, utilities, parking, advertising, plumbing, and customers” for merchants who sold counterfeit recordings on the premises.[79] The court reasoned that “it would be difficult for the infringing [sales] to take place in the massive quantities alleged without the support services provided by the swap meet.”[80]

In Solid Host, NL v. Namecheap, Inc., the United States District Court for the Central District of California extended the Fonovisa “swap meet” reasoning to the online world.[81] In denying a privacy service’s motion to dismiss a trademark holder’s contributory trademark infringement claim, the court stated that the privacy service, which acted as the registrant for the domain name used by a “Doe” cybersquatter to commit the underlying offense,[82] had the requisite “direct control and monitoring of the instrumentality” used for infringement[83] to be held liable for contributory trademark infringement.[84] The court reasoned that, similar to a swap meet owner, the privacy service provided the “[I]nternet real estate” utilized by the cybersquatter to hijack the plaintiff’s domain name.[85] The court also stated that the “anonymity service [provided] was central to [the] cybersquatting scheme” because the illegal activity would have ceased if the privacy service had simply returned the domain name to the plaintiff.[86]

Like the utilities, parking, and other support services in Fonovisa,[87] it would be very difficult to commit website-based copyright infringement without the necessary domain address and privacy-cloaking features that facilitate infringement with impunity. Infringers who use their own domain names as they appear in the WHOIS database can easily be discovered and prosecuted, and such registrations can be terminated by the registrar pursuant to ICANN rules.[88] Because the infringement would be more difficult to commit or even cease completely without provision of the Internet address and the insurance afforded by anonymity, privacy services provide the “site and facilities” for infringement to occur. Although Solid Host was a trademark case,[89] the licensing scheme deemed “central” to the infringement scheme in that case[90] is no less central to the copyright infringement at issue here. Just as the illegal activity in Solid Host[91] would have ceased upon termination of the privacy protection,[92] infringing website owners would cease their illegal activities if they were exposed to liability upon removal of the anonymity protection.

In response to the copyright holder’s argument, a defendant privacy service would: (1) challenge the real estate-Internet address analogy; (2) object to the application of a trademark case in the copyright context; (3) argue that “anonymity” should be extricated from the domain licensing scheme and analyzed as a First Amendment issue; and (4) challenge the causal relationship between providing anonymity and the commission or facilitation of copyright infringement. Each of these counterarguments will be examined in turn.

1. The Analogy Between Real Estate and Domain Names

There is some debate over whether infringement cases that arose in the brick-and-mortar context should apply to the Internet.[93] A defendant privacy service would likely object to a comparison of the Fonovisa flea market to an Internet address. In Perfect 10, Inc. v. Visa Int’l Serv. Ass'n, the Ninth Circuit held that a defendant credit card company’s provision of a payment transaction system for purchases of infringing content over a website did not amount to a material contribution, because the infringing purchases could occur even without the payment transaction system.[94] In reaching its decision, the court rejected the plaintiff’s application of the Fonovisa case and stated that brick-and-mortar infringement cases should not be applied to the online world.[95]

However, some judges are more willing to accept the real estate-intellectual property connection. The Solid Host court comfortably drew an analogy between landowners and domain owners by accepting the flea market analogy and describing the defendant privacy service as a “cyber-landlord of Internet real-estate.”[96] The court in A & M Records, Inc. v. Napster, Inc. relied on the flea market analogy when it held that “site and facilities” encompasses file storage computers, which are arguably less analogous to real estate than domain names.[97] While computer servers are mobile, domain names, like real estate, derive their value and utility from their unique locations in space.[98] Finally, the Perfect 10 court explicitly stated that providing a “website” would count as a “site” under the material contribution test.[99] Arguably, privacy services that license domain names—an essential component of a website—provide their customers with the websites used for infringement.[100] A judge with a fairly sophisticated understanding of the Internet should accept the proposition that privacy services that knowingly lease Internet domains for illegal use contribute to infringement in the same way as landlords or flea market owners who knowingly lease real property for illegal use.

2. Copyright and Trademark Share Similar Principles of Secondary Liability

A defendant privacy service would object to the application of Solid Host in the copyright context. However, while the standards for trademark and copyright infringement are fundamentally different,[101] courts have recognized that copyright and trademark share similar principles of secondary liability.[102]

Contributory infringement “originates in tort law and stems from the notion that one who directly contributes to another’s infringement should be held accountable.”[103] To illustrate, the Fonovisa flea market owner was also found liable for contributory trademark infringement for knowingly supplying the necessary marketplace for the sale of infringing products.[104] This is hardly different from the court’s rationale for its copyright infringement holding,[105] and, more importantly, the flea market owner’s actions satisfied both standards of contributory liability.[106] If a privacy service was found liable for contributory trademark infringement in Solid Host,[107] then a privacy service engaging in identical acts of contribution to copyright infringement should also be found liable under similar copyright and tort law principles of secondary liability. Accordingly, privacy services should be held accountable for their contributory acts in either infringement context.

3. Anonymity Is Not an Independent Contribution to Infringement

The “site and facilities” question may hinge on whether providing a domain name and anonymity are regarded by the court as separate contributions to infringement. Answering this question requires a technical understanding of how “privacy” is administered. The registrar is the entity that maintains the WHOIS database and publishes registrants’ information therein.[108] The privacy service’s act of registering a domain on behalf of its customer automatically triggers the input of the privacy service’s information into the WHOIS database in place of the customer’s, which produces the bait-and-switch described as “anonymity.” [109] No anonymity is provided independently from the process of registering a domain on behalf of a third party.[110] Thus, “privacy service” is a composite service involving domain registration, domain licensing, and the resulting anonymity protection—none of which can be isolated and analyzed as separate, volitional acts of contribution. A privacy service, however, would ask the court to scrutinize anonymity as a separate contribution that, if considered alone, raises a causation issue and implicates the customer’s First Amendment right to speak anonymously online.[111]

A court is not likely to concentrate solely on “anonymity” as an independent contribution to infringement. In Fonovisa, the court rejected the defendant’s argument that the “leasing of space” should be scrutinized in isolation, and instead considered the leasing of space in the broader context of providing “the environment and the market for counterfeit recording sales to thrive.”[112] The court considered the combined effect of providing the “space, utilities, parking, advertising, plumbing, and customers”[113] without scrutinizing the causal relationship between providing toilets and the infringement. Similarly, the insurance against prosecution afforded by anonymity should be viewed in the larger context of providing an online safe haven for known infringers which also offers domain registration services, as well as technical support.[114] The overall “environment” created by the privacy service’s contributions is relevant under Fonovisa,[115] and given that the anonymity is technically inextricable from domain registration, a court is unlikely to scrutinize anonymity in isolation.[116]

4. Causation

Causation is not a required element of contributory copyright infringement,[117] but at least one court has read an element of “but for” causation into the material contribution analysis. In Perfect 10, a credit card company was not liable for contributory copyright infringement when it provided an online payment transaction system for an infringing website because the card company “[had] no direct connection to [the] infringement.”[118] The court stated that the card company did not cause the infringement because the infringement could continue even without the payment system,[119] and because “[a]ny conception of ‘site and facilities’ that encompasses [credit card companies] would also include a number of peripherally-involved third parties, such as . . . utility companies that provide electricity to the Internet.”[120] Similarly, a defendant privacy service would argue that providing anonymity is a “peripheral” contribution akin to providing electricity, that the infringement would continue even if the privacy protection were lifted, and that privacy protection cannot therefore be the cause of the infringement.

The privacy service is not a “peripheral” contributor to the infringement because it contributes the domain name—a major component of a “website,” which the Perfect 10 court stated would qualify as a material contribution.[121] The very nature of the Internet and the website format is in the domain name system itself: Internet addresses are the gateways to the server computers that comprise the Internet,[122] and providing such access points should be encompassed in the Ninth Circuit’s conception of a “website” as a “site and facility” for online infringement.[123] The added effect of anonymity only magnifies the privacy service’s assisting role in the infringement, as it would be near impossible to operate an infringing website for long without the aid of an anonymous domain name. As the district court duly noted in Solid Host, “[i]f [the privacy service] had returned the domain name to [the plaintiff], Doe’s illegal activity would have ceased.”[124] Accordingly, privacy services do play a central causal role in their customers’ infringing activities.

D. Anonymous Infringement is Not a Constitutionally Protected Right

Apart from objecting to discovery requests on First Amendment grounds, the privacy service would argue that imposing liability for providing anonymity service would violate the First Amendment rights of its customers to speak anonymously,[125] as asserted on their behalf by the privacy service.[126] While privacy services might be inclined to frame any legal claim against them as an attack on anonymity itself, courts have consistently recognized that “[t]hose who suffer damages as a result of tortious or other actionable communications on the Internet should be able to seek appropriate redress by preventing the wrongdoers from hiding behind an illusory shield of purported First Amendment rights.”[127] The District of Columbia Court of Appeals has stated that the law must strike a balance “between the well-established First Amendment right to speak anonymously and the right of the plaintiff to protect its proprietary interests . . . through the assertion of recognizable claims based on the actionable conduct of the anonymous, fictitiously-named defendant.”[128] More specifically, courts have consistently recognized that the First Amendment does not protect copyright infringement.[129]

Here, the manner in which the privacy service achieves a customer’s disappearance from the WHOIS database—by ceding control of the domain name to a known infringer while retaining ownership—amounts to an act of contributory copyright infringement in itself for all of the foregoing reasons.[130] Assuming the elements of contributory copyright infringement are met, the First Amendment does not bar the imposition of infringement liability on privacy services,[131] even if the licensing scheme produces an incidental “anonymity” effect on its users.

Accordingly, privacy services should not receive First Amendment protection in the limited situation in which they license domain names to customers who they know are engaged in infringement. Anonymous speech is a fundamental right,[132] but a court should not tolerate the abuse of anonymity to further the commission of infringement.

E. Sony-Betamax Does Not Protect Privacy Services

In Sony Corp. of America v. Universal City Studios, Inc., the Supreme Court held that a maker of a video recording device was not liable for contributory copyright infringement when it sold the device to consumers who used the device to make copies of television broadcasts of copyrighted material.[133] The court borrowed a patent statute providing that “the sale of a ‘staple article or commodity of commerce suitable for substantial non-infringing use’ is not contributory infringement,”[134] and, in recognizing the similarities between patent and copyright law,[135] applied the doctrine in the copyright context. Staple articles of commerce include typewriters, recorders, cameras, and photocopying machines,[136] all of which are capable of both infringing and legitimate uses;[137] and the court reasoned that imposing liability for selling copying equipment would disrupt consumers’ rights to freely engage in areas of commerce substantially unrelated to the copyright sought to be protected.[138]

Innovations in copying technology have inspired a revival of the “staple article of commerce” defense in Internet cases.[139] In Arista Records LLC v. Usenet.com, Inc., the court rejected a defendant’s “staple article” defense to contributory copyright infringement when the defendant operated an online newsgroup in which users posted and downloaded infringing music files,[140] and the defendant assisted users by providing live technical support.[141] The court stated that a critical part of the “staple article” defense is that the product maker maintains no ongoing relationship with the end-user after the point of sale.[142] Far from doing so, and unlike manufacturers of video recorders, the defendant in Usenet maintained an ongoing relationship with users by providing technical support for their illegal downloads, among other communications.[143]

Domain privacy services are clearly capable of non-infringing uses. Privacy services arguably have some legitimate social value, as they allow Internet users to prevent spammers and data harvesters from gathering personal information from the WHOIS database.[144] However, unlike the sale of a video recorder, there is no single “point of sale” after which a privacy service severs its relationship with end-users.[145] To the contrary, privacy services retain ownership of their customers’ domains,[146] provide twenty-four hour technical support,[147] share e-mail addresses with their customers,[148] refuse to disclose their customers’ identities without express permission,[149] and assume the online identities of their customers by replacing them in the WHOIS database.[150] This conduct demonstrates the type of ongoing relationship found in Usenet.[151] Accordingly, privacy services are not sufficiently insulated from infringement to raise a complete defense under Sony-Betamax.[152]

F. Privacy Services Should Not Qualify for DMCA Safe Harbor Protection

A defendant privacy service would likely attempt to raise a DMCA Section 512(a) “safe harbor” defense to contributory copyright infringement.[153] DMCA Section 512(a) provides immunity to contributory infringement claims against “service provider[s]” that offer “routing” and “transmission” functions.[154] In RIAA v. Verizon, the Ninth Circuit stated that the Section 512(a) safe harbor applies to Internet service providers performing functions such as providing Internet access and “transmitting e-mails, instant messages, or files sent by an [I]nternet user from his computer to that of another [I]nternet user.”[155] In another case, In re Aimster Copyright Litig., the United States District Court for the Northern District of Illinois held that a defendant peer-to-peer file transfer service was not eligible for Section 512(a) immunity because the service did not merely enable file transfer between users, but also offered file search capabilities, automatic resumption of interrupted downloads, one-click downloads of the most popular titles, and editorial comment on popular titles.[156] The court reasoned that the defendant did more than provide a “mere conduit” for information passing through the system.[157]

Assuming a domain privacy service falls under the broadly defined “service provider” designation,[158] a privacy service would need to show that it performs “routing” or “transmission” functions,[159] yet provides nothing more than a “mere conduit” for information passing between Internet users.[160] First, privacy services offer none of the file transfer or Internet access functions offered by the Verizon court as examples of routing or transmission functions;[161] and unlike Aimster,[162] no infringing material passes through the privacy service’s computer systems. Licensing one’s domain name for another’s use merely alters the registration information in the WHOIS database,[163] which involves no routing, transmission, or storage of users’ files.[164] Moreover, simply offering an e-mail forwarding service should not allow a privacy service to claim that it offers a “transmission” function and escape liability, because the central function of the privacy service is to provide anonymity—not e-mail service. Contributory infringement would be meaningless if every facilitator of infringement could qualify for Section 512(a) immunity simply by adding e-mail forwarding to its list of offered services.

A registrar is an example of a service provider that might qualify for DMCA Section 512(a) immunity to contributory copyright infringement. Registrars such as GoDaddy.com[165] arguably provide nothing more than a routing function by connecting domain names to IP addresses,[166] a process which forms the basis of the Internet.[167] While many privacy services are affiliated with registrars,[168] they are not registrars in any sense.[169] Privacy services are themselves the registrants and owners of the domains they license to their customers,[170] and Section 512(a) would be meaningless if it immunized all domain registrants from infringement liability. Privacy services are more akin to dealers of domain names—indeed “cyber-landlord[s]”—than passive providers of an Internet routing function.[171] The Solid Host court adopted this position when it compared a defendant privacy service to a property owner instead of a registrar: the “[defendant’s] position is closer to that of a flea market operator . . . than . . . a registrar.”[172] Privacy services do not connect their customers directly to the Internet; rather, they buy pieces of the Internet and lease them to their customers, not unlike a flea market owner.[173] There is no DMCA Section 512(a) protection for that activity when it is knowingly done to assist an infringer.[174]

In sum, privacy services do not offer any “routing” or “transmission” functions because no infringing material passes through their computer systems, and domain licensing does not equate to merely providing Internet access. Domain licensing is outside the purview of DMCA Section 512(a) protection, and the safe harbor defense should fail.

III. BEFORE LITIGATION, A COPYRIGHT HOLDER SHOULD SEND THE PRIVACY SERVICE A NOTICE OF INFRINGEMENT AND DEMAND THE INFRINGER’S CONTACT INFORMATION

A copyright holder should pursue any and all avenues of obtaining an infringer’s identity before considering litigation. The first step is to send the privacy service a notice of infringement and demand for the infringer’s contact information. The letter serves two purposes: to put the privacy service on notice of infringement in anticipation of suit, and to give the privacy service a chance to avoid litigation by revealing the infringer. Support for this demand letter is found in (1) ICANN’s policies, (2) some of the privacy services’ own TOS agreements, and (3) case law as described in Part II of this article.

A. Failure to Respond to a Demand Letter is a Violation of ICANN Rules

A privacy service’s failure to respond to a written demand letter is a violation of ICANN rules, and this should be made clear in any demand letter.[175] All ICANN-accredited registrars must abide by ICANN’s Registrar Accreditation Agreement (RAA) or risk losing accreditation.[176] The RAA requires all registrars to enter an agreement with registrants including the following three provisions: (1) although registrations on behalf of third party licensees are permitted under the RAA, the Registered Name Holder must provide “information adequate to facilitate timely resolution of any problems that arise in connection with the Registered Name”;[177] (2) the Registered Name Holder must “accept liability for harm caused by wrongful use of the Registered Name, unless it promptly discloses . . . the identity of the licensee to a party providing the Registered Name Holder reasonable evidence of actionable harm”;[178] and (3) the Registered Name Holder represents that, to the best of the name holder’s knowledge, the Registered Name does not directly or indirectly infringe the “legal rights of any third party”.[179]

Privacy services that provide their own contact information for the WHOIS database but fail to respond to copyright infringement complaints, or merely forward the complaints to their nonresponsive customers, do not provide any information sufficient to resolve infringement problems occurring in connection with the domain. Thus, they are likely to be in violation of RAA Section 3.7.7.3.[180] Next, copyright infringement should constitute “harm caused by wrongful use of the Registered Name,”[181] because the infringement could not occur without the domain functioning as a locus for the infringing activity. Privacy services that own and license such domains while refusing to either reveal licensee infringers’ identities or accept liability themselves are in breach of RAA Section 3.7.7.3.[182] Finally, privacy services that refuse to address infringement after receiving the first complaint from a copyright holder violate RAA Section 3.7.7.9 by knowingly allowing their domain registrations to continue to be used for copyright infringement.[183]

Unfortunately for copyright holders, the RAA specifically excludes third party beneficiaries from bringing claims for breach of the RAA,[184] which precludes copyright holders from enforcing the RAA against Registered Name Holders. Nevertheless, demand letters should remind privacy services that if they do not reveal their infringing customers’ contacts, ICANN may hold them responsible for their customers’ acts of infringement under the RAA,[185] and registrars may enforce the RAA against privacy services by suspending, terminating, or transferring their registrations.[186]

B. Failure to Reveal an Infringer’s Identity is a Violation of Most Privacy Services’ TOS Agreements

Most privacy services’ Terms of Service (TOS) agreements are drafted in compliance with ICANN rules,[187] so a violation of ICANN rules is likely to be a violation of the privacy service’s own TOS agreement as well. For example, WhoisGuard’s TOS states that it will make available its customers’ registration information “to third parties as ICANN and applicable laws may require or permit,”[188] and Domains by Proxy’s TOS reserves the absolute right and power to reveal personal information in order “to comply with ICANN rules, policies or procedures.”[189] A privacy service's violation of its own policy might be viewed by a court as an endorsement of its customers’ infringing acts, despite the privacy service’s declarations of intended legal compliance in its TOS. Evidence of a violation of the TOS could be used against the privacy service in a lawsuit. A demand letter to a privacy service should specifically include such a warning.

C. Privacy Services That Refuse to Reveal Their Infringing Customers Should be Warned About Exposure to Liability

Privacy services may choose not to respond to requests for contact information based solely on alleged violations of the ICANN and TOS agreements. However, a strong demand letter should mention that legal liability may exist for privacy services that refuse to reveal infringers under recent case law.[190] The demand letter should mention Solid Host,[191] and it should caution broadly that joint liability exists for intellectual property infringement.[192] This should sufficiently pressure the privacy service to release the infringers’ contact information, but there are potential risks. One significant risk is that such a letter-writing campaign may encourage privacy services to move offshore out of fear of liability to U.S. copyright holders, which could create jurisdictional obstacles for copyright holders seeking redress for infringement.

IV. CONCLUSION

A new demand letter to privacy services should be drafted stating that (1) privacy services violate the Internet Corporation for Assigned Names and Numbers’ (ICANN) Registrar Accreditation Agreement (RAA) Sections 3.7.7.3 and 3.7.7.9 by refusing to divulge infringing customers’ information or accept legal liability for the infringement;[193] (2) privacy services may be in violation of their own Terms of Service (TOS) agreements by refusing to reveal infringers, and such a violation can be used against them in a lawsuit;[194] and (3) privacy services should be found liable for intellectual property infringement under recent case law.[195]

If a demand letter yields no response, a copyright holder should prevail against a privacy service on a contributory copyright infringement claim.[196] A court may be reluctant to accept the necessary analogies between copyright and trademark law[197] and between real estate and intellectual property.[198] Furthermore, the privacy service may challenge the causation[199] and raise First Amendment objections.[200] A privacy service is not likely to raise a successful Sony-Betamax,[201] defense because privacy services are not sufficiently insulated from their customers to disclaim responsibility for their actions.[202] A privacy service is also unlikely to raise a successful Digital Millennium Copyright Act (DMCA) Section 512(a) safe harbor defense, because domain licensing is not a “routing” or “transmission” function akin to providing Internet access or file transfer services.[203] A successful contributory copyright infringement suit against a privacy service would set a useful precedent and hopefully help ease the enforcement burdens of copyright holders.

V. SAMPLE DEMAND LETTER TO PRIVACY SERVICES

Date

[Copyright Holder]

Sent by: [_______]

[Law Firm Name]

[Law Firm Address]

[Recipient Privacy Service Name/Address]

Re: NOTIFICATION OF ILLEGAL USE OF YOUR REGISTERED DOMAIN AND REQUEST FOR USER CONTACT INFORMATION

This is a notification on behalf of [copyright holder] regarding infringements of [copyright holder’s] intellectual property rights occurring at the web domain www.________.com, which is registered in your name. In accordance with ICANN’s Registrar Accreditation Agreement (RAA), your terms of service agreement with the licensee operator of www.___________.com, and federal law, we request that you immediately provide contact information for the licensee and operator of the aforementioned domain or assume liability for the infringement of [copyright holder’s] intellectual property rights.

Pursuant to ICANN RAA Section 3.7.7.3, you are required to provide contact information sufficient for copyright holders to address infringement occurring in connection with your domain in a timely manner or accept liability for such infringement. Further, under RAA Section 3.7.7.9, you also represent that your registration will not be used to infringe the copyright of any third party.

In addition, as you may already be aware, your [Terms of Service Agreement] states your intention to comply with ICANN policies and the law. [This section must be tailored for each privacy service as their terms of service vary]. Specifically, [common language in terms of service agreements states that the service will identify infringers who break ICANN rules and/or the law].

Furthermore, as you likely are aware, recent federal case law holds that privacy services may be liable for operators’ underlying intellectual property infringement.[204] Should you refuse to identify the aforementioned infringer, we caution that you may be exposed to liability for your domain licensees’ usage of your registered name for purposes of infringement.

Accordingly, we request that you provide information sufficient for [copyright holder] to identify the operator of www._________.com so that we may contact them directly regarding the infringement. Any refusal to comply with this request may expose you to liability for the underlying infringement, and in addition, your registrar may be required to terminate your registration under RAA Section 3.7.7.11.

The following links and screenshots demonstrate unauthorized use of [copyright holder’s] content at www.________.com, which is registered in your name:

[Links]

[Screenshots]

In addition to providing a working contact for the licensee operator of your domain, we ask that you preserve all evidence of infringement, including any correspondence with the operator, in anticipation of [copyright holder] serving a subpoena to obtain this information through legal process.

Sincerely,

[Counsel]

[Firm]

Paulo André de Almeida[205]

1. Wikipedia, Whois, http://en.wikipedia.org/wiki/Whois (last visited Aug. 26, 2010) [hereinafter Wikipedia, Whois].

2. See generally Richard Keyt, Internet Copyright Law: A Rat Pilfered My Web Site Cheese - What Do I Do?, Keytlaw, Nov. 9, 2002, http://www.keytlaw.com/Copyrights/cheese.htm.

3. Domains By Proxy, How Private Registrations Work, http://www.domainsbyproxy.com/GetDBP.aspx (last visited Aug. 25, 2010) [hereinafter How Private Registrations Work].

4. See Domains By Proxy, Domains By Proxy Civil Subpoena Policy, http://domainsbyproxy.com/popup/subpoenapolicies.aspx (last visited Sept. 8, 2010) [hereinafter Domains By Proxy Civil Subpoena Policy]. See generally Fed. R. Civ. P. 45.

5. See Domains By Proxy Civil Subpoena Policy, supra note 4.

6. See generally David Lieberman, Piracy Pillages Music Industry, USAToday.com, Apr. 8, 2002, http://www.usatoday.com/money/covers/2002-04-05-music-piracy.htm (warning that the music industry could collapse as a result of widespread illegal file sharing).

7. See, e.g., Press Release, Universal Music Group, David Benjamin Named Senior Vice President, Anti-Piracy, Universal Music Group (July 15, 2002), available at http://www.universalmusic.com/corporate/news35192.

8. See generally BayTSP.com, Tracking, http://www.baytsp.com./services/tracking.html (last visited Aug. 24, 2010).

9. See id. (stating that an anti-piracy enforcement agency uses new technology to scan peer-to-peer and BitTorrent networks for infringing content).

10. See Posting of Vic to Code Confidential, http://vilabs.typepad.com/vilabs/2009/06/ubiquitous-cyberlocker-file-share-service-gets-fined.html (June 25, 2009, 16:41 EST).

11. Id.

12. Id.

13. Digital Millennium Copyright Act, 17 U.S.C. § 512 (2006).

14. See id. § 512(c)(1)(C).

15. See id. § 512(g)(1)–(3).

16. See generally David Krauets, 10 Years Later, Misunderstood DMCA is the Law That Saved the Web, Wired.com, Oct. 27, 2008, http://www.wired.com/threatlevel/2008/10/ten-years-later (describing routine uses of the DMCA takedown procedure).

17. BayTSP.com, supra note 8.

18. See Wikipedia, Anonymizer, http://en.wikipedia.org/wiki/Anonymizer (last visited Jan. 30, 2010) (describing various technologies used to create anonymity and make Internet activity untraceable).

19. See Columbia Ins. Co. v. Seescandy.com, 185 F.R.D. 573, 578 (N.D. Cal. 1999) (explaining that “[p]arties who have been injured by [copyright infringement] are likely to find themselves chasing the [anonymous] tortfeasor from Internet Service Provider (ISP) to ISP, with little or no hope of actually discovering the identity of the tortfeasor.”).

20. ICANN, About, http://www.ICANN.org/en/about/ (last visited Aug. 24, 2010) [hereinafter ICANN, About].

21. See generally Kathleen E. Fuller, ICANN: The Debate Over Governing the Internet, 2001 Duke L. & Tech. Rev. 2 (2001), http://www.law.duke.edu/journals/dltr/ARTICLES/2001dltr0002.html (comparing ICANN to a government of the Internet).

22. ICANN, About, supra note 20.

23. Registrars are wholesalers of domain names. Consumers purchase domain names from registrars such as Go Daddy. See GoDaddy.com, http://www.godaddy.com (last visited Sept. 14, 2010). See generally Wikipedia, Domain Name Registrar, http://en.wikipedia.org/wiki/Domain_name_registrar (last visited Sept. 12, 2010).

24. See generally ICANN, May 2009 Registrar Accreditation Agreement, http://www.icann.org/en/registrars/ra-agreement-21may09-en.htm [hereinafter RAA].

25. Id.

26. Id., §§ 3.3, 3.7.7.1; see also WHOIS Lookup, http://www.whois.net (last visited Sept. 14, 2010).

27. RAA, supra note 24, §§ 3.1, 3.3.

28. Wikipedia, Domain Privacy, http://en.wikipedia.org/wiki/Domain_privacy (last visited Sept. 14, 2010) [hereinafter Wikipedia, Domain Privacy].

29. See Wikipedia, Whois, supra note 1.

30. See id.

31. Domains By Proxy, About Domains By Proxy, http://www.domainsbyproxy.com/About.aspx?prog_id= (last visited Sept. 14, 2010) [hereinafter About Domains By Proxy]; see also WhoisGuard, http://www.whoisguard.com (last visited Sept. 14, 2010).

32. See How Private Registrations Work, supra note 3.

33. Domains By Proxy, Domain Name Proxy Agreement § 2, https://www.domainsbyproxy.com/policy/ShowDoc.aspx?pageid=domain_nameproxy (last visited Nov. 10, 2010) [hereinafter Domains By Proxy TOS].

34. See, e.g., id.; see also Namecheap, Inc., WhoisGuard Service Agreement § 1–2, http://www.namecheap.com/legal/whoisguard-agreement.asp (last visited Sept. 14, 2010) [hereinafter WhoisGuard TOS].

35. See How Private Registrations Work, supra note 3.

36. ICANN, FAQ’s, http://www.icann.org/en/faq (last visited Sept. 7, 2010).

37. About Domains By Proxy, supra note 31.

38. Posting of Eric Goldman to Tech. & Mktg. L. Blog, http://blog.ericgoldman.org/archives/2009/05/ (May 28, 2009, 10:15:27 PST) (describing how an alleged cybersquatter used a privacy service to commit trademark infringement under the cloak of anonymity).

39. See Solid Host, NL v. Namecheap, Inc., 652 F. Supp. 2d 1092, 1098 (C.D. Cal. 2009) (quoting a defendant privacy service that stated “it would ‘remain neutral’” in a dispute between an infringer customer and an aggrieved trademark holder); see also Domains by Proxy, Frequently Asked Questions, http://products.secureserver.net/products/domains_by_proxy/dbp_faq.htm#correspondence (last visited Sept. 14, 2010) (stating that Domains By Proxy merely forwards e-mail complaints to its customers) [hereinafter Domains by Proxy FAQ’s].

40. See 17 U.S.C. § 512(h).

41. Recording Indus. Ass’n of Am., Inc. v. Verizon Internet Servs., Inc., 351 F.3d 1229, 1233 (D.C. Cir. 2003).

42. Wikipedia, Domain Privacy, supra note 28 (stating that domain privacy services solely provide private registration or “forwarding” services).

43. See generally Fed. R. Civ. P. 45.

44. Id.

45. See Columbia, 185 F.R.D. at 578–80 (requiring a plaintiff seeking to discover the identity of a “Doe” defendant to (1) identify the defendant with enough specificity to allow the court to determine whether the defendant is a real person or entity who could be sued in federal court; (2) recount the steps taken to locate the defendant; (3) show that the action could survive a motion to dismiss; and (4) file a request for discovery with the court identifying the persons or entities on whom discovery process might be served). Variations of this test are used in different jurisdictions. See Solers, Inc. v. Doe, 977 A.2d 941, 951 (D.C. 2009).

46. See Solers, 977 A.2d at 951 (“[W]e must strike a balance ‘between the well-established First Amendment right to speak anonymously, and the right of the plaintiff to protect its proprietary interests . . . through the assertion of recognizable claims based on the actionable conduct of the anonymous, fictitiously-named defendant.’” (quoting Dendrite Int’l, Inc. v. Doe No. 3, 775 A.2d 756, 760 (N.J. Super. Ct. App. Div. 2001))).

47. See Fed. R. Civ. P. 15(c)(3) (permitting plaintiff to amend defendant’s name on complaint while retaining original filing date).

48. See Fed. R. Civ. P. 20(a) (permitting joinder of defendants).

49. See Fed. R. Civ. P. 45(a)(1)(D).

50. See Columbia, 185 F.R.D. at 578–80 (requiring a plaintiff seeking to discover the identity of a “Doe” defendant to (1) identify the defendant with enough specificity to allow the Court to determine whether the defendant is a real person or entity who could be sued in federal court; (2) recount the steps taken to locate the defendant; (3) show that the action could survive a motion to dismiss; and (4) file a request for discovery with the court identifying the persons or entities on whom discovery process might be served). This article assumes personal jurisdiction, and that the copyright holder has a strong infringement claim. So long as the plaintiff has a serious, non-frivolous claim, these requirements are likely satisfied, and the privacy service must comply with the subpoena.

51. Gershwin Publ’g Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1162 (2d Cir. 1971).

52. Id.

53. Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 261 (9th Cir. 1996).

54. See Perfect 10, Inc. v. Visa Int’l Serv. Ass’n, 494 F.3d 788, 816 n.10 (9th Cir. 2007) (Kozinski, J., dissenting) (“It is true that [the absentee-landlord] cases were developed in a brick and mortar world . . . .”); see also Fonovisa, 76 F.3d at 264 (holding flea market owner liable for contributory copyright infringement because the infringing activity could not take place “without the support services provided by the [flea market] . . . .”).

55. See Perfect 10, 494 F.3d at 796 (“The [Defendants] cannot be said to materially contribute to the infringement in this case because they have no direct connection to that infringement . . . .”); see also id. at 816 n.10 (Kozinski, J., dissenting) (“It is true that [the absentee-landlord] cases were developed in a brick and mortar world, but the distinction they draw between those who materially assist infringement (and are therefore liable) and those who are more remotely involved (and are therefore not liable) is equally important-perhaps even more important-in cyberspace than in real space.”).

56. 17 U.S.C. § 512(a).

57. Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 456 (1984).

58. Id. at 426.

59. See Solers, 977 A.2d at 950 (observing that anonymous Internet speech is protected by the First Amendment). The privacy service would likely have standing to assert a First Amendment right to remain anonymous on behalf of its customers. NAACP v. Ala. ex. rel. Patterson, 357 U.S. 449, 459 (1958); Va. v. Am. Booksellers Ass’n., 484 U.S. 383, 392–93 (1988) (allowing third-party standing in free speech case because of potential chilling effect of law on others).

60. Arista Records LLC v. Usenet.com, Inc., 633 F. Supp. 2d 124, 149 (S.D.N.Y. 2009).

61. Id. at 154.

62. Id.

63. A&M Records v. Napster, Inc., 239 F.3d 1004, 1023 (9th Cir. 2001).

64. Arista, 633 F. Supp. 2d at 154.

65. Id. at 139, 155.

66. In re Aimster Copyright Litig., 252 F. Supp. 2d 634, 651 (N.D. Ill. 2002), aff’d, 334 F.3d 643, 650 (7th Cir. 2003) [hereinafter In re Aimster I].

67. Domains By Proxy, http://www.domainsbyproxy.com (last visited Nov. 7, 2010) [hereinafter Domains By Proxy Homepage].

68. Napster, 239 F.3d at 1021 (quoting Religious Tech. Ctr., 907 F. Supp. at 1374).

69. Domains By Proxy Homepage, supra note 67.

70. See Domains By Proxy TOS, supra note 33; see also RAA, supra note 24, § 3.7.7.3.

71. RAA, supra note 24, §§ 3.7.7.1, 3.7.7.2.

72. See, e.g., Domains By Proxy TOS, supra note 33, § 4.

73. See About Domains By Proxy, supra note 31.

74. See Solid Host, 652 F. Supp. 2d at 1098 (quoting a defendant privacy service that stated it would “remain neutral” in a dispute between an infringer customer and an aggrieved trademark holder); see also Domains by Proxy FAQ’s, supra note 39.

75. In re Aimster Copyright Litig., 334 F.3d 643, 650 (7th Cir. 2003) [hereinafter In re Aimster II].

76. Id. at 650–51 (“Our point is only that a service provider that would otherwise be a contributory infringer does not obtain immunity by using encryption to shield itself from actual knowledge of the unlawful purposes for which the service is being used.”).

77. Gershwin, 443 F.2d at 1162.

78. Fonovisa, 76 F.3d at 264.

79. Id. at 259, 260, 264.

80. Id. at 259, 264.

81. Solid Host, 652 F. Supp. 2d at 1115.

82. Cybersquatting in violation of the Anticybersquatting Consumer Protection Act typically involves “[r]egistering a famous trademark as a domain name and then offering it for sale to the trademark owner . . . .” See Solid Host, 652 F. Supp. 2d at 1102 (citing Ford Motor Co. v. Catalanotte, 342 F.3d 543, 549 (6th Cir. 2003)); see also Anticybersquatting Consumer Protection Act, 15 U.S.C. § 1125(a). In this atypical case, after the cybersquatter “hack[ed]” into the registrar’s system, transferred plaintiff’s domain to his or her own account, and transferred the stolen domain to the defendant privacy service, the privacy service licensed control of the domain back to the alleged hacker, who then attempted to ransom the domain name back to the plaintiff. Solid Host, 652 F. Supp. 2d at 1102. The court viewed the privacy service as the registrant for the domain. Id. at 1115.

83. Solid Host, 652 F. Supp. 2d at 1112 (citing Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 984 (9th Cir. 1999)).

84. Id. at 1116.

85. Id. at 1115.

86. Id. at 1115.

87. Fonovisa, 76 F.3d at 264.

88. RAA, supra note 24, § 3.7.7.11.

89. Solid Host, 652 F. Supp. 2d at 1092.

90. Id. at 1115.

91. Id. at 1092.

92. Id. at 1115.

93. See Perfect 10, 494 F.3d at 798 n.9 (“We similarly take little comfort in the dissent’s resurrection of the ‘dance-hall-owner/absentee-landlord’ cases as a source of any principled distinction in this area. Those tests were developed for a brick-and-mortar world, and . . . they do not lend themselves well to application in an electronic commerce context.”).

94. Id. at 797–98.

95. Perfect 10, 494 F.3d at 798 n.9 (“We similarly take little comfort in the dissent's resurrection of the ‘dance-hall-owner/absentee-landlord’ cases as a source of any principled distinction in this area. Those tests were developed for a brick-and-mortar world, and . . . they do not lend themselves well to application in an electronic commerce context.”).

96. Solid Host, 652 F. Supp. 2d at 1115.

97. Napster, 239 F.3d at 1022.

98. See 5 Ways Domain Names Are Better Than Real Estate, DomainNameWire.com, Mar. 3, 2008, http://domainnamewire.com/2008/03/03/5-ways-domain-names-are-better-than-real-estate (comparing the value of real estate and online domain names).

99. Perfect 10, 494 F.3d at 799 (“The websites are the ‘site’ of the infringement, not Defendants’ payment networks.”).

100. See Posting of John Moore to SonicBlog, http://www.sonicweblog.com/pebble/main/2007/08/21/1187728020000.html (Aug. 21, 2007, 13:27 PST) (identifying the domain name, hosting, and website files as the three essential components of a website).

101. Sony, 464 U.S. at 439 n.19.

102. Fonovisa, 76 F.3d at 259, 261.

103. Id. at 259, 264.

104. Id. at 259, 265.

105. Id. at 261, 264 (“[I]t would be difficult for the infringing activity to take place in the massive quantities alleged without the support services provided by the swap meet.”).

106. Id. at 259.

107. Solid Host, 652 F. Supp. 2d at 1092.

108. RAA, supra note 24, § 3.3.

109. See Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 982 (9th Cir. 1999) (explaining that the domain registration process is usually electronic and without human intervention).

110. See Solid Host, 652 F. Supp. 2d at 1096.

111. See Solers, Inc. v. Doe, 977 A.2d 941, 950 (D.C. 2009) (observing that anonymous Internet speech is protected by the First Amendment).

112. Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 264 (9th Cir. 1996)..

113. Id.

114. See About Domains By Proxy, supra note 31.

115. See Fonovisa, 76 F.3d at 264.

116. See infra § II(D) (arguing that a privacy service cannot invoke the First Amendment right to speak anonymously as a defense to copyright infringement).

117. See Fonovisa, 76 F.3d at 264 (“[O]ne who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be held liable as a ‘contributory’ infringer.” (quoting Gershwin, 443 F.2d at 1162)). The “or” suggests that causation is not a strict requirement of contributory copyright infringement.

118. Perfect 10, Inc. v. Visa Int’l Serv. Ass’n, 494 F.3d 788, 796 (9th Cir. 2007).

119. Id. at 798.

120. Id. at 800.

121. See id. at 799.

122. See Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 981-82 (9th Cir. 1999) (“When [a person] seeks to maintain an Internet web site, that [person] must reserve . . . an Internet Protocol (‘IP’) Address . . . . When an Internet user accesses the [person’s] web site, the user enters the domain-name combination that corresponds to the IP Address and is routed to the host computer.”).

123. See Perfect 10, 494 F.3d at 799–800.

124. Solid Host, 652 F. Supp. 2d at 1115.

125. See Solers, 977 A.2d at 950 (observing that anonymous Internet speech is protected by the First Amendment).

126. The privacy service would likely have standing to assert such a right on behalf of its customers. NAACP, 357 U.S. at 459; Virginia v. Am. Booksellers Ass’n, 484 U.S. 383, 392–93 (1988) (allowing third-party standing in free speech case because of the potential chilling effect of a law on others).

127. Solers, 977 A.2d at 951 n.7 (quoting In re Subpoena Duces Tecum to Am. Online, Inc., 52 Va. Cir. 26, 35 (Va. Cir. Ct. 2000)); see also Columbia, 185 F.R.D. at 578 (stating that “[w]ith the rise of the Internet has come the ability to commit certain tortious acts, such as defamation, copyright infringement, and trademark infringement, entirely on-line . . . . People are permitted to interact pseudonymously and anonymously with each other so long as those acts are not in violation of the law.”).

128. Solers, 977 A.2d at 951.

129. See Sony Music Entm’t, Inc. v. Does 1–40, 326 F. Supp. 2d 556, 562–63 (S.D.N.Y. 2004) (“The First Amendment . . . does not protect copyright infringement . . . .”); see also Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 555–60, 569 (1985) (holding that a copyright violation which did not qualify as a “fair use” of the copyrighted material was not protected speech under the First Amendment). This article assumes that the copyright holder has a strong infringement claim against the primary infringer, and that “fair use” does not apply.

130. See supra § II.A–C.

131. See Sony Music Entm’t, 326 F. Supp. 2d at 562–63 (“The First Amendment . . . does not protect copyright infringement . . . .”); see also Harper & Row, 471 U.S. at 555–60, 569 (holding that a copyright violation which did not qualify as a “fair use” of the copyrighted material was not protected speech under the First Amendment).

132. Solers, 977 A.2d at 950.

133. Sony, 464 U.S. at 442.

134. Id. at 440 (quoting 35 U.S.C. § 271(c)).

135. Sony, 464 U.S. at 439, 442 (“We recognize there are substantial differences between the patent and copyright laws. But in both areas the contributory infringement doctrine is grounded on the recognition that adequate protection of a monopoly may require the courts to look beyond actual duplication of a device or publication to the products or activities that make such duplication possible.”).

136. Id. at 426.

137. Id.

138. Id. at 442.

139. Wikipedia, Sony Corp. of Am. v. Universal City Studios, Inc., http://en.wikipedia.org/wiki/Sony_Corp._of_America_v._Universal_City_Studios,_Inc. (last visited Sept. 14, 2010) (referring to various cases in which the Sony-Betamax defense was raised).

140. Arista, 633 F. Supp. 2d at 133, 156.

141. Id. at 133.

142. Id. at 156.

143. Id. at 133, 156.

144. See Domains By Proxy Homepage, supra note 67.

145. See Domains By Proxy TOS, supra note 33.

146. See id.

147. See About Domains By Proxy, supra note 31.

148. See How Private Registrations Work, supra note 3.

149. Domains By Proxy TOS, supra note 33, § 1.

150. Id.

151. Arista, 633 F. Supp. 2d at 156.

152. Sony, 464 U.S. 417.

153. See 17 U.S.C. § 512(a) (2006).

154. 17 U.S.C. § 512(a).

155. Recording Indus. Ass’n of Am., Inc. v. Verizon Internet Servs., Inc., 351 F.3d 1229, 1237 (D.C. Cir. 2003).

156. In re Aimster I, supra note 66, at 660.

157. Id. at 660.

158. Id. at 658.

159. 17 U.S.C. § 512(a).

160. In re Aimster I, supra note 66, at 660.

161. Verizon, 351 F.3d at 1237.

162. In re Aimster I, supra note 66, at 660.

163. See About Domains By Proxy, supra note 31.

164. Domains By Proxy TOS, supra note 33.

165. GoDaddy.com, supra note 23.

166. See Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 982 (9th Cir. 1999) (describing how registrars provide Internet connectivity).

167. Id.

168. See About Domains By Proxy, supra note 31.

169. See id.

170. RAA, supra note 24, § 3.7.7.3; see also Domains By Proxy TOS, supra note 33.

171. Solid Host, NL v. Namecheap, Inc., 652 F. Supp. 2d 1092, 1114 (C.D. Cal. 2009).

172. Id. at 1115.

173. Id. at 1114.

174. 17 U.S.C. § 512(a).

175. RAA, supra note 24, § 3.11.5.

176. RAA, supra note 24, § 5.3.

177. RAA, supra note 24, § 3.7.7.3.

178. Id.

179. RAA, supra note 24, § 3.7.7.9.

180. See RAA, supra note 24, § 3.7.7.3.

181. Id.

182. Id.

183. See RAA, supra note 24, § 3.7.7.9.

184. RAA, supra note 24, § 5.10.

185. See RAA, supra note 24, § 3.7.7.3.

186. RAA, supra note 24, § 3.7.7.11.

187. See, e.g., Domains By Proxy TOS, supra note 33, § 4; WhoisGuard TOS, supra note 34, § 8.

188. WhoisGuard TOS, supra note 34, § 8.

189. Domains By Proxy TOS, supra note 33, § 4.

190. See, e.g., Solid Host, NL v. Namecheap, Inc., 652 F. Supp. 2d 1092, 1092 (C.D. Cal. 2009).

191. Id.

192. See Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 264 (9th Cir. 1996) (“[O]ne who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be held liable as a ‘contributory’ infringer.” (quoting Gershwin, 443 F.2d at 1162)).

193. See RAA, supra note 24, §§ 3.7.7.3, 3.7.7.9.

194. See Domains By Proxy TOS, supra note 33, §4.

195. See Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 264 (9th Cir. 1996) (“[O]ne who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be held liable as a ‘contributory’ infringer.” (quoting Gershwin, 443 F.2d at 1162)); Solid Host, NL v. Namecheap, Inc., 652 F. Supp. 2d 1092, 1092 (C.D. Cal. 2009).

196. See supra Part II.

197. See Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 439 n.19 (1984) (rejecting “the proposition that a . . . kinship exists between copyright law and trademark law . . . .”). See also United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 97 (1918) (stating that a trademark right “has little or no analogy” to a copyright or patent (citing Canal Co. v. Clark, 80 U.S. 311 (1872))); supra Part II.C.2.

198. See supra Part II.C.1.

199. See supra Part II.C.4.

200. See supra Part II.D; see also Religious Tech. Ctr. v. Netcom On-Line Commc’n. Servs., Inc., 907 F. Supp. 1361, 1383 (N.D. Cal. 1995) (raising First Amendment concerns about imposing copyright infringement liability when injunction against Internet service provider would chill its users’ speech).

201. Sony, 464 U.S. at 417.

202. See supra Part II.E.

203. See supra Part II.F.

204. See Solid Host, 652 F. Supp. 2d at 1092, 1105–06; see also Transamerica Corp. v. Moniker Online Servs., 672 F. Supp. 2d 1353, 1363–64 (S.D. Fla. 2009) (denying domain privacy service’s motion to dismiss plaintiff’s contributory cybersquatting claim).

205 J.D. Loyola Law School, Los Angeles 2011; B.A., University of Southern California. Special thanks to Professor Christopher Hawthorne for his helpful comments on this project. Thank you to Camila Reartes for encouraging me to submit this article for publication, and many thanks to my family and friends for their support and helpful critiques of my work.

WINNER, WINNER, NO CHICKEN DINNER: AN ANALYSIS OF INTERACTIVE MEDIA ENT’MT & GAMING ASS’N V. ATT’Y GEN. OF THE U.S. AND THE UNJUSTIFIED CONSEQUENCES OF THE UIGEA

This note observes the deficiencies of the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), placing special emphasis on the 2009 Third Circuit decision in Interactive Media Entertainment and Gaming Association v. Attorney General of the United States, which upheld the constitutionality of the UIGEA. Since the initial preparation of this note, the federal government has initiated its enforcement and shut down of some of the largest United States internet gaming sites, referencing the UIGEA as the source for its authority. This note proposes a complete overhaul of the present enforcement tactics by means of repealing the UIGEA and instead establishing a statutory scheme which would allow for internet gaming in the United States.

I. INTRODUCTION

You are seated at a poker table with nine other faces glaring back and forth between you and the four cards sprawled on the table, studying your every move. They wait for you to make a move as adrenaline pumps through your veins and anxiety sets in. With thousands on the line and two clubs on the table, all you need is one more club to make your Ace high flush and the best possible hand in play. The dealer slowly turns the defining card, but does it really even matter?

Poker players and card players alike often insist they play the game solely for money—a business endeavor of sorts. Whether players admit to it or not, it is all about the action. As recent scientific studies have shown, it is not entirely true that gamblers are purely in it for the win—rather, it is the rush of the risk that leaves people coming back for more.[1] As an individual’s gambling habits progress, studies show that physical changes take place in the brain, including the release of dopamine and transformations in areas of the brain “associated with planning and forming strategies.”[2] Many of these physical symptoms are said to parallel those of drug addiction.[3] As a result, there are concerns that this recreational activity will lead to increases in pathological gambling, underage gambling, and criminal behavior.[4]

Due to these and other financial concerns, several states within the United States, and more recently the United States in its federal capacity, have enacted legislation limiting access to gambling.[5] The most recent legislation concerns the modern-day phenomenon of Internet gambling. Gambling today “no longer evokes the images of Frank Sinatra and Dean Martin playing on a neon stage with well-dressed, wealthy patrons.”[6] Like never before, gamblers can relax at home and try to beat the odds with just a click of a mouse. To curb the growth of this industry, the federal government has passed legislation, including the Wire Act of 1961,[7] the Travel Act,[8] and the Illegal Gambling Business Act.[9] With little to no success in ceasing Internet gambling, Congress has enacted the Unlawful Internet Gambling Enforcement Act of 2006 (“UIGEA” or “Act”), greatly impacting financial institutions involved in the industry.[10]

This Note analyzes the effects of the UIGEA as it has been interpreted in recent court decisions. Specifically, it focuses on a recent Third Circuit case that upheld the constitutionality of the Act.[11] Part II provides a historical analysis of federal legislation and case analysis with respect to Internet gambling. Part III focuses on the Third Circuit decision upholding the UIGEA. Part IV analyzes the implications of the Act or any ban on Internet gambling. Part V offers an alternative explanation of the effects of the UIGEA and recent court decisions upholding the Act. This Note argues that the financial burdens far outweigh the benefits of the UIGEA. Part VI proposes that gambling should not be banned in its entirety, but instead regulated for the benefit of the government and the public as a whole.

II. BACKGROUND

Before the 1990s, the only legal form of gambling took place at traditional brick-and-mortar casinos.[12] Over the past few decades, legalized gambling in the United States has transformed into a “commonplace activity undertaken by the masses.”[13] In 1995, the first online gambling site was created.[14] Internet gambling more than doubled by 1998, both in players and in revenue.[15] In 2002, United States gamblers constituted fifty to seventy percent of the total revenues for United States Internet gambling operators.[16] Concerns about the social and moral repercussions resulting from the ease of access to this growing industry were mounting.[17]

A. Unsuccessful Attempts at Regulation

The first piece of legislation passed to limit the use of Internet gambling was created long before the problem of such gambling itself arose. Congress enacted the Wire Act of 1961 to discourage organized crime.[18] The Wire Act makes it illegal for people participating in the “business of betting or wagering [to] knowingly [use] a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest.”[19] The Department of Justice (“DOJ”) has argued that the Wire Act should be interpreted to include Internet gambling communications.[20] Two cases played a critical role in defining the boundaries of the Wire Act as it pertains to Internet gambling.[21]

In United States v. Cohen, the defendant owned and operated an Antigua-based bookmaking business, primarily servicing United States customers.[22] A customer would create an account, based in Antigua, for the purposes of using the funds therein to place bets and wagers on sporting events.[23] The court upheld the defendant’s conviction under the Wire Act, finding that Cohen “knowingly transmitted information assisting in the placing of bets.”[24] This ruling was significant because it was the first to hold that the Wire Act applied to Internet gambling activities.[25] Still, one issue remained unresolved. Because the Wire Act specifically states that its purpose is to regulate “sporting events or contests,”[26] the ruling left open the question of whether the Wire Act would apply to all Internet gaming in general.[27]

The Fifth Circuit soon addressed this issue in In re MasterCard International, Inc.[28] There, the two plaintiffs had engaged in Internet gambling by using their credit cards to place wagers.[29] The plaintiffs argued that MasterCard, and the other named defendant credit card companies, knowingly engaged in unlawful activity by allowing their cardholders to place wagers on off-shore Internet sites with the purpose of profiting on gambling debts.[30] The court refused to apply the Wire Act to the defendant credit card companies, holding that “a plain reading of the statutory language clearly requires that the object of the gambling be a sporting event or contest.”[31] In effect, the Wire Act does not apply to any Internet gambling activities outside sports wagering, leaving poker and several other card and game sites untouched.

Several more laws passed in the 1960s, such as the Travel Act, the Interstate Transportation of Wagering Paraphernalia Act (“ITWPA”), and, later, the Illegal Gambling Business Act (“IGBA”) appeared to apply to Internet gambling.[32] All three pieces of legislation aimed to curtail organized crime associated with gambling and bookmaking.[33]

The Travel Act states: “Whoever travels in interstate or foreign commerce or uses the mail or any facility in interstate or foreign commerce, with [the] intent to—distribute the proceeds of any unlawful activity; or . . . otherwise promote . . . any unlawful activity . . . shall be fined under this title . . . .”[34] The Travel Act defines “unlawful activity” as “any business or enterprise involving gambling . . . in violation of the laws of the State . . . .”[35] The Travel Act seemingly mended the problems with the Wire Act by omitting the enumeration of activities deemed illegal, and thereby expanding its scope.[36] Nonetheless, it suffers from many of the same defects as the Wire Act. Namely, the Travel Act applies only to the operators of illegal businesses, not to the bettors themselves.[37] Additionally, it is not clear whether wireless communications would be covered by the Travel Act.[38]

Alternatively, the “ITWPA criminalizes the introduction into interstate commerce of ‘any record, paraphernalia, ticket, certificate, bills, slip, token, paper, writing or other device used, or to be used’ in illegal gambling.”[39] Unlike the Travel Act, it is enough under the ITWPA that the perpetrator knowingly moves such paraphernalia into interstate commerce.[40] Specific intent is not required, which means that a subscriber to an Internet gambling site who downloads the required software is in violation of the ITWPA.[41]

The IGBA prohibits the operation of illegal gambling businesses.[42] An illegal gambling business is one which: (1) violates the laws of the State in which it is conducted; (2) involves five or more persons; and (3) has been in continuous operation for a period of more than thirty days, or generates or has generated a gross revenue of at least $2,000 on any given day.[43] “Like the Wire Act, the IGBA only applie[s] to gambling businesses, not individual gamblers.”[44]

Congress attempted to pass a further prohibition on Internet gambling that focused on the financial institutions supporting the industry with the Internet Gambling Enforcement Act (“IGEA”).[45] However, the IGEA failed in the Senate,[46] leaving the legality of Internet gambling unresolved. As a result, Internet gambling sites continued their operations into the early 2000s.[47]

Although Internet gambling sites seem to violate a number of the laws addressed above, “[t]he Wire Act … has been the predominant tool used to prosecute Internet gambling across state and international lines.”[48] Presumably, this is because it is easier to obtain a conviction under the Wire Act since it does not require a violation of any state law.[49] However, recent case law has limited the “applicability of the Wire Act to certain forms of Internet gambling[,]” leaving the Department of Justice in need of alternative means by which to target this arena.[50]

B. The Unlawful Internet Gambling Enforcement Act (“UIGEA”)

Despite the unsuccessful enforcement of the Wire Act and its legislative counterparts as they applied to Internet gambling, many financial institutions were buckled down by pressures from local law enforcement agencies to cease their participation in the online gambling industry.[51] In 2003, then-New York Attorney General Eliot Spitzer signed agreements with ten banks that promised to block cardholders from using their credit cards for online gambling purposes.[52] Spitzer assured the public that “[t]he vast majority of credit card issuers . . . [had] recognized their legal, ethical, and business obligation [sic] to block credit-card transactions identified as online gambling.”[53] These self-regulatory practices may have been the “catalyst[s] for a shift in focus with many federal legislators [eventually leading] to the adoption of the UIGEA.”[54]

Congress passed the UIGEA in 2006 during its last days in session as an earmark to the SAFE Port Act.[55] The UIGEA makes it illegal for any “person engaged in the business of betting or wagering [to] knowingly accept, in connection with the participation of another person in unlawful Internet gambling” various forms of payment, including credit.[56] Like its unsuccessful predecessors, the UIGEA targets the financial institutions that profit from Internet gambling, not the individual gamblers themselves.[57] The Act defines unlawful Internet gambling as “plac[ing], receiv[ing], or otherwise knowingly transmit[ting] a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable Federal or State law … in the State” where it was made.[58] In effect, it manages to maintain individual state autonomy by continuing to grant states the right to determine Internet gambling laws within their boundaries.[59]

III. THE THIRD CIRCUIT UPHOLDS THE UIGEA

In the most recent appellate court decision regarding online gambling, the Third Circuit upheld the Unlawful Internet Gambling Enforcement Act (“UIGEA”) as constitutional.[60] The appellant, Interactive Media Entertainment and Gaming Association, Inc. (“Interactive”), was a New Jersey non-profit organization that collected and distributed information regarding Internet gambling.[61] Interactive’s clients were businesses that provided Internet gaming services throughout the world, including in the United States.[62]

A. Procedural Posture

In its complaint, Interactive sought to enjoin the government from enforcing the Act on two grounds: (1) the Act was unconstitutional on its face; and (2) it violated United States treaty obligations.[63] The government moved to dismiss the complaint for lack of standing.[64] Although the lower court found that Interactive had standing to sue, it nonetheless dismissed the action on its merits.[65]

B. The Appeal

Article III of the Constitution “limits the jurisdiction of federal courts to ‘Cases’ and ‘Controversies’” which can be properly resolved by means of the judicial process.[66] This notion is referred to as the doctrine of standing, and it prohibits courts from issuing advisory opinions.[67] The plaintiff in a lawsuit bears the burden of showing that he or she has brought forth a case or controversy so that the court can establish jurisdiction over the claim.[68] To assert standing, a plaintiff must show that he or she suffered (1) an injury in fact; (2) which is concrete and particularized; and (3) which is actual or imminent.[69] In the present case, Plaintiff Interactive struggled to show that it suffered an injury in fact or “an invasion of a legally protected interest.”[70]

Interactive claimed that it could prove injury in fact on the basis of three separate “injuries suffered by its members under the UIGEA: (1) a threat of criminal prosecution or civil liability; (2) a chilling effect on the exercise of First Amendment rights; and (3) imminent financial ruin.”[71] The court held that because Interactive alleged First Amendment harm on behalf of its members, and because the UIGEA did not create a provision which exempted Interactive’s members from criminal prosecution if it did not conform its actions in accordance with the statute, Interactive’s members did have an injury in fact.[72] Furthermore, this injury was not a subjective unsubstantiated fear, but rather an immediate threat of criminal penalties and financial burdens, which are distinct and palpable,[73] and therefore sufficient for standing purposes.[74] However, this analysis applied only to the members of Interactive’s association.[75] As to whether Interactive itself could establish associational standing to bring a claim on behalf of its members,[76] the District Court found that the organization’s goal of “represent[ing] the interests of persons and companies which provide Internet interactive [gaming and gambling services]” was germane to the members’ interests of protecting their First Amendment rights.[77] On appeal, the Third Circuit affirmed these holdings without further elaboration.[78]

1. Constitutional Claims

Interactive’s claims regarding the facial constitutionality of the Act were as follows: (1) expressive association; (2) commercial speech; (3) overbreadth and vagueness; (4) privacy; (5) World Trade Organization claims; (6) an ex post facto clause claim; and (7) a Tenth Amendment claim.[79] On appeal, the court reviewed only the allegations pertaining to vagueness and privacy.[80]

a. Vagueness

Interactive alleged that the UIGEA was unconstitutionally vague and ambiguous because “the statutory phrase ‘unlawful Internet gambling’ lack[ed] an ‘ascertainable and workable definition.’”[81] A statute is unconstitutionally vague if it fails to provide notice to a person of ordinary intelligence or where it lacks standards, which may promote discriminatory enforcement of the statute.[82] Furthermore, a claim that a statute is unconstitutionally vague on its face requires the plaintiff to prove that it is vague in all possible applications of the statute.[83]

The court’s response was three-fold. First, it noted that the statute was clear because it unambiguously made it illegal for any gambling business to knowingly accept payment in a jurisdiction that does not allow Internet gambling or from a person who places a bet in such a jurisdiction.[84] The court did not elaborate, but merely concluded that this sufficiently provided a person of ordinary intelligence with proper notice as to what conduct the Act prohibits.[85]

Second, the court found that the UIGEA was not vague in all of its applications.[86] The court demonstrated that the application of the statute would be clear in states where a law barred Internet gambling. For example, because Hawaii has statutes illegalizing Internet gambling,[87] if a person in Hawaii places a bet a gambling business that knowingly accepts payment on that bet would be in violation of the Act.[88] Additionally, Oregon has similarly enacted statutes illegalizing Internet gambling.[89]

In dicta, the court in Interactive added another scenario that would violate the Act—namely, when a person places a bet from a state where Internet gambling is illegal and the gambling business accepting the bet was in another country.[90] Because a “country can regulate conduct occurring outside its territory which causes harmful results within its territory,” a bid accepted in a foreign territory violates the Act.[91] In sum, the court held the Act was not vague in all applications and, therefore, not facially unconstitutional on such grounds.[92]

Lastly, the court considered the allegation that the Act was overly vague. Appellant Interactive claimed the UIGEA did not establish the illegality of any particular conduct in and of itself, “but rather incorporate[d] other Federal or State law related to gambling.”[93] While the court conceded that the Act did not create a distinct offense, it refused to find vagueness on these grounds.[94] It recognized that incorporation of other provisions does not render a statute unconstitutional because “a reasonable person of ordinary intelligence would consult the incorporated provisions.”[95] Furthermore, the court recognized that the fact that the Act would be legal in some states but illegal in others is insufficient to render it unconstitutionally vague.[96]

Interactive also pointed out the difficulty in determining jurisdiction over Internet activities.[97] It argued that because it would be difficult to determine from which jurisdiction a person placed the online wager, it would be nearly impossible to know whether acceptance of such a wager was unlawful.[98] In response, the court noted that the determining factor for vagueness was not “the possibility that it will sometimes be difficult to determine whether the incriminating fact it establishes has been proved; but rather the indeterminacy of precisely what that fact is.”[99] The court regarded the issue as a substantive matter to be determined on its merits, not one which fails to put a gambling business on notice of the legal consequences of its actions.[100]

b. Privacy

In its second argument, appellant Interactive claimed that the UIGEA “violate[s] a constitutional right of individuals to engage in gambling-related activity in the privacy of their homes.”[101] Before evaluating the claim on its merits, the court first addressed the preliminary issue of whether Interactive could assert third-party standing on behalf of its individual members.[102] To assert third-party standing, the plaintiff must prove: (1) injury; (2) a “close relationship” with the third party; and (3) the third party faces some obstacle that prevents it from bringing forth its own claim.[103] Here, the court ultimately concluded that Interactive did not satisfy the prerequisites to assert third-party standing because it did not share a close relationship with the gamblers whose rights it claimed were violated; rather, Interactive’s member companies did.[104] Nonetheless, the court noted that third-party standing requirements were merely prudential and developed by the courts themselves, and not jurisdictional requirements imposed by the Constitution.[105] Accordingly, the court went on to determine that Interactive’s claim failed on its merits.[106]

Appellant Interactive focused its argument on the opinions in Lawrence v. Texas and Reliable Consultants, Inc. v. Earle.[107] Both cases “involved . . . sexual conduct between consenting adults in the privacy of the home.”[108] The court distinguished these two scenarios, finding that “[g]ambling, even in the home, simply does not involve any individual interests of the same constitutional magnitude,” and is therefore not protected by any constitutional right to privacy.[109] With no more than a few superficial statements, the court affirmed the district court’s decision and refused to find any constitutional protection for adult gaming in the privacy of the home.[110]

IV. A MERITORIOUS OPINION?

As indicated above, a plaintiff, whether a natural person or a legal entity, must have standing to challenge a statute’s enforcement.[111] The court in Interactive suggested that even an entity such as appellant Interactive, which had no direct relationship with individual gamblers, may bring a constitutional claim based on vagueness via associational standing if it and its member entities suffer from the harms that give rise to the cause of action.[112] Still, the court denied standing on the privacy claim because neither Interactive nor its member entities were allegedly harmed as a result of privacy violations; rather, it was the individual gamblers who were harmed.[113] But, if Interactive lacked standing to assert the privacy claim in the first place, does the court’s continuing analysis on the merits hold any validity or is it mere dicta?

Although the Third Circuit failed to address this issue in Interactive, the U.S. Supreme Court has found that “[f]or a court to pronounce upon the meaning or the constitutionality of a state or federal law when it has no jurisdiction to do so is, by very definition, for a court to act ultra vires.”[114] In making this assertion, however, the Supreme Court in Steel Co. v. Citizens for a Better Environment referred only to standing issues arising under Article III of the Constitution.[115] The Court articulated that determining the existence of a cause of action prior to an issue of statutory standing is proper, since “[i]t has nothing to do with whether there is a case or controversy under Article III.”[116] In effect, prudential standing issues, like the third-party standing issues determined in Interactive, “do not carry a risk of plunging a court into issuing advisory opinions.”[117] Therefore, the Third Circuit in Interactive properly analyzed the merits of appellant’s constitutional privacy claim, despite its assertion that appellant Interactive lacked third-party standing to bring the claim on behalf of individual gamblers.

A. The Vagueness of the UIGEA

On the issue of vagueness, the court in Interactive found the provisions within the Act were sufficient to provide a person of reasonable intelligence notice of what activity is prohibited.[118] Yet, in its own analysis, the court failed to exact a consistent definition of the terms of the Act. The court opined that the Unlawful Internet Gambling Enforcement Act of 2006 (“UIGEA”) focuses solely on businesses, like that of appellant, which are directly affiliated with the industry of Internet gaming.[119] In fact, the court specifically pointed to the language of the Act itself, indicating that the phrase “the business of betting or wagering”:

“ . . . does not include the activities of a financial transaction provider, or any interactive computer service or telecommunications service.” . . . Thus, the criminal prohibition contained in § 5363 of the Act applies only to gambling-related businesses, not any financial intermediary or Internet-service provider whose services are used in connection with an unlawful bet.[120]

This phrase suggests that the UIGEA applies only to those companies that directly provide Internet gaming services and their advertising counterparts.

However, the court later stated the UIGEA itself requires that certain financial institutions create regulations to block transactions prohibited by the UIGEA.[121] By doing so, the court expanded its earlier interpretation to allow for broader umbrella coverage of the UIGEA as it applies to any financial institution that in any way participates in an Internet gaming wager.[122] The court ultimately upheld the UIGEA despite the vagueness argument and the fact that the court could not consistently define the UIGEA’s terms and conditions.[123]

The court in Interactive suggested two alternative interpretations of the UIGEA. The first interpretation limits the application of the UIGEA to companies directly providing Internet gambling services.[124] The second interpretation expands the UIGEA’s scope to include financial institutions.[125] Interestingly, the interpretation which quotes from the UIGEA—the first interpretation—would actually frustrate the UIGEA’s purpose by limiting its application only to those industries directly related to gaming. Only under the court’s second interpretation would the UIGEA apply to financial institutions. This second, broader interpretation has been the standard for interpreting the UIGEA.[126]

B. The UIGEA: Void for Vagueness

A statute is unconstitutional under the Due Process Clause of the Fourteenth Amendment if it is imprecise and indefinite, thereby encouraging subjective enforcement.[127] The Unlawful Internet Gambling Enforcement Act of 2006 (“UIGEA”) is thus argued to be unconstitutionally vague on its face because it fails to properly and workably define the term “unlawful Internet gambling,” which has no generally accepted definition.[128] The court in Interactive responded to this concern by dramatically oversimplifying the issue, finding that the UIGEA is meant to defer to state laws, so that Internet gambling is only unlawful when a state law says it is.[129] Yet, the court failed to address the additional ambiguity created by such a response due to the drastic inconsistencies between state laws.[130] For instance, nearly all states allow for some form of gambling, including “skill gaming” and “sweepstakes,” which have become multi-million dollar industries.[131] The popularity of skill gaming and sweepstakes has increased because most state laws prohibit lottery and gambling, which involve: “(1) the award of a prize, (2) determined on the basis of chance, and (3) where consideration was paid.”[132]

Similarly, the UIGEA places great focus on the distinction between those games which are primarily determined on the basis of chance, and those which are not.[133] The UIGEA creates special exemptions for only a few selected games of chance, such as fantasy sport contests, provided that:

1. All prizes and awards offered to winning participants are established and made known to the participants in advance of the game . . . .

2. All winning outcomes reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of individuals . . . in multiple real-world sporting or other events.

3. No winning outcome is based (aa) on the score, point-spread, or any performance or performances of any single real-world team or any combination of such teams; or (bb) solely on any single performance of an individual athlete in any single real-world sporting or other event.[134]

However, the UIGEA does not establish a list of unlawful activities to be regulated by banks and credit unions.[135] One questionable activity is Texas Hold ‘Em Poker, which has “exploded in popularity in recent years,” with televised professional tournaments and cash games becoming a part of mainstream coverage.[136] Most professional players of the game make a living from it because they understand the fundamental concepts that render it a game of skill.[137] Yet, critics of the game often insist that it is a game of “imperfect information and chance outcomes.”[138]

To understand why poker is a game of skill rather than chance, it is necessary to start with a basic understanding of the laws of probability. Consider a coin toss where the probability of landing on heads or tails is fifty percent. The result of one coin toss is generally referred to as a gamble.[139] If the tosses were done repeatedly, however, any such gamble would be eliminated since any “positive expectation” of repeatedly choosing one side would eventually be zero.[140] In other words, gambles do exist in short-term, single experiment analyses. However, it is always true that “mathematical probability is not overcome in the long term . . . .”[141] Poker statistical calculations operate similarly. While a player may lose a hand or two despite heavy odds in his or her favor, the poker player envisions the game in terms of long-term expectations, calculating the statistics of each hand as though it would be performed an infinite number of times.[142] The player who can skillfully calculate his or her odds and continue to play tends to win in the long run, making poker a true game of skill, not chance.[143] After all, it is no surprise that “the same five guys make it to the final table of the World Series of Poker every single year[.]”[144]

Despite clear indications to the contrary, courts have reached different results on the status of poker as a game of skill.[145] For instance, in a recent case involving illegal gambling, Colorado District Judge James Hartmann concluded, “[a] poker player may give himself a statistical advantage through skill or experience, but that player is always subject to defeat when the next card is turned.”[146] While technically true, this phenomenon does not account for a player’s long-term expectations.[147] Regardless of their validity, these conflicting opinions create confusion for those attempting to interpret the UIGEA. In Interactive, the court made it clear that the UIGEA is to be clarified by state statutes.[148] State legislatures, in turn, have established a practice of creating statutes that distinguish between games of skill and chance.[149] Yet, state courts that are reviewing these statutes cannot determine whether poker falls into the category of skill or chance.[150] In effect, the UIGEA defers to state laws that are essentially incognizable.

Adding to the confusion, the UIGEA goes on to specifically exempt certain games of skill, including “investments in securities, commodities, over-the-counter derivatives, and insurance.”[151] The UIGEA also includes various activities which incorporate a high element of chance, creating more uncertainty. After all, “the only difference between gambling at a casino and day trading stock online is that you have to serve yourself drinks when sitting at your home computer.”[152] While poker deals primarily with statistical calculations,[153] stock predictions generally take into account the actions of other living human beings who are agents of free will and ultimately unpredictable.[154]

For these reasons, the UIGEA’s “skill versus chance” distinction becomes utterly incomprehensible, leaving the interpreter of the UIGEA in a position of not knowing which activities are outlawed and which are allowed. Consequently, as the pressure mounts on United States financial institutions to begin implementing the regulatory provision of the UIGEA, they are faced with the immense burden of figuring out what exactly they are meant to enforce.[155]

C. UIGEA’s Effects on Financial Institutions

One of the primary concerns with the vagueness of the Unlawful Internet Gambling Enforcement Act of 2006 (“UIGEA”) and its failure to successfully define “unlawful Internet gambling” is the effect it will have on financial institutions throughout the nation. Aside from the requirement that financial institutions determine which games are unlawful based on state laws, financial institutions will have to bear an even more cumbersome burden of locating transactions that fall within the elusive definition.[156]

The UIGEA specifically states that financial institutions are to adopt policies and procedures for the purpose of blocking Internet gambling activities.[157] The UIGEA directs the Secretary of the Treasury and the Board of Governors of the Federal Reserve System to work with the U.S. Attorney General in identifying and blocking illegal Internet gambling transactions.[158] By late 2007, these agencies had used a macro approach to develop a set of proposed rules, whereby they identified five distinct categories of payment systems: (1) card; (2) check collection; (3) wire transfer; (4) money transmission; and (5) automated clearing house.[159] The agencies set up specific regulations for each of these payment systems so that financial institutions would not have to bear the burden of establishing their own regulations.[160] Thus, when a payment system complies with an agency’s proposed set of rules, it will be deemed to comply with the UIGEA.[161] Alternatively, the agency could choose to establish its own set of procedures.[162]

Realizing that it would be nearly impossible for most financial institutions to identify which of its transactions were associated with Internet gambling using their current infrastructure, the agencies established a set of broad exemptions.[163] These included exemptions for all automated clearing house systems, check collections systems, and wire transfer system participants without direct relationships with customers involved in the Internet gambling business.[164] The exemptions were a response to the companies’ inability to “accurately identify and block certain restricted transactions.”[165] Yet, the agencies created no exemptions for card systems and money transmitting businesses, effectively leaving them with the burden of analyzing each processed transaction to determine whether it is directly associated with illegal Internet gambling.[166] Such a system would require extensive resources in an effort to investigate each transaction and determine if it violates the law of any one of the fifty United States jurisdictions.[167] Costs associated with recordkeeping in this type of system have been estimated to be four million dollars annually, not including preliminary expenses, such as the implementation of the system.[168] With no mention of any government reimbursement for such expenses, it becomes apparent that financial institutions will be left to cover the tab.[169]

In addition to the aforementioned burdens, financial institutions would also have to reconcile state laws with UIGEA exemptions.[170] The Act currently bans “staking or risking . . . something of value . . . upon an agreement or understanding that . . . another person will receive something of value in the event of a certain outcome[.]”[171] As previously discussed, the Act makes specific exemptions for insurance, over-the-counter derivatives, securities investments, and commodities.[172] The problem is that “hedge funds and offshore reinsurance contracts do not fit neatly into any of these categories.”[173] When faced with these transactions, financial institutions must determine, on an individual basis, whether they should be included within the UIGEA exemptions.[174] Compliance with the Act is essentially left to an individualized interpretive methodology, whereby institutions are given little to no guidelines to assist them in determining how to treat these unaccounted-for transactions.[175]

Another problem arises with online transactions, which have generally been accepted as legal but appear to fit the mold for “unlawful Internet gambling” created by Congress via the UIGEA.[176] More specifically, online auctions, like those on eBay, could easily be construed as chance-based transactions since their values “depend[] on the number of participants, and the outcome is uncertain.”[177] The UIGEA does not properly address these common transactions, leaving financial institutions to interpret the boundaries of legislative provisions, a task better suited for the legislative or judicial branches. Moreover, where a state law does not exempt the same activities as the UIGEA, financial institutions will have to reconcile the federal and state laws.[178] Not only is this role of lawmaker and law interpreter inappropriate for an entity which is unelected and inexperienced, it also creates a massive burden of having to determine the legality of each transaction on an ad hoc basis. This could lead to an absurd scenario wherein two financial institutions enforce the same Internet gambling regulation upon the same individual in two distinct ways.[179]

D. Privacy Rights and the UIGEA

Comments on a proposed rule to implement the Act have shown that many consumers agree with Interactive that gambling in one’s own home should be a private determination.[180] These consumers argue that the Act allows too much “inappropriate governmental intrusion into citizens’ private affairs.”[181] Should gamblers choose to play from their own homes, it should be their prerogative to do so. As Massachusetts Democratic Representative, Barney Frank, put it, “If American citizens . . . want to gamble, let them.”[182]

Aside from the Unlawful Internet Gambling Enforcement Act of 2006’s (“UIGEA”) infringement on individual choice, serious privacy concerns arise as to the regulatory methods financial institutions will resort to when regulating Internet gambling.[183] The Financial Services Roundtable, a representative of several United States financial institutions, has made clear that the UIGEA, “[u]nder the proposed rules, forces financial services entities to perform police functions more appropriate for law enforcement agencies.”[184] These institutions will have to take measures to establish an entirely revised system of internal controls, requiring vast additional resources for implementing the system, including training and maintenance.[185] Because online gambling transactions are often of small value, systematic oversight will require the monitoring of nearly every transaction that passes through a company’s database.[186] This responsibility exacerbates the already immense burden financial institutions bear in applying the UIGEA.[187]

More importantly, this ad hoc system of review by financial institutions likely threatens individual privacy, for companies become more willing to reject legitimate transactions than risk the possibility that they fall outside the boundaries of the UIGEA.[188] Bank of America, for example, has expressly indicated that it will likely be forced to block legitimate transactions in an effort to enforce a potentially ambiguous act.[189] This is because the UIGEA “requires banks and other institutions to know the purpose and legality of payments in an industry.”[190] Thus, the UIGEA effectively becomes a threat, not only to the privacy of individuals that participate in Internet gambling, but to everyone who utilizes financial institutions for any monetary transaction.[191]

While financial institutions are most concerned with the costly implementations of the UIGEA, they are not who will ultimately suffer from UIGEA regulation.[192] Banks and credit unions will be inclined to pass the expenses to consumers by lowering interest rates on deposits and investments as well as increasing the rates on loans.[193] While banks and other institutions will be left with the tasks of establishing the necessary protocol and determining how to comply with the UIGEA’s provisions, ultimately, “[c]onsumers, not stockholders, will end up paying the bills.”[194]

V. THE REAL EFFECTS OF THE UIGEA

Proponents of the Unlawful Internet Gambling Enforcement Act of 2006 (“UIGEA”) are certain that the Act is destined to minimize Internet gambling throughout the nation.[195] However, even with the proper infrastructure, it is questionable whether the UIGEA would ultimately serve that purpose.[196] After all, Internet sports betting and virtual casino sites are already illegal in the United States, but nothing has stopped American gamblers from reaching the thousands of sites based overseas.[197] Even with the recent FBI takeover of three of the largest internet gambling sites in the nation, the UIGEA will not be the effective tool for curbing the widespread hobby that the legislature hopes it will be.[198]

A. Internet Gambling Continues to Flourish

The American Banking Association (“ABA”) has declared the Unlawful Internet Gambling Enforcement Act of 2006 (“UIGEA”) “an unprecedented delegation of governmental responsibility with no prospect of practical success in exchange for all the burden it imposes.”[199] According to the ABA, the proposed rules would promote foreign correspondent banks to help identify and block illegal Internet gambling transactions, but, at the same time, could “rais[e] more problems than [they] solv[e].”[200]

Many financial institutions have taken a direct approach to the problem by negotiating settlement agreements and non-prosecution agreements with the Department of Justice.[201] For instance, Electronic Clearing House, a Nevada-based corporation, negotiated a non-prosecution agreement with the Department of Justice when the Department learned that the corporation was involved in money transfers for “e-wallets,” or online payment services.[202] However, several online gamblers have resorted to less legitimate overseas-based gambling operations, which effectively “forc[e] these problems into the shadows where they’re harder to address and mak[e] it impossible to enlist the industry in helping to fight them.”[203] Instead of minimizing Internet gaming, the UIGEA punishes reputable and responsible Internet gambling services by turning gamblers to less legitimate offshore providers that can evade UIGEA enforcement.[204] Ironically, the UIGEA only promotes industry fraud and corruption, which is what its proponents have said it was meant to prevent.[205]

B. How Applicable is the UIGEA?

Assuming, arguendo, that the UIGEA is successfully implemented, companies will be prohibited only from accepting wagers of players within a state whose laws prohibit Internet gambling.[206] The reality is that only six states have laws that ban Internet gambling, while the remaining forty-four have not enacted any legislation making Internet gambling illegal.[207] Consequently, in addition to ignoring the numerous flaws in the UIGEA, the Act would likely not result in an actual ban of Internet gambling in the entire United States until the legislators in the remaining forty-four states pass legislation explicitly banning Internet gambling.[208] Again, the Act falls short of its intended outcome, resulting in a heavy burden of enforcement that outweighs any benefits.[209]

VI. REGULATION AS AN ALTERNATIVE TO THE UIGEA

On a practical level, the Unlawful Internet Gambling Enforcement Act of 2006 (“UIGEA”) is simply unenforceable.[210] The President and Chief Executive Officer of the Governmental Employees Credit Union has even stated that the “check-processing systems would come to a stand-still if financial institutions [had] to review each check to determine if the payment was made to fund illegal gambling activities.”[211] As a result of this practical impossibility, most financial services favor the possibility of regulating Internet gambling as opposed to implementing an outright ban.[212]

Modern financial institutions are more equipped to regulate Internet gambling than to enforce a total ban.[213] With respect to the issue of minors engaging in Internet gambling, modern-day age-verification software and government databases, in combination with strict operating procedures, would serve to easily prevent underage players from accessing gambling sites.[214] Sites could also cross-reference drivers’ licenses and voter registration lists to verify that a player is not underage.[215] The mere possibility of underage gambling does not justify an outright ban on Internet gambling, since simple, alternative solutions already exist to solve this problem.[216]

Even more compelling a reason to regulate Internet gambling is the potential for great social benefit.[217] Rather than establishing a guise of prohibition while allowing Internet gambling to thrive in an underground arena, the government could instead regulate it and impose a hefty tax.[218] In 2005, Internet gambling revenues reached ten billion dollars.[219] The Internal Revenue Service taxed none of it, since the “agency had no way of tracking or regulating profits and winnings.”[220] Meanwhile, the United States remained at a budget deficit of $455 billion during the fiscal year ending September 2008.[221] The nation could have yielded as much as $43 billion in tax revenue from online gambling, over the course of ten years, as estimated by the consulting firm PricewaterhouseCoopers.[222] If not for any of the aforementioned reasons, the United States should follow its foreign counterparts in regulating Internet gambling for the financial incentives.[223] In the current economic downturn, Congress should consider repealing the highly ineffective UIGEA and substituting a regulatory provision that would benefit a troubled United States economy.[224] Steve Wynn, Chairman and CEO of Wynn Resorts Ltd., stated that “[they] are convinced that the lack of regulation of Internet gaming within the U.S. must change. . . . We must recognize that this activity is occurring and that law enforcement does not have the tools to stop it. . . . It is time that the thousands of jobs created by this business and the potentially significant tax dollars come home to the U.S."[225]

In May 2009, Barney Frank sought to make this a reality when he proposed the Internet Gambling Regulation Consumer Protection and Enforcement Act (“IGRCPEA”) to replace the ban imposed by the UIGEA with a federal system for regulating online gaming.[226] The IGRCPEA seeks to regulate and tax online gambling and to push back the December 1, 2009 date on which the proposed UIGEA rules were scheduled to take effect.[227] Although Frank introduced the legislation in May 2009, it was set aside as a result of the legislative need to focus on the deteriorating United States economy.[228] However, in late 2009, Frank was able to win over his sixtieth co-sponsor for the bill.[229] By delaying the implementation of the UIGEA for one more year, Frank’s prospects for overturning the Act and implementing his proposed regulatory legislation are promising.[230] Meanwhile, major gambling Nevada corporations, including Ceasars Entertainment Corp., MGM Resorts, and Wynn Resorts, along with representatives like Senate Majority Leader, Harry Reid, have undertaken their own efforts to push for federal regulation of internet gaming, as opposed to an outright ban.[231]

VII. CONCLUSION

The history of the United States is filled with ongoing disfavor towards gambling institutions.[232] While this disfavor is seemingly consistent over all forms of gambling, certain gaming has been given preferential treatment by the nation’s regulating entities.[233] This preference has been masked by the cloak of a “chance versus skill” analysis.[234] Clear games of skill, such as poker, have been regularly categorized as games of chance by observers unfamiliar with the long-term analyses on which the games are based.[235] The most recent attack on gambling, the Unlawful Internet Gambling Enforcement Act of 2006 (“UIGEA”), is the first to successfully target the Internet gambling arena.[236] In Interactive Media Entertainment & Gaming Association v. Attorney General of the U.S., the Third Circuit upheld the constitutional validity of the UIGEA.[237] However, the Act should be found unconstitutionally vague in defining what unlawful Internet gambling actually is[238] and the threat that it poses to individual privacy.[239] Apart from its constitutional defects, the Act also fails for several other reasons: (1) it poses excessive burdens on financial institutions;[240] (2) it is inapplicable in the majority of jurisdictions it seeks to regulate;[241] and (3) its enforcement would be counterproductive to the legislature’s stated intent, since most online gambling providers are simply relocating themselves overseas, beyond the reach of regulation.[242] The Supreme Court should overturn the decision and declare the UIGEA unconstitutional on its face. Alternatively, Congress should consider the recently proposed legislation seeking to overturn the UIGEA and implement a federal regulatory mechanism that could establish credible and responsible Internet gambling businesses and significantly contribute to national tax revenue.[243] The UIGEA is yesterday’s bill which deals with yesterday’s issues, not tomorrow’s.[244]

Rotem Nicole Moran [*]

1. Randy Shore, Gambling Affects Brain, Research Finds, Vancouver Sun, Feb. 29, 2008, at A12.

2. Id.

3. Gambling’s Rush Pushes Lawyer to Brink of Losing Big, Mass. Bar Ass’n Lawyers J., July-Aug. 2009, at 10, http://www.massbar.org/publications/lawyers-journal/2009/julyaugust/gambling-rush (discussing the effects that online gambling has on lawyers).

4. U.S. Gen. Accounting Office, GAO-03-89, Internet Gambling: An Overview of the Issues 1-2 (2002), available at http://www.gao.gov/new.items/d0389.pdf [hereinafter U.S. Gen. Accounting Office].

5. Katherine A. Valasek, Comment, Winning the Jackpot: A Framework for Successful International Regulation of Online Gambling and the Value of the Self-Regulating Entities, 2007 Mich. St. L. Rev. 753, 756, 759-60 (2007).

6. Lisa Lester, Comment, Beating the Odds: Regulation of Online Gaming Stateside and Abroad, 28 J. Nat’l Ass’n Admin. L. Judiciary 621, 621 (2008).

7. 18 U.S.C. § 1084 (2006).

8. 18 U.S.C. § 1952 (2006).

9. 18 U.S.C. § 1955 (2006); Yevgeniya Roysen, Note, Taking Chances: The United States’ Policy on Internet Gambling and Its International Implications, 26 Cardozo Arts & Ent. L.J. 873, 876-78 (2009).

10. Roysen, supra note 9, at 879.

11. See Interactive Media Entm’t & Gaming Ass’n v. Att’y. Gen. of the U.S., 580 F.3d 113 (3d Cir. 2009) (finding that gambling does not involve constitutionally protected individual interests).

12. U.S. Gen. Accounting Office, supra note 4, at 6.

13. Jason A. Miller, Note, Don’t Bet on This Legislation: The Unlawful Internet Gambling Enforcement Act Places a Bigger Burden on Financial Institutions Than Internet Gambling, 12 N.C. Banking Inst. 185, 186 (2008).

14. Lester, supra note 6, at 621.

15. Id. at 621–22 (stating that Internet gambling doubled from $300 million in 1997 to $651 million in 1998, and the number of gamblers increased from 6.9 million to 14.5 million).

16. U.S. Gen. Accounting Office, supra note 4, at 6.

17. Mark Reutter, Social Costs of Gambling Nearly Half That of Drug Abuse, New Book Concludes, News Bureau U. Ill., Mar. 8, 2004, http://news.illinois.edu/news/04/0308grinols.html.

18. Brant M. Leonard, Note, Highlighting the Drawbacks of the UIGEA: Proposed Rules Reveal Heavy Burdens, 57 Drake L. Rev. 515, 518 (2009).

19. 18 U.S.C. § 1084(a) (2006).

20. Leonard, supra note 18, at 518.

21. See United States v. Cohen, 260 F.3d 68 (2d Cir. 2001); In re MasterCard Int’l, Inc., 132 F. Supp. 2d 468 (E.D. La. 2001).

22. Cohen, 260 F.3d at 70.

23. Id.

24. Id. at 76.

25. Id.

26. 18 U.S.C. § 1084(a) (2006).

27. Leonard, supra note 18, at 519.

28. In re MasterCard Int’l, Inc., 132 F. Supp. 2d 468 (E.D. La. 2001).

29. Id. at 474.

30. Id. at 475.

31. Id. at 480.

32. 18 U.S.C. § 1952 (2000); 18 U.S.C. § 1953 (2006); 18 U.S.C. § 1955 (2006).

33. See 18 U.S.C. § 1952 (2000); 18 U.S.C. § 1953 (2006); 18 U.S.C. § 1955 (2006).

34. 18 U.S.C. § 1952(a) (2000).

35. 18 U.S.C. § 1952(b) (2000).

36. Kraig P. Grahmann, Betting on Prohibition: The Federal Government's Approach to Internet Gambling, 7 Nw. J. Tech. & Intell. Prop. 162, 168 (2009).

37. Id.

38. Id.

39. Michael D. Schmitt, Note, Prohibition Reincarnated? The Uncertain Future of Online Gambling Following the Unlawful Internet Gambling Enforcement Act of 2006, 17 S. Cal. Interdisc. L.J. 381, 387 (2008) (citing 18 U.S.C. § 1953(a) (2006)).

40. Id.

41. Id.

42. Roysen, supra note 9, at 877.

43. 18 U.S.C. § 1955(b)(1)(i)-(iii) (2006).

44. U.S. Gen. Accounting Office, supra note 4, at 14.

45. Grahmann, supra note 36, at 170.

46. Id. at 171.

47. Schmitt, supra note 39, at 389.

48. Id. at 387.

49. Id.

50. Id.

51. Miller, supra note 13, at 191.

52. Spitzer, Banks Target Internet Gambling Via Credit Card, Bus. J. – Cent. N.Y., Feb. 21, 2003, at 14.

53. Id.

54. Miller, supra note 13, at 193.

55. Id. at 195; see also U.S. Gov’t. Accountability Office, GAO-08-86T, Maritime Security: The SAFE Port Act and Efforts to Secure Our Nation’s Seaports 1-3 (2007), available at http://www.gao.gov/new.items/d0886t.pdf (explaining that the SAFE Port Act was a post-9/11 attempt to secure seaport boundaries by establishing heightened security criteria).

56. 31 U.S.C. § 5363 (2006).

57. Roysen, supra note 9, at 879.

58. 31 U.S.C. § 5362(10)(A) (2006).

59. See generally id.

60. Interactive Media Entm’t & Gaming Ass’n v. Att’y. Gen. of the U.S., 580 F.3d 113, 119 (3d Cir. 2009).

61. Id. at 114

62. Id.

63. Interactive Media Entm’t & Gaming Ass’n v. Att’y. Gen. of the U.S., 580 F.3d 114-15 (3d Cir. 2009).

64. Interactive Media Entm’t & Gaming Ass’n v. Gonzales, No. 07-2625, 2008 U.S. Dist. LEXIS 16903, at 5 (D.N.J. Mar. 4, 2008).

65. Id. at 14-15, 36.

66. Lujan v. Defenders of Wildlife, 504 U.S. 555, 559 (1992).

67. Id. at 560.

68. Id. at 561

69. Id. at 560

70. Id.

71. Interactive Media Entm’t & Gaming Ass’n v. Gonzales, No. 07-2625, 2008 U.S. Dist. LEXIS 16903, at 7 (D.N.J. Mar. 4, 2008).

72. Id. at 13.

73. As part of the test for establishing injury in fact for standing purposes, a plaintiff must show that he or she suffered a “distinct and palpable” harm as opposed to an “abstract” or “conjectural” harm. Richard A. Epstein, Standing in Law and Equity: A Defense of Citizen and Taxpayer Suits, 6 Green Bag 2d 17, 17-18 (2002) (“In essence there is a requirement that the defendant’s conduct be the cause of a distinct injury to the plaintiff not shared by other individuals for which the legal system can provide an appropriate remedy.”).

74. Interactive Media Entm’t & Gaming Ass’n v. Gonzales, 2008 U.S. Dist. LEXIS 16903, at 13.

75. Id. at 14–15.

76. Associations are generally able to represent their injured members in court in order to provide greater public access to government agency action. However, such representation must adhere to appropriate guidelines. Fla. Home Builders Ass’n v. Dep’t of Labor & Emp. Sec., 412 So.2d 351, 353 (Fla. 1982) (“An association has standing to bring suit on behalf of its members when: (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization's purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.”) (emphasis added).

77. Interactive Media Entm’t & Gaming Ass’n v. Gonzales, 2008 U.S. Dist. LEXIS 16903, at 17. See supra text accompanying note 73.

78. Interactive Media Entm’t & Gaming Ass’n v. Att’y. Gen. of the U.S., 580 F.3d 113, 118 (3d Cir. 2009).

79. Interactive Media Entm’t & Gaming Ass’n v. Gonzales, No. 07-2625, 2008 U.S. Dist. LEXIS 16903, at 2-3 (D.N.J. Mar. 4, 2008).

80. Interactive Media Entm’t & Gaming Ass’n v. Att’y. Gen. of the U.S., 580 F.3d at 115–17.

81. Id. at 115.

82. United States v. Williams, 553 U.S. 285, 304 (2008).

83. Interactive Media Entm’t & Gaming Ass’n v. Att’y. Gen. of the U.S., 580 F.3d at 116 (3d Cir. 2009) (quoting Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 497 (1982)).

84. Interactive Media Entm’t & Gaming Ass’n v. Att’y. Gen. of the U.S., 580 F.3d at 116.

85. Id.

86. Id.

87. Haw. Rev. Stat. §§ 712-1220(4), 712–1223 (1993).

88. Interactive Media Entm’t & Gaming Ass’n v. Att’y. Gen. of the U.S., 580 F.3d at 116.

89. Or. Rev. Stat. § 167.109 (2003). See also Interactive Media Entm’t & Gaming Ass’n, 580 F.3d at 116 (providing the example that if a gambling business located in Oregon knowingly accepts payment in connection with Internet gambling, it too would violate the UIGEA).

90. Interactive Media Entm’t & Gaming Ass’n v. Att’y. Gen. of the U.S., 580 F.3d at 116 n.5.

91. Id. (quoting Laker Airways, Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 922 (D.C. Cir. 1984)).

92. Id. at 116.

93. Id.

94. Id. at 117.

95. Id. at 116 (quoting United States v. Iverson, 162 F.3d 1015, 1021 (9th Cir. 1998)).

96. Interactive Media Entm’t & Gaming Ass’n v. Att’y. Gen. of the U.S., 580 F.3d at 116.

97. Id.

98. Id.

99. Id. at 116–17 (quoting United States v. Williams, 553 U.S. 285, 306 (2008)).

100. See Interactive Media Entm’t & Gaming Ass’n v. Att’y. Gen. of the U.S., 580 F.3d at 117.

101. Id.

102. Id. at 117–18.

103. Id. at 118 (citing Nasir v. Morgan, 350 F.3d 366, 376 (3d Cir. 2003)).

104. Interactive Media Entm’t & Gaming Ass’n v. Att’y. Gen. of the U.S., 580 F.3d at 118.

105. Id.

106. Id.

107. Id.; see also Lawrence v. Texas, 539 U.S. 558 (2003); Reliable Consultants, Inc. v. Earle, 517 F.3d 738 (5th Cir. 2008).

108. Interactive Media Entm’t & Gaming Ass’n v. Att’y. Gen. of the U.S., 580 F.3d at 118; see also Lawrence, 539 U.S. at 564 see also Reliable Consultants, Inc., 517 F.3d at 744.

109. Interactive Media Entm’t & Gaming Ass’n v. Att’y. Gen. of the U.S., 580 F.3d at 118.

110. Id. at 118–19.

111. Id. at 117.

112. Id. at 118.

113. Id.

114. Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 101–02 (1998).

115. Id. at 102.

116. Id. at 97.

117. Grand Council of the Crees v. FERC, 198 F.3d 950, 960 (D.C. Cir. 2000).

118. Interactive Media Entm’t & Gaming Ass’n v. Att’y. Gen. of the U.S., 580 F.3d at 116.

119. Id.

120. Id. at 114 n.1 (quoting 31 U.S.C. § 5363 (2006)).

121. Id. at 114.

122. See Eli Lehrer, Time to Fold the Unlawful Internet Gambling Enforcement Act: A Bad Law with Perverse Outcomes, CEI OnPoint, (Mar. 27, 2008), available at http://cei.org/studies-point/time-fold-unlawful-internet-gambling-enforcement-act (“[The UIGEA] touches every sort of financial service provider: banks, credit unions, credit card companies, wire transfer services, and even brokerages.”).

123. Interactive Media Entm’t & Gaming Ass’n v. Att’y. Gen. of the U.S., 580 F.3d at 116.

124. Id. at 114 n.1.

125. Id. at 114.

126. See Lehrer, supra note 122.

127. City of Chicago v. Morales, 527 U.S. 41, 59–60 (1999).

128. Court Rejects iMEGA Challenge to UIGEA-Unlawful Internet Gambling Enforcement Act, PokerPages.com, Sept. 9, 2009, http://www.pokerpages.com/poker-news/news/court-rejects-imega-challenge-to-uigea--unlawful-internet-gambling-enforcement-act-31885.htm.

129. Interactive Media Entm’t & Gaming Ass’n v. Att’y. Gen. of the U.S., 580 F.3d 113, 117 (3d Cir. 2009).

130. See generally, Adam Richards, Court of Appeals Upholds UIGEA, CasinoAdvisor.com, Sept. 3, 2009, http://www.casinoadvisor.com/court-of-appeals-upholds-uigea-new-item.html (stating that there are only a half-dozen states with laws against Internet gambling, and forty-four where it is still potentially legal).

131. Louis V. Csoka, Three Persisting Myths of Gaming Technology Law, 16 Nev. Law. 10, 10 (2008).

132. Id. (emphasis added).

133. See 31 U.S.C. § 5362(1)(A) (2006) (stating that a bet or wager “means the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance, upon an agreement or understanding that the person or another person will receive something of value in the event of a certain outcome”) (emphasis added).

134. 31 U.S.C. § 5362(1)(E)(ix)(I)–(III) (2006).

135. Lehrer, supra note 122.

136. DeeDee Correll, The Art of Poker Goes to Court: Whether the Game is Based on Luck or Skill is at the Heart of a Spate of Recent Cases, L.A. Times, Sept. 3, 2009, at A14.

137. Michael A. Tselnik, Note, Check, Raise, or Fold: Poker and the Unlawful Internet Gambling Enforcement Act, 35 Hofstra L. Rev. 1617, 1646 (2007).

138. Darse Billings et.al., Approximating Game-Theoretic Optimal Strategies for Full-Scale Poker, 2003 Int’l Joint Conf. on Artificial Intelligence 661, 661 (2003), available at http://ijcai.org/Past%20Proceedings/IJCAI-2003/content.htm; Correll, supra note 136.

139. See Tselnik, supra note 137, at 1643–44.

140. Id. at 1644.

141. Id.

142. Id.

143. Id. at 1648–49.

144. Id. at 1643 (quoting Rounders (Miramax Films 1998)).

145. Correll, supra note 136.

146. Id.

147. Tselnik, supra note 137, at 1648.

148. Interactive Media Entm’t & Gaming Ass’n v. Att’y. Gen. of the U.S., 580 F.3d 113, 114 (3d Cir. 2009).

149. Correll, supra note 136.

150. Id.

151. Lehrer, supra note 122.

152. Tselnik, supra note 137, at 1654 (quoting Jimmy Cox, The Pitfalls of Day Trading Stock Online, available at http://www.articles2k.com/article/176/76174/The_Pitfalls_of_Day_Trading_Stock_Online/ (last visited Sept. 7, 2007)).

153. Id. at 1654–55.

154. Id. at 1617.

155. Leonard, supra note 18, at 541.

156. Michael Hiltzik, Calling America’s Bluff on Online Gambling, L.A. Times, Oct. 19, 2009, at B2.

157. Miller, supra note 13, at 196.

158. Id.

159. Prohibition on Funding of Unlawful Internet Gambling, 72 Fed. Reg. 56,683-85 (proposed Oct. 4, 2007) (to be codified at 12 C.F.R. pt. 233) (stating that these groups can be defined as follows: (1) card systems, including credit cards, debit cards, pre-paid cards, and gift cards; (2) check collection systems, or systems between banks which are used to facilitate paper check transactions; (3) wire transfer systems, which process paper check data electronically; (4) money transmitting businesses, which include businesses which facilitate transfers of money between business and people; and (5) automated clearing house systems, which facilitate transactions between financial institutions).

160. Miller, supra note 13, at 198.

161. Id.

162. Id.

163. Id. at 200.

164. Id. at 199.

165. Id. at 200.

166. See Hiltzik, supra note 156.

167. Leonard, supra note 18, at 541.

168. Id. at 542.

169. See id.

170. See id. at 540.

171. 31 U.S.C. § 5362(1)(A) (2006).

172. 31 U.S.C. § 5362(1)(E)(i)–(vii) (2006).

173. Lehrer, supra note 122.

174. See Leonard, supra note 18, at 540.

175. Lehrer, supra note 122.

176. See id.

177. Id.

178. Leonard, supra note 18, at 540.

179. Miller, supra note 13, at 202.

180. See Proposed UIGEA Regulations: Burden Without Benefit?: Hearing Before the Subcomm. on Domestic and Int’l Monetary Pol’y, Trade, and Tech. of the H. Comm. on Fin. Serv., 110th Cong. 98 (2008) (statement of Louise L. Roseman, Dir., Div. of Reserve Bank Operations and Payment Sys.), available at http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr040208.shtml.

181. Id.

182. Mijnonlinegokken.net, Online Gokken Quotes, http://www.mijnonlinegokken.net/online-gokken-quotes.html (last visited Sept. 5, 2010); see also Edward Epstein, Online Gambling Bill in Congress Far From Being Sure Bet, S.F. Chron., June 14, 2002, at A4.

183. See generally Leonard, supra note 18, at 541.

184. Id. at 540–41.

185. Id. at 543.

186. Id.

187. See generally id.

188. Stephanie Kirchgaessner, Banks Attack Conflicting U.S. Gambling Rules, Fin. Times, Dec. 18, 2007, http://www.ft.com/cms/s/0/30810968-ada1-11dc-9386-0000779fd2ac.html.

189. Id.

190. Id.

191. See generally id.

192. See generally Letter from Eli Lehrer, Senior Fellow, Competitive Enter. Inst., to House Fin. Serv’s Comm. Members (Sept. 15, 2008), available at http://cei.org/cletters/2008/09/15/letter-uigea-house-financial-services-committee-members.

193. Id.

194. Id.

195. Doug Carlson, Internet Gambling Law a Success, But Faces Scrutiny, Ethics & Religious Liberty Commission, Nov. 27, 2007, available at http://erlc.com/article/internet-gambling-law-a-success-but-faces-scrutiny.

196. See generally Epstein, supra note 182.

197. Id.

198. Popper, Nathaniel, Three Largest Online Poker Sites Indicted and Shut Down by FBI, L.A. Times, April 15, 2011, available at http://latimesblogs.latimes.com/money_co/2011/04/three-largest-online-poker-sites-indicted-and-shut-down-by-fbi.html. (Eleven executives from Pokerstars, Full Tilt Poker, and Absolute Poker were arrested under the alleged authority of the UIGEA and charged with bank fraud and money laundering. The domain names of these online gambling sites were seized and efforts were made to shut down ongoing gambling activities); see generally Lisa Boikess, The Unlawful Internet Gambling Enforcement Act of 2006: The Pitfalls of Prohibition, 12 N.Y.U. J. Legis & Pub. Pol’y 151, 192–195 (2008-09).

199. PokerPages.com, Poker Page News: Am. Banking Ass’n Report Cites Major Objections to UIGEA, Mar. 10, 2008, http://www.pokerpages.com/poker-news/news/american-banking-association-report-cites-major-objections-to-uigea--30510.htm.

200. Proposed UIGEA Regulations: Burden Without Benefit?, supra note 180 (statement of Wayne Abernathy, Executive Vice President, American Bankers Association).

201. See, e.g., Electronic Clearing House in Pact with Prosecutors, Reuters, Mar. 28, 2007, http://www.reuters.com/article/idUSN2829250520070328.

202. Id.

203. Hiltzik, supra note 156.

204. Letter from Eli Lehrer, supra note 192.

205. Id.

206. Interactive Media Entm’t & Gaming Ass’n v. Att’y. Gen. of the U.S., 580 F.3d 113, 117 (3d Cir. 2009).

207. Richards, supra note 130.

208. See generally id.

209. See generally Press Release, U.S. Dep't of the Treasury, Prohibition on Funding of Unlawful Internet Gambling (Nov. 12, 2008), available at http://www.ustreas.gov/press/releases/reports/unlawfuinternetgambling11.12.08.pdf (noting that proposed regulation would be unduly burdensome and would result in compliance costs greater than any offsetting societal benefit).

210. See Boikess, supra note 198, at 193–94.

211. Proposed UIGEA Regulations: Burden Without Benefit?, supra note 180 (prepared statement of Harriet May, President & CEO, Gov’t Employee Credit Union of El Paso, Tex., on behalf of the Credit Union Nat’l. Assoc.), available at http://financialservices.house.gov/hearing110/may040208.pdf.

212. See generally Lehrer, supra note 122.

213. See generally id.

214. Frank Catania, Regulate, Don’t Ban, Internet Gambling, Phila. Inquirer, May 25, 2006, at A27.

215. Id.

216. See id.

217. Valasek, supra note 5, at 773 (noting that by regulating Internet gambling, federal and state governments could tax business revenues as well as gamblers' winnings; additionally the governments can create new jobs and businesses).

218. Boikess, supra note 198, at 194.

219. Valasek, supra note 5, at 772.

220. Id.

221. Joint Statement of Henry M. Paulson, Jr., Sec’y of the Treasury, and Jim Nussle, Dir. of the Office of Mgmt. and Budget on Budget Results for Fiscal Year 2008 (Oct. 14, 2008), available at http://www.treasury.gov/press/releases/hp1213.htm.

222. Hiltzik, supra note 156.

223. Valasek, supra note 5, at 772–73.

224. See supra Part VI.

225. Ceasar, Stephen, Efforts to Legalize Online Poker in the U.S. Pick Up Steam, L.A. Times, Mar. 26, 2011, available at http://www.latimes.com/news/nationworld/nation/la-na-online-poker-20110326,0,7533311.story.

226. Christine Hall, Barney Frank Internet Gambling Bill Aims at Legalization, Competitive Enter. Inst., May 6, 2009, http://cei.org/news-releases/barney-frank-internet-gambling-bill-aims-legalization.

227. Id.; Tom Jones, Barney Frank Online Gambling Bill Hits Sixty Co-Sponsors, CasinoGamblingWeb.com, Oct. 2, 2009, http://www.casinogamblingweb.com/gambling-news/gambling-law/barney_frank_online_gambling_bill_hits_sixty_co_sponsors_54579.html.

228. Jones, supra note 227.

229. Id.

230. See generally id.

231. Id.

232. Valasek, supra note 5, at 754 (citing James H. Frey, Federal Involvement in U.S. Gaming Regulation, 556 Annals Am. Acad. Pol. Soc. Sci. 138 (1998)).

233. Id. at 756–60.

234. Correll, supra note 136.

235. See generally id.

236. Miller, supra note 13, at 195.

237. Interactive Media Entm’t & Gaming Ass’n v. Att’y. Gen. of the U.S., 580 F.3d 113, 119 (3d Cir. 2009).

238. See id. at 116.

239. See id. at 118.

240. See supra Part IV.C.

241. Richards, supra note 130.

242. Valasek, supra note 5, at 767.

243. See Hall, supra note 226.

244. Epstein, supra note 182.

* J.D. Loyola Law School, Los Angeles 2011; I would like to first and foremost thank my parents and all my family for being incredibly supportive and always reminding me to do my very best in all that I do. I would also like to thank the 2010-11 Loyola Law School Entertainment Law Review for recognizing the present significance of this issue and expending a great deal of time and effort to perfect this note.

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Table of Contents

Table of Contents

Editorial Board & Staff

Law School Faculty

Surviving Reality TV: The Ultimate Challenge for Reality Show Contestants

Unmasking the Mask-Maker: Domain Privacy Services and Contributory Copyright Infringement

Winner, Winner, No Chicken Dinner: An Analysis of Interactive Media Ent’mt & Gaming Ass’n v. Att’y Gen. of the U.S. and the Unjustified Consequences of the UIGEA