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Liability and Legal Issues
Hyperlinks: An Effective Tool Or A Source Of Liability?


By: Barbara Dunn, Esq. Howe & Hutton, Ltd.

There is no doubt that the Internet has become a part of both our personal and business lives. Associations have embraced this mode of communication in increasing numbers, making association web sites their "storefront" in the new millennium. Through their web sites, associations are able to provide information and services to members and to the public in an effective and cost-efficient manner. 

Hyperlinks - a picture, highlighted text, or other indication designed to allow the user to "click" and go to another web site without having to type in the URL address - have become a very useful feature of many association web sites. Whether the link is to a chapter, member or affiliate web site, or to an affinity partner web site, hyperlinks are an effective way to deliver information and services to members and to the public in this "instant information" era. Yet, placing a hyperlink on the association's web site may present an additional array of liability concerns for the association. By understanding the areas of potential liability and learning techniques to reduce or eliminate liability, associations should be able to breathe easier when posting hyperlinks on their web sites. 

It is important to note that simply because a work does not include the "©" symbol does not mean that the work is uncopyrighted and therefore is capable of being used without the owner's permission. In fact, a recent case involving an association illustrates this point. The association's web site administrator (who was also a member of the association) posted what he believed to be "uncopyrighted" clip art on the association's web site. He believed the clip art was uncopyrighted because it did not bear the "©" symbol and because he was told by the person who posted the clip art that it was uncopyrighted. The clip art was, however, copyrighted and the manufacturer of the software from which the clip art came sued the association for copyright infringement. 

Copyright owners have a "bundle" of rights in their work: (1) the right to copy the work; (2) the right to control others' use of the work in derivative fashions (e.g., create a workbook based on a textbook or translate a work into another language) and to control what is done with the copyrighted work; (3) the right to publicly distribute the work; (4) the right to publicly display the work; and (5) the right to publicly perform the copyrighted work. These rights are fully divisible and independently transferable, i.e., the owner may give permission ("license") or sell ("transfer" or "assign") any or all of these five rights to one or more individuals or entities. 

In the event an individual or organization undertakes to use a work in one or more of the manners noted above, it must first secure the copyright owner's permission to do so. Permission may come in the form of a license to use the work for the specified purpose(s) or by way of an assignment (transfer) of rights from the owner to the entity which seeks to use the work. A license or assignment should always be made in writing. 

The public display and distribution of an article falls within the copyright owner's exclusive rights. As such, organizations which seek to post an article on their web site must ensure that they have the copyright owner's permission to do so or have acquired ownership rights in the work. For example, if an association wants to post articles from its publication on its web site, it must ensure it either (a) owns the copyright interest in the article or (b) has permission from the copyright owner to publicly display the article on the Internet. To the extent the association does not have such permission or ownership interest, it can be held liable for copyright infringement. 

Copyright infringement occurs when an individual or entity uses a work without first securing the appropriate license or ownership interest from the copyright owner. Under the 1976 Copyright Act, infringers are liable to the copyright owner for actual damages relating to the infringement or, in the alternative, statutory damages, preliminary and permanent injunctions, impoundment or destruction or infringing copies, costs, and attorney's fees. Criminal penalties may also apply for certain types of infringement. 

Contributory Infringement Liability 
Taking the concept of copyright infringement one step further, if an association provides a hyperlink on its web site to another organization's web site and the other organization's web site contains infringing material, the association which provided the hyperlink could be held liable under the theory of contributory infringement. (The claim would be in addition to the copyright owner's claim against the operator of the infringing web site for copyright infringement.) Contributory infringement occurs when an individual or organization knowingly induces, causes, or materially contributes to the infringing conduct of another. The essential elements of this claim are knowledge of and participation in the infringement. 

While we have not seen any cases yet involving an organization being sued under the theory of contributory infringement for placing a hyperlink on its web site to another site which contains infringing material, there have been several cases testing the application of contributory infringement on the Internet. Several of the cases involve computer bulletin board (electronic storage media which allows users to upload and download content) operators being sued by owners of copyrighted material for posting infringing content provided by others. In such cases, the copyright owner must establish that the bulletin board operator knew of the infringing activities. In one case, the bulletin board operator knew users uploaded and downloaded infringing computer games and participated substantially in such activities. The bulletin board operator also encouraged users to upload such games and sold downloading privileges. 

Further, in the case noted above concerning clip art and an association's web site, the company which "hosted" the association's web page on its computer system was sued for contributory infringement. The court noted, however, that it was unclear whether the company knew of the infringing clip art and whether it monitored or controlled the content of the hosted web page. 

The extension of this case law into the realm of hyperlinking is likely, especially given the growing number of lawsuits involving Internet-related activity. In establishing a claim of contributory infringement against an association which placed a hyperlink on its site to another site containing infringing material, a copyright owner could establish the requisite knowledge and participation. The knowledge aspect could be established if the association has been put on notice (e.g., letter from copyright owner's attorney or allegations made in a pending lawsuit against the linked site) that the linked site includes infringing material. The participation aspect of this claim can be established by the placing of a hyperlink which facilitates the user going to the web site which contains the infringing material. 

The participation aspect can be strengthened by the fact that the association was compensated for placing the link on its site. In essence, the court may deem the association to be partnering (from a financial standpoint) in the infringing effort. 

Of particular concern to associations in this regard is the situation in which a for-profit supplier of one of the association's affinity programs (e.g., credit card or insurance) wants to post a hyperlink at the association's web site. Because some form of compensation, generally in the form of a royalty, is paid to the association for use of its name and logo in connection with the affinity program, the association may be deemed to have been compensated for placing the link. (Note this may also pose an unrelated business income tax - UBIT - problem.) Another example would be hyperlinks placed on the association's web site for advertising purposes. Such an arrangement would most certainly be viewed as compensation (and, with a few exceptions, the net advertising income would be subject to UBIT). 

Although a claim for contributory infringement may be strengthened if the association is compensated for placing the link, "uncompensated" links may be problematic as well. This may include links to chapter, member or affiliate web sites. Infringing material on such sites can create a basis for liability for the association as well. 

Other Types of Liability 

While copyright infringement and contributory infringement liability concerning hyperlinks appear to be the most likely source of liability, the association may face liability for tortious (wrongs against another) acts on the linked site, e.g., libel or invasion of privacy. Trademark (words or design which identify a source) infringement may be another source of liability. 
There is also the concern that content on the linked site may be viewed as obscene or vulgar and a hyperlink to that site on the association's site will be viewed as condoning such content. 

Risk Management Techniques 
Despite the potential for liability, associations should not be deterred from placing hyperlinks on their web sites. Instead, associations should be proactive in combating any potential for liability. 

Hyperlink Agreement 
Hyperlink agreements are an effective tool in addressing liability concerns. Associations should develop a hyperlink agreement for use whenever an organization or other third party requests to place a hyperlink on the association's web site. Such agreements should be used regardless of whether the association is being compensated for placing the link. 

For issues to address in the hyperlink agreement, see inset. The most important item to address in such an agreement is indemnification. Indemnification is a method by which one party can "shift" liability to another party who can best control the risk. In the hyperlink context, the risk is shifted from the association's web site to the operator of the linked-site which can best control the risk that no infringing material is put on the site. With a properly worded indemnification provision, if there is infringing material on the site, the linked-owner is required to indemnify (i.e., ensure that the association is not harmed financially) and defend the association (i.e., hire attorneys to defend the lawsuit from the outset).

Hyperlink Policy 
Associations should also develop internal policies concerning which types of organizations may place hyperlinks on the association's web site and the requirements concerning such placement, e.g., execution of a hyperlink agreement. It is essential that staff members understand the association's policy and its method(s) of helping to reduce the risk of liability. 

Insurance 
Insurance is a key component of any risk management program. Essentially, the association agrees to bear some amount of risk (i.e., deductible) for the benefit of obtaining insurance coverage for the remainder. Associations must evaluate their insurance policies regularly to ensure that Internet-related claims, such as contributory copyright infringement liability for hyperlinks, are covered.

Disclaimer 
While the posting of a disclaimer does not absolve the association from liability, it serves to put users on notice that the association does not control the linked sites. The disclaimer is not designed to combat a copyright infringement claim, but rather a claim that could be made by a user of the association's web site. For a sample disclaimer, see inset. 

Addresses 
We have not seen any cases in which an organization has been held liable under a contributory copyright infringement theory for the posting of simply a URL address to another web site. Thus, one method of risk management may be to include only web site addresses, rather than actual links to those sites. Posting only addresses may frustrate users, though, in this "instant information" era. 

Conclusion 
Hyperlinks are an effective feature of association web sites and any liability concerns can be addressed as noted above. So...go on linking, but think before you link! 


SOME ITEMS TO INCLUDE IN HYPERLINK AGREEMENT 

-Indemnification concerning any claims of libel, violation of right of privacy, plagiarism, copyright infringement and any other claims or suits based on the contents or subject matter of the linked-site. 

-Warranties that the linked-site has the right to display all material that has been incorporated at its site, that none of the content of its site infringes on the property rights of others including but not limited to rights in trademarks, copyrights, and patents, and that the linked site does not contain any obscene, vulgar, or defamatory material. 

-Right to terminate agreement and discontinue hyperlink at any time. 

DISCLAIMER REGARDING HYPERLINKS 
The links on this web site are provided only for the convenience of Association web site visitors. Association has no interest in, responsibility for, or control over the linked-site. Association makes no promises or warranties of any kind, express or implied, including those of merchantability and fitness for a particular purpose, as to the content of the linked-site. In no event shall Association be liable for any damages resulting from use of these links even if Association has been informed of the possibility of such liability. 

Copyright Liability 
The main source of liability associations can face concerning hyperlinks placed on their web sites involves copyright law. A copyright is an intangible property interest which arises in an original work of authorship, e.g., article, photograph, software, song ("work"). A copyright interest arises the moment a work is created. Authors can register their copyright ownership interest with the Unites States Copyright Office, but such registration is not necessary to secure copyright ownership in a work or to use the "©" symbol in connection with the work. Copyright registration is necessary, however, in order to pursue a copyright infringement claim in federal court (authors can register the work at any time and then pursue the claim). 

* * * * * * * * * 

Barbara Dunn is an attorney with Howe & Hutton, Ltd., a law firm with offices in Chicago, Washington, D.C. and St. Louis. The firm specializes in the representation of nonprofit organizations -- most particularly, trade associations, professional societies, public charities, educational organizations, foundations and related entities. The firm serves as general counsel to the Association Forum of Chicagoland (formerly the Chicago Society of Association Executives) and Meeting Professionals International, among hundreds of other nonprofit organizations. 
_______________________________________________________________________________ 
©Copyright 2000. Howe & Hutton, Ltd. Chicago, Illinois, Washington, D.C and St. Louis, Missouri. All rights reserved under both international and Pan American copyright conventions. No reproduction of any part may be made without the prior written consent of the copyright holder


Tagged: "cyberlaw, hyperlinks, copyrights, liability, infringement, risk managment, disclaimer, hyperlink agreemen
 

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