In the United States, two federal laws provide a powerful shield for ISPs that follow the rules. Here's how they work.

Everyone who hops on the Internet or posts a website has to affiliate with an Internet Service Provider (ISP), a company that acts as a gatekeeper for access to the Web. An ISP can range in size from America Online (AOL) with millions of users, to a small Mom & Pop business with a server in the garage. In effect, an ISP is a combination telephone company and worldwide public-access television station allowing a subscriber to say or sell anything.

But what happens when a subscriber to an ISP behaves badly and causes an injury to an unsuspecting third party -- say, by copying someone's music without authorization or making a libelous statement? Is the ISP responsible for the behavior or actions of its subscribers? Can the victim of an online injury argue that even though the ISP is not the direct cause, it can be sued because it knew of the activity, encouraged it, profited from it, or had control over it? Obviously, there's often a strong motivation to make such an argument because adding an ISP to a lawsuit provides a defendant whose pockets -- if not always deep -- will at least jingle.

The Controversy

Those who want ISPs to be financially responsible argue that ISPs are publishers like newspapers or magazines and must take responsibility for the material on their servers. On the other side, the ISPs argue that they are like telephone companies -- simply carriers that provide a means of sending information. So far, Congress and courts have favored the ISPs' position and provided guidelines that permit responsible ISPs to avoid liability for the millions of bits of digital information passing through their portals.

Start by understanding that lawsuits against websites and the ISPs that host them tend to fall into two categories: copyright infringement and defamation. A lesser number of lawsuits have also been brought for claims such as distribution of obscenity and negligence. In short, we are worried about a fairly small number of legal claims.

Copyright Infringement

Online copyright infringement occurs when a copyrighted work -- such as a song, movie, artwork, or text -- is copied, modified, displayed, or performed without the copyright owner's authorization.

In the early days of the Internet (1995-1998), angry copyright owners tried using two theories against ISPs:

• the ISP contributed to the infringement ("contributory infringement"), or
• the ISP supervised and profited from the infringement ("vicarious infringement").

Digital Millennium Copyright Act

ISPs who claimed they couldn't possibly monitor everything said on hosted websites lobbied Congress for protection and, in 1998, President Clinton signed into effect the Digital Millennium Copyright Act (DMCA). Under Title II of the DMCA (17 U.S.C. § 511 and following), an ISP can avoid financial liability by following the "notice and takedown" provisions, should one of its subscribers offer infringing copy online. These provisions basically state that once an ISP receives notice of the infringement, it must take down the unauthorized material.

Under the DMCA, to avoid liability the ISP must:

• not obtain financial benefit from the infringement
• not have actual knowledge or awareness of facts indicating infringing transmissions
• upon learning of an infringing transmission, act quickly to remove or disable access to the infringing transmission, and
• implement a policy of terminating the accounts of subscribers who are repeat infringers.

In addition to these and other requirements, the ISP must designate an agent to receive notices from unhappy copyright owners. Because designating an agent is one of the ISP's keys to avoiding financial liability, it's essential that the ISP promptly send its agent's name and address to the U.S. Copyright Office and pay the $30 agent registration fee. For assistance in designating an agent, visit the U.S. Copyright Office website, at www.loc.gov/copyright/onlinesp.

The DMCA protections for ISPs extend not only to content that is stored on the ISP servers and storage devices, but also to an ISP's "information location tools," which are devices that help a user find or access sites, such as directories, pointers, and hypertext links.