EBay Ruling Punctures Web Liability Shield

EBay Inc.'s savvy user agreement protects it from liability for defamatory postings on its Web site, an appeals court has ruled. But the court's decision left vulnerable other online content providers.

[California's] 2nd District Court of Appeal ruled Thursday that a release provision in eBay's user agreement relieved the company of liability for the comments one user of its auctioneer site made against another. But the court said that a law routinely invoked as a shield by content providers does not immunize eBay against liability for distributing information it knew or had reason to believe was false.

The law in question, a provision of the California Decency Act of 1996, has been a first line of defense for content providers.

Details here from The Recorder via Law.com. Or read the court's opinion, Grace v. eBay, Inc.