Paypal is New Money: Extending Secondary Copyright Liability Safe Harbors to Online Payment Processors

Abstract

The Digital Millennium Copyright Act (DMCA) has shaped the Internet as we know it, by shielding online service providers from secondary copyright infringement liability for the acts of their users in exchange for takedown of infringing content. Yet online payment processors, the backbone of $300 billion in U.S. e-commerce, are completely outside of the DMCA’s protection. This article uses PayPal, the most popular online payment company in the U.S., to illustrate the growing risk of secondary liability for payment processors through seminal cases on other online intermediaries, industry self-regulation and legislative proposals targeting payment processors. It argues that a DMCA-style safe harbor for online payment processors offers the most efficient and fair option to balance the interests of processors, rights holders and users alike. The article concludes with important initial challenges and considerations in the design of such a safe harbor.

Keywords: Secondary copyright infringement, Digital Millennium Copyright Act, payment processors