Erika Douglas


The Digital Millennium Copyright Act (DMCA) has shaped the Internet as we know it. This legislation shields online service providers from secondary copyright infringement liability in exchange for takedown of infringing content of their users. 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. First it looks at jurisprudence that expands secondary copyright liability online, and explains how it might be applied to PayPal. Then it considers legislative proposals and industry-self regulation that similarly target an increasing role for payment processors in the fight against online infringement. It argues that the introduction of a DMCA-like safe harbor for online payment processors offers a fairer and more efficient option for all stakeholders than the status quo of gradually expanding liability risk. It concludes with a discussion of important initial considerations in the design of such a safe harbor.