Stern v. Delphi: Are Online Services News Disseminators? by Eric Goldman

Stern v. Delphi: Are Online Services “News Disseminators”?

The laws of cyberspace continue to develop, albeit slowly. The debate over the regulation of the Internet and online services has begun to rage at the Congressional level, potentially entangling pornography, hate speech and bomb recipes on the Net in a web of federal regulations. But as these debates wend their way through rhetorical drivel and outright paranoia, at this moment the real law of cyberspace is being developed in the courts.

The recent New York decision of Stern v. Delphi Internet Services Corp. (New York Supreme Court, May 1, 1995) exemplifies how the law of cyberspace is being developed in comparative obscurity.Stern v. Delphi also indicates the way courts are grappling with the technology of cyberspace in an attempt to craft sensible rules to govern this technology.

The Stern case deals with the issue of whether an online service is a “news disseminator” for the purposes of applying an invasion of privacy statute. Stratton Oakmont v. Prodigy, also a New York Supreme Court decision which was issued about three weeks following Stern, deals with the issue of whether an online service is a “publisher” for purposes of defamation liability.  While the Stratton Oakmont and Stern courts both engaged in “analogizing” to reach their decisions, the Stratton Oakmont court did not look to or discuss the Stern case in reaching its decision. As this analysis will discuss, the Stern court’s methodology could have been useful in reaching a more precise result in the Stratton Oakmont case – and could be helpful in resolving future cases involving online services.


Delphi is a major national online service and Internet service provider, with approximately 500,000 subscribers. When talk radio host Howard Stern announced his candidacy for Governor of New York in 1994, Delphi created an online discussion forum for its subscribers to discuss Stern’s candidacy.

At that time, to promote its service, Delphi placed some advertisements in New York periodicals, advertising Delphi and its discussion forum on Stern’s candidacy. As part of the advertisements, Delphi used a photograph of Stern in leather pants that exposed most of his behind. Although the source of the photograph was not specified, it was clear Stern had posed for the photo, and he did not allege that Delphi’s possession of it was impermissible or unlawful.


Common law recognizes the tort of invasion of privacy, which includes a cause of action for the misappropriation of a person’s name or likeness. In New York, the common law tort action has been codified by New York Civil Right Law, Sections 50 and 51, which makes it both a misdemeanor and a tort to commercially misappropriate a person’s name or likeness. In this case, it was undisputed that Delphi had commercially appropriated Stern’s likeness by using a photo of Stern’s behind in its advertisement without Stern’s permission.


New York courts have created an exception to the statute called the “incidental use exception.” This exception permits “news disseminators” to use a person’s name or likeness to advertise the news disseminator. Therefore, if the New York Times wants to advertise its news gathering and reporting by using a photograph in an advertisement, the New York Times is not liable to the subject of the photo for invasion of privacy, whether or not the Times obtained permission from the subject.

Because the exception is available only to “news disseminators,” the Stern court had to deal with the “novel” issue of whether Delphi should be treated as a news disseminator.

On the one hand, this is an easy question. While in the 1970s there was great paranoia that the “Fourth Estate” would obtain a monopoly on the dissemination of news, it is clear that the hegemony of the traditional news filters has disappeared. The Internet played a prominent role in such major world events as Tiananmen Square and the failed Russian coup of 1991. Online services typically create discussion forums for the dissemination of news and information within hours or even minutes after major crises such as the Northridge earthquake of 1994 and the recent Oklahoma City bombing. These discussion areas are often the quickest and most accessible way of obtaining news from the source during a crisis. The instantaneous nature and global scope of online services have created a flourishing online information economy that allows many information seekers to bypass the slower, filtered news media. As a result, there can be little question that online services are news disseminators, and important ones at that.

On the other hand, online services do much more than just disseminate news. Online services allow users to chat with each other on silly topics, to play games, and to download photos of naked women. A court anxious to look beyond the more “socially valued” functions of news dissemination might easily have derided the significance of the new technology, finding that its news dissemination component was outweighed by its frivolous functions.

At this critical juncture in the court’s analysis, Judge Goodman made a leap of heroic proportions. Instead of trying to fit Delphi into a single functional category, the court looked to whether the likeness was used to promote the news dissemination function.

The importance of doing such a functional analysis cannot be overstated. Functionally, online services users can post public messages on a bulletin board, send private e-mail, chat with each other in real time, upload and download information, upload and download software, shop, store information electronically, and so on. No one doctrine of law can cover the rights and responsibilities of sysops and users in such a broad range of functions. Yet, there is always the danger that an uninitiated court will ignore the different functional uses and try to apply the law that is applicable in one function to a function to which the laws are less suited. Judge Goodman asked the questions:

(1) is there a news dissemination component to the service, and

(2) did the advertisement pertain to this function?

By asking these questions, the court used the correct approach – what function is implicated and how did the online service treat that function – that we can only hope will be replicated in future decisions.


In deciding whether or not Delphi in fact did act as a news disseminator, the court looked at various analogies to determine if Delphi had a news dissemination function.

The court initially looked to the landmark case of Cubby v. CompuServe, 776 F. Supp. 135 (S.D.N.Y 1991). In Cubby, CompuServe established an independent contractor relationship with the manager of its journalism forum. One of the content providers to the journalism forum disseminated allegedly defamatory material, and the (allegedly) defamed party sued, among others, the manager of the journalism forum and CompuServe. CompuServe pointed out that it had no relationship with the party that wrote the material in question other than that CompuServe allowed the material to be disseminated over its network. The Cubby court, recognizing that CompuServe had little control over what content was being disseminated, analogized CompuServe to “an electronic, for-profit library” and further reasoned that CompuServe should not be liable for the content contained on the forum, any more than a library would be responsible for defamatory content in one of its thousands of books.

The Stern court, looking at the Cubby decision, noted that the Cubby court had afforded CompuServe the same First Amendment protection as a “distributor of publications.” As a result, the Stern court concluded that it is “evident that Delphi’s online service must be analogized to distributors such as news vendors, bookstores and libraries.” The court’s statement is an important application of the Cubby holding. Whereas the Cubby court went through a number of factors to determine the independence of CompuServe from the content provider, the Stern court took it as “evident” that a subscriber-participation forum (an online bulletin board discussion area) is like a “news vendor, bookstore or library.” This is a potentially important conclusion, because holding that message forums are like a news vendor, bookstore or library could insulate sysops from liability for the actions or statements of their users on such message forums.

(In contrast, the Stratton Oakmont court held that Prodigy was the publisher of its message forum, exposing Prodigy to significant liability for defamation. If the Stratton Oakmont court had considered the analysis in Stern, the Stratton Oakmont court might have considered more deeply the import of its conclusion.)

After sifting through analogies to find the right one, the Stern court stated that the discussion forum was “a newsworthy service similar to a letters-to-the-editor column in a news publication.” This statement indicates that the court’s search for an analogy had become muddled. Letters-to-the-editor columns are subject to completely different sets of rights and responsibilities under the law. The difference between a letters-to-the-editor column and, say, a library is editorial control. Content publishers such as newspapers have the power to control the content they disseminate and therefore are legally required to exercise that editorial power; their failure to do so can lead to legal liability. There are countless cases in which newspapers have been held liable for defamatory statements contained in letters printed in letters-to-the-editors columns.

In contrast, libraries and bookstores deal in a high volume of content created by third parties. If libraries and bookstores were legally liable for the content of the material they disseminate, these entities would have to pre-review everything – an impossible task. As a result, libraries and bookstores are generally absolved from liability for the content in the materials they disseminate, in the absence of some specific reason why they knew there was a problem.

The court’s weak analysis regarding these analogies is compounded by the fact that the court did not look to see how Delphi actually managed the Stern discussion forum. Some online services, such as Prodigy, previously managed their public discussion areas extensively, to the point that the Stratton Oakmont court concluded that Prodigy exercised editorial control and looked more like a letters-to-the-editor column. Other online services do not manage their discussion forums at all, allowing users to disseminate content without any control by the sysop, which looks a lot more like a library or bookstore.

The distinction between primary publishers (publications with letters-to-the-editors columns) and secondary publishers (bookstores and libraries) was not significant to the court’s analysis. Either type of publisher can claim the incidental use exception. However, the court failed to realize how its choice of analogies might affect the application of these analogies in the future. Indeed, in Stratton Oakmont, the court reached the conclusion that Prodigy acted as a publisher of its message forum.

After analogizing online services to news vendors, bookstores, libraries, and letters-to-the-editor columns, the court had yet more analogies to make. In trying to deal with the fact that Delphi could be used for both serious (news dissemination) and entertainment purposes, the court said “the proper analogy is to a television network” in that television will broadcast both news and entertainment, but that the television network is eligible to claim the role of news disseminator only for its news component and not its entertainment component. The court’s reasoning is sound and accurate, but the introduction of yet another analogy creates some confusion about exactly how the court conceptualized the technology.


Concluding that Delphi was a news disseminator and that the advertisement related to Delphi’s role as news disseminator, the court awarded summary judgment to Delphi under the incidental use exception, stating that there was no factual dispute over the application of the incidental use exception to Delphi.

While the case ostensibly dealt with a fine point of statutory analysis and judicially created exceptions, the court’s treatment of the issues was significant and may have broad implications. More courts may recognize the power of online services, BBSs, and Internet sites as legitimate competitors to the traditional news media, even though these sites also support other, totally unrelated functions. As online services gain legitimacy in the courts’ eyes, the courts should be willing to protect these services from the broad limitations being considered by Congress and state legislatures. Furthermore, a functional analysis of online services’ liability, such as for the actions and statements of their users, could also support the development of an increased number of unmanaged user interactivity forums where the courts will recognize the sysops’ limited power to control content.

Unfortunately, the New York Supreme Court, just three weeks after the Stern decision, reached the conclusion in Stratton Oakmont v. Prodigy that Prodigy was a publisher of its online message forums. In reaching its conclusion, the Stratton Oakmont court did not undertake the difficult factual inquiry into the methods of control employed by the network. However, because the Prodigy decision was more widely publicized than the Stern case, many will hold it up as the latest and greatest statement on the matter.

In the end, the Stern case may indicate only that many courts are trying to be thoughtful and sensitive to the technology in weighing cases. As might be expected with new technology, early litigation will result in a mixed bag, but the Stern v. Delphi result is a relatively heartening decision for those seeking to protect the rights of computer networks and system operators.