Issues with Wi-Fi - Could Your Free Wi-Fi Cost You a Bundle?

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By: Bill Dahlin

Wi-Fi is everywhere and much of the time it is offered for “free.” Starbucks offers it. So does McDonald’s. In fact, motels, retailers, RV parks and more offer it for “free”. And, while many businesses understand that it is a great way to bring in new customers and business, many do not understand the potential implications of allowing relatively unfettered access to the Internet. My office has, however, met with clients who have learned about the implications the hard way. They received what are known as DMCA “takedown” notices. And with those takedown notices, they have received demand letters from law firms, movie studios, and television networks threatening lawsuits and claims of monetary damages reaching into the thousands of dollars. Suddenly, free Wi-Fi access may not seem like such a great idea.


DMCA Takedown Notices.Without getting technical, DMCA is an acronym for the Digital Millennium Copyright Act of 1998, a federal law making it unlawful to produce and disseminate technology, devices, or services intended to circumvent measures that control access to copyrighted works (commonly music, movies, television shows, etc. The DMCA provides an exemption from direct and indirect liability to Internet Service Providers (“ISP”s) and other intermediaries provided they adhere to certain guidelines, such as forwarding demand letters to their users when they receive them from an owner of copyrighted material. By doing so, the ISP’s can avoid liability altogether.


Typically, the cause of a problem for Wi-Fi provider has been misuse of the Wi-Fi by someone who has illegally downloaded a recent Hollywood movie without paying for it or uploaded popular music they did not own or posted otherwise inappropriate material on the Internet. The problem for the Wi-Fi provider is that while they were not directly involved in the illicit activity, they furnished the Wi-Fi (and thereby access to the Internet) and by doing so created potential liability for themselves. Many Wi-Fi providers have compounded the problem by not implementing and enforcing a p p r o p r i a t e “terms of use” for those they have allowed to use their Wi-Fi.


An example in a recent matter; a landlord provided “free” Wi-Fi as part of an overnight rental agreement with visitors. The landlord received a DMCA takedown notice from its ISP alleging the purportedly unauthorized copying and distribution of a video depicting Kim Kardashian in an “intimate” moment. The takedown notice included correspondence from an attorney who claimed to be acting on behalf of a copyright enforcement company and the alleged owner of the video content. 


Settlement Demands.  Through the use of “web crawlers (also known as “spiders”), copyright enforcement companies are able to identify many unauthorized downloads of multimedia content and then pass along the information to attorneys and others who then send a demand letter, citing copyright infringement, to the ISP for delivering to the address at which the download occurred. The ISP then sends along a copy of the demand letter with a DMCA takedown notice. The recipient is prompted to access a“case number” using a “password’ (all of it having been provided in the demand letter), to “settle” the copyright infringement at aWebsite dedicated to this sole purpose. Which website is owned and operated by the copyrightenforcement company. Presumably, if they are paid, then the copyright enforcement company forwards the “settlement” moneys (or at least a portion thereof) to the rightful copyright owner. At this point, there is nothing overtly illegal about these “copyright enforcement” activities however distasteful they may be. 


Potential Repercussions. DMCA takedown notices and threats of copyright infringement litigation are serious and should be given the attention they deserve. However, it is important to understand that the instances of potential copyright infringement over the Internet number in the millions every single day and not every such instance is of equal importance to copyright holders. If a movie studio or television network chased down every person who illegally downloaded a movie or otherwise violated the DMCA, they would put themselves out of business because the return would not warrant the expense of the pursuit. Indeed, absent proof that a business providing free Wi-Fi acted intentionally to infringe a copyright, there is very little incentive for the copyright owner to file and prosecute a copyright infringement lawsuit. The likely recovery of monetary damages is so small that it argues strongly against copyright owners taking any further action (unless the offending activity continues and/or substantially increases).


General Recommendations. Consequently, unless there is more to the alleged infringement than a one-time mistake, businesses would be well served to take the following actions to preempt problems and protect themselves should the need ever arise:


  1. Create and implement a fairly stringent “Wi-Fi Guest User Policy” that includes a properly-worded “terms of use” disclosure statement;
  2. Using an experienced outside Wi-Fi provider and implement the use of technological filters that act to prevent unauthorized access to the Wi-Fi;
  3. Require customers, visitors, and anyone else using the Wi-Fi to sign an acknowledgment of the “terms of use” (on hard copy in pen or via a “click through” on the company Website);
  4. If Wi-Fi users do not agree to the terms of use, then do not grant them access to the Internet; Maintain at least electronic copies of the policy (plus any amendments) as well as the “signed” disclosure statements;
  5. If a DMCA takedown notice or a demand letter is received, do not ignore it;
  6. Keep a copy of the DMCA takedown notice and forward it to legal counsel for review; and response.
  7. Follow your attorney’s recommendations; and
  8. Confirm that the company’s insurance policy (or policies) provides a defense and indemnity for the Wi-Fi being offered. If there ever is any actual litigation to enforce third party copyrights, you will be very glad that you planned for it and have insurance coverage. 


Bill Dahlin is a partner with the Southern California law firm of Hart King and a leader in the firm’s Manufactured Housing Industry Practice Group. He can be reached at (714) 432-8700, (714) 619-7084 (direct dial) or This article is for general information purposes and is not intended to be and should not be taken as legal advice for any reader.

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