Michael Geist reported in the July 23 issue of BNA's Internet Law News (http://ecommercecenter.bna.com) that a California appeals court has made its ruling in the Grace v. eBay case, a lawsuit went to the heart of eBay's Feedback System, a method for rating a transaction that ultimately helps establish a member's reputation.

Robert Grace sued eBay and his trading partner after eBay refused to remove negative comments made by Grace's trading partner.

The appellate court concluded, "the written release in eBay's User Agreement relieves eBay of the liability alleged in the complaint," therefore affirmed the original judgement.

However, it did not agree with the Superior court conclusion that title 47 U.S. Code section 230 (section 230), part of the Communications Decency Act of 1996, immunized eBay against liability for libel. "We conclude that section 230 provides no immunity against liability for a distributor of information who knew or had reason to know that the information was defamatory."

According to Law.com's reporting of the decision (http://www.law.com/jsp/article.jsp?id=1090180161293), its up to the California Supreme Court to decide the liability issue in a separate case pending before it.

Earlier this month, BNA's Internet Law News newsletter reported that a German court ordered eBay to remove a negative feedback rating of an eBay seller because the rating was "objectively unjustified."