Members of the public hold signs Inside the board of Supervisors at a discussion of short term rentals in 2015.

A federal district court judge on Tuesday denied homesharing company Airbnb, Inc. its request for an injunction against a San Francisco law aimed at protecting local rental housing stock from being used as tourist lodging.

Further discussions will be held in court, however, about the enforceability of the regulation.

The law, authored by District 9 Supervisor David Campos, prohibits homesharing platforms like Airbnb and Homeaway from booking rentals inside people’s homes unless the host was registered with the city’s office of short term rentals and obtained a business license.

Platforms are open to  fines – up to $1,000 per day – if the rental is booked. The law does not prohibit listings, just bookings.

Airbnb filed suit against the city to get an injunction against the law, arguing among other things that it curbed the company’s free speech under the first amendment and went against the provisions of the Communications Decency Act that protect web-based intermediaries from liability if users break the law.

In his order, Judge James Donato dismissed the free speech argument, saying that the law regulated only commercial speech rather than any transmission of some kind of message from Airbnb.

He also wrote that the the law holds Airbnb accountable for its business transactions rather than the actions of hosts, the issue at the center of the Communications Decency Act argument.  A host, for example, can list a place, but Airbnb does not make money until it is booked and that is when Airbnb’s responsibility comes in, according to the ruling.

“Plaintiffs are perfectly free to publish any listing they get from a host and to collect fees for doing so – whether the unit is lawfully registered or not – without threat of prosecution or penalty under the Ordinance,” Donato wrote. “The Ordinance holds plaintiffs liable only for their own conduct, namely for providing, and collecting a fee for, Booking Services in connection with an unregistered unit.”

That is an uncomfortable assertion for not only Airbnb, but the Electronic Frontier Foundation, which filed an amicus brief in the case raising concerns over the regulation of companies that act as online middlemen.

“We see this as an issue that is not really about Airbnb, but this is about the strength of the federal law that protects internet intermediaries from liability,” said the EFF’s David Greene. “If intermediaries were responsible for how their sites were used by other people, then there would be these great disincentives to having these sites, and the structure of the internet as we currently have it would not be sustainable.”

Similar cases against firms like online auction marketplace Ebay and ticket reseller StubHub, Greene said, have shielded the firms from liability under the same provisions Airbnb has invoked.

“I do think it’s going to open up intermediaries to a greater amount of regulation,” Greene said, though he added that “I’d like to think that a single decision that’s appropriately narrow won’t harm the internet – you just don’t want to see these things in accumulation.”

“While we appreciate that the judge has acknowledged our concerns about the inadequacy of the screening obligations in the new law and has continued to postpone enforcement of these rules as a result, we respectfully disagree with the remainder of his ruling,” Airbnb wrote in a statement. “No matter what happens in this case, we want to work with the City to fix the broken system long before the legal process runs its course.”

Campos, for his part, called the lawsuit “petty” and called the argument that rental listings are protected speech “a stretch.”

“It’s getting a little hard to swallow all of Airbnb’s talk about ‘sharing’ and ‘community’ when they’re suing every city who passes common sense regulations,” he wrote in a statement. “The truth is, while no one in San Francisco’s city government wants to see a homegrown company like Airbnb go out of business, it’s our job to protect the housing stock of our citizens. And while San Franciscans appreciate tech and innovation, they also appreciate not being evicted from their homes so landlords can Airbnb.”

Donato did, however, acknowledge that the city’s verification and enforcement system for short term rental registration is not working smoothly yet.

“Plaintiffs have understandably expressed concerns about the lack of a functional verification system while they face potential criminal sanctions under the Ordinance,” he wrote in the order.

To work out those problems, the parties will meet in court again next week to see if a joint proposal for enforcement can be agreed upon.

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