Aug 16 (Reuters) - A federal appeals court on Friday

left intact a key part of an injunction blocking a California

law meant to shield children from online content that could harm

them mentally or physically.

The 9th U.S. Circuit Court of Appeals in San Francisco said

NetChoice, a trade group for companies that do business online,

was likely to show that the California Age-Appropriate Design

Code Act violated members' First Amendment free speech rights.

California required businesses to create "Data Protection

Impact Assessment" reports addressing whether their online

platforms could harm children, such as through videos promoting

self-harm, and take steps prior to launch to reduce the risks.

Businesses were also required to estimate the ages of child

users and configure privacy settings for them, or else provide

high settings for everyone.

Civil fines could reach $2,500 per child for each negligent

violation, or $7,500 per child for each intentional violation.

NetChoice said the law would turn its 37 members - including

Amazon.com ( AMZN ), Google, Facebook parent Meta

Platforms ( META ) and Elon Musk's X, formerly Twitter - into

"roving censors" of whatever California deemed harmful.

Circuit Judge Milan Smith wrote for a three-judge panel that

the first requirement was likely unconstitutional because

California had less restrictive ways to protect children.

He said the state could improve education for children and

parents about online dangers, give companies incentives to

filter or block content, or rely on enforcing its criminal laws.

Requiring "the forced creation and disclosure of highly

subjective opinions about content-related harms to children is

unnecessary for fostering a proactive environment in which

companies, the state, and the general public work to protect

children's safety online," Smith wrote.

The appeals court set aside the rest of the preliminary

injunction issued last September by U.S. District Judge Beth

Labson Freeman in San Francisco, and returned the case to her.

It said Freeman did not properly assess NetChoice's other

objections to California's law, or whether the law could survive

without the unconstitutional portions.

The office of California Attorney General Rob Bonta, which

defended the law, did not immediately respond to requests for

comment.

Chris Marchese, director of the NetChoice Litigation Center,

called Friday's decision "a victory for free expression, online

security and Californian families."

California modeled its law after a similar law in the United

Kingdom. Governor Gavin Newsom signed the state law in September

2022. The law was to have taken effect on July 1, 2024.

The case is NetChoice LLC v Bonta, 9th U.S. Circuit Court of

Appeals, No. 23-2969.