Aug 16 (Reuters) - A U.S. 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 its members free speech rights under the

Constitution's First Amendment.

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 ), Netflix ( NFLX ) and Elon Musk's X - 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 9th Circuit set aside the rest of the September 2023

preliminary injunction from U.S. District Judge Beth Labson

Freeman, including as to the law's restrictions on collecting

and selling children's geolocation information and other data.

The court said Freeman did not properly assess if the law

could survive without the unconstitutional provisions, and

returned the case to her.

California modeled its law after a similar law in the United

Kingdom. Governor Gavin Newsom signed the state law in September

2022, and it was to have taken effect on July 1, 2024.

In a statement, Newsom said the appeals court "largely

sided" with the state. The governor also urged NetChoice to

"drop this reckless lawsuit and support safeguards that protect

our kids' safety and privacy."

Chris Marchese, director of the NetChoice Litigation Center,

called the decision "a victory for free expression, online

security and Californian families."

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

Appeals, No. 23-2969.