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In a way, they are right about it being against the twitter terms of use, and twitter should comply because it's their rules anyway. Still, can twitter be "held responsible"? It kind of sounds like you holding a bar tender responsible for drugs being traded in her bar. Even if she was aware of it, why not arrest the actual culprits?

Any lawyers care to comment?

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I posted some thoughts on the law here: https://news.ycombinator.com/item?id=8789302

Service provider liability isn't exactly a new topic; it goes back to at least Cubby v. CompuServe in 1991 (note this is not necessarily the law today) and hundreds of law review articles and dozens of conferences have discussed the topic. You might also want to read DMCA Sec. 512: http://www.law.cornell.edu/uscode/text/17/512

To extend your analogy, once the management knows this is going on in their bar, they have a responsibility to act. If they don't they open themselves and the bar to legal liability. What if someone is injured or dies in the course of, or later as a result of, illegal acts on their premises?

To have "terms of use" and not enforce them, or enforce them selectively, is to invite disaster. If the rules should be changed, better to do that. The courts will take that better than selective enforcement.

P.S. I despise Scribd.

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