Author:	Anna Beyer BA, Grad Dip Freelance Journalist
Subjects:	Defamation (Other articles) Internet computer network law and legislation (Other articles) Internet Service Providers - Law and Legislation (Other articles)
Issue:	Volume 11, Number 3 (September 2004)
Category:	Refereed Articles

Contents

• Introduction
• Approach of this Paper
• The Gutnick Case
• Supreme Court of Victoria – 2001 Proceedings
• High Court of Australia – 2002 Proceedings
• Concerns about the High Court Decision
• Nasty regimes’ threat
• Discrimination
• Self-censorship
• Hampered access to information
• Forum shopping
• Impact on other areas of online publishing
• Traditional Barriers to Litigation
• Positives of the High Court Decision: Curbing US Dominance
• Need for Law Reform
• Stress on lawmakers’ responsibilities
• Anarchy on the Internet
• Protecting different categories of operators
• Proposed international regulations
• Self-regulation
• Conclusion
• Notes

Introduction

1. The wrong (or tort) of lowering an individual in the estimation of others, causing him/her to be shunned or avoided, or exposing him/her to hatred, contempt or ridicule,[1] through publishing demeaning statements or other matter,[2] is referred to in English common law as defamation. Inherited from that law, Australian defamation law is controlled largely by the States and Territories.[3] Although it is not uniform across the country, there is a common thread: its strict liability rules provide strong protection to reputations.

2. Such protection clashes with the principle of free speech. However, in Australia, the right to express one’s views openly is perceived not as an end in itself, but as a necessary element of democracy.[4] Notwithstanding the merits of that right, the law recognises that laissez-faire can be harmful. Based on such beliefs, Australian defamation law places considerable restraints on the media.[5] Conversely, there are also countries where freedom of speech is deemed more valuable than personal reputations. For instance, in the United States (US) the right to free speech is – famously – guaranteed in the Constitution.[6]

3. This presents serious problems in the era of rapidly developing information technology (IT) which allows written material to be disseminated almost instantly in many different countries, each with its own defamation laws. Consequently, Collins argues that “the way in which the Internet[7] works, and is used, [raises] very substantial questions for the operation of the rules of civil defamation law”.[8]

   Approach of this Paper

4. To consider such questions, this paper investigates a defamation dispute involving an Australian businessman, Joseph Gutnick (Gutnick), and an American publisher specialising in economic reports and analyses, Dow Jones and Company (Dow). The case (Gutnick) is important because – as Garnett points out – it has provided an Australian court with a major opportunity to see how the rules of private international law can be applied in the context of the Internet. Until Gutnick, in Australia, “the issues of jurisdiction and choice of law in relation to the Internet remained largely unexplored”.[9]

5. Particular emphasis is placed on the Australian High Court (HC) decision (December 2002) allowing Gutnick to sue Dow in his home state of Victoria. The paper sets out to determine the possible impact of that decision on online publishing,[10] mainly in Australia, but also – due to the global nature of the Internet – abroad.

   The Gutnick Case

6. The Gutnick conflict arose when, on 28 October 2000, Dow published on its financial journal and news service entitled Barron’s Online (Barron’s)[11] an article, ‘Unholy Gains’, in which the author, William Alpert (Alpert), alleged irregularities in Gutnick’s business dealings with religious charities and with a convicted criminal, Nachum Goldberg.

7. Gutnick decided to sue Dow only in relation to that part of the article which portrayed him as Goldberg’s abettor. The article, he claimed (its words, as well as the accompanying photograph, showing him and Goldberg together), imputed that he “was masquerading as a reputable citizen when he was a tax evader who had laundered large amounts of money through Goldberg, and bought his silence”.[12] Significantly, too, Gutnick narrowed his claim to Victoria, his home state, where the article could have been accessed by Barron’s subscribers, including brokers and financial advisers[13] – i.e. the circle of people in which his reputation was likely to be damaged by Alpert’s allegations. And – most contentiously, it appears – the plaintiff lodged his claim in a Victorian court.[14]

   Supreme Court of Victoria – 2001 Proceedings

8. In Australia, an overseas defendant may – by entering a conditional appearance – ask the court to decline to exercise its jurisdiction. That means that by appearing in the Supreme Court of Victoria (VSC), Dow did not automatically submit to that jurisdiction.[15] This is important, because, indeed, Barron’s publisher undertook to dispute Victorian jurisdiction, arguing that the online article was not published in Victoria but in New Jersey, where Dow’s web server was located.[16]

9. Supported by affidavits submitted by its selected experts, the defendant asserted that it had no control over the users who might request to extract a particular article from its server. However, in his decision made on 28 August 2001, Justice Hedigan remarked that such an assertion was not “wholly accurate”,[17] as Dow had – intentionally – programmed its computers to ensure that only password holders, whose accounts had been paid up, could access its website. It was, therefore, not an innocent disseminator.[18]

10. Since, under the common law, in all Australian jurisdictions, “defamatory matter is published in each place in which it is read, seen (…) heard”[19] and comprehended, Hedigan J concluded that Alpert’s article had been published in Victoria. Consequently, he found the State of Victoria to be an appropriate and convenient forum to try the dispute and to entertain the proceedings.[20]

    High Court of Australia – 2002 Proceedings

11. Although Dow was later granted limited special leave to appeal the VSC decision to the HC[21] and 18 businesses and organisations, supportive of the appellant (among them Yahoo!, Amazon.com, News Limited and the Australian Internet Industry Association), were able to intervene in the case,[22] ultimately, on 10 December 2002, the HC unanimously dismissed Dow’s appeal, thus allowing the defamation case brought against the American publisher to proceed in a Victorian court.[23] The seven judge bench found that in the case of the Internet, published material was

    not available in comprehensible form until downloaded on to the computer of a person who [had] used a web browser to pull the material from the web server. It [was] where that person [downloaded] the material that the damage to reputation [might have been] done. Ordinarily then, that [would] be the place where the tort of defamation [was] committed.[24]

    And, since Gutnick objected to the publication of the disputed material only in Victoria, the Supreme Court of that State was a competent authority to examine the controversy.[25]

    Concerns about the High Court Decision

12. That landmark decision has attracted severe criticism, mainly from media groups and IT experts, but also from some lawyers, worried about a negative impact such a verdict might have on online publishing.[26]

    Nasty regimes’ threat

13. One concern is that if the principles of the HC judgment were to be applied elsewhere, material put on the Internet in, say, Australia would be subject to the diverse defamation laws of every country in the world.[27] Online publishers argue that this would encourage “nasty”, totalitarian regimes to “misbehave”.[28]

14. In some countries, persecution by prosecution could become a norm, online media practitioners becoming the main victims of such oppression. Although not directly related to Gutnick, the case of an American journalist, Andrew Meldrum, a correspondent for The Guardian, prosecuted in Zimbabwe (2002) for “publishing falsehoods” in the newspaper’s online service, is cited as the case in point.[29]

    Discrimination

15. Reynolds suggests that, moreover, internet publishing may become

    the domain of discrimination: publishers may choose only to print negative articles about those too poor, or too unpopular or discriminated against, to be likely to sue. Or perhaps only the wealthiest enterprises, able to afford any legal charges, will be able to publish on the internet – except, perhaps, for private individuals who are so impecunious as to be “judgment-proof” and hence able to flout libel laws with impunity.[30]

    Self-censorship

16. Publishers might adopt “a lowest common denominator approach”,[31] striving not to offend anybody. This would force many either eventually to stop publishing all together, or to publish “only inoffensive pap”.[32] Guernsey also predicts that Gutnick may lead to increased self-censorship among publishers who may prefer to withdraw some material from Internet sites.[33] Evidence does exist to support her claims: for example Yahoo! decided to change its web content after a ban - imposed by a French judge in November 2000 – on the auction and sale of Nazi memorabilia over the Internet to users residing in France.[34]

17. In Wimmer’s opinion, such “chilling” of free speech on the Internet would devalue the level of discourse that is the backbone of democratic societies.[35] If the Internet is “gagged”, access to information will be hampered. Yet, as Coroneos puts it: “Information is (…) empowering, and the information revolution is no less than a revolution of empowerment”.[36]

    Hampered access to information

18. Although Hedigan J clearly mocked Dow’s counsel, Geoffrey Robertson’s subtle suggestion that the judge had “a national duty”[37] to pronounce a verdict which would not drive major international publishers towards withdrawing subscriptions from Australian online readers,[38] concerns that it could happen are not without basis. Several analysts (Clarke,[39] Baker,[40] Coroneos[41] predict that to avoid “multiple lawsuits in multiple legal jurisdictions arising from a single article”,[42] smaller publishers – especially those lacking Dow’s financial clout,[43] – may block Australian readers’ (and, presumably, of readers from other countries with strict defamation laws) access to websites, by equipping those sites with software that looks up the user’s geographical location and then – based on that information – modifies website pages’ content.[44]

19. Although the technique is not infallible, some independent experts estimate that geolocation services can identify the user’s country of origin with 90% accuracy.[45] Further technological advances should improve that success rate. Gutnick may reinforce the perception among publishers that to avoid expensive litigation, it is necessary – as Guernsey puts it – “to install online gates and checkpoints around their sites, giving access to only certain viewers”.[46]

    Forum shopping

20. Moreover, the Wall Street Journal[47] warns of the risk of “forum shopping on a global scale”:[48] plaintiffs may lodge their complaints in jurisdictions which are the most favourable to them, hoping for the highest possible financial gains.[49] Indeed, in Australia, selecting the most advantageous out of eight jurisdictions is common – and not limited to online publishing;[50] thus, its experience lends credibility to such claims.

21. Dawson and Kloczko observe that Australian plaintiff-friendly defamation laws, combined with Australian courts’ readiness to enforce foreign judgments[51] (including those of similarly conservative jurisdictions, such as Canada’s and the United Kingdom’s) in defamation cases, benefit, in effect, those publishers whose assets are in countries with less restrictive legislation, particularly the US.[52] It is simply safest to run a business from where the risk of being sued is lowest.

22. Although Dawson and Kloczko believe it unlikely that, due to Gutnick, any major Australian publisher (who needs to employ local staff in order to gather, process and publish local news) will “move its operations off shore to avoid potential liability for internet content”,[53] prospective investors in the media sector might be discouraged from setting up offices in Australia and other countries with similarly tough defamation laws. This could result in further concentration of online publishing in the US and, thus, increased domination of American content (and view of the world) on the Internet.[54]

    Impact on other areas of online publishing

23. According to Coroneos, Gutnick will have repercussions far beyond litigation arising from defamation. Other areas, such as privacy, negligence and copyright, to name just a few, will also be affected. For example, in Australia, content in transit is not copyrighted. Thus, Internet Service Providers (ISPs) do not fear liability for ‘caching’ – i.e. storing and reproducing such content on a short, temporary basis.[55] On the other hand, some other countries’ rules are more restrictive in that regard. If each nation compels ISPs with a global reach to conform to its legislation, they will be constantly breaking the laws of some countries, while acting lawfully within others.[56]

    Traditional Barriers to Litigation

24. Pullen, however, believes that such predictions are “hysterical”[57] – traditional barriers to litigation will curb perilous excesses. As Macgregor and Vincent point out, people will probably try to sue only in the place where they have a reputation and in jurisdictions where they could enforce a judgment and pursue damages (if the defendant has assets where the defamation complaint has been lodged).[58]

25. Baker also notes that the High Court itself highlighted the limits of potential litigation.[59] Therefore, the threat of multiple defamation actions in different countries as a result of one publication is minimal.[60]

    Positives of the High Court Decision: Curbing US Dominance

26. In fact, in Pullen’s opinion, if Dow’s argument had been accepted,

    absurd situations would arise. For instance, a person defamed by an article appearing on the Internet would have to protect his or her reputation in the country hosting the relevant server, even though they may not be known there. Furthermore, the United States, arguably the largest publisher on the Internet, would become the de facto forum for settling these types of disputes.[61]

    This, he argues, would mean that how well people’s reputations are protected throughout the world would be largely controlled by US laws.[62]

27. Interestingly, Mayne and Young, two Australian online publishers, are both “relaxed”[63] about the possible implications of Gutnick for small operators like themselves. Mayne believes that it will affect only “the big guys who’ve got something to lose”,[64] as minor operators would most probably take no notice of foreign court orders and refuse to pay any penalties imposed.[65]

28. Therefore, Mayne is not foreshadowing any changes at all in the way his site - crikey – has been operating. Neither is Young, the publisher of Online Opinion. In his view, too, only large media proprietors, with substantial assets, are likely to be sued internationally for defamation, or other breaches of local laws. And even that would be irrespective of any outcome of Gutnick.[66] In fact, he proposes that Dow and perhaps even other big US publishers, are benefiting from the publicity generated by the dispute. Without regard to fairness, they want to discourage overseas suits, warning potential plaintiffs: “Only try [to sue] at home if you are a mining magnate or have similar access to gold or other means of commercial exchange. Success may equal financial ruin”.[67]

    Need for Law Reform

    Stress on lawmakers’ responsibilities

29. Yet, some believe that defamation laws should be modernised, to acknowledge Internet’s uniqueness and allow it to bring benefits to the global community. While supporting his colleagues’ decision in Gutnick, HC’s Kirby J conceded that the dismissal of Dow’s appeal did not represent an entirely satisfactory outcome, as the Internet’s unique and still expanding features made it a distinctive communications system in the modern world.[68] However, he also emphasised:

    Where large changes to settled law are involved, in an area as sensitive as the law of defamation, it should cause no surprise when the courts decline the invitation to solve problems that others, in a much better position to devise solutions, have neglected to repair.[69]

30. Thus, although reform in the area of defamation was urgently needed, it was up to the Parliament, not the courts, to amend existing legislation. Any such move would require great caution and careful consideration.

    Anarchy on the Internet

31. Young supports that view. He sees the Internet community as anarchic, libertarian and egomaniac, confident of its god-like powers. “It is almost a parallel universe to the respectable one in which the rest of us live our lives, a demi-monde where hackers can be heroes, and any hierarchy or authority or restraint is regarded with suspicion”.[70] Giving online publishers total freedom would only – in Mayne’s words – encourage “cowboys”.[71]

32. This view is shared by Collins who warns that, given blanket immunity, website hosts would not make any effort to sift out offensive material.[72] Yet, as Callinan J has observed, “Publishers are not obliged to publish on the Internet. If the potential reach is uncontrollable then the greater the need to exercise care in publication”.[73]

33. Furthermore, Reed argues that online publishers would welcome a uniform defamation law but they would not like it to be English (or – one may add – Australian) law. They would only support the introduction of US-style legislation. Otherwise, they prefer the status quo.[74]

    Protecting different categories of operators

34. Collins suggests that Australia should adopt a regime which would take into consideration the level of control that different operators hold over the material they publish. Those different categories of operators would be offered different levels of protection against defamation suits.[75] Such a flexible system would favour responsible publishers and ensure that innocent disseminators do not get sued. This would be a positive outcome of Gutnick for online publishers.

    Proposed international regulations

35. Young postulates introduction of an international treaty, perhaps, but not necessarily, under the United Nations’ auspices. In his view, the treaty should follow the US laws[76] and guarantee online publishers the right of free speech. Those who followed the treaty’s guidelines would be given immunity from prosecution, he proposes.[77] Bartlett also believes that a united global approach in relation to jurisdiction on the Internet is urgently needed.[78] He proposes the Durban model[79] under which,

    For the purposes of determining any claim arising from the content of an Internet site posting, a competent court shall apply the substantive law of the jurisdiction (…) in which the editorial work on the content is completed (i.e., where the decision to publish is made).[80]

36. Mayne, however, disagrees. In his opinion, such an approach would be unsound, because online publishers would be trying to establish sites in remote places, where the arm of the law is unable to reach them.[81] He, personally, can see no need for “sweeping new laws” or “sweeping international conventions just yet”.[82]

    Self-regulation

37. Perhaps Gutnick will lead to greater self-regulation of the online publishing industry. While Garnett suggests that alternative – more balanced, in his view (i.e. less favourable to the plaintiff) – approaches to existing law might have been adopted by the Australian courts in the Gutnick v Dow Jones dispute,[83] Collins asserts that the “Codes of Practice currently on offer in the United Kingdom and Australia do not provide an alternative to the resolution of civil defamation disputes through the courts”.[84] Yet, it would be advisable that they do.

    Conclusion

38. It remains to be seen what long-lasting repercussions, if any, Gutnick will have on online publishing.[85] So far, Gutnick has been cited – internationally – as a precedent on at least two occasions. On 27 January 2004, a Canadian Superior Court judge, Pitt J, referred to Gutnick while giving reasons for ruling “in favour of the plaintiff's choice of forum”[86] in the Bangoura v The Washington Post case.

39. Ten days later, in the King v Lewis and Ors case, invoking (among others) Gutnick, a British High Court judge, Eady J, observed that “the common law currently regards the publication of an Internet posting as taking place when it is down-loaded”.[87] He also took the view that an English court was the most convenient forum to deal with any English publications – however limited and technical – that relate to an English corporation.[88]

40. This does not, of course, spell the death of the Internet as we know it,[89] but suggests that Gutnick’s battle against Dow may influence the way online publishing is perceived and understood by the judiciary. Hopefully, the debate surrounding the case will contribute to a greater understanding of defamation laws in different countries among online publishers.