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eLaw Journal: Murdoch University Electronic Journal of Law |
| Author: | Andrew Nicholson Solicitor |
| Issue: | Volume 8, Number 4 (December 2001) |
· A Developing Line of Authority:
· Appeal:
· Notes:
1. A recent high-profile case demonstrated some interesting legal issues arising out of the growth of the Internet. As the Internet continues to grow, both in terms of users and jurisdictions, so too does the law relating to defamatory statements which are published by that means.
2. The case, [1] may create a precedent for claims for defamation being brought across jurisdictional boundaries, including in other countries where actions for defamation are recognised. [2]
3. Well-known Melbourne businessman Joe Gutnick alleged that he was defamed in an article, which was published by Dow Jones in the United States and accessible over the Internet. The Court was asked to consider whether the action could be brought in Victoria, given that the claim involved material published on the Internet by a web server located in the US. The Court held that the claim could be heard in Victoria on the basis that the material was available to be downloaded and read in Victoria and that is where Mr Gutnick suffered most harm. The publication was likely not to be defamatory in the US, which has wider rights to free speech than those, which exist in Australia.
2. “Dow Jones” is the publisher of the Wall Street Journal and a related periodical known as “Barrons Magazine”. Barrons is customarily published online. Dow Jones operates from New Jersey where its website is located. The address of the website is “http://www.wsj.com/”. This is a subscriber Website with some 550,000 subscribers, some of whom reside in Victoria.
3. An article headed “Unholy Gains” appeared on Barrons’ Website on Sunday 29 October 2000.
4. Joe Gutnick is a prominent business identity with a reputation in philanthropic, sporting and religious circles and he is an international entrepreneur with substantial connections in the United States. He claims that the article alleged that he was the biggest customer of the gaoled money-launderer and tax evader Nachum Goldberg, that he was masquerading as a reputable citizen when in fact he was a tax evader who had laundered large sums of money through Goldberg, and that he had bought Mr Goldberg’s silence.
5. Dow Jones was served in the United States with the Victorian legal proceedings and applied to the Victorian Court to stay or dismiss the proceeding on a number of bases, including that the proper forum was the US and that the Victorian Court did not have jurisdiction.
4. Mr Gutnick contended that it was not the writing but the publication of the article, which is actionable. He argued that merely placing the article on Dow Jones Web server and making it available for downloading did not constitute “publication” because until the article is downloaded and the defamatory meanings were conveyed to some person, Dow Jones was in the same position as the person “who shouts aloud defamatory words on a desert or moor when no-one hears them”. [3] He argued that publication only occurred once the article was displayed on the subscribers’ computer screens and it was only then that the publication was in a form which conveyed the defamatory words to the subscribers in Australia who downloaded the article. [4]
5. Dow Jones’ argument was that liability for defamation in cyberspace must be determined by the jurisdiction of the Website. They insisted that there was no publication by Dow Jones in Victoria, by merely putting Barrons on an Internet site accessible in Victoria and that it would be unfair for the publisher to have to litigate in the multitude of jurisdictions in which its statements are downloaded and read. However, the Court found those considerations must be balanced against the world-wide inconvenience caused to litigants, “from Outer Mongolia to the Outer Barcoo”, [5] frequently not of notable means, who would at enormous expense and inconvenience have to embark upon the formidable task of suing in the USA.
4. The Court considered a number of earlier cases relating to the appropriate jurisdiction for defamation claims. It appears, from the cases considered that there is a developing line of authority which supports the proposition that claims may be brought in the jurisdiction where the material is received (published), regardless of where the web site host is located.
5. The Court considered a number of US decisions, including the pre-Internet case of Calder v Jones.[6] In that case, entertainer Shirley Jones brought an action for defamation against the “National Enquirer” magazine, one if its reporters and its editor. She claimed that although the magazine was published in Florida, most copies were sold in California where she lived and worked. It was alleged that the Defendants had engaged in a course of conduct, which was intentional and calculated to cause her injury in California.
6. The Court found that the matter should be heard in California as the Defendants had knowledge of the potential devastating impact that their conduct might have upon the respondent within the state where the Plaintiff lived and worked.
7. Following Calder v. Jones is the decision of the Supreme Court of Arizona in Edias Software International, L.L.C. et al v. Basis International Ltd. [7] The Defendant company posted statements on its web site concerning its reasons for terminating a contract with the Plaintiff. The Defendant also sent an e-mail and a forum message to its customers which had similar contents. The issue was whether the Defendant whose residence and business were located in New Mexico, could be brought within the jurisdiction of the court in Arizona where the Plaintiff resided and carried on business.
8. The Court found that the Defendant knew that the information, which was posted onto their web site would be available to residents of Arizona. The Court reasoned that:
“… because, messages sent through computers are available to recipients and anyone else who may be watching, and have made commercial transactions simpler and more feasible, consequently, it must broaden the permissible scope of jurisdiction exercisable by the courts.”
9. Accordingly, as the Defendant knew that its conduct would cause foreseeable harm to the Plaintiff in Arizona, the Court should hear the claim in Arizona.
10. That reasoning was further developed in Telco Communications v. An Apple a Day. [8] Telco was a corporation headquartered in Virginia. It alleged in the Supreme Court of Virginia that the Defendant wrote two press releases in Missouri, and placed them on the Internet via Business Wire for distribution into Connecticut, New York and New Jersey.
11. The court considered “the nature and quality of the activity that the Defendant conducts over the Internet,” and found that it was sufficient to attract the jurisdiction of the Court that the Defendant had advertised and solicited its business over the Internet in the jurisdiction. The Court found that:
“Though the (defamatory) letters were not directed at the plaintiff’s actions in Virginia, there can be no doubt that the primary and most devastating effects of the letters would be felt in Virginia where the Plaintiff lives.” [9]
12. Relevantly, in deciding that it had jurisdiction to hear the claim, the Court also reasoned that the use of a computer instead of paper did not distinguish the Defendants from the general principles applicable in Calder v Jones.
13. That decision was considered in Blumenthal v. Drudge.[10] Drudge created an electronic publication called the Drudge report, which is a gossip column focussing on gossip from Hollywood and Washington D.C. The Drudge Report was published via his web site, which was based in Los Angeles, California. In addition, Drudge had developed a list of regular readers or subscribers, (some 85,000 by 1997), to whom he e-mailed each new edition of the Drudge Report.
14. Drudge entered into a written licence agreement with AOL. The agreement allowed AOL to post the new editions of the Drudge Report on its service, so that the Report was made available to all members of AOL’s service for a period of one year. Drudge also continued to distribute each new edition of the Drudge Report via e-mail and his own web site.
15. Drudge transmitted the article in question from Los Angeles, California by e-mail to his direct subscribers and by posting both a headline and the full text of the Blumenthal story on his World Wide Web site. He then transmitted the text but not the headline to AOL, which in turn made it available to AOL subscribers.
16. The Court made a number of relevant comments in relation to the dissemination of information over the Internet:
“The near instantaneous possibilities for the dissemination of information by millions of different information providers around the world to those with access to computers and thus to the Internet have created ever-increasing opportunities for the exchange of information and ideas in cyberspace. This information revolution has also represented unprecedented challenges relating to rights of privacy and reputational rights of individuals, to the control of obscene and pornographic materials, and to competition among journalists and news organizations for instant news, rumours and other information that is communicated so quickly that it is too often unchecked and unverified. Needless to say, the legal rules that will govern this new medium are just beginning to take shape.” [11]
17. In addition, the Court considered the level of interactivity of a web site and the commercial nature of the exchange of information that occurs on the Web site to be relevant in determining whether it had jurisdiction.[12] In particular, the Court considered it relevant that the web site must also allow browsers to interact directly with the web site on some level. In reaching that view, it reasoned:
“At one end of the spectrum are situations where a defendant clearly does business over the Internet. If the defendant enters into contracts with residents of foreign jurisdiction that involves the knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper. At the opposite end are situations where a defendant has simply posted information on an Internet Web Site, which is accessible to users in foreign jurisdictions. A possible Web site that does little more than make information available to those who are interested in it, are not grounds for the exercise [of] personal jurisdiction. The middle ground is occupied by interactive Web sites where a user can exchange information with the host computer.”[13]
18. The Court found that Drudge’s web site was interactive, and that by targeting the Blumenthals, who work in the White House and live in the District of Colombia, Drudge knew that “the primary and most devastating effects of the [statements he made] would be felt [in the District of Columbia].” He should have had no illusions that he was immune from suits here.
19. The line of reasoning developed in the US decisions has been followed in other countries. In Kitakufe v. Oloya Ltd [14] the Canadian Supreme Court assumed jurisdiction in a defamation suit arising out of publication in a newspaper “The New Vision”, which was published in Uganda and republished on the Internet. Both the plaintiff and the defendant were born in Uganda and were African-Canadian. The Defendant worked as a reporter and wrote the article.
20. The Plaintiff claimed the article imputed that he was fraudulent, dishonest and of bad moral character. The Defendant argued that Uganda was a more convenient and natural forum, and that the proceeding had a real and substantial connection to Uganda. The Canadian Court decided not only that it was the court of convenience, but it also assumed jurisdiction over the claim on the basis that the Website could be received (that is, downloaded and published) in Canada.
21. A similar approach was taken in a recent English decision, [15] which considered the liability of web site operators for defamatory material, which is published on their web sites.
22. The Plaintiff was an Internet Service Provider. It alleged that the Defendants, who operated web sites containing discussion boards, were liable for defamatory statements made in postings to their discussion boards by an anonymous contributor. The Plaintiffs wrote to the Defendants after discovering the postings complaining that they were defamatory and requested their removal. Consequently, the postings were removed, and the contributor’s access revoked.
23. The Court considered that journalists are responsible at law for the material they publish. However, the Defendants took no responsibility for the material published on their discussion boards, as they exercised no editorial control. The Defendant web site operators were found to simply provide a means by which the public at large is able to communicate its view, and accordingly, were found not to be responsible for the statements published on their discussion boards. In delivering judgment the Court made a point of commenting that it wanted to:
“give the clearest indication to those who wish to defame that they can not do so with impunity behind the screen of anonymity made possible the use of web sites on the Internet.”
24. In the Gutnick case, the Court first looked at the pre-Internet law, and considered whether defamatory material is published at the time and in the place where it was created, or whether it is published when delivered. The Court concluded that the law in defamation cases has been for centuries that publication takes place when and where the contents of the publication, oral or spoken, are seen and heard, (i.e. made manifest to) and comprehended by the reader or hearer. Having decided that a person is defamed at the place where publication is made, the Court found that the dissemination of the material on the Internet and the downloading of that information in Victoria meant that publication had been made there. The Court then followed the line of developing authority discussed above, and found that the publication of the material in Victoria gave the Court the necessary connection to allow it to assume jurisdiction and hear the claim.
25. Dow Jones have now filed an appeal, [16] although indications are that it may take up to a year for the matter to be heard.
26. Authors who post material on the Internet may now find themselves the subject of proceedings in foreign jurisdictions, even if the material does not offend the law where it is posted, provided that the material has a sufficient connection with the jurisdiction where proceedings are instituted. Those responsible for the operation of a site may similarly find themselves subject to an action for defamation.
27. However , the Courts have been careful to discourage “forum shopping” by Plaintiffs who are seeking to bring their claim in a jurisdiction which provides them with a greater chance of success. It is clear that the action must have a substantial connection with the place where proceedings are instituted.
28. The case has the potential to have a major impact on the way media companies operate throughout the world. However, it is also relevant on a smaller scale and even at a local level, care should be taken by both publishers and Internet site operators to consider the content of websites and other publications in light of this recent authority.
[1] Gutnick v. Dow Jones & Co Inc [2001] VSC 305
[2] There are currently 190 countries that recognise defamation actions.
[3] Gambrill v. Schooley Court of Appeals of Maryland 1901.
[4] citing Gorton v. ABC (1973) 22 FLR 181
[5] Paragraph 73 of the judgment.
[6][1984] USSC 53; (1984) 465 US 783
[7] 947 Full Supreme Court 413 19 Arizona
[8] (1997) F. Supp 404 Virginia
[9] citing First American First v. National Association of Bank Women [1986] USCA4 1619; 802 F. 2d 1511 at 1517
[10] Sidney Blumenthal and Jacqueline Jordan Blumenthal v. Mat Drudge and America Online Inc (1998) 922 F. Supp 44)
[11] paragraph ii Judgment.
[12] following Cybersell, Inc v Cybersell, Inc [1997] USCA9 3689; 130 F. 3d 414
[13] Paragraph III Judgment.
[14] Unreported Ontario Court of Justice.
[15] Totalise Pic v. Motley Fool Ltd and another Queen’s Bench Division 145 SJLB 70
[16] in the Court of Appeal, Victoria filed 18 September 2001
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