Defamation actions arising from internet publishing

A recent court ruling has highlighted the potential vulnerability of publishers on the world wide web to defamation actions in the whole wide world, writes Nick Hanbidge.

The Australian High Court – roughly equivalent to the English House of Lords – has decided Victoria is the right forum to rule on a dispute arising from an article published on the internet by US-based Dow Jones.

The dispute arose from an article published by Dow Jones in the online version of its finance publication, Barrons Magazine. In October 2000, Barrons ran an article that libelled a well-known businessman from Victoria called Joseph Gutnick. Only a fraction of the 305,563 print editions of Barrons were sold in Australia, but the website had 1,700 subscribers with Australian addresses, including some members of the business and finance community in Victoria.

Gutnick sued for defamation in Victoria. The traditional basis for an action in defamation is that a defamatory statement has been published and that third parties have read it, thereby causing damage to the reputation of the person identified in the article.

Gutnick argued the article was published when read on the computers of subscribers in Victoria, that this damaged his reputation in Victoria and therefore Victoria was the appropriate forum. Dow Jones disagreed and applied for a stay of proceedings on the basis that the article was published when uploaded onto its web servers based in New Jersey, and that the trial should therefore be heard in the US.

Dow Jones wanted the court to accept a distinction between the passive role of a person making material available on the internet and the comparatively active role of a publisher of widely circulated newspaper or a widely disseminated broadcast. By this logic, Dow Jones’s publication took place in New Jersey because that is where the website was based and subscribers had come to it to request the article, rather than Dow Jones circulating it in Victoria.

But the Supreme Court of Victoria was not persuaded, and rejected the application. Dow Jones appealed and ended up before the Australian High Court.

Dow Jones now focused on policy issues. It said Gutnick’s argument created the spectre of internet publishers being sued for defamation in any country from Afghanistan to Zimbabwe. Dow Jones argued that the unique nature of the internet required the law applying to it to be rethought. It said jurisdiction should be determined by the location of the publisher’s web servers.

The High Court disagreed. While the internet had many novel technical features, there was nothing new about speedy global media distribution. On the question of where the full trial should take place, the High Court was satisfied that Victoria had jurisdiction, that Australian law should apply, and that the court in Victoria was the most appropriate forum. Accordingly, Dow Jones’s appeal was dismissed.  UK-based internet publishers should take note, for although the decision will have most immediate impact in Australia, where it sets binding precedent, English courts may be persuaded by the reasoning when considering similar cases.

Nick Hanbidge is an associate in media litigation at Theodore Goddard

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