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Disclaimer: The views expressed below  do not necessarily represent the views of the Internet Industry Association or any of its members. This article was published in eLaw Practice in October 2001 and is reproduced with permission.

Headnote: The appeal to the decision of the Victorian Supreme Court was heard by the High Court of Australia on 28 May 2002. The Internet Industry Association was granted leave by the Court to participate as Interveners in the case along with a number of other parties. The transcript of that hearing is now available online. The Court has reserved its decision.

 

"Diamond Joe"

If the Victorian Supreme Court judgment stands and its principles are applied elsewhere, it may be that you put something on the Internet in Australia and are subject to the defamation laws of Angola, Zimbabwe and every country in between. James Elder speaks to the experts about the decision itself and the need for a different approach to the new medium of the Internet.

The smile on Joseph Gutnick's face gleams like one of the diamonds his company extracts every day from his Great Central Mines. Sitting in his Melbourne office talking to e.Law Practice about last month's landmark decision in the Victorian Supreme Court, the Melbourne entrepreneur, sporting and religious identity is blithe. "Delighted," Gutnick says. "I'm absolutely delighted with the decision."

"The decision" - one to be heard around the world - is that his defamation hearing against American publisher Dow Jones should be held in Australia. The decision establishes that publication for defamation purposes takes place where material is downloaded and is likely to have a profound influence on where future e-defamation cases are heard and the development of jurisdictional rules in relation to the Internet.

Showing he hasn't lost any of his sense of humour since the court action, when I mention to Diamond Joe the fact that his name may now be heard around the world, he says: "well I'd prefer that my fame came from a major diamond discovery than a defamation case."

"I'm not known to be an introvert, so I wasn't going to sit back and be abused. My aim in life isn't to resolve the Internet issues but I certainly feel that, when a magazine publishes something in the United States and there are subscribers who get it on the Internet in Australia, I should have a right to defend it."

Joseph Gutnick is suing the United States-based business information organisation, Dow Jones and Co Inc, claiming that it defamed him in an article in one of its publications and on the Internet. Gutnick claims 'Unholy Gains', a 7,000-word article in last October's issue of 'Barron's' magazine, implied he had been involved in improper business dealings with jailed moneylaunderer and tax evader Nachum Goldberg. Gutnick denied any relationship with Goldberg and sued for defamation.

What has given the case worldwide attention was not the substance of the claims but the fact that Gutnick asserted the article's appearance on the Internet enabled it to be accessed by people in Victoria, thereby defaming him where he is best known. The Supreme Court of Victoria has jurisdiction to entertain proceedings in relation to torts committed in Victoria or in relation to cases where the torts were committed outside Victoria but the damage was suffered within Victoria.
 
As Peter Bartlett, partner at Minter Ellison Melbourne, explained in 'The Age' the day after the ruling: "Dow Jones argued that publication occurs when the material is delivered to a third party (the 'delivery rule'). Gutnick argued that publication occurs when a third party comprehends the matter ('the comprehension rule')."
 
Justice Hedigan relied on Commonwealth defamation law and ruled in favour of Gutnick. "I have concluded that it (the article) was published in the State of Victoria," said Justice Hedigan, "and accordingly, I rule that Victoria has jurisdiction to entertain the proceeding."

Dow Jones had claimed the article was written in America, by an American for American consumption and should be heard in the US. But Justice Hedigan was firm: "In my view, it would be verging on the extraordinary to suggest that Mr Gutnick's defamation action ... should be removed for determination to the State of New Jersey or the State of New York."

Despite the alarm and, in some quarters, outrage at Justice Hedigan's decision, it perhaps should come as no surprise, given that it follows the strict letter of the law. "I can't say this is a good or a bad decision," says Nic Pullen, partner at Holding Redlich, who specialises in media communication and defamation. "In many senses it is a bad decision and in other sense it's a good decision because it actually conforms with the current practice of publication."

Hugh Northam, a partner specialising in defamation at Clayton Utz, the firm who acted for Gutnick, has no doubt: "It's an excellent decision. I think the judge has stated the law as it is, whether the law will ultimately be changed and whatever you feel about what the law ought to be is a separate matter."

But it is a matter that is consuming defamation lawyers, Internet proponents and governments around the world. Indeed, the case underlines the idea that the Internet has no respect for international boundaries and it could have profound implications for the availability of contentious Web sites in Australia. Certainly, Dow Jones argued that international publishers of Web sites may prevent Australians from accessing information for fear of being dragged into an expensive defamation action in Australia.

"There's no question that this is a test case," says Nic Pullen. "This has been eagerly awaited. Such a situation on the Net has always existed, it's only now that a court has had a chance to hear full argument from all parties concerned. Until now, courts have generally heard a plaintiff's argument without that of a defendant - usually because the defendants weren't concerned about the case due to having no assets in that jurisdiction."

Barrons is a weekly with a substantial circulation in the US primarily among investors. 'Unholy Gains' - sub-headed 'when stock promoters cross paths with religious charities, investors had better be on guard' - was available on-line to subscribers, five of whom accessed the information in Victoria. Dow Jones argued that, because the location of its Web server was in New Jersey, the court should refuse to hear the case outside an American jurisdiction.

Although the media giant has no assets in this jurisdiction, it was anxious to avoid a dangerous precedent being set in the Commonwealth. "The Commonwealth countries will look at this decision far more closely than, say, America," says Pullen.
 
Indeed, there has already been a case of some similarity in the UK. In Godfrey v Demon Internet in 1999, the English High Court held that Godfrey had been defamed by a message in a newsgroup, carried on Demon's servers and available in the UK. This was on the basis that the information was accessible in the UK. The jurisdiction point was not taken because Demon is a UK corporation and so could in any event be sued in the UK but it seems clear from the case that the High Court was basing its decision on the availability of the information to UK readers, not on where the server was located. "Thus, the main influence on UK law will probably be that no-one will try to argue the jurisdiction point for servers located outside the UK, on the basis that it is already a lost cause," says Chris Reed, Professor of Electronic Commerce Law and Head of the Information Technology Law Unit at the Centre for Commercial Law Studies, University of London and counsel for UK firm Tite & Lewis.

From the outset, Dow Jones made it clear they were taking the case very seriously. Because of the ramifications of the case, Dow Jones brought in Geoffrey Robertson QC as counsel. Robertson argued that with on-line services, "publication occurs when (material) is placed on the server, (and) the place of publication ... is where the Web site is established". Robertson's arguments in relation to publication were, first, that the common law recognised the delivery rule and, second, that if this is not so, then the "unique nature of Web communication compels the adoption of the delivery rule".

There is a widespread belief that Justice Hedigan's decision failed to acknowledge the "unique nature" of the Internet. Certainly it appears the Internet, being fundamentally different in its construction from the off-line world, has again proven incompatible with the application of traditional jurisdictional principles.

Justice Hedigan relied (and not incorrectly) on Gutenberg-era legalism that says "publication takes place where and when the contents are comprehended by the reader". He said that "this has been the law for centuries in respect of other forms of communication and I find no persuasive reason that it should not apply to Internet publication".

However, there is popular support for the notion that new laws are needed for a new century and a new age. The Internet is a new method of communication and the technology it embodies is expanding at a rate faster than the law evolves. In a digital age, where information can be published in one destination and then received around the world, Hedigan's ruling means the dangers of being sued for defamation on the Net are now omnipresent.
 
Publishers may need to be aware of such laws in every country around the world. Or, as an editorial in 'The Australian' boomed: "anyone who puts information on the Internet is, under Gutnick's defamation ruling, effectively publishing in every nation instantaneously, creating every second millions of excuses for governments and the law to step in and stop you or anyone else from taking part in informed debate".

On a micro level, the threat extends from Australian companies to clubs and individuals who use the Internet as their voice to the outside world. As Murray Mottram wrote in 'The Age': "The potential damage caused by a factual error or bad-taste remark goes way beyond the old-fashioned newsletter."

The result, says barrister and Chairman of Electronic Frontiers Australia Kimberley Heitman, could be 'forum shopping', given that a plaintiff may choose to litigate in any of the world's jurisdictions. "They may decide, for example, to litigate in Paris where there are strong privacy laws or in the UK where libel laws are quite plaintiff friendly," says Heitman. "This is a very dangerous decision in that it will dramatically increase the risk the publication of all forms on the Internet. The judgment gives a green light to plaintiffs to choose to litigate in any country where the Internet is available. I think the case Dow Jones put not only made technical and legal sense but was also good policy. In the sense that the legal liability for publication should be in the jurisdiction of the printing press ... and in this case the printing press is a Web server."

How greatly the decision will impact upon publishing is yet to be seen, though it does mean that when an organisation such Dow Jones publishes on paper, it knows that it runs a defamation risk in every country where it foresees its paper being distributed. When it publishes on-line it runs the same risk, except that it should now foresee that its Web site could be read world-wide and thus runs a world-wide risk. "Many countries have introduced immunity for intermediaries," says Professor Reed, "that is, those who merely carry or host third party information but are not themselves primarily responsible for its publication. Those intermediaries are immune from defamation suits and other civil liabilities for that information unless they have actual knowledge that information is unlawful and fail to take steps to remove or block it."

Examples of this type of law include the EU directive on electronic commerce (in force January 2002) and the Singapore Electronic Transactions Act 1998. The US Communications Decency Act 1996 does not even impose liability if the intermediary has actual knowledge of the content. However, where the defendant is primarily responsible for making the information available (as was Dow Jones), these immunities do not apply. In other words, the policy decision is that if you consciously decide to make information available, with the opportunity to control its content in advance, you must take responsibility for that act.

It is now being acknowledged in many legal circles that the law is trailing technology and that decisions such as Justice Hedigan's highlight the chasm. "This decision is at the cutting edge of who is going to be responsible for publication on the Internet and where is that responsibility going to lie," says partner at Holding Redlich, Nic Pullen. "This decision is a good example of how the law just can't deal sensibly with the technology that's available today. That's no reflection on the law. It's just a very good example of how the law has to be in catch up mode for new technology that's out there."

And Peter Bartlett: "The law simply cannot keep up with the developments in technology. Some of the cases that were cited in this decision of Hedigan's are 150 years old. I think that the decision is correct in law, on a narrow reading of the law, [but] I think that Dow Jones is likely to appeal and will put submissions to the Victorian Court of Appeal, and possibly the High Court, that the on-line environment is a unique environment that requires a variation to the old conservative publication rules. I think courts do need to recognise that it is a unique environment and I think it is an argument for international defamation coming closer together."

 However, there are many practical obstacles to convergence. In the US for instance, defamation law is strongly influenced by the First Amendment, protecting freedom of speech, which tends to override private rights. Thus, defamation of public figures requires proof of malice/bad faith in the US - which is probably why Dow Jones wanted the case heard in a US court. Other countries (such as Australia and the UK) have made different policy decisions and have no general defence of good faith publication. Says Professor Reed: "I agree that Web site operators would like a uniform defamation law but they wouldn't like it to be English law - for them, the current differences are better than a plaintiff-friendly law like that of England."

It now seems likely that Dow Jones will run this all the way to the High Court.

"Dow Jones may be of the mind that, if they run it to the High Court, the High Court will do another Mabo - and legislate," says Clayton Utz's Hugh Northam. And Peter Bartlett: "I would hope that the High Court would take a broader view of where the defamation laws should go in the on-line environment and not blindly follow historical precedent which largely evolved out of small publications in a small geographical area."

Certainly Joseph Gutnick doesn't seem fazed by the idea of taking the matter to the highest court in the land: "This is certainly a good start but the fight is far from over and I'll keep fighting. I'm no virgin to courts."

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