TechKnowledge No. 46

Internet Libel Ruling: Talk About a Kangaroo Court

By Adam D. Thierer and Clyde Wayne Crews Jr.
December 16, 2002

Australians put beets on their hamburgers, eat chicken-flavored Lay’s potato chips, dine at Hungry Jacks and drive Holden cars. With strange behavior like that, should they be free to hold American journalists liable for what they consider online defamation?

Australia’s High Court has ruled that the Dow Jones publication Barron’s, with respect to a defamation claim, is subject to jurisdiction down under - despite the Web site’s New Jersey base - because Australians can access it. The implications for writers could be tremendous because the ruling means material published on the Net can be judged by the governments and courts where the information is downloaded instead of under the laws of the country where it is originally uploaded. (Simply, under the logic of this court’s decision, an Internet article is considered to be “published” where it is ultimately read instead of where it was written or where the actual publisher is physically based.)

Many journalists and publishers are concerned about the free-speech implications of the case. If other courts across the globe were to adopt the Aussie “destination-based” principle, the result could be a jurisdictional tangle of online libel standards. If this standard were strictly enforced, it would mean that Internet publishers would need to monitor the different libel standards for any of the roughly 190 countries that exist on Planet Earth to make sure they comply with each of them. Alternatively, many publishers would instead adopt a “lowest common denominator” approach by sanitizing their Web content to comply with the most restrictive libel standards. So if Zimbabwe says you can’t say anything negative about the dictator du jour, you might want to be careful about publishing that critical story about him.

Hopefully it won’t come to that. It may be the case that this decision has more limited implications. In this case, the Barron’s Web site was a subscription-based service and Australian credit cards were used by some subscribers to register. Thus, the Aussie judges reasoned that Dow Jones did have some “presence” in their country and purposefully directed content to Australian citizens. That’s a tenuous link, but it’s apparently enough to establish some basis for liability.

At the end of the day, of course, the real issue is enforcement. Australian courts are free to hand down all the libel penalties they want. But will the decisions be enforced within the United States, where 98 percent of Barron’s readers live? Will U.S. judges apply and enforce Aussie libel standards, or will they take the less restrictive American libel standards into account? Similar questions were raised when French courts attempted to force the American-based web portal company Yahoo! to remove, or at least block from the view of French citizens, those portions of its website where Nazi memorabilia was for sale. In a recent Cato Institute study, Robert Corn-Revere, a partner with the D.C.-based law firm of Hogan & Hartson, notes that this raises a more profound question for consideration: “Does the Internet’s global reach justify less freedom of speech?”

Regardless of how these questions are answered, as The Economist recently noted, these cases highlight the fact that, “national laws in a wide array of areas, not just libel, now seem to be out of step with the realities of the Internet.” A forthcoming Cato Institute book entitled Who Rules the Net? will explore these controversies and outline a variety of frameworks to resolve contentious jurisdictional squabbles.

In the meantime, Net vendors and publishers may be able to avoid such confrontations by using new geographic location technologies to better target their services instead of just blasting their materials out to the planet. On the one hand, such self-censorship and technology-blocking does partition the Internet and lead to “borders” on what many assumed would be a borderless medium. On the other hand, it gives nations-or at least those with voting citizens-an incentive to rethink their restrictive laws if they want to participate in a fluid Internet environment. Overly restrictive nations may face job pullouts or disinvestment by U.S. firms. And retaliation will be a factor. The United States surely has no interest in looking for Australian Web sites to sue. But if overseas reach becomes a fad, more than one nation will play the game.

The upshot is that unnecessarily restrictive laws can end up harming the nation that enshrines them more than such laws harm the United States. But those laws have the potential to cause a lot of chaos in the short run.

Adam Thierer (athierer [at] cato [dot] org) ) is the Director of Telecommunications Studies and Clyde Wayne Crews Jr. (wcrews [at] cato [dot] org) is the Director of Technology Studies at the Cato Institute in Washington, D.C. . A version of this essay originally appeared in The Orange County Register on December 14, 2002. To subscribe, or see a list of all previous TechKnowledge articles, visit www.cato.org/tech/tk-index.html.