Internet Libel Ruling: Talk About a Kangaroo Court

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Australians put beets on their hamburgers, eat chicken-flavoredLay's potato chips, dine at Hungry Jacks and drive Holden cars.With strange behavior like that, should they be free to holdAmerican journalists liable for what they consider onlinedefamation?

Australia's High Court has ruled that the Dow Jones publicationBarron's, with respect to a defamation claim, is subjectto jurisdiction down under - despite the Web site's New Jersey base- because Australians can access it. The implications for writerscould be tremendous because the ruling means material published onthe Net can be judged by the governments and courts where theinformation is downloaded instead of under the laws of the countrywhere it is originally uploaded. (Simply, under the logic of thiscourt's decision, an Internet article is considered to be"published" where it is ultimately read instead of where it waswritten or where the actual publisher is physically based.)

Many journalists and publishers are concerned about thefree-speech implications of the case. If other courts across theglobe were to adopt the Aussie "destination-based" principle, theresult could be a jurisdictional tangle of online libel standards.If this standard were strictly enforced, it would mean thatInternet publishers would need to monitor the different libelstandards for any of the roughly 190countries that exist on Planet Earth to make sure they complywith each of them. Alternatively, many publishers would insteadadopt a "lowest common denominator" approach by sanitizing theirWeb content to comply with the most restrictive libel standards. Soif Zimbabwe says you can't say anything negative about the dictatordu jour, you might want to be careful about publishing thatcritical story about him.

Hopefully it won't come to that. It may be the case that thisdecision has more limited implications. In this case, theBarron's Web site was a subscription-based service andAustralian 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 toAustralian citizens. That's a tenuous link, but it's apparentlyenough 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 penaltiesthey want. But will the decisions be enforced within the UnitedStates, where 98 percent of Barron's readers live? WillU.S. judges apply and enforce Aussie libel standards, or will theytake the less restrictive American libel standards into account?Similar questions were raised when French courts attempted to force theAmerican-based web portal company Yahoo! to remove, or at least block fromthe view of French citizens, those portions of its website whereNazi 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 forconsideration: "Does the Internet's global reach justify lessfreedom of speech?"

Regardless of how these questions are answered, as The Economistrecently noted, these cases highlight the fact that, "national laws in awide array of areas, not just libel, now seem to be out of stepwith the realities of the Internet." A forthcoming Cato Institutebook entitled Who Rules the Net? will explore thesecontroversies and outline a variety of frameworks to resolvecontentious jurisdictional squabbles.

In the meantime, Net vendors and publishers may be able to avoidsuch confrontations by using new geographic location technologiesto better target their services instead of just blasting theirmaterials out to the planet. On the one hand, such self-censorshipand technology-blocking does partition the Internet and lead to"borders" on what many assumed would be a borderless medium. On theother hand, it gives nations-or at least those with votingcitizens-an incentive to rethink their restrictive laws if theywant to participate in a fluid Internet environment. Overlyrestrictive nations may face job pullouts or disinvestment by U.S.firms. And retaliation will be a factor. The United States surelyhas no interest in looking for Australian Web sites to sue. But ifoverseas reach becomes a fad, more than one nation will play thegame.

The upshot is that unnecessarily restrictive laws can end upharming the nation that enshrines them more than such laws harm theUnited States. But those laws have the potential to cause a lot ofchaos in the short run.

Adam D. Thierer

Adam Thierer (athierer@cato.org) ) is the Director of Telecommunications Studies and Clyde Wayne Crews Jr. (wcrews@cato.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.