Questions of Internet jurisdiction spin web of confusion for online publishers

From the Winter 2003 issue of The News Media & The Law, page 33.

By Wendy Tannenbaum

Three major court rulings — two in the United States and one abroad — gave differing answers to a question that has media companies worried about the increasingly common practice of posting news online: Whose libel laws apply to content on the Internet?

The issue is a serious one for anyone who disseminates information online because while the Internet can connect writers with a worldwide audience, it also brings the potential for increased liability.

In the latest court battles, U.S. media companies faced off with libel plaintiffs from other states and countries. The conflict pits free-speech advocates fighting for unrestrained, global flow of information against libel plaintiffs seeking to protect their reputations, sometimes under foreign regimes that do not recognize U.S. ideals of free expression.

While federal appeals courts at home ruled in favor of First Amendment advocates who claim that jurisdiction should not extend everywhere the Internet reaches, an Australian case took the issue of liability abroad. The outcome of a case pending in the U.S. Court of Appeals in San Francisco (9th Cir.) is expected to shed some light on questions about the enforceability of foreign judgments relating to Internet content.

While the jurisdiction question remains unclear, recent legal developments have fed a debate that some say may require an international solution.

Defamation down under

The first decision, issued Dec. 10, came out of Australia’s highest court. In the only decision thus far from a country’s court of final appeal, the Australia High Court held that Dow Jones, publisher of numerous periodicals including the Wall Street Journal and Barron’s, could be sued in Australia over an article that was written in the United States and distributed over the Internet.

The case arose out of an October 2000 article that appeared in Barron’s magazine, both in print and online. The article connected Joseph Gutnick, a wealthy Australian businessman, with money laundering operations in the United States and Australia.

Gutnick sued in his home state of Victoria, Australia, where libel laws strongly favor plaintiffs. Australian law relating to privileges, burdens of proof, and public figures make a libel case easier to prove there than in the United States.

The High Court’s decision centered on the legal definition of where a story is “published,” for purposes of a libel suit. Dow Jones argued that “publication” occurs in the place where the publisher places the article on the Internet: In this case, New Jersey.

The court disagreed, holding that “publication” occurs where the alleged damage to reputation takes place.

“Harm to reputation is done when a defamatory publication is comprehended by the reader, the listener, or the observer,” the court said

in its opinion. Because harm in this

case occurred in Australia, the court

reasoned, an Australian court should have jurisdiction over the case.

The High Court did not discuss the merits of Gutnick’s defamation claim. Dow Jones must now defend itself in an Australian trial court. (Dow Jones v. Gutnick)

No juridiction in Virginia and Texas

Three days after the Australian court ruled in the Gutnick case, American media advocates got better news from home.

The U.S. Court of Appeals in Richmond (4th Cir.) issued a decision holding that a libel plaintiff could not bring suit in Virginia over articles that appeared on the Web sites of two Connecticut newspapers.

The articles at issue, published by The Hartford Courant and the New Haven Advocate, involved Connecticut’s practice of sending its overflow of inmates to Virginia prisons. The papers reported on the conditions in the Virginia prisons, noting that transferred inmates had complained of unnecessary use of force and racist attitudes.

Virginia prison warden Stanley Young, who was mentioned in one of the articles, filed a libel suit in a federal court in Virginia.

The appeals court held that Virginia courts did not have jurisdiction over the Connecticut publishers.

“It appears that these newspapers maintain their websites to serve local readers in Connecticut, to expand the reach of their papers within their local markets, and to provide their local markets with a place for classified ads,” the court said.

Merely placing their stories on the Internet did not open the locally oriented papers to lawsuits in every state and country. The Connecticut papers did not have enough contacts with the state of Virginia to allow a libel suit to be brought there, according to the court. (Young v. New Haven Advocate)

The reasoning employed in Young was reiterated in a decision issued on the last day of 2002 by a federal appeals court in New Orleans.

The U.S. Court of Appeals in New Orleans (5th Cir.) held that a former FBI official could not bring a libel suit in Texas over an article posted on an Internet bulletin board operated by Columbia University.

The article charged members of the Reagan administration with wilfully failing to stop the terrorist attack on Pan Am flight 103, which exploded over Lockerbie, Scotland in 1988. The author, Hart G. W. Lidov of Harvard Medical School, accused Oliver “Buck” Revell, who was assistant deputy director of the FBI at the time of the attack, of being involved in the conspiracy.

Revell brought suit in Texas, where he resided at the time the article was posted, but the court said jurisdiction in Texas was improper.

“If you are going to pick a fight in Texas, it is reasonable to expect that it be settled there,” the court said. But “we look to the geographic focus of the article, not the bite of the defamation, the blackness of the calumny, or who provoked the fight,” to determine where the suit should be brought. (Revell v. Lidov)

Yahoo! case pending

Also in December, a federal appeals court in San Francisco (9th Cir.) heard oral arguments in an Internet jurisdiction case involving the Web company Yahoo!.

Yahoo!, like Dow Jones, was sued for its online content in a foreign country. Two French civil rights groups, La Ligue Contre le Racisme et l’Antisemitisme and L’Union des Etudiants Juifs de France, brought suit in France, claiming Yahoo!’s U.S.-based online auction violated French law because it contained Nazi memorabilia.

A French court sided against Yahoo! and ordered the company to restrict access to the site.

Yahoo! sued the groups in the United States and convinced a federal district court that the French court order was unenforceable in the United States. The court said the French order was inconsistent with U.S. law and the First Amendment.

In the appeal from that ruling, presented to the court on Dec. 2, 2002, Yahoo! continued to press its argument that a French court’s imposition of France’s law interferes with the company’s basic constitutional rights.

Eighteen organizations, including The Reporters Committee for Freedom of the Press, submitted a friend-of-the-court brief to the appeals court, arguing that allowing enforcement of the claim would have drastic consequences.

“The conclusion that the French Order may be enforced in the United States would establish an international regime in which any nation would be able to enforce its legal and cultural ‘local community standards’ on speakers in all other nations. In such a regime, Internet Service Providers and content providers would have no practical choice but to restrict their speech to the lowest common denominator in order to avoid potentially crushing liability,” the media argued in their brief. (Yahoo!, Inc. v. La Ligue Contre le Racisme et l’Antisemitisme)

Implications

The recent flurry of activity on the issue of Internet jurisdiction provides the media with few definite answers about the safety of publishing news online.

Libel and defamation laws differ widely throughout the world, and most countries have far fewer press protections than the United States. The majority of the world’s nations do not have an equivalent to the First Amendment, and even where free speech is recognized, rules governing libel suits vary widely.

Before the Internet connected U.S. journalists with the world, publishers could generally assume that if they complied with U.S. laws, their libel liability would be low. Now that online publications are accessible everywhere, it is significantly harder to predict where suits will be brought, and under what legal standards.

Media advocates had hoped that the Gutnick case would relieve their fear of having to know and comply with the libel laws of every country in the world. But the Australian court refused to limit jurisdiction to the locale where a story is written.

“The spectre . . . of a publisher forced to consider every article it publishes on the World Wide Web against the defamation laws of every country from Afghanistan to Zimbabwe is seen to be unreal when it is recalled that in all except the most unusual of cases, identifying the person about whom material is to be published will readily identify the defamation law to which that person resorts,” the Court wrote.

The Court’s decision requires that a publisher, before posting a piece on the Web, predict where in the world libel claims might crop up and tailor the piece to the libel laws of that particular country.

This rule is hardly satisfying to free speech proponents.

“Under the court’s perverse logic, every person or organization that posts something on the Internet will need to understand and comply with the libel laws of 190 nations and who knows how many sub-national jurisdictions,” wrote San Jose Mercury News columnist Dan Gillmor in a Dec.11, 2002 column. “That’s absurd, of course.”

Media advocates point to Zimbabwe, which the Australian Court mentioned, as one of the most frightening jurisdictions for online journalists. In 2002, prosecutors in Zimbabwe brought criminal charges against an American journalist for “publishing a falsehood.” The reporter had written a story for the British newspaper, The Guardian, which was accessible in Zimbabwe only over the Internet. The story linked the political party of Zimbabwe President Robert Mugabe with suspected murderers.

The reporter eventually was acquitted, but the case is cited as proof that allowing foreign countries to have jurisdiction on the basis of online content can have very serious consequences.

Indeed, the fundamental concern for U.S. media is having to comply with laws in countries such as Zimbabwe, Iran or Libya, that punish unpopular writings.

It’s dangerous, Gillmor wrote, “because it encourages powerful and paranoid people to use local laws, some of which will be designed . . . to stamp out unwelcome news or opinions. If we all have to temper our speech to fit the restrictions of the worst abusers of liberty, no one will say anything worth hearing.”

Critics say this effect — that publishers attempting to comply with all countries’ laws will be reduced to the lowest common denominator, or no speech at all — is the nemesis of free speech.

Kevin Goldberg, a media attorney for the American Society of Newspaper Editors, said the Gutnick decision is not quite as bad as some have made it out to be.

As the Court’s opinion points out, he said, for most news stories a publisher can determine where a libel claim might potentially be brought. Thus, instead of looking to every libel law in the world, a publisher need only comply with the law of the country targeted in any particular piece.

Nevertheless, Goldberg said, the practical obstacles that the decision imposes for online publishers are significant. Hiring attorneys to advise on foreign libel laws is bound to be costly. And adding the foreign law element to the review of stories could delay publication.

“You’d never want to tell somebody: ‘Don’t write on something of international importance,'” Goldberg said, “but you might want to be aware of the international implications of doing so.”

The Australia decision requires publishers to “keep a better awareness of their options,” he said.

One option for news organizations might be to limit the geographical reach of their Web sites. Canadian law professor Michael Geist recommends that publishers “consider implementing geo-identification technologies to target their content to jurisdictions where they feel comfortable with the legal systems.”

Such newly emerging technologies, although not yet entirely reliable, can block access to a particular Web sites from certain geographic locations, according to Geist.

While technologies restricting Web access may seem to go against U.S. ideals supporting free-flow of information, Geist said that’s not necessarily such a bad thing.

“Societies make choices about the speech they wish to permit — the U.S. sets some limits, other countries set more,” Geist said. “I’m not convinced that the Internet should remove societal choices, particularly those of free and democratic societies.”

Geist and other experts say Australia’s High Court decision in Gutnick is likely to be followed by other courts, particularly in other British Commonwealth countries such as the United Kingdom and Canada.

Enforceability

One comforting factor is that even if plaintiffs win libel cases in other countries, their judgments may not be enforceable in the United States, meaning the media company sued may never have to pay. That is the upshot of the Yahoo! case, which experts expect will be upheld on appeal.

“U.S. courts are protective of the First Amendment,” said Goldberg, and when free-speech values are threatened, American judges have been known to resist enforcing foreign court orders.

Of course, relying on the unenforceability of a foreign libel judgment is risky, as well as expensive. A media company usually must defend a full lawsuit in a foreign court before it can ask a U.S. judge to refuse to enforce any judgment against it. That can take years and cost a significant amount in overseas attorneys fees.

Just ask Dow Jones. In a statement released after the Australia High Court issued its decision, the media company expressed “disappointment” at the court’s decision not to dismiss the case on jurisdictional grounds.

“The result means that Dow Jones will defend those proceedings in a jurisdiction which is far removed from the country in which the article was prepared and where the vast bulk of Barron’s readership resides,” the company said.

Moreover, a large media company with operations overseas may not have the option of opposing a foreign libel award, because the judgment may be enforced against its foreign bureaus.

“Keep your assets out of foreign countries,” Goldberg advised, and foreign plaintiffs are less likely to get at them.

But such a move is unacceptable for many in the business of international reporting. An editorial in The Washington Post lamented the implications of the Gutnick decision: “To avoid liability, newspapers and others with assets or personnel abroad would either have to block access to their content in many countries or would have to censor themselves. Both options are repugnant to anyone whose business is disseminating information and ideas.”

“To an American, the answer is simple,” the Post editorial said. “Speech is different from crime or other punishable behavior. The rule ought to be that libel suits for Web-based material proceed under the laws of the country in which the offending statements were written and where they were placed on the Internet.”

International solutions

Some international law experts suggest that the Internet jurisdiction question ultimately may require an international solution, in the form of a global code or treaty.

World leaders tried to negotiate such a treaty through The Hague Convention on Jurisdiction and the Recognition and Enforcement of Foreign Civil Judgments, but in 2001 they concluded they could not reach a consensus on the issue of libel and other tort actions, and decided to focus their efforts elsewhere, mainly on jurisdiction over contract matters.

Meanwhile, media advocates are debating whether an international resolution could ever be feasible, or even beneficial.

David Schulz, the media attorney who represented an amicus group before the Australia court, said the time for international legislation has come. He was encouraged by language in the Gutnick ruling suggesting that the “novel, complex and global” issue of Internet jurisdiction may require international discussion in “a forum as global as the Internet itself.”

But a global treaty may require compromises that U.S. media will not want to accept. Most of the world’s libel laws are harsher on the media than those of the United States. Thus, negotiating with other countries might mean giving up protections.

Goldberg thinks international negotiation on Internet libel issues would only exacerbate the problem.

While the Australia decision certainly will chill the dissemination of speech, Goldberg said, it probably is better than any compromise the global community might reach.