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Dow Jones v Gutnick: the Internet honeymoon is over. What's next?

By Graham Young - posted Friday, 17 January 2003


For a day or so it seemed that Australia had become the centre of the Internet. Experts, publishers and commentators fulminated against the decision of the Australian High Court in Dow Jones v Gutnick as "disastrous" (Oz), "luddite" (Oz) "tangl[ing] the web" (Oz). According to others, the court was "on a very slippery slope to totalitarianism", "gagging the internet" (Washington Post), "could render the Internet unusable as a vehicle for mass communication" (Lawyer for Dow as quoted in Washington Post); and its judgement was "bound to please tyrants" (Asia Times).

Yet when two of Australia's Internet-only publishers - Stephen Mayne and I - were interviewed by the ABC's Media Report, we were both relaxed about the judgement. Why the disparity? Are we just a couple of dopey minnows in the big pond of the Internet who just don't get it? What are the real ramifications of the decision?

The facts of the case were that Dow Jones' US business magazine Barron's had published a story including critical comments about Melbourne businessman, Joseph Gutnick. One hundred and forty people living in Australia downloaded and read the article. Gutnick launched a defamation action in Victoria. Dow Jones opposed the action claiming it should be heard in New Jersey, where Dow's server is located. This was rejected first by the Victorian Supreme Court, then the Victorian Court of Appeal, and now the High Court - a total of 10 judges.

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What the High Court found was that defamation happens when a defamatory imputation is comprehended by someone other than the publisher. On the 'net, comprehension occurs when and where a page is downloaded, and this is the appropriate place to sue. As an Internet site can be accessed from anywhere, an Internet site may simultaneously defame a person in every country.

The alarmists would have you believe that this means that an Internet publication would have to take into account the laws in all the countries of the world, and adopt the lowest common denominator (i.e. strictest) laws as their standard. In practice it doesn't mean this at all.

The right to damages arises from the detriment done to a person's reputation. While a person without much of a reputation can be defamed, little damage can be done, so there is no point in them suing. Most of our reputations are local, not global; most readers like to read about people with reputations; and most publications, even those with Internet sites, write only about people their readers want to know about. Therefore in most defamation cases there will be a strong correlation between place of production, audience and jurisdiction.

This was an obvious judgement and On Line Opinion has always published on the understanding that this was the law. We do not worry about the defamation laws of every country on earth, because we know that in practical terms, given our subject matter, the only laws we need to worry about are those in the six states and the territories of Australia.

Suits like Gutnick's are exceptions, but that is no reason to change the law as they will also be rare.

It's likely Dow Jones also expected the result. Think of this: why would they have chosen international human rights lawyer and showman Geoffrey Robertson to represent them? Because of his deep understanding of the Australian law and his experience in influencing the bench of our High Court? Or because in the aftermath of an adverse decision he would be one of the best people to put the case for them to a US and international audience? Robertson was a counter-offense, not a defence.

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So, if the law is so obvious, why all the criticism? There are at least three camps of critics: the 'net tragics, the free speech romantics, and the commercial muscle - and they all have their reasons.

Commercial muscle

Dow Jones falls into the last category. Loudly prosecuting its case in the court of public opinion brings benefits. Dow may have failed in court, but defending his position cost Gutnick dearly and generated far more publicity than the original claim. Dow's behaviour conveys a warning that says: "Only try this at home if you are a mining magnate or have similar access to gold or other means of commercial exchange. Success may equal financial ruin."

Dow, and other US publishers, want to discourage overseas suits, whatever their merits. Most common-law countries have a stricter view of defamation than the US, generally involving a public interest test. American free speech is protected by the First Amendment. As a result there were only 110 defamation cases in the whole of the US last year, while there were 77 heard in NSW alone in the same period.

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About the Author

Graham Young is chief editor and the publisher of On Line Opinion. He is executive director of the Australian Institute for Progress, an Australian think tank based in Brisbane, and the publisher of On Line Opinion.

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