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Internet Defamation Case

BY Admin  December 10, 2002 at 12:00 PM EDT

The ruling from the High Court — Australia’s top judicial body — dismissed Dow Jones’s appeal to relocate to the United States a lawsuit filed by an Australian businessman over an allegedly libelous article published in the print and Internet versions of its weekly magazine Barron’s.

The ruling means that Joseph Gutnick, a Melbourne-based mining magnate, can sue Dow Jones for defamation in the Australian state of Victoria, where libel laws are much more strict than those in the U.S.

The lawsuit is the first seeking to establish international jurisdiction relating to an Internet site, which could have widespread implications for online publishers and news providers.

The High Court called “unreal” Dow Jones’ contention that every publisher would be “forced to consider every article it publishes on the World Wide Web against the defamation laws of every country from Afghanistan to Zimbabwe.”

Geoffrey Robertson, the lead lawyer representing Dow Jones, expressed concern that exposing Web publishers to defamation actions in jurisdictions where the material was downloaded was unfair and could limit the “information being made available online.”

Robertson argued that libel proceedings could take place in the 190 or so countries — some with what he called “utterly barbaric” laws — where the Internet is accessible.

Dow Jones’ lawyers had sought to relocate the Gutnick case to the U.S., saying the plaintiff could seek damages if he made the defamation claim where the allegedly libelous publication was made. In this case, Dow Jones argued the Barron’s article was published only in New Jersey because it was uploaded to the company’s Web servers located in the state.

“We’re not arguing that cyberspace is a … defamation-free zone,” Robertson said. “We’re arguing that … there is liability for defamation on the Web, but that liability should be tested where the Web is established, that is by New Jersey, rather than Australian law.”

Dow Jones, publisher of The Wall Street Journal, Barron’s, the Dow Jones Newswires, and other publications has said Barron’s had only 14 subscribers in Australia, including five in Victoria. Nearly 1,700 people in Australia subscribe to wsj.com and have access to the Internet version of Barron’s.

More than 18 international media companies — including CNN, Yahoo, The New York Times, Britain’s Guardian, Reuters, Fox News and Amazon — joined Dow Jones’ appeal, fearing that a decision in Gutnick’s favor could set a precedent for future cyberspace libel suits.

In its written judgment, the High Court determined that publication of the Barron’s story occurred in the Australian state of Victoria when a reader downloaded the article from the Internet.

The High Court also found that a claim of defamation could be made only if the person had a reputation in the location where the allegedly libelous material was published, and where a favorable judgment could redeem the plaintiff’s reputation.

The seven justices gave no judgment on the libel case itself; Gutnick’s suit against Dow Jones will now continue in the Supreme Court of Victoria, the businessman’s home state.

Gutnick initially filed the lawsuit against Dow Jones in Oct. 2000. He claimed that a 7,000-word article falsely linked him to a jailed money launderer and damaged his reputation.

Gutnick’s lawyer, Jeffrey Sher, said the article’s allegations were untrue and the facts were incorrect.

Gutnick, who pushed to have the case heard in his home town of Melbourne, where he said people read and were influenced by the Barron’s article, said he was pleased with the High Court’s decision.

“They’ll have to be very careful what they put on the net,” Gutnick said Tuesday. “The net is no different from a regular newspaper. You have to be careful what you write.”

In a statement, Dow Jones expressed disappointment with the decision.

“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,” it said.