US Web site faces defamation suit in Australia

The High Court of Australia ruled Tuesday that a story published by Dow Jones & Co. Inc. on a U.S.-hosted Web site can be grounds for a defamation lawsuit against the story to be heard in Australia, as the story was downloaded and viewed in Australia.

The ruling from Australia's highest court, that content created in one country can be subject to the laws of another country where it is viewed, has been regarded by local media as an important test case which opens up a host of legal issues over Internet content publication.

The defamation lawsuit was brought by Australian mining magnate Joseph Gutnick over the Internet version of an article entitled "Unholy Gains" in Dow Jones' Barron's magazine.

Gutnick filed the suit in the Supreme Court of his home state of Victoria in Australia, saying that the article's appearance on the Internet enabled it to be accessed by people in Victoria, thereby defaming him where he is best known.

Two Victorian courts rejected Dow Jones' application that the lawsuit should be heard in the U.S., and the High Court has now rejected the publisher's appeal against those earlier decisions.

The principal issue debated in the appeal was where the material of which Gutnick complained was published -- whether in the U.S. state of New Jersey, where Dow Jones' Web servers are located, or in Victoria, where some readers saw the story and alerted Gutnick to its contents -- the High Court said in its ruling.

"The torts of libel and slander are committed when and where comprehension of the defamatory matter occurs," the High Court said in its ruling, citing several precedents. "The rules have been universally applied to publications by spoken word, in writing, on television, by radio transmission, over the telephone or over the Internet."

"The appellant's (Dow Jones) submission that publication occurs, or should henceforth be held to occur relevantly at one place, the place where the matter is provided, or first published, cannot withstand any reasonable test of certainty and fairness.. ...what the appellant seeks to do, is to impose upon Australian residents for the purposes of this and many other cases, an American legal hegemony in relation to Internet publications."

The High Court dismissed Dow Jones' appeal with costs.

In a statement, Dow Jones expressed disappointment with the ruling, but vowed to continue fighting the case in the Australian courts.

"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.

Dow Jones also expressed optimism about statements from the high court that the case presented "novel, complex and global" issues requiring "national legislative attention."

A legal expert in the United States interviewed about the ruling said that the Australian court's decision did not come as a surprise.

"This is yet another step in the traditional battle over Internet jurisdiction," said Jonathan Zittrain, a director at The Berkman Center for Internet & Society at Harvard Law School.

Given the relatively long history of such legal disputes, Dow Jones should have been on notice that they could have to answer to foreign courts over content posted on U.S.-based Web servers, Zittrain said.

The company is especially vulnerable to the oversight from Australian courts because it has sold subscriptions to its publications to individuals in Australia, Zittrain said.

"We don't cry a river when RJ Reynolds has to obey different countries' laws about selling tobacco. Why should we cry for Dow Jones? If (Dow Jones) didn't want Australian subscribers, they may have been able to make a case that they didn't have to answer to Australian courts because they didn't intend to profit from Australians," Zittrain said.

With lawyers who are practiced in defending against libel claims, Dow Jones may still prevail in court in Australia. Even if they don't, Zittrain said that U.S. courts may take a hard look at the Australian court's ruling before allowing the plaintiff to make claims for restitution based on Dow Jones' property in the U.S.

"This ruling doesn't mean Dow Jones will lose the case. And even if they lose it, it doesn't mean they will lose any assets as a result," Zittrain said.

Regardless of how the case against Dow Jones is resolved, however, it masks technological developments in online distribution that will change the terms of future legal battles over Internet content publication, according to Zittrain.

The advent of new tools such as geo-location technologies that allow publishers to precisely limit the reach of their published speech will allow content publishers to avoid taking chances that might result in lawsuits such as that faced by Dow Jones, Zittrain said.

While solving the thorny jurisdictional problems, however, such technology may result in a division of the global Internet into separate content regions, with readers in China, Australia, and the U.S. all getting a slightly different take on the same information from the same publisher, according to Zittrain.

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