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WASHINGTON — On August 10 President Barack Obama signed the Speech Act, which shields American journalists, publishers (both print and online) and bloggers from “libel tourism,” a term applied when foreign companies attempt to stifle American writers by suing in countries where they can thwart tough American free speech laws.
The new law stops defamation lawsuits from the United Kingdom, Australia, New Zealand and other countries that target Americans. American bloggers and online writers are already protected by Section 230 of the Communications Decency Act of the United States, which shields host services and interactive sites like Facebook and Blue MauMau from liability for what guests and members post. The law requires U.S. courts not to recognize or enforce foreign libel tort judgments.
Paul Alan Levy, an attorney at Public Citizen, a Washington-based advocacy group founded by Ralph Nader, successfully persuaded a Congressional staffer that the law’s protections of publishers from foreign defamation judgments should also extend to Internet host services, interactive message boards and blogs. U.S. House Representative Steve Cohen (D-Tenn) took up the cause. The amended Speech Act made its way through Congress, and was signed into law by the President.
Levy explains in his blog that such an extension of the law to protect interactive sites was needed because “plaintiffs are tempted to try to suppress speech by suing a third-party interactive computer service, rather than the actual author of the offending statement. In such circumstances, the service provider would likely take down the allegedly offending material rather than face a lawsuit. Providing immunity removes this unhealthy incentive."
A Real Case: Australian franchisors try to intimidate American bloggers and Internet hosting service
For Kentucky-based Blue MauMau, such legislation is far from an academic exercise. Australian and New Zealand-based franchisors have been unaccustomed to the grumblings about their systems posted in Blue MauMau’s public forum section and have threatened suits.
In November of last year, New Zealand-based franchisor David Reid Homes didn’t like reading unflattering remarks by Blue MauMau’s public forum posters. The discussion thread ranked fourth on a Google search of their firm. One forum poster called the franchise a “FranWhack," a term that a Houston litigator invented to describe franchisors that have enough of a flaw that they can be whacked off the short-list of best franchise brands to buy. Another remark said that if the frandchisor was considering selling franchises in the United States, “[DRH] could be another transcontinental disease...” The unhappy franchising firm from Down Under consulted their attorneys at Tucker & Cowen Solicitors, first writing to Australia-based blogger Ray Borradale, who started the forum based on a recap of an article in Australia’s Sunshine Coast Daily, “David Reid Homes latest company to crumble.” The solicitors demanded “ ... your immediate apology, retraction and … cease such further conduct.” The letter continued, “our clients reserve the rights to seek damages in respect of the damage to their reputation, including exemplary damages in view of the plain malice involved in your illegal conduct.”
Solicitor Alexander Moriarty then wrote to the Internet service provider of Blue MauMau and to the hosting service, Blue MauMau: “We demand, on behalf of our clients, that you immediately remove the website hosted and published at http://www.bluemaumau.org/david_reid_homes.” It added, “Our clients reserve their right to sue Blue MauMau Inc.”
Management from the service provider called Blue MauMau, saying they understood their rights, but that they had thousands of clients and didn’t want a fight. They requested that Blue MauMau remove the post or find another provider. Moving to another provider would have taken several hours of work to transfer content. In the end, Blue MauMau did not take down its guests’ postings. And it persuaded the firm not to be intimidated.
New York-based attorney Paul Steinberg observes, “This troubles me. It is like going to the paper manufacturer and saying that I don’t like what the New York Times prints on your paper, so I’m going after you unless you stop supplying the New York Times. Don’t supply these people with paper. Don’t supply these people with a server. They are trying to intimidate anyone who does business with you to make sure that you cannot host a web site. That’s the whole problem.” Steinberg thinks attorneys have considerable power and responsibility as officers of the court. “The franchisor may not know what a legal course of action is, but the lawyer does,” he says. Attorneys understand that a typical blogger does not want to spend $30,000 to confront a law firm.
An Australian executive, Neil Welsh, franchisor of Jim’s Test and Tag, employed attorney Christian Munt of law firm Donaldson Walsh to threaten Blue MauMau about allowing posts in its public forums that it considered “defamatory comments concerning our client.” One example of a comment that the firm considered defamatory came from a guest posting as Long Time Jims Franchisor. Long Time wrote that in a meeting he thought that Welsh contributed little and was “looking like an Easter Island Statue.” The law firm warned that failure to remove the offending posts would result in their client considering legal proceedings against Blue MauMau for defamation.
To American eyes, this level of criticism is mild. Remember when BP’s oil spill stopped the livelihoods of business people on the Gulf Coast? Strong words were written online about the head of BP, Tony Hayward, and the company after the oil spill. Even on conservative journal Business Insider, comments under its news articles included calling the CEO a name that starts with an f and ends with an r. Blue MauMau has filters that immediately remove the worst of potty-mouth language, but the phrase “Easter Island statue” is not one of them.
Not all Australian firms are against allowing a free exchange of thoughts. Franchisor Jim Penman, founder of Jim’s Group, Australia’s second largest franchisor, writes, “Why be concerned about the opinion of a few idiots who don't even dare to give their names?” He continues, “why not respond with posts of your own? If you're reasonable and factual, most readers will form the right conclusions.”
Steinberg thinks cyber-intimidation, when attorneys know that there isn’t a thing they can legally do, should be put to a stop. “The courts should go after the lawyers who pursue cases without foundation and who seek to disrupt business relationships,” says the attorney. “The courts should make the lawyers pay.”
In a recent court ruling against a business opportunity licensor suing a blogger, the court did just that, awarding financial compensation to the blogger for legal fees in recognition of the free speech violation.
The right to protect a brand versus the right to speak out against a brand; libel tourism and American free speech
In a controversial 2002 ruling, Dow Jones versus Gutnick, Australia's High Court ruled that an item posted on the Internet would be deemed to be published where files and pages are downloadable. The consequence was that if an American posted on a site that a firm’s leader in Australia was a pudding head, under Australian defamation law the American could be sued, lose in an Australian court, and then be forced to pay in the United States.
America’s new Speech Act that President Obama signed into law on August 10 prohibits such libel tourism.
Terry Gygar, barrister in the Supreme Court of Queensland and associate law professor at Bond University, thinks the U.S. doth protest too much in its high-minded verbosity about free speech. Gygar cites how Australians who publish online betting operations, based in the Northern Territory where it is legal, are banned in certain U.S. states. He writes, “These guys will be arrested not only if they go to the U.S., but also run the same risk if they visit some U.S. client states, which have mutual enforcement and deportation agreements with the U.S.”
“The self-righteous bellowing of the Americans about 'freedom of speech' really doesn't wash with the rest of the world,” he says. The Australian thinks that America’s emphasis on free speech makes its defamation laws “appallingly inadequate” for the protection of intellectual property rights.
But to Americans, free speech is a hallowed right that trumps consideration of trademark damages. Law professor Liz Spencer of Bond University observes, “Speaking as a naturalized Australian, raised and attended law school in the States, there is no country in the world that protects freedom of speech as effectively as the U.S.” She describes how Australia does not have a First Amendment, and that only a few short years ago, even saying something that was the truth was not a defense against a firm seeking damages for defamation. Someone could call a managing director a crook, and even if the truth were that he had served time in prison, the defendant could still lose.
Gygar thinks this law is a form of American cultural imperialism. The new law might “prompt other nations to retaliate with legislation to protect their nationals from this form of attempted extra-territorial aggression,” he thinks. He concludes, “Sometimes U.S. arrogance and hubris makes them their own worst enemy.”
Washington-based Levy stresses that Australia may have whatever libel laws they want. Australia, New Zealand, Britain and other countries can enforce whatever standards they like against their own citizens, their own companies and even against Americans who have assets in those countries. It is just that these foreign judgments will not be enforced against Americans who keep their assets here. “What we oppose is cultural imperialism by the Australians, telling Americans what our law has to be,” Levy says.
U.S. intellectual property attorney and prolific blogger Ron Coleman of law firm Goetz Fitzpatrick LLP observes, “American decisions and legislation requiring the application of U.S. constitutional standards to the enforcement of foreign defamation judgments are not only good policy, they are almost certainly the only constitutional option.” The New York lawyer adds, “The issue is not only the First Amendment. The Constitution's Due Process Clause prohibits enforcement of any judgment that is obtained by means, particularly with respect to the assertion of personal jurisdiction over the defendant, that falls short of due process itself. This applies even vis-a-vis judgments obtained in one state against residents of another state. A fortiori a judgment obtained in a foreign country should be subject to at least the same level of scrutiny.”
Lee Plave of Virginia-based law firm Plave Koch PLC says, “It’s hard to say what a publication means nowadays. The New York Times circulates in New York and Australia. Blue MauMau is visible everywhere there is an Internet connection.”
Plave observes, “If you are accustomed to saying, ‘I’m a journalist in the United States and I’m entitled to the protection of the First Amendment, only to find that your publication is read outside the United States subject to other standards, it is a very unsettling prospect.”
The implications of this new law are that not only are Americans protected, but if Australians also post anonymously on American public boards, Australian courts will not be in a position to tell American online discussion boards with no assets in Australia to take down posts or reveal poster identities.
Internationally, the American floodwaters of free speech may be out of the gate. “If Australians feel that things posted on American blogs offend their cultural values, then I suppose the government there could block access to American sites,” Levy says. For example, the People's Republic of China has an elaborate system for filtering out content that it thinks isn't in its best interests.
With a wink in his voice, Levy concludes, “That may be political suicide though.”
British libel laws: cutting off crucial information [First Amendment Center]
Surge in Britons Exported for Trial [Daily Telegraph]