Dangers of a Down-Under Download   

Australia's High Court says an Internet story is “published” where it is read.

When Barron's decided to publish an article called "Unholy Gains," raising "uncomfortable questions" concerning business dealings between stock promoters and religious charities, the magazine's lawyers probably reviewed the story before it appeared. And it is likely that the lawyers for Dow Jones & Co., which publishes Barron's, would have considered whether any of the people mentioned in the article could sue for libel.

One of those people was "Diamond Joe" Gutnick, an Australian national who claims that the article described him as having business associations with various shady characters, including a convicted tax evader. Gutnick has business interests and homes around the world, including in Melbourne, Australia.

That's where he filed his suit, presumably to take advantage of Australian libel laws, which hold defendants to a "strict liability" standard, unlike the United States' laws, which require proof of fault on the part of the publisher.

Theoretically, a publisher can be sued anywhere its newspapers or magazines are sold, not just where they're printed. But in the United States, the fact that a few copies of a publication find their way into another state doesn't necessarily establish the so-called "minimum contacts" that due process requires before a publisher can be hauled into a court in another jurisdiction. So it's unlikely that the Dow Jones lawyers would have worried a lot about the libel laws in Australia, where Barron's has a small distribution.

But they should have. Last December, the Australian High Court decided that Gutnick could sue Dow Jones in Melbourne because the Barron's article was available on the Internet.

Dow Jones argued that it publishes Barron's primarily for the benefit of readers in the United States. It has no offices or assets in Australia and makes virtually no money from Australian sales. If it could be sued anywhere, the company claimed, it would be in New Jersey, where Dow Jones maintains editorial offices and where the offending article was uploaded to the Internet--and where, incidentally, the First Amendment applies.

That's an argument adopted recently by federal appeals courts for the Fourth and Fifth Circuits, and by the highest state court in Minnesota. They say that even though a story could be downloaded anywhere in the world, the publisher can be sued only in places it expressly intended to target. The act of placing information on the Internet, in itself, isn't enough to confer jurisdiction.

But that didn't wash with the Australian High Court. The justices found that the key question was not where the article was published, or for whom, but where the damage to reputation occurred. According to the majority opinion by Chief Justice Anthony Gleeson, that's where the story was downloaded--which a few people in Melbourne apparently did. "[T]hose who post information on the World Wide Web do so knowing that [it] is available to all and sundry without any geographic restriction," Gleeson admonished. The message: An Australian who claims his reputation was harmed by a story downloaded in his hometown should be allowed to bring a lawsuit there to vindicate himself, even if that's not convenient for an American defendant.

In a separate opinion, Justice Michael Kirby tried to minimize the significance of the ruling by pointing out that it is costly and impractical for most litigants to bring a lawsuit against a foreign publisher. Even if a plaintiff managed to get a damage award, a publisher with no assets in that jurisdiction could simply ignore it, waiting to see whether a court in its own country would enforce it. This would be unlikely, Kirby observed, if the judgment "would be regarded as unconstitutional or otherwise offensive to a different legal culture," as several United States courts, including in Maryland and New York, have found.

In the meantime, those who publish on the Internet will be vulnerable to the expense and inconvenience of being sued anywhere from Afghanistan to Zimbabwe. In countries that criminalize libel, the threat of penal sanctions could undermine the ability of foreign correspondents to do their jobs.

To ensure that this new threat of liability in a variety of jurisdictions doesn't have a chilling effect on free speech, Kirby suggested that all nations "adopt new principles," such as a treaty, to define a single international defamation law.

That might raise a barrier to a successful libel suit in some countries. But I wouldn't count on that international treaty looking much like the First Amendment. In the end, American journalists would still be the losers.