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Roger Clarke's 'The Gutnick Case'

Defamation on the Web: Gutnick v. Dow Jones

Roger Clarke

Principal, Xamax Consultancy Pty Ltd, Canberra

Visiting Fellow, Department of Computer Science, Australian National University

Version of 29 June 2002

© Xamax Consultancy Pty Ltd, 2002

This document is at http://www.rogerclarke.com/II/Gutnick.html


Abstract

Joseph Gutnick sued Dow Jones in relation to statements made by Dow Jones in the web version of its publication Barron's Digest. Gutnick chose to sue in Victoria, the jurisdiction in which he has his principal place of residence.

Dow Jones challenged the appropriateness of the case being heard in Victoria. In the Victorian Supreme Court, Justice Hedigan found in favour of Gutnick, i.e. he decided that the case could be heard in Victoria. Dow Jones sought leave to appeal to the Full Bench of the Victorian Supreme Court, but was refused. It sought leave to appeal to the High Court of Australia. The High Court granted leave.

These notes summarise the hearings in the High Court of Australia on 28 May 2002, as perceived by myself alone, prior to receiving the transcript, and prior to the judgement being handed down. The case has potentially very serious implications for freedom of expression, and for the freedom of access to information.


Contents


Introduction

Dow Jones publishes The Wall Street Journal and Barron's Digest in North America, and considers that it publishes its web-version there too. It also publishes in some other locations, in particular the European and Asian WSJ. The web-site, at wsj.com, is the primary example of commercially successful, subscription-based e-publishing.

Dow Jones published an article about Joseph Gutnick in Barron's Digest, in both the print and web-site versions.

Gutnick sued in Victoria, alleging that some specific comments made in the article were defamatory. He claimed that the article implied that he had been the biggest customer of a Victorian person subsequently gaoled for 7 years for money-laundering and tax-evasion. These notes are not in the least bit interested in the accusation, nor in whether or not it was defamatory. My concern is solely with the question as to the basis on which it is decided in which jurisdiction(s) a defamation action can be brought.

In preliminary proceedings in the Victorian Supreme Court in Melbourne on 4-7 June 2001, Dow Jones argued that the case should not be heard there. On 28 August 2001, Justice Hedigan found that the Victorian Supreme Court had jurisdiction to hear the case.

Dow Jones sought leave to appeal that decision to the Full Bench, but was declined.

Dow Jones then sought leave to appeal to the High Court of Australia. Preliminary hearings were held on 18 October 2001 and 14 November 2001, both in Melbourne and before Justice Hayne alone. He was far from sympathetic to Dow Jones' claims. A final hearing was held before Chief Justice Gleeson and Justice Hayne, in Sydney on 14 December 2001. Leave to appeal was granted, although limited to several quite specific grounds.

The case was heard between 10:15 and 16:15 on 28 May 2002, in the High Court in Canberra. The Full Bench of 7 judges sat. The proceedings were generally of an intellectually high level, although some blind spots emerged. The case offered enormous scope for diversions that appeared to be of modest relevance, and for discussion of fine points of law and legal process.

The justices intervened frequently, and on occasions with some enthusiasm. Scepticism about the barristers' arguments was apparent on multiple occasions, especially with regard to the Dow Jones team's arguments. The apparent technical understanding of the judges was highly variable, at worst lamentably poor. This is addressed in the final section of these notes.

I made these notes after attending the hearing, prior to receipt of the transcript, and prior to the delivery of the judgement. The reader may want to bear in mind the following interests that the author has in the matter:


The Key Issue

The article was authored in New York, placed on a web-server in New Jersey, and later downloaded by a person in Victoria. The courts were asked to determine whether the article was published in Victoria for the purpose of defamation law.

Readers who are unfamiliar with British-originated, common law systems might be surprised at the high degree of uncertainty that exists in many areas of law. The common law does not deal in sets of rules that provide clear guidance to corporations and members of the public.

In common law systems, each case involves a set of facts. The court's role is to apply to those facts any relevant legislation, together with the existing case law (i.e. prior judgements), where the facts appear to the court to be meaningfully similar. Each judgement may or may not provide clear expression of the principles that the judge or judges used in making their determination. Judges generally (and certainly in superior courts) have at least a working knowledge of the relevant cases, and conduct their own research. In addition, barristers bring to the attention of the court cases that they believe are to the advantage of their client, and in which either the facts are at least broadly similar to the case in question, or a principle applied in the case is arguably relevant.

Because of this approach, no-one knows what the law actually is. Lawsuits are therefore able to be brought with the intention of chilling the other party's behaviour; and litigation lawyers have a reliable source of income. (Counter-arguments in favour of common law over codified systems include that the uncertainty only really exists at the boundaries, and that codified law is inflexible and somewhat ambiguous anyway, especially at the boundaries).

In his judgement in the Victorian Supreme Court, Justice Hedigan uses or refers to many somewhat different terms in considering the location of 'publication for the purposes of defamation'. These include:

In addition to there being a considerable array of possible criteria, the notion of intention by the publisher, although arguably implicit, is nowhere directly discussed.

As an inveterate structuriser of available information, I've attempted the following consolidation of the existing, in part implicit principles that appear to underlie the case:

A publication is subject to a jurisdiction (or 'law area') for the purposes of defamation law, if:

For obvious reasons, however, that formulation is no more than a guide.


The Dow Jones Argument

The Dow Jones team was led by Geoffrey Robertson QC, of London. He argued that, for the purposes of defamation law, web-publication occurs either at the point in time and space where the upload to the web-server is initiated, or the point where the upload instruction is performed by the web-server, or the point where the web-server generates a copy of the page in response to a request from a web-browser.

Although this argument appears entirely reasonable in terms of the technologies involved, it encounters difficulties in the context of defamation case law. This is because the concept of 'publication for the purposes of defamation law' is highly specialised. In particular, the common law appears to use as the key criterion the point in time and space that the information is comprehended. Because this creates a number of anomalies, however, it appears to be subject to some qualifications and exceptions. These address instances of what might be called 'innocent dissemination' into a particular jurisdiction of material that is arguably defamatory in that jursidiction.

Robertson sought to convince the court, in effect, that some form of active intention to publish in a jurisdiction is needed in order to justify an action in defamation. An HTTP Get causes an automated response by a web-server. This does not constitute intention. Hence a web-page should not be treated as being published in any and every jurisdiction, which is the logical outcome in the event that the case is able to be heard in Victoria.

Robertson's reference to the critical act of the defendant drew fire from Justice Gaudron, who said that he was running away from the well-established elements of the tort.


The Argument by the Intervenors

A group of very large international publishers, a major Australian publisher, several publishing industry associations, and the Australian Internet Industry Association, together sought leave to 'intervene' in the case. This was because it raised very important issues affecting those organisations, which they feared would not be considered by the court unless they were permitted to submit their argument. The application was opposed by Gutnick. It was granted by the court, but only by majority. The intervenors' team was led by Mr B.W. Walker SC.

The intervenors argued:

This reflects the principle that the jurisdiction is determined by the location of the conduct that gives rise to the harm, and not by the place where the harm arises.

[Lawyers frequently fail to appreciate the importance and subtlety of the words 'and' and 'or'. The intervenors' team failed to notice that they had proposed an awkward double-condition: the editorial decisions, and the 'final technical work' might not be conducted in the same jurisdiction].


The Gutnick Response

The Gutnick team was led by Jeffrey Sher QC, of Melbourne. The crux of the Gutnick position is that the basis for determining whether a case in defamation can be heard has been whether the material was comprehended by someone who was in that jurisdiction at the time they comprehended it.

The primary claim was that Dow Jones intended that its subscribers in the various States of Australia should have access to the article. He claimed that Dow Jones controlled access to the Internet article, and that extracts from the web-logs showed that Dow Jones knew who its subscribers were. This was presumably in the hope that the court would infer that the server, in responding to requests, was able to discriminate based on web-browser location. [That was expressly addressed in uncontested expert evidence, which showed that any attempt to discriminate was prone to significant error]. If that argument failed, however, then Sher claimed that the 'reasonably foreseeable' and/or 'natural and probable consequence' criteria could be relied upon.

Sher refused to recognise that the Internet is any different from any previous technology. [This was despite uncontested expert evidence from myself and another, which explained at some length what the differences were]. Justice Kirby challenged him by saying that meant that everyone who ever uploads is liable for every download ever, and must be prepared to defend themselves anywhere and everywhere. Sher responded by saying that Gutnick limited its argument to: when you upload, you intend download.

Following on from his misleading comments about the control over access, Sher stated that the case is not about the open Internet. He protested when Justice Kirby argued that the court needed to solve the genus and not just the instance.

The Gutnick response concluded with the remarkable pleading that, even if it were not currently possible to prevent download in particular places, then the law should be left unchanged, in the expectation that technological change will occur in the future, which will enable such discrimination to be made. He sought to claim that the Government's regulatory regime in relation to the filtering of materials that breach pornography laws was evidence of such development. [That argument was entirely specious].


Comments in Reply

Robertson had some time to provide additional information, and to respond to several points. He concluded that the courts shielded libraries and bookshops from defamation suits in the nineteenth century, because it was too much to ask them to take responsibility for. The same was needed now for small publishers. Justice Gaudron retorted that Robertson was arguing from policy, not from the common law, nor from jurisprudence.


Conclusions

The judges appeared to adopt rather different approaches. In particular, it was abundantly clear that Justice Hayne was vehemently opposed to even hearing the appeal, let alone recognising the need for the web to be considered as a new medium, with characteristics different from anything that precedes it.

Justice McHugh stated that it is fundamental to defamation law that it is hostile to freedom of expression, and is strongly oriented towards the reputation of persons defamed, and not towards publishers. He also appeared to deny a role for the courts in bringing about substantial change.

Justice Gaudron sought to argue that there were natural protections against publishers being pursued in remote jurisdictions, and hence the concerns expressed by various parties about continued application of the 'place of comprehension' criterion were exaggerated. [This is an extraordinarily dangerous argument. Critics of, say, Mahathir Mohamad and Goh Chok Tong, who lived and published outside Malaysia and Singapore, could never afford to set foot in those countries - even though one of them is a major transport hub and the other an increasingly vibrant economy - and might even be subject to extradition procedures from their home-country].

Justice Kirby agreed with Sher that the Dow Jones team sought a massive change to the law. He also supported Justice McHugh's argument as regards sudden and substantial departures from precedent being at least highly unusual; but he stated that gradual change does occur. He also expressly recognised the importance of the policy question of accessibility of information by Australians.

Although the other three judges did not show their hands very clearly, it would appear rather likely that the court will find against Dow Jones. This might mean that the first superior court in the world to reach a final conclusion in a case on the criteria for determining jurisdiction in relation to web defamation may deliver a judgement seriously harmful to web-publishing, and hence to freedom of access to information.

It may also leave a great deal of uncertainty, particularly if the judgements are split, are at variance in terms of the bases on which they are reached, do not make clear whether they refer to the web generally or only to particular applications of the web, and/or make confusing or ill-informed interpretations of Internet or web technology.

On the other hand, there are ways in which the judgement might offer some comfort at least to individuals, to non-commercial publishers, and perhaps to small commercial publishers, if not to Dow Jones in the particular case.


The Bench's Understanding of the Relevant Technology

Many years ago, I examined the understanding of basic computer technology evident in a series of judgements in the Apple v. Computer Edge case (which determined, almost alone among nations, that software was not subject to copyright law). The misunderstandings were enormously diverse, and completely undermined the judges' reasoning in that case. See Clarke R. (1988) 'Judicial Understanding of Information Technology: The Case of the Wombat ROMs' Comp. J. 31,1 (February 1988).

In the present case, it is not yet clear to what extent the judges understand the relevant aspects of Internet technology. Justices Hayne, Gummow and Gaudron said little that gave any means of inferring their technical understanding. On the other hand, based on comments made and questions asked:

For example, Justice Callinan argued in support of Sher's claim that the Internet raises no new issues. He used the example of 'The London Times' in the 19th century, which went everywhere coloured red on the map. [He appeared to be oblivious to the uncontested expert evidence before him, which in effect stated that a web-server cannot reliably recognise the colour red].

Justice McHugh asked a question about why there was no screening program for the word 'Victoria' (which suggested that he hadn't read the expert evidence); apparently did not comprehend the notions of distributed databases and backup sites; talked about 'impulses' and 'packets' when referring to a web-site; and later referred to such data being installed on a silicon chip with circuits, which would require an electron microscope in order to be read.

Justice McHugh's understanding appears to be so wide of the mark that a tutorial is sorely needed, to get the judge up to speed on the basic concepts of information technology. But there is still no mechanism in Australian court systems whereby judges can avail themselves of independent advice on such matters. It can be expected that the quality of judicial work, even in the highest courts, will continue to be very poor in technical matters such as this.


References

Gutnick v Dow Jones & Co Inc [2001] VSC 305 (28 August 2001), Judgement, at http://www.austlii.edu.au/au/cases/vic/VSC/2001/305.html

Dow Jones & Company, Inc v Gutnick M99/2001 (18 October 2001), Transcript of Preliminary Proceedings, at http://www.austlii.edu.au/au/other/hca/transcripts/2001/M99/1.html

Dow Jones & Company, Inc v Gutnick M99/2001 (14 November 2001), Transcript of Preliminary Proceedings, at http://www.austlii.edu.au/au/other/hca/transcripts/2001/M99/2.html

Dow Jones & Company, Inc v Gutnick M99/2001 (14 December 2001), Transcript of Preliminary Proceedings, at http://www.austlii.edu.au/au/other/hca/transcripts/2001/M99/3.html

Dow Jones & Company, Inc v Gutnick M3/2002 (28 May 2002), Transcript of Proceedings, at http://www.austlii.edu.au/au/other/hca/transcripts/2002/M3/2.html



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Created: 23 June 2002 - Last Amended: 29 June 2002 by Roger Clarke - Site Last Verified: 15 February 2009
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