Opinion: Imperiling the Internet

The High Court of Australia ruled this month that a defamation action there may move forward based on an article that appeared in the online version of the U.S.-based business magazine Barron's. The court said that because material regarding an Australian mining entrepreneur was downloaded and read in Australia, it is subject to that nation's law.

The decision is a caution flag for Internet publishers. It suggests that countries with restrictive defamation laws may impose their standards on material written and posted in other nations, and publishers may find themselves having to self-censor their online content in order to avoid potential liability.

In the 1964 case of New York Times vs. Sullivan, the U.S. Supreme Court set the bar for libel in the United States quite high. Public figures cannot succeed in an action for libel unless they can show the false information printed about them was done so with actual malice. This balance was struck in order to encourage a vibrant press, and it contrasts sharply with libel law in places such as Britain and Australia where, under common law theories, targets of the media are given greater leeway to sue.

Normally, these varying standards wouldn't be much of a problem. Publishers and broadcasters concerned about the potential for litigation by people who don't like what was aired or written about them would simply avoid markets in countries with lax standards. But the Internet is an entirely different medium, with a ubiquity that makes it nearly impossible to respect jurisdictional limits.

The Barron's case involves magnate Joseph Gutnick, who was featured in an online article titled "Unholy Gains." The magazine's online subscription service allows readers from all over the world to access material uploaded onto the Web in New Jersey, the site of publisher Dow Jones & Co.'s Web servers. Dow Jones did not send the information to Australia. Subscriber computers retrieved it there, just as if an Australian had gone to New Jersey, bought a copy of the magazine and then brought it back home.

Should a U.S. bookseller really be subject to Australian defamation law because some of his customers are from that country? The Australian court, while recognizing the implications its decision might have for free speech on the Internet, nonetheless ruled that the seller can be held liable.

Since the Internet's advent, its borderless nature has raised sovereignty and choice-of-law questions around the world. France has tried to restrict an auction Web site on Yahoo from selling Nazi items. China and Germany, among other nations, have caused overseas search engines to censor certain sites in order to operate. And even in this country, prosecutors have taken advantage of the Web's universality by downloading sexually oriented material in a state with strict community standards in order to charge pornography operators in California.

The danger of course, is that the countries with the most restrictive and censorious laws will be able to influence what appears online. The world's file cabinet, which is the true manifestation of Jefferson's marketplace of ideas, should be free of worries that the long arm of some distant law is hovering. Even the Australian High Court said in its ruling that a treaty should be crafted to address the issue. Despite the Bush administration's distaste for international agreements, one is needed here.

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