Stop Bad e-Publicity

New Jersey Law Journal January 28, 2002

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All Rights Reserved.
New Jersey Law Journal

January 28, 2002

LENGTH: 1203 words

HEADLINE: Countering Bad E-Publicity
Claiming breach of contract or violation of trade secrets can be more effective than allegations of libel

BYLINE: By JonathanBick

Internet Law

The author is counsel to Brach, Eichler, Rosenberg, Silver, Bernstein, Hammer & Gladstone of Roseland and is an adjunct professor of Internet law at Pace Law School and Rutgers Law School. He is also the author of 101 Things You Need To Know About Internet Law (Random House 2000).

Unfavorable Internet publications provide a constant form of negative publicity that can have a long-term impact on a business's reputation. A new tactic is being used to counter the free and anonymous public access that the Internet offers. This tactic simply involves retiring libel allegations in favor of allegations of breach of contract or violation of trade secrets.

Speaking Anonymously

Internet content is far easier to copy and distribute than traditional negative publicity. In addition, it remains easy to access, read, copy and distribute indefinitely.

Removal of harmful Internet publications is normally more difficult than traditional negative publicity because the Internet allows authors to hide their identity or plausibly deny the creation of their work.

In the past, companies brought lawsuits against authors and publishers of negative publicity alleging libel. Defendants in such instances have defended themselves by saying their speech is protected. E-publishers often refuse to remove the negative e-publicity or to identify the authors of the negative e-publicity, citing the First Amendment as a basis for their action.

Defendants have successfully argued that they have the right under the First Amendment to voice their opinions. This freedom is limited by a business's legal right to market in an environment that is free of intentionally inaccurate information that is posted by consumers, investors, employees or competitors.

Internet publishers and e-authors are justified in their reliance on the First Amendment because courts have long used it to protect the identity of authors who want to remain anonymous.

In Thomas v. Collins, 323 U.S. 516 (1945), the Supreme Court found "[T]he very purpose of the First Amendment is to foreclose public authority from assuming a guardianship of the public mind through regulating the press, speech, and religion." More particularly, in McIntyre v. Ohio Elections Comm'n, 514 U.S. 334 (1995), the Court found that the First Amendment protects anonymous speech, stating that the identification badge was also an unnecessary burden on speech.

The McIntyre Court also stated that "[A]nonymity is a shield from the tyranny of the majority. It thus exemplifies the purpose behind the Bill of Rights, and of the First Amendment in particular: to protect unpopular individuals from retaliation and their ideas from suppression at the hand of an intolerant society."

The Supreme Court's conclusion in Cohen v. Cowles Media, 501 U.S. 663 (1991), that newspapers (and hence e-publishers) could be liable for breaching a promise of anonymity to a source, might actually further speech interests. Just as the traditional press has convinced the court of the need for the sanctity of reporter-source confidentiality agreements by arguing that the First Amendment should shield reporters from having to reveal their sources, so have their Internet counterparts.

In the past, businesses that sued individual Internet users alleging simple libel did not necessarily expect to win. Their strategy was to force individual users to incur large legal expenses in order to deter them and others from conducting negative Internet publicity campaigns in the future. Since libel suits designed to stop bad publicity are often frivolous and aimed at stifling speech protected under the First Amendment, individuals have countered this type of legal action by filing their own suits.

Switching Gears

McIntyre requires courts to subject anonymous-speech regulation to the same strict scrutiny that is currently applied to any other speech-related right. Since the right to remain anonymous may be abused when it shields fraudulent conduct, alternate means of achieving protection from bad acts perpetrated with the help of the Internet are necessary.

To counter First Amendment-related defenses (and counter suits), companies have legally begun to circumvent such claims. An alternative to alleging libel, which may easily be transformed into a First Amendment issue, is to allege breach of contract or violation of trade secrets.

For example, a Midwestern food wholesaler and retailer has filed a lawsuit claiming breach of contract and misappropriation of trade secrets. See "Nash Finch sues to temper Net talk," Star Tribune (Minneapolis, Mn.), Aug. 23, 2001, Metro Edition.

If the defendants turn out to be the company's employees, they have violated the company's Code of Ethics and Business Conduct and Associate Handbook, the suit alleges.

This legal tactic of going beyond libel immediately negates the First Amendment defense and is useful for countering contractually and constitutionally based privacy claims. A First Amendment defense is not applicable to a breach of contract claim. A claim of privacy is similarly inapplicable in most instances.

Adopting an innovative approach with respect to the negative e-publicity law problem, the company alleges that confidential information about it was posed on an Internet message board.

The lawsuit is an innovative use of existing law to hold people legally accountable for saying harmful things about a business on the Internet. The information placed on an Internet message board has caused "irreparable injury" to its business, the suit alleges.

In addition to using a new basis for filing suit, firms battling negative e-publicity must typically deal with the anonymity of the author and publisher. Individual Internet users usually employ pseudonyms to legally distance themselves from their Internet postings.

As a result, companies resorted to suing "John Does" for posting comments on chat boards critical of company performance and management. Plaintiffs hope to use subpoenas to force Internet service providers to identify those using pseudonyms. Once the e-author and e-publisher are identified, traditional legal action can be taken, if warranted.

The food wholesaler and retailer's suit did not name defendants specifically, but called them (John) "Does" 1 through 50. Normally, the plaintiff in a John Doe suit will amend its lawsuit once it learns the identities of those involved. It is likely that the this company will subpoena from Yahoo the identities of the people who are posting the allegedly unlawful information on the Internet.

This new legal tactic will likely meet the necessary legal criteria for achieving speedy disclosure of the John Doe identities for two reasons. First, once a suit based on a breach has been sanctioned by the courts, a lawyer can issue subpoenas without a judge's approval. Second, parties at a court hearing who know the identities of unidentified Internet parties are less likely to balk at revealing these parties when a First Amendment defense is not available.

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