Printer Friendly

Cybersmear may be coming to a Website near you: a primer for corporate victims; how to respond or combat venomous comments from current or former disgruntled employees presents both legal and non-legal problems.

SAMUEL Taylor Coleridge wrote, "Whispering tongues can poison truth." The Internet is no exception to this simple maxim. With one of three Americans logging onto it daily, and at least 350 million users worldwide by 2003, the Internet has the potential to become the electronic rumor mill for the new millennium. (1)

Much of the time, online gossip is merely scurrilous and perhaps embarrassing. For example, corporate executives and their alleged sexual proclivities are favorite topics for online badmouths. (2) Sometimes, however, boorish banter gives way to injurious falsehood. Consider the story of popular cookie manufacturer Mrs. Fields. In 1996, speeding along the information superhighway was speculation that the company planned to donate pounds of cookies, brownies and other sweets to an O.J. Simpson victory party. Despite its facial implausibility, this myth inspired rumblings of a national boycott. Mrs. Fields was unable to expose the hoax until it retained a public relations firm at great expense. (3)

Then there is Varian Medical Systems, a publicly traded, Fortune 500 company with a market capitalization in the billions. Disgruntled former employees posted more than 14,000 messages--on hundreds of websites--accusing the company and its management of everything from homophobia to pregnancy discrimination to the surreptitious videotaping of public bathrooms. When Varian sued them for defamation, the defendants turned around and created their own web site. Varian prevailed on the merits after a protracted trial. (4) But as a practical matter, it may have won the battle but lost the war. It incurred substantial legal fees and generated negative publicity, but it has yet to silence the defendants, who continue to lambaste the company on their home page. The victory was bittersweet and more or less pyrrhic. (5)

As a general proposition, civil libertarians would applaud this result. These activists insist that the typical action to suppress online discourse is frivolous. It serves only to harass, they say, and often offends constitutional rights, including those to privacy and free speech. (6)

Taken to its extreme, this rhetoric brings David and Goliath into the digital age: Corporations dig deep into their pockets to pay for lawyers whose tactics aim to intimidate and ultimately muzzle computer-savvy but underfinanced critics. (7) Whatever facial appeal it may have, such hyperbole cannot withstand closer scrutiny. To urge that corporate America seeks only retribution when it pursues scandalmongers is to ignore certain economic realities and policy concerns.

When broadcast over the Internet, defamatory speech sometimes causes substantial monetary losses, especially for publicly traded companies. Stock prices can fluctuate wildly; their movement is a function of information or, as the case may be, misinformation. Cyberlibel can manifest itself not only as personal potshots that bruise egos, but also as institutional slurs that move markets. Companies that try to curb the dissemination of misinformation are improperly cast as corporate bullies. Quite the contrary. These companies are honoring their obligation to shareholders to attend to matters that jeopardize reputation, brand name, and thus profitability. (8)

Unbridled innuendo has broader, systemically corrosive consequences to society. It compromises meaningful dialogue. Cloaked in anonymity and unencumbered by editorial filters, almost anyone with a computer can take to the Internet and share their convictions with the world at large. This has the cumulative effect of generating massive amounts of conflicting information, the credibility of which is frequently beyond evaluation. The online marketplace of ideas becomes increasingly incoherent and in the final analysis struggles to fulfill what should be its central role: an arena in which competing ideas collide, but out of which the truth eventually emerges.

What are the theories of liability that corporate plaintiffs may enlist to combat cybersmear campaigns? What are the pros and cons of bringing suit? What are the alternatives to litigation? What preventive measures are there to reduce both the incidence and the impact of digital defamation?


While purveyors of fibbery are sued time and again for defamation, other causes of action can lie against them. Depending on the facts, they might be prosecuted for, among other things, violating securities laws, breaching contracts, or diluting intellectual property. In any event, affected businesses should appreciate that their options are not necessarily limited to classic theories of defamation.

A. Defamation

1. Libel or Slander

There is a dearth of precedent as to whether electronic communications are subject to the roles of libel, on the one hand, or of slander, on the other. Doctrinally, this issue turns--obviously enough--on whether such communications are more analogous to the printed or the spoken word.

The same issue confronted the legal community when radio and television first became popular. Initially, when broadcasters read from scripts, libel provided the rule of law, but when they spoke extemporaneously, slander principles applied. (9) Over time, courts "recognized the breadth of exposure and resulting damage from broadcast defamation was akin to published defamation, and began to apply libel standards to broadcast defamation." (10) Today television stations are considered publishers of libelous material, with limited exceptions to this rule, (11) notwithstanding any absence of a script. (12) To the extent that the Internet is susceptible to classification, it has evolved into an interactive blend of print and broadcast media. (13) Courts should be expected to invoke libel, as opposed to slander, in online defamation cases. (14)

This observation is hardly just an academic one. It has practical and, for that matter, positive ramifications for corporate victims of cybersmear. At common law, a prima facie case of slander requires a greater quantum of proof. In particular, the slander plaintiff must demonstrate that which the libel plaintiff need not: special damages, as distinguished from actual or general damages, or, stated differently, actual pecuniary harm. (15)

In a libel action, that is to say, plaintiffs must establish only injury to reputation; they need not go a step further and prove resultant economic damages. The underlying rationale is that the relative permanence of the written word raises a presumption of harm, whereas the ephemeral qualities of speech cannot occasion a similar inference.

Modern jurisprudence, however, is in some instances collapsing the distinction between libel and slander. As a result, some states--most notably, New York--have begun to require proof of special damages even when libel is the theory on which suit has been brought. (16)

Legal philosophy aside, the bottom line is clear: if cast in the role of defamation plaintiff, a corporation, whenever possible, should proceed under a theory of libel rather than slander. While in the final analysis the former may prove only marginally easier to maintain, common sense alone dictates that no advantage go unexploited.

2. Libel Defenses

Even though special damages are often not a prerequisite to recovery, libel remains a notoriously difficult cause of action to prosecute successfully, (17) not because of a high prima facie hurdle, but because of a panoply of privileges and affirmative defenses that do not lend themselves to refutation. (18) Figuring most prominently among them is, of course, the First Amendment.

a. Constitutional Privileges

(i) Opinion

Opinions are tantamount to ideas, the policing of which is rightly the province of neither judges nor juries. Opinions are often not actionable under a theory of libel, (19) but the U.S. Supreme Court has stressed that its decisions have stopped short of carving out a wholesale defamation exemption for "opinion." (20) Indeed, to the extent it serves as a defense to libel, opinion is narrowly defined and reaches only statements that cannot be proved false or that cannot be reasonably interpreted as stating actual facts about an individual. (21)

Because of this closely circumscribed definition, accused libelists cannot escape liability by qualifying their defamatory utterances with the caveat that they were merely expressing opinions, rather than statements of fact. Accepting such superficial assurances at face value would elevate form over substance in an flourish of naivete. (22) As the First Circuit has put it, "to say `I think' is not enough to turn fact into opinion, where what is supposedly `thought' is, or implies, a proposition of fact." (23)

The question becomes: Under what circumstances will a statement, however unflattering, find refuge under cover of opinion? Because libel cases are almost invariably fact-intensive, a satisfying answer is difficult to come by. One federal judge has ventured that a statement takes on the character of opinion "where it involves expressions of personal judgment, especially as the judgments become more vague and subjective in character." (24)

In effect, courts subscribe to that kernel of wisdom first inspired by bullies and hatched in playgrounds: "Sticks and stones may break my bones, but names will never hurt me." While the adage is a simple one, subsumed under it is an important lesson: Corporate managers must recognize the difference between the truly pestilent and the merely vulgar and indecorous--the stuff that batters big egos, rather than big profits. Legal action properly presents itself as an option only with respect to the former genus of online opprobrium.

(ii) Parody

Satire is everywhere, and perhaps due in part to its prevalence, it frequently lies outside the bounds of actionable defamation. "There is no libel," according to one appellate court, where the "material is susceptible of only non-defamatory meaning and is clearly understood as being parody [or] satire." (25) That is not to say, however, that the comedian enjoys a license to defame.

What sets parody apart from other strains of humor is its essential character, one of conspicuous "distortion and exaggeration. [L]ike the warped and curved mirrors in a carnival fun house, it depends upon the grotesque for its effects." (26) Stated differently, parody can be mistaken for nothing else, and its satirical nature is immediately self-evident. For that reason, a parody necessarily cannot "defame ... by false attribution or presentation of false facts." (27)

Corporate executives must recognize that they and their companies may become fodder for satirists whose work appears on web pages, in discussion groups, or in chat rooms. This bothersome reality is best viewed as a cost of doing business, rather than a reason to retain counsel. Although it is frustrating to be the butt of a joke built on hyperbole or tall talk, the law simply offers little relief to those whose only complaint is that they have been reduced to caricatures.

(iii) Public Figures

Commenting on the debate surrounding the highly publicized shootings of four teenagers in a Manhattan subway, a New York judge opined that it "is a paramount interest of a free society to assure that open and spirited discussion of matters of public concern will not be chilled by the threat of litigation." (28) Such unabashed endorsement of the marketplace of ideas harkens back to a landmark decision of the U.S. Supreme Court, New York Times Co. v Sullivan, (29) in which the Court held that public officials and figures may recover for defamatory statements only when the statements are made with "actual malice"--that is, with knowledge of their falsity, or with reckless disregard for the troth.

Defining who are public figure, however, is no easy task. At the risk of oversimplification, it may be said that public figures typically hail from one of two factions: those who "occupy positions of such persuasive power and influence that they are deemed public figures for all purposes" or those who "have thrust themselves to the forefront of particular public controversies in order to influence the resolution of the issues involved." (30)

Examples of the sorts of personalities that courts have classified as public figures include political activists, candidates for office and even football coaches who become state university athletic directors. (31) Natural extensions of these examples would include executives at major corporations who become ensnarled in controversies implicating matters of public concern. Take, for instance, Bill Gates, founder of software giant Microsoft. His antitrust debacle with the Justice Department has transformed him into the archetypal public figure, perhaps explaining why he has become a favorite subject for editorial cartoonists whose works are scattered far and wide across the Internet.

Gates--or, for that matter, anyone similarly situated--could proceed against his critics only with great difficulty, since they could almost certainly avail themselves of the heightened actual malice standard. Perhaps more important, for a public figure to initiate a libel action is often to ignite a public relations nightmare.

Besides, litigation is not necessarily the most effective solution for a prominent persona. Abraham Lincoln said that "truth is generally the best vindication against slander." In this respect, "public figures usually enjoy significantly greater access to the channels of effective communication and hence have a more realistic opportunity to counteract false statements then private individuals normally enjoy." (32) Since both the courts and the public at large are keenly aware of this imbalance in power, the corporate behemoth that accuses a single, vociferous individual of defamation may appear to be using the law not as an instrument of justice, but instead as a tool of coercion.

2. Common Law and Statutory Defenses

a. Anti-SLAPP Legislation

Home to Silicon Valley and its hotbed of Internet start-ups, California has erected a heightened barrier to recovery for online defamation--the Strategic Lawsuit Against Public Participation Act, conveniently known by the acronym SLAPP. (33) On a legislative finding that "a disturbing increase in lawsuits brought primarily to chill the valid exercise of the constitutional right of freedom of speech," the legislation requires libel plaintiffs to establish a likelihood of success on the merits before trial. Should they fail to make this showing, they subject their defamation claims to a special motion to strike, which generally will succeed if the challenged statements amount to acts in furtherance of the right of "petition or free speech," which are defined as, among other things, "statement[s] or writing[s] made in a place open to the public or a public forum in connection with ... issue[s] of public interest."

Referring to this language, a California appellate court ruled that Internet discussion groups about the management of publicly held companies are "open and free to anyone who wants to read" them, are relevant to matters of public interest, and are thus "public forums" for purposes of the legislation. The court then recognized a range of comments from one such discussion group as "disparaging" but nonetheless non-actionable. (34)

At least a dozen other jurisdictions--including New York, Massachusetts and Florida--have enacted similar statutory schemes. (35) Legislators have not ignored the public perception that, through predatory litigation tactics, big business sometimes exploits the power and resources it has. Before dragging cyberlibelists into court, large corporate entities should be certain that their claims are not just legally cognizable, but also are compelling, persuasive and meritorious. Otherwise, libel defendants may reach up their sleeves for an anti-SLAPP statute, use it to cast themselves in the role of David and garner the sympathy that courts often afford the underdog.

b. Retraction Statutes

Ordinarily, the public retraction of a libelous statement does not defuse liability but does mitigate damages. (36) While historically a function of common law, this principle today is embedded in so-called "retraction statutes," which provide that the timely renunciation of defamatory declarations will serve to limit damages, usually to those for actual harm. (37)

For purposes of online defamation, however, retraction statutes may offer little or no shelter to average defendants, who often are individuals, acting alone or in collaboration with a few friends, and who spread their word on electronic bulletin boards, in Internet chat rooms and on independent web sites. Retraction statutes typically reach members of the media, to the exclusion of all other classes of libel defendants. (38)

A widely cited decision from the Wisconsin Court of Appeals illustrates this. In It's in the Cards Inc. v. Fuschetto, (39) the court held that a trial judge had erred by granting summary judgment to the defendant, on the grounds that the plaintiffs had never demanded a retraction pursuant to a state statute. Rosario Fuschetto, the defendant, had made a series of allegedly defamatory statements about the plaintiffs, a sports memorabilia store and its owner. Fuschetto posted his statements on an electronic bulletin board to which a community of subscribers had open access. The court held that the Wisconsin retraction statute did not apply to bulletin board postings because they do not constitute a "publication" according to its ordinary meaning.

In the end, corporate victims of cybersmear, if they elect to pursue their harassers in court, usually can dispense with concerns over retraction statutes--at least with respect to the merits of their cases. Even when retraction laws are facially inapplicable to non-media defendants, badmouths who voluntarily forswear their words still can insulate themselves from liability, albeit not completely, because, however motivated, retractions will tend to breed evidence of good faith and thus mitigate damages. (40)

c. Statutes of Limitations

The limitations period for a libel claim customarily begins to run upon the publication of the purportedly libelous material. Establishing the date of publication for libel appearing in a book, newspaper or magazine is a relatively straightforward task. The same cannot be said of libel that manifests itself on the Internet.

The dynamic nature of the online community is to blame--or, as some may see it, credited--for this difficulty. Unlike those memorialized on paper and in ink, messages broadcast on the Internet can propagate at truly exponential rates. This robust proliferation is attributable to a variety of causes, so-called "hypertext" perhaps the most prominent among them.

Hypertext lies at the heart of the Internet and the programming language--hypertext markup language, commonly referred to as HTML--that gives it interactive life. At the risk of oversimplifying matters, hypertext has been defined as "any text that contains links to other documents--words or phrases in the document that can be chosen by a reader and which cause another document to be retrieved and displayed." (41) Since ramping onto the Internet has become an inexpensive proposition, the likes of hypertext and the complex network of interconnectivity that it inspires can transform a person's keystrokes into gospel for the masses.

Aside from its practical implications, hypertext raises jurisprudential concerns over the time at which claims for cyberlibel accrue. "Under the single publication rule," one commentator has written, "a cause of action accrues at the time of the original publication; therefore, subsequent shipments and ... reprintings of the same edition of the work do not extend the date." But, at the same time, "reprintings of a book in a new edition ... will usually constitute a new publication of the libel." (42)

While application of these rules is simple enough for print media, their extension to the digital frontier is awkward. The fundamental nature of the World Wide Web---and the billions, if not trillions, of hypertextual links populating it--blur the distinctions between reprinting and subsequent editions. To date, the courts have offered next to no guidance on this issue. While this is sure to change over time, libel plaintiffs must for the moment arm themselves only with the knowledge that defenses based on limitations periods may present issues of first impression that require creative argumentation rather than extensive reliance on existing precedent.

d. Insulated ISP

Deep corporate pockets are on the short list of defendants in just about any tort action. Libel claims are no different. Unlike print media giants, however, Internet heavyweights can often find asylum from defamation in a unique array of defenses. In this way, libel plaintiffs inevitably face uphill, if not impossible, battles when matched against the likes of America Online, Yahoo! and other web portals and internet service providers (ISPs).

Among the most potent of these defenses is the Communications Decency Act of 1996 (CDA), 47 U.S.C. [section] 230 et seq. Enacted to overrule a decision of a New York trial court, (43) the CDA states that "no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider." This Good Samaritan provision, as it is frequently called, has been construed to largely immunize the ISP industry against defamation lawsuits.

In Zeran v. America Online Inc., (44) for example, a Virginia federal district court refused to hold America Online (AOL), the largest ISP in the United States, accountable for a series of profoundly distasteful messages that one of its users had posted to an AOL bulletin board. The messages advertised tee shirts containing slogans that joked about the 1995 bombing of the federal building in Oklahoma City. Worst of all, the name and telephone number of the plaintiff, Zeran, were included in the messages, although he had absolutely nothing to do with them. He was inundated with a barrage of harassing telephone calls, a number of them threatening his life.

Alleging that it failed to take timely steps to delete the messages and to cancel the account of the offending user, the plaintiff sued AOL for his monetary loss and emotional suffering. Laboring under the express terms of the CDA, the district court was all but obligated to reject his claim pursuant to a theory of statutory immunity.

The legal hurdles to prosecuting an ISP for the defamatory remarks of its users carry dire consequences for the cyberlibel plaintiff. Because of the inherently anonymous character of the Internet, to try to identify an online defamer may be to attempt the impossible. (45) So with ISPs shrouded in statutory protections and libelists cloaked in anonymity, parties aggrieved by cybersmear may be left with fingers, but with nowhere to point them.

B. Collateral Theories of Liability

Although defamation is the most obvious theory on which cybersmear plaintiffs may rely, creative litigants can sometimes turn to other causes of action in their pursuit of online irritants. In this realm, however, the law is in the throes of infancy and thus remains a necessarily scant and often unsettled lot.

1. Employment Relationship

Unhappy, disgruntled current and former employees comprise a common class of cyberlibelists. (46) Armed with inside information, office gossip and axes to grind, they have used the Internet to launch attacks against corporate entities big and small. Sometimes, these offensives are not defamatory but are in derogation of contracts attendant to the employment relationship.

The execution of a confidentiality or nondisclosure agreement is becoming an increasingly standard term of employment, especially in high-tech industries. (47) When drafted broadly enough, they can endow employers with an instrument to silence detractors who are a drain on more than just their payrolls. Of course, shrewd employees--versed in the contractual prohibitions to which they are subject--can skirt the edges of confidentiality agreements, for instance, by carefully eschewing references to trade secrets, proprietary data and related varieties of sensitive information.

Dissatisfied employees who grumble, gripe and grouse over the Internet also may violate provisions embedded in employment manuals or other internal company policies. Several legal commentators have alluded to this possibility, (48) which presumably would at a minimum help justify the discharge of refractory employees.

2. Securities Laws and Business Torts

Transmitted via the Internet, false or otherwise misleading reports about a company, especially those opining on its financial stead or its business prospects, can wreak immediate and sometimes irreversible havoc. When this happens, affected companies should look beyond defamation law to vindicate their rights. In Hart v. Internet Wire Inc., (49) for example, a former employee of the defendant news wire concocted a phony press release about Emulex Corp. After short selling large blocks of Emulex stock, he sent the release to Internet Wire, which then published it. The bogus release subsequently was redistributed by Bloomberg News, another but much larger news service. Predictably, the price of Emulex stock plunged to $60 a share in just 15 minutes.

The plaintiff sued under color of federal law, alleging that both Bloomberg and Internet Wire had run afoul of Section 10(b)(5) of the Securities Exchange Act of 1934. Although the plaintiff later succumbed to a motion to dismiss, his claim failed only because neither defendant had published the fictitious press release with the requisite scienter--that is, an intent to defraud or with fraudulent intent.

Under slightly different facts, in other words, the plaintiff could have successfully prosecuted his 10(b)(5) claim. In fact, recognizing the vast potential for the manipulation of stock prices through online embroidery, the Securities and Exchange Commission has established an Office of Internet Enforcement, which employs about 60 attorneys "who devote substantially all of their time to [the] detection and investigation of fraud on the Internet." (50) The plaintiff might also have brought a derivative action against the author of the press release for, among other things, commercial disparagement, sometimes known as trade libel, (51) and tortious interference with business relations.

So, while it may generally be the most apposite, libel is not necessarily the only theory of liability that can ensnare digital defamers.

3. Intellectual Property

When corporations are derided online, their intellectual property is frequently implicated. Often, their trademarks are co-opted, inextricably entwined in defamatory speech. By way of example, one web the strangulation of a cartoon figure whose head bears a striking resemblance to the AOL logo and its familiar triangular design. Surrounding the image is a collection of caustic anecdotes about the company and particularly about the quality and reliability of its services. (52) AOL might argue that its distinctive insignia, which it promotes at an annual cost in the millions, (53) is diluted when positioned beside an array of denigrating comments.

Trademark dilution is actionable under 15 U.S.C. [section] 1127, which defines it as the "lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence" of competition among the parties or any likelihood of confusion. Dilution can manifest itself in two ways: through "blurring," when a mark is attributed to goods or services neither produced nor delivered by the trademark owner, or through "tarnishment," when a mark is enlisted so as to taint or debase it. (54)

Dilution claims, unlike those for trademark infringement, can succeed without first establishing any likelihood of confusion. Instead, plaintiffs need only show that the mark is famous and that the defendant is blurring its distinctiveness or tarnishing its prominence through some commercial application. (55) Since this standard obviously differs from that for libel, a dilution claim, depending, of course, on the facts, may present itself as an alternative means of proceeding against a libel-proof plaintiff.


So much for theory. The question is no longer how to sue, but whether to do so at all. If the answer is yes, corporate plaintiffs should recognize the inevitable extralegal consequences and understand how to neutralize them. And, if the answer is no, the savvy lawyer will be attuned to and prepared to implement any number of alternatives to litigation.

A. The Pros

The advantages to combating corporate cybersmear through litigation are two-fold. On one hand, there are upsides that exist on a purely legal plane. At the same time, formal proceedings can occasion a range of positive, extralegal effects. They can, for example, sponsor larger, systemic values and, not least of all, act as a visible and powerful deterrent for aspiring libelists.

As an altogether legal matter, successful online defamation claims serve at least two ends. First, they promote finality. By seeking appropriately broad injunctive relief, plaintiffs can rest somewhat easier knowing that if detractors succumb during litigation but later resurface, emboldened anew, they will already have an equitable judgment in hand. Unburdened by any threshold inquiries into liability, aggrieved corporations can focus on enforcement alone, and thus bring a more rapid end to their problems.

Second, a victory on the merits can establish valuable precedent. Because Internet libel is in its formative stages, visible companies subject to public scrutiny might be wise to shape the doctrines developing around cyberlibel in ways consonant with their best interests. Otherwise, lobbies on the opposite side of the aisle--the American Civil Liberties Union, the Digital Freedom Network and the Electronic Privacy Information Center, to name but a few--may make a point of getting in on the ground floor. By undertaking the defense in the early waves of cases, they may set the sort of speech-protective precedent that elevates personal freedoms over the right to seek redress of reputational wrongs in a court of law.

Extralegally, corporations emerging victorious from cyberlibel suits can generate disincentives for armchair malingers who harbor disparaging thoughts, but have yet to graft them onto some Internet outpost for mass consumption. While any publicity surrounding online defamation cases may generate bad press for the plaintiff companies, the limelight also can illuminate a blunt message: Proceed at your own risk. Because the anonymity of the Internet widens comfort zones even for the ordinarily risk-averse, it may be incumbent on corporate America to remind the public that torts are no less actionable when committed on the Internet.

From a broader perspective, cybersmear has palpable systemic effects that threaten the very evolution of the Internet. While it serves as a vehicle for entertainment and other varieties of lighter fare, the Internet is first and foremost a mechanism for gathering and disseminating information. In this sense, it was dubbed the "Information Superhighway" because of its unique potential for delivering knowledge to populations everywhere. Since information and power go hand in hand, if the Internet is impaired in its ability to share the former with the world at large, its role as the great equalizing force of the new millennium will be compromised.

Inasmuch as its essence borrows from that of a program of misinformation, cybersmear hampers public discourse that is truthful, ingenuous and thus meaningful. Veiled in anonymity and emancipated from editorial oversight, anyone with access to the Internet can spread deceptive propaganda around the globe. This might have the over-all effect of spawning vast bodies of conflicting information, the reliability of which often cannot be assessed. In this way, the Internet may be infected with falsehoods that will never be identified as such in the online marketplace of ideas.

Companies that take cyberlibelists to task will work toward eliminating this dynamic, and will thus do their part, however small, to contribute to the public good.

B. The Cons

Taking to the courts in pursuit of digital mudslingers is not without its fair share of distinct disadvantages. The biggest concern is that a lawsuit will simply exacerbate the visibility and thus the impact of the alleged defamation.

In particular, so-called "backlash" websites can be nightmares; recall the plight of Varian Medical Systems. Although the company won a series of legal victories, it thereby aroused the wrath of two past employees whom it had accused of libel. In time, making matters even worse, the backlash website gave rise to several collateral complications: republishing and a new phenomenon sometimes known as "spamdexing."

As its name suggests, republishing refers to the distribution of libelous statements through an outlet other than the original host. Such secondary outlets are usually members of the media. Spamdexing, a nouveau term of art, pertains to "a modern variant on long-utilized systems of keyword indexing." (56) Specifically, the process involves the abuse of "meta tags"--words and phrases transparently implanted in web pages to facilitate their indexing by search engines. (57)

Apparently through the manipulation of meta tags, the Varian defendants were able to raise the profile of their website on popular search engines Yahoo! and Google. Of the more than 10,800 destinations containing the phrase "Varian Medical Systems," the site operated by the defendants was listed third, directly beneath an official Varian home page. (58)

Because spamdexing can be so effective, the reach of backlash sites should not be underestimated: If properly coded, they will not necessarily wallow in obscurity.

A parade of other drawbacks can follow the decision to file suit, the cost and uncertainty of litigation marching at the head of the pack. Corporate executives should be sure to put fiscal realities before their own pride. To be attacked is not necessarily to suffer any genuine harm. Put another way, ego has no place in the process of deciding whether libelous statements threaten the sort of damages which would warrant the time and expense of litigation.

Each of the following, however, are among the many other factors properly put into the balance when exploring the expedience of initiating legal action: the potential impact on public image, especially the perception of the plaintiff as a monied corporate tyrant; the consequent costs of remedial public relations initiatives; and, finally, the difficulties in identifying and later satisfying a cash judgment against an individual defendant who is swathed in anonymity but not in wealth.

C. Alternatives to Litigation

It should come as no surprise that businesses affected by cybersmear can vindicate their rights through means other than litigation. The most common and often the simplest and most effective approach is a cease-and-desist letter. Because the Internet is a virtual costume ball--with the identities of its millions of guests hidden behind masks of an intangible sort--the perceived anonymity of online speech lulls many into a false sense of invincibility. When the mythology of unassailability is shattered on receipt of a sternly worded letter from an attorney, the average muckraker is quick to apologize and retract the causidical statements.

Taking coordinated, cooperative action with the appropriate ISP is a second possibility. Ordinarily, web surfers are required, even if only impliedly, to consent to certain terms of use before logging onto the Internet or viewing a home page. (59) The Microsoft Network, for instance,
   reserves the right at all times to disclose any
   information as Microsoft deems necessary to
   satisfy any applicable law, regulation, legal
   process or governmental request, or to edit,
   refuse to post or to remove any information
   or materials, in whole or in part, in Microsoft's
   sole discretion. (60)

The effect of such language is to imbue service providers with the unilateral authority to regulate their domains as they see fit. And, while the typical ISP is immunized against liability for the statements of its users, no one likes trouble. From this perspective, a corporation portrayed in a patently offensive light may discover that the ISP, which hosts the objectionable content or user, prefers to delete the material summarily or revoke the membership of the offender, rather than risk entanglement in litigation. (61)

Another option, albeit a riskier one, is to counteract cyberlibelists with a dose of their own medicine. By publicly responding to them in their own forum, a defamed company can try to set the record straight. Defusing and discrediting revilers on their own turf has the added advantage of communicating with the same general audience to which the tortfeasor first appealed. The downside, however, is that the calumniators may be provoked into intensifying their crusades. Should this occur, company officials are left with two choices, both unenviable: continue the dialogue, which could rapidly degenerate into an obtuse slugfest; or, withdraw from the exchange, which can smack of giving up or, even worse, of conceding the truth of the objectionable statements.

Last, a company may do nothing as an external matter, while at the same time taking internal steps to lay the foundation for litigation. To this end, it must preserve some evidence of the offending statements. Given the temporary nature of Internet content, the aspersive language inherently will lack permanence, and it should be documented to prepare for future legal action.

D. Corporate Pre-emptive Measures

Although it may be impossible to eliminate them entirely, both the incidence and the impact of cybersmear can be lessened by taking certain precautions. First consider the story of one Jeremy Dorosin, who had bought an espresso machine from coffee giant Starbucks. Apparently, the machine was defective, and Starbucks never sent Dorosin the complimentary coffee that was to accompany his purchase. When Starbucks refused his demand that it replace the broken machine with one costing thousands of dollars more, Dorosin took out a full-page spread in the Wall Street Journal. The advertisement invited readers to voice their complaints about Starbucks by calling a toll-free number that Dorosin had established, or by visiting "starbucked. com," a website that also included a detailed account of his problems with the coffee company. (62)

The advice to glean from the foregoing episode should be obvious. Preemptively register unflattering domain names that co-opt your corporate identity. Purchase Internet addresses in bulk; they can be had on the cheap. Especially for large, publicly held companies, the annual cost will be de minimis.

Next consider that the unseen enemy is bad enough, but that the unknown enemy is even worse. Accordingly, businesses must devise some means of monitoring the Internet for defamatory materials concerning them, their products and services, as well as their individual officers, directors and key employees. All but the largest entities will be best served by outsourcing this responsibility to any of the growing number of third-party services that specialize in scouring the web for derogatory references to their corporate clients. (63)

Third, the prudent company will plan now for what has yet to come. Vicious rumors can materialize on the Internet out of nowhere, and will sometimes spread like wildfire. If it becomes necessary to undertake some form of damage control, a contingency plan--or the lack thereof--may mean the difference between the effective and the feckless response strategy. Caught off guard, a firm layered in bureaucracy may struggle to first formulate and then execute a rapid, but still measured rejoinder.

Last, a timeless truth deserves repeating. Those closest to us sometimes hurt us most. For present purposes, the sentiment is intended to underscore the fact that corporate cyberlibel recurrently comes from within. (64) Although employers can exercise little or no control over the after-hours activities of their employees, vigilant companies can regulate behavior to a much greater extent during the work day. Woefully behind the times is any modern business that has yet to promulgate and enforce stringent company policies for the use of electronic mail and of the Internet generally.

While some employees will inevitably break the rules, others at least will reflect on them and think twice before using an office computer to speak out against their employer. With such policies in place, transgressive employees also may subject themselves unwittingly to liability not only in tort, but also in contract.


To call the Internet a new frontier is by now a misnomer. Its reach is global, its content consumed by billions, and almost anyone with a computer can tap its power. The Internet is becoming a bully pulpit from which the disgruntled broadcast their frustrations to the world at large.

Squarely in their crosshairs--much like politicians, celebrities and other magnets for public attention--will be corporations the world over. Because that much is inevitable, companies today must understand the intricate contours of the problem, appreciate both their legal and extralegal options, and prepare themselves--now, rather than later- for the trouble that will eventually come knocking.

(1.) See Drilling Down into Computer and Web Trends, at; Bruce W. Sanford & Michael J. Lorenger, Teaching an Old Dog New Tricks: The First Amendment in an Online World, 28 CONN. L. REV. 1137, 1137 (1996); Geoff Thompson, $40,000 Awarded in First Cyberspace Defamation Case, AUSTRALIAN FIN. REV., May 4, 1994, at S41 ("uninhibited defamation is one of the things that makes cyberspace such a fun place to be").

(2.) See, e.g., Cybersmear Litigation Joins Online Arsenal Ridge, THE RECORD, March 1, 2000, at B01, available at 2000 WL 15812270.

(3.) Liar, Liar: Unscrupulous Web Pages, PC COMPUTING, December 1, 1998, at 89.

(4.) Shannon Lafferty, California Internet Libel Suit Yields Big Verdict, THE RECORDER [San Francisco], December 14, 2001, available in archive at

(5.) See the following stories, all in THE RECORDER by Shannon Lafferty and all available in archive at Defendants Not Nice in Internet Case, November 6, 2001; No Easy Outs Seen in Suit for Internet Libel, December 12, 2001; Judge Silences Ravings of Angry Ex-employees, December 13, 2001; Web War of Words Drawing More Hits, March 26, 2002; Contempt Hearing Set in Internet Libel Case, March 27, 2002; Court Issues Stay in Case over Web Defamation, April 18, 2002; FBI Investigating Death Threats in Varian Libel Case, August 1, 2002. See also mobeta_inc/slapp/slapp.html.

(6.) See generally Joshua R. Furman (Comment), Cybersmear or Cyber-SLAPP: Analyzing Defamation Suits Against Online John Does As Strategic Lawsuits Against Public Participation, 25 SEATTLE U.L. REV. 213 (2001); Bruce P. Smith, Cybersmearing and the Problem of Anonymous Online Speech, COMM. LAW. 3 (18-Fall 2000).

(7.) See, e.g., Jeffrey R. Elkin, Cybersmears: The Next Generation, 10 BUS. L. TODAY 42 (August 2001).

(8.) See generally Werner F.M. De Bondt & Richard H. Thaler, Does the Stock Market Overreact? 40 J. FIN. 793 (1985); Wayne Joerding, Are Stock Prices Excessively Sensitive to Current Information? 9 J. ECON. BEHAV. & ORG. 71 (1988); Mark J. Roe, The Shareholder Wealth Maximization Norm and Industrial Organization, 149 U. PA. L. REV. 2063, 2065.

(9.) LAURENCE H. ELDREDGE, THE LAW OF DEFAMATION [section] 13, at 83 (1978).

(10.) Anthony M. Townsend et al., Libel and Slander on the Internet, 43 COMM. OF THE ACM 15, 15-17 (June 2000).

(11.) California, for example, still adheres to the minority view, treating defamatory statements on television and radio as slander. See generally CAL. CIV. CODE ANN. [subsection] 46, 48.5; Arno v. Stewart, 54 Cal.Rptr. 382 (Cal. App. 1966).

(12.) See Finley P. Maxson (Note), A Pothole in the Information Superhighway: BBS Operator Liability for Defamatory Statements, 75 WASH. U. L.Q. 673, 676 n.13 (1997).

(13.) See, e.g., Julie Adams, Will Wage Gap Persist for Women in New Media? in Harvard Third Biennial Conference on Internet & Society, available at wage.html (last updated June 2, 2000).

(14.) But some commentators suspect otherwise, predicting that slander laws may ultimately control certain iterations of online defamation. See, e.g., Karen S. Frank, Potential Liability on the Internet, 437 PLI/Pat. 417,437 (1996).

(15.) See, e.g., Vanover v. Kansas City Life Ins. Co., 553 N.W.2d 192, 197 (N.D. 1996); Stickle v. Trimmer, 143 A.2d 1, 3 (N.J.Super. 1958), cert. denied, 145 A.2d 168 (N.J. 1958). See also Susan Oliver, Opening the Channels of Communication among Employers: Can Employers Discard Their "No Comment" and Neutral Job Reference Policies? 33 VAL. U. L. REV. 687, 700 (1999) (harm or actual injury presumed with written defamatory statements because written statements are likely to be permanent; slander plaintiff must prove special harm or actual pecuniary loss). Accord ELDREDGE, supra note 9, [section] 12, at 77; DAN B. DOBBS, THE LAW OF TORTS [section] 409, at 1144.

See also RESTATEMENT (SECOND) OF TORTS [section] 569 (1977) ("One who falsely publishes matter defamatory of another in such a manner as to make the publication a libel is subject to liability to the other although no special harm results from the publication.")

(16.) See, e.g., Boule v. Hutton, 138 F.Supp.2d 491, 506 (S.D.N.Y. 2001) (applying New York law). But inasmuch as it muddies the doctrinal waters of defamation, this trend has been the target of some criticism. See, e.g., Mike Steenson, Defamation Per Se: Defamation By Mistake? 27 WM. MITCHELL L. REV. 779, 809 (2000).

(17.) See, e.g., Bonheur v. Dresdner Bank, 1986 WL 4702, at *2 n.2 (S.D.N.Y.); Lyrissa Barnett Lidsky, Prying, Spying, and Lying: Intrusive Newsgathering and What the Law Should Do About It, 73 TUL. L. REV. 173, 198 n.103 (1998). When set against the backdrop of the Internet, libel is further complicated by a host of knotty, extralegal concerns.

(18.) See, e.g., Robert E. Drechsel, The Paradox of Professionalism: Journalism and Malpractice, 23 U. ARK. LITTLE ROCK L. REV. 181, 194-95 (2000); James C. Goodale & Rex S. Heinke, Libel Litigation: Summary Judgment, 338 PLI/Pat. 137, 139 (1992); Kevin T. Peters, Defamation and the First Amendment: Recent Cases Emphasizing the Content of Defamatory Communications and the Nature of the Communicator, 20 SUFFOLK U. L. REV. 1089, 1092 (1986).

(19.) Gertz v. Robert Welch Inc., 418 U.S. 323, 339-40 (1974), rev'g and remanding 471 F.2d 801 (7th Cir. 1072); Henry v. Nat'l Ass'n of Air Traffic Specialists Inc., 836 F.Supp. 1204, 1214 (D. Md. 1993); Gifford v. Nat'l Enquirer Inc., 1993 WL 767192, at *5 (C.D. Cal.); Davis v. Ross, 754 F.2d 80, 85 (2d Cir. 1985); Hotchner v. Castillo-Puche, 551 F.2d 910, 913 (2d Cir. 1977), cert. denied, 434 U.S. 834 (1977)).

(20.) Milkovich v. Lorain Journal Co., 497 U.S. 1, 18 (1990), rev'g and remanding 545 N.E.2d 1320 (Ohio App. 1989).

(21.) See generally Philadelphia Newspapers Inc. v. Hepps, 475 U.S. 767 (1986), rev'g and remanding 485 A.2d 374 (Pa. 1984); Greenbelt Coop. Pub. Ass'n v. Bresler, 398 U.S. 6 (1970), rev'g and remanding 252 A.2d 755 (Md. 1969); Old Dominion Branch No. 469, Nat'l Ass'n of Letter Carriers v. Austin, 418 U.S. 264 (1974), rev'g 192 S.E.2d 737 (Va. 1972); Hustler Magazine Inc. v. Falwell, 485 U.S. 46 (1988), rev'g 797 F.2d 1270 (4th Cir. 1986); Milkovich, 497 U.S. 19.

(22.) Cianci v. New Times Pub. Co., 639 F.2d 54, 64 (2d Cir. 1980)

(23.) Gray v. St. Martin's Press Inc., 221 F.3d 243, 248 (1st Cir. 2000) (citations omitted).

(24.) Id. at 248.

(25.) Salek v. Passaic Collegiate Sch., 605 A.2d 276, 278 (N.J.Super. 1992), citing Romaine v. Kallinger, 537 A.2d 284, 288 (N.J. 1988).

(26.) Salomone v. MacMillan Pub. Co., 411 N.Y.S.2d 105, 109 (Sup. Ct N.Y. County 1978).

(27.) See, e.g., San Francisco Bay Guardian Inc. v. Superior Ct. (Sparks), 21 Cal. Rptr. 2d 464, 467 (Cal.App. 1993).

(28.) Goetz v. Kunstler, 625 N.Y.S.2d 447, 453 (Sup. Ct N.Y. County 1985).

(29.) 376 U.S. 254 (1964).

(30.) Gertz, 418 U.S. at 345.

(31.) See generally Curtis Pub. Co. v. Butts, 388 U.S. 130 (1967), aff'g 351 F.2d 702 (5th Cir. 1965); Monitor Patriot Co. v. Roy, 401 U.S. 265 (1971), rev'g and remanding 254 A.2d 832 (N.H. 1969).

(32.) Gertz, 418 U.S. at 344.

(33.) CAL. CIV. PROC. CODE [section] 425.16.

(34.) ComputerXpress Inc. v. Jackson, 113 Cal. Rptr.2d 625 (Cal.App. 2001) (company became matter of public interest merely because it was "publicly traded company" and "had inserted itself into the public arena by means of numerous press releases"). The posted comments were far from innocuous and included the abrasive likes of the following: "When the people who have ... been duped into this stock realize the scam they were coaxed into, my guess is there will be hell to pay."

(35.) DEL. CODE ANN. tit. 10, [subsection] 8136-8138 (Supp. 1996); FLA STAT. ANN. [section] 768.295 (West 2000); GA. CODE ANN. [section] 9-11-11.1 (Supp. 1997); IND. CODE ANN. [subsection] 34-7-7-1 to 34-7-7-10 (West Supp. 1998); LA. CODE CIV. PROC. ANN. art. 971 (West 1999); ME. REV. STAT. ANN. tit. 14, [section] 556 (West Supp. 1997); MASS. GEN. LAWS ANN. ch. 231, [section] 59H (West 1997); MINN. STAT. ANN. [subsection] 554.01-554.05 (West Supp. 1997); NEB. REV. STAT. [subsection] 25-21,241 to 25-21,246 (1995); NEV. REV. STAT.. [subsection] 41.640-41.670 (Supp. 1993); N.Y. C.P.L.R. [section] 3211(g) (McKinney 1997-1998); OKLA. STAT. ANN. tit. 12, [section] 1443.1 (1999); R.I. GEN. LAWS [subsection] 9-33-1 to 9-33-4 (Supp. 1996); TENN. CODE ANN. [subsection] 4-21-1001 to 4-21-1003 (1997); WASH. REV. CODE ANN. [subsection] 4.24.500-4.24.520 (West Supp. 1997).

(36.) See, e.g., ROBERT D. SACK. LIBEL, SLANDER AND RELATED PROBLEMS [section] V.5.1.1 at 211 (1980).

(37.) See, e.g., CONN. GEN. STAT. ANN. [section] 52-237 (West 2002); NEB. REV. STAT. [section] 25-840.01 (2001). Some jurisdictions go so far as to make a request for retraction a condition precedent to filing a libel suit. FLA. STAT. ANN. [section] 770.01 (West 2001).

(38.) In Hinerman v. Daily Gazette Co., 423 S.E.2d 560, 595 n.21 (W.Va. 1992), Miller, J., dissenting, noted different statutes and stated: "California, for example, follows the majority approach and provides only for certain media defendants in its retraction statute, while Connecticut, Louisiana, Maine, Massachusetts, Nebraska, Texas, and West Virginia apply their statutes to all defendants."

(39.) 535 N.W.2d 11 (Wis. App. 1995).

(40.) Jonathan D. Hart et al., Cyberspace Liability, 523 PLI/Pat. 123, 163 (1998).

(41.) Matisse Enzer, Glossary of Internet Terms, available at (updated February 24, 2002). See also, which defines html as "[t]ext that includes links or shortcuts to other documents, allowing the reader to easily jump from one text to related texts, and consequentially from one idea to another, in a non-linear fashion."

(42.) Elizabeth A. McNamara, A Selective Survey of Current Issues Facing Book and Magazine Publishers, 601 PLI/Pat. 9, at 45 (2000).

(43.) Stratton-Oakmont Inc. v. Prodigy Servs. Co., 1995 WL 323710 (N.Y. Sup.Ct. Nassau County) (defendant liable for statements that one of its subscribers posted on electronic message board over which it exercised some editorial control).

(44.) 958 F.Supp. 1124 (E.D. Va. 1997), aff'd, 129 F.3d 327 (4th Cir. 1997).

(45.) See Nancy Toross (Note), Double-Click on This: Keeping Pace with On-Line Market Manipulation, 32 LOY. L.A. L. REV. 1399, 1419 (1999) (one can "hide his or her identity on the Internet and make statements on an anonymous or false basis, thus making it difficult to identify and prosecute"); Shahram A. Shayesteh (Comment), High-Speed Chase on the Internet Superhighway: The Evolution of Criminal Liability for Internet Piracy, 33 LOY. L.A. L. REV. 183, 193-94 (1999) (discussing various means by which Internet users can hide their true identities).

(46.) See, e.g., Peter Schnitzler, Web Attacks Tough to Stop, INDIANAPOLIS BUS. J., May 6, 2002, at 19; Stephanie Armour, Courts Frown on Online Badmouthing; Grousing Ex-workers Lose Legal Battles, USA TODAY, January 7, 2002, at B01.

(47.) See, e.g., Carole Levitt, Computer Counselor, L.A. LAWYER, October 2000, at 62.

(48.) See, e.g., Tonianne Florentino, Privacy in the Ever-evolving Workplace, 632A PLI/Pat. 453, 463-65 (2001).

(49.) 145 F.Supp.2d 360 (S.D.N.Y. 2001).

(50.) Thad A. Davis, A New Model of Securities Law Enforcement, 32 CUMB. L. REV. 69, 85 (2001-02).

(51.) Picker Int'l v. Leavitt, 865 F.Supp. 951,964 (D. Mass 1994) (noting that Section 623A of the Restatement (Second) of Torts defines "commercial disparagement" as a false statement intended to bring into question quality of rival's goods or services in order to inflict pecuniary harm).

(52.) See AOL Watch--Updated Daily! available at (visited May 27, 2002).

(53.) See, e.g., Beth Healy, Former Thomson Financial Chief Resurfaces at Web Firm, BOSTON GLOBE, May 21, 2000, at C5.

(54.) See generally I.P. Lund Trading ApS & Kroin Inc. v. Kohler Co., 163 F.3d 27 (lst Cir. 1998); Intermatic Inc. v. Toeppen, 947 F.Supp. 1227 (N.D. Ill. 1996); Hasbro Inc. v. Internet Entertainment Group Ltd., 40 U.S.P.Q.2d 1479 (W.D. Wash. 1996); Toys `R' Us v. Akkaoui, 1996 U.S.Dist. LEXIS 17090 (N.D. Cal.).

(55.) See, e.g., Ian C. Ballon, Litigation Trends in Internet Disputes, 691 PLI/Pat. 245,294-96 (2002).

(56.) Ira S. Nathanson, Internet Inflogut and Invisible Ink: Spamdexing Search Engines with Meta Tags, 12 HARV. J.L. & TECH. 43, 47 (1998).


(58.) Search results for Varian Medical Systems, at Medical+Systems&hc=1&hs=l (visited June 2, 2002).

(59.) Yahoo! is a perfect example. Its terms of service emphasize, "Yahoo provides its service to you, subject to the following Terms of Service ... which may be updated by us from time to time without notice to you." Available at_ info/terms (visited June 3, 2002) (emphasis added).

(60.) Available at (last modified March 2002) (emphasis added). Weighing in at a total of nearly 9,000 words, the MSN terms of use span some 25, single-spaced pages.

(61.) See, e.g., Ronald F. Lopez, Corporate Strategies for Addressing Internet "Complaint" Sites, 14 INT'L L. PRACTICUM 101, 104 (2001).

(62.) Id.

(63.) eWatch L.L.C. is perhaps the leading such service. Information about it is available at http:// (visited June 3, 2002) (describing a range of corporate intelligence solutions). Another prominent member of this burgeoning "cottage industry" is Connecticut-based CyberAlert Inc. See Shaun B. Spencer, CyberSLAPP Suits and John Doe Subpoenas, 19 J. MARSHALL J. COMPUTER & INFO. L. 493,494 n.9 (2001).

(64.) See, e.g., Matthew S. Effland, Digital Age Defamation, 75 FLA. B.J. 63, 63-64 (2001) (observing that damaging comments made by disgruntled employees about company business practices is not new phenomena, but suggesting that Internet has magnified problem); Daniel P. Schafer (Note), Canada's Approach to Jurisdiction over Cybertorts, 23 FORDHAM INT'L L.J. 1209-10 (2000) ("Since [Internet] bulletin boards provide an easy and inexpensive way for a speaker to reach a large audience, disgruntled ... employees have used them to voice their concerns over a company, regardless if the complaints are justified.") (footnote omitted).

IADC member Eric W. Wiechmann is a litigation partner of Cummings & Lockwood, LLC, in the firm's Harford, Connecticut, office. He is a graduate of Hamilton College (B.A. 1970) and Cornell Law School (J.D. 1974).

A litigation associate in the firm's Stamford, Connecticut, office, Thomas G. Ciarlone Jr. was educated at New York University (B.A. 1998) and Cornell Law School (J.D. 2001).
COPYRIGHT 2003 International Association of Defense Counsels
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2003 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Author:Ciarlone, Thomas G., Jr.; Wiechmann, Eric W.
Publication:Defense Counsel Journal
Date:Jan 1, 2003
Previous Article:The self-critical analysis privilege in the product liability context: if analyzed as a subsequent remedial measure, self-evaluation wouldn't impede...
Next Article:Between the devil and the deep blue sea: monitoring the electronic workplace; employers should have detailed, understandable and fair computer,...

Terms of use | Privacy policy | Copyright © 2021 Farlex, Inc. | Feedback | For webmasters |