Defamation and Intellectual Property on the Internet
It is still over-pessimistic to say, as the Hamburg Landgericht did in Maritim, 2003 ILPr 17, page 297, that "any undertaking that is actively involved on the internet ... must expect to be sued in foreign courts" but the effect of dealing on the internet is that the possibility is unavoidable.
The fundamental difficulties caused by traditional approaches to jurisdiction are obvious. Lord Bingham of Cornhill recently wrote that, in its impact on the law of defamation, the internet will require "almost every concept and rule in the field ... to be reconsidered... ": Collins, The Law of Defamation and the Internet, (2001). For an invaluable general introduction to current thinking in the United Kingdom on these issues, see the English Law Commission scoping study, here, of December 2002. The cases and commentaries tend to deal either with defamation, or with intellectual property issues, rather than underlying themes. But the questions underlying these two fields are clearly similar and it is helpful to consider them together.
For an explanation of the underlying technology, which courts have so often had difficulty grappling with in its relation to the problem of jurisdiction, see Roger Clarke's Defamation on the Web. There is a good review of the electronic literature on WorldLII here. The useful first and third reports of the New Zealand Law Commission are downloadable here and here.
Note also the Electronic Commerce (EC Directive) Regulations 2002, substantially in force from 21 August 2002, in particular regulations 17, 18 and 19 which provide a defence for ISPS, hosters of weblogs, and other innocent hosters of damaging material. "It is difficult yet to be sure of their precise effect"; Law Commission, paragraph 2.10. A jurisdictional effect is that it may limit forum-shopping, because if it is not possible to identify one defender who can be sued as domiciled in the desired jurisdiction it will be necessary to sue on the basis of one of the exceptions to the general rule, probably Article 5(3) or one of its equivalents.
Some decisions and contrasts
First question: Syldavian website is legal worldwide except in Borduria; can a Bordurian court interdict its operation and make an order with worldwide effect?
It may well be able to do so, but the facts are important and the underlying theory varies between jurisdictions. The limited Scottish authority available suggests that the Court of Session may be prepared to make an order with worldwide effect on the basis of an act wrongful in Scotland.
The Court of Session, as a supreme court, has long exercised the power of granting an interdict purporting to have effect outwith Scotland; the classic example is interdict against commencing or continuing legal proceedings in a foreign jurisdiction, for an early example of which see Young v Barclay (1846) 8 D 774. The underlying, usually tacit, assumption is that in doing so it is interdicting something that in some sense is done or has a wrongful effect in Scotland: see William Grant & Sons Ltd 2001 SLT 1419 at paragraph 66. It may be hard to apply these analogies to the present case. In Bonnier Media v Smith, 2003 SC 56, the Court of Session held that a Mauritian company, and an American resident in Greece, could be interdicted in Scotland from using a domain name said to infringe a trademark in Scotland; a "person who sets up [a] website can be regarded as potentially committing a delict in any country where the website can be seen, in other words in any country in the world". The order of the court was framed as having worldwide effect. An appeal is understood to have been refused on 15 February 2003 but no written decision was given.
Macquarie Bank v Berg [1999] NSWSC 526 shows an alternative approach in Australia; "An injunction to restrain defamation in NSW is designed to ensure compliance with the laws of NSW, and to protect the rights of plaintiffs, as those rights are defined by the law of NSW. Such an injunction is not designed to superimpose the law of NSW relating to defamation on every other state, territory and country of the world. Yet that would be the effect of an order restraining publication on the Internet. It is not to be assumed that the law of defamation in other countries is coextensive with that of NSW, and indeed, one knows that it is not. It may very well be that, according to the law of the Bahamas, Tazhakistan, (sic) or Mongolia, the defendant has an unfettered right to publish the material. To make an order interfering with such a right would exceed the proper limits of the use of the injunctive power of this court."
For a parallel contrast, see Harrods Ltd v Sixty Internet Domain Names, 23 August 2002; Harrods of London upset when Argentinians registered competing domain names; a US Court of Appeals held in an odd decision that the courts of Virginia had jurisdiction because the domain name registrar carried on business in Virginia. On similar facts, in Easthaven Ltd v Nutrisystems 15 August 2001, (a dispute between Pennsylvanians and Barbadians), the Ontario courts declined jurisdiction as there was no real and substantial jurisdiction with Canada.
Bonnier Media may demonstrate how the Scottish approach is likely to work in practice. But it is not an entirely satisfactory decision. It seems to have been argued and decided on the basis of the Brussels Convention, although the defender being domiciled in Greece it was the Brussels Regulation which applied. One of the reforms the Brussels Regulation introduced was the explicit extension of article 5(3) jurisdiction to places where a harmful event "may occur" (the European Court has since held, in VKI v Henkel, this was implicit anyway). It seems to follow that the harm which may be interdicted under this provision (as opposed to article 2) is future harm within the jurisdiction in question: Shevill v Presse Alliance 1995 2 AC 18 (ECJ), not world wide harm, which could only properly be interdicted by a Scottish court against a defender domiciled in Scotland (except perhaps as an interim protective measure under sections 24(2) and 27 of the Act). Nothing in the opinion of the court shows any indication that it considered whether its grant of interdict should be worldwide or restricted to publication in Scotland or perhaps the UK. As the petitioners sought an order with world-wide effect, they should have gone to Greece. It is unfortunate that no reasoning is available for the refusal of the appeal.
A practical difficulty is whether orders granted by one jurisdiction purporting to have effect in a second will be recognised by the second jurisdiction. In Europe, the effect of the recognition and enforcement provisions of the Brussels Convention, Lugano Convention, and Brussels Regulation is that they generally will be, so that in a Greek court the decision of the Court of Session in Bonnier Media should have been enforced: but not so further afield; there is no system of automatic enforcement beyond Europe. If the wrong that is being interdicted is, as in Bonnier Media, the infringement of a British trademark, which is a right effective only in the UK, it is hard to see why there should be any entitlement to interdict the infringement of a right which does not exist in other jurisdictions. The passage quoted above in Macquarie Bank v Berg raises issues of national sovereignty; consider the American reaction to the French theory that a French court might interdict Americans in America from breaking French law, shown by the history of Yahoo! Inc. v. La Ligue Contre le Racisme et L'Antisemitisme (French and US decisions collected here). More generally, it is not obvious why any country's courts should either assume a general right to police the law worldwide or recognise a right in others to do so.
Second question: A Syldavian insults a Bordurian on a weblog; might the courts of Scotland or some other third country hear an action for damages? In European and Commonwealth jurisdictions, and hence Scotland, the answer is probably "yes, if anyone in the jurisdiction read it"; in an American state, the answer would probably be "no, unless this is really of concern in this state".
Berezovsky v Forbes [2000] 2 All ER 986 (HL) [2000] 1 WLR 1004, is the leading UK decision; it was held by the House of Lords that a defamation action by a Russian magnate against an American magazine was properly brought in London, on the basis of its 0.2% circulation in England; it is pointed out that if the action was brought in England it followed that damages were in principle only for the loss in England. There is no real doubt that that reflects the law of Scotland; indeed Lord Hope refers in Berezovsky to Scots authority, Longworth v. Hope (1865) 3 M. 1049, quoting this passage: "According to our law, the sending of a single copy to any individual in Scotland, even if it were only to the [pursuer] herself, would be publication sufficient to found an action for libel, if there were otherwise good grounds of action."
The practical effects are that the courts of Scotland, as of England, are open to anyone, worldwide, who can point to a defamation on the internet which was read by anyone in the jurisdiction, although against a non-Scottish defender damages may be very limited as they will be limited to damage within the jurisdiction; and that a person claiming defamation may bring a multiplicity of actions in different jurisdictions. With both Scotland and England having traditionally applied unusually stringent defamation laws, forum-shopping is attractive; and, as Berezovsky demonstrates, the continuing rule of "double actionability" for defamations committed abroad (preserved by the Private International Law (Miscellaneous Provisions) Act 1995) may be of little practical significance in protecting speech which was not actionable when and where it was uttered.
There may be protections in the principle of forum non conveniens. Berezovsky is not, as it is sometimes taken to be, authority for the proposition that the court should always exercise its jurisdiction in a multi-jurisdictional libel. Thus, in Lakah v Al-Jazeera, 24 May 2002, unreported, an English court refused to allow an order to permit service abroad to be made in a defamation action by an Egyptian businessman resident in Paris against al-Jazeera TV and an Egyptian reporter; the sole connection with England was that the plaintiff had been interviewed there by the second defendant.
Fundamental to the European approach is the theory that every publication of a libel is itself a harmful event. The American courts, following a "single publication" theory of defamation, have rejected that analysis in favour of a view that the test of jurisdiction is "substantial justice". Thus Young v New Haven Advocate, 13 December 2002, United States Court of Appeals; the defamation on the internet of a (Virginian) prison officer was of no real concern except in Connecticut. See also MGM v Grokster, Leiber v Consumer Empowerment, US District Court, Central District of California, 9 January 2003; Californian courts decided to hear the civil case for copyright infringement against the major P2P successor to Napster, KaZaa, although that defendant was incorporated in Vanuatu and had its main business activities in Australia, because it specifically targeted Californian users so that "an exercise of jurisdiction is consistent with traditional notions of fair play and substantial justice."
For an attempt by US publishers to import US tests into Australia, and an analysis of why that attempt failed, see Dow Jones v Gutnick, [2002] HCA 56; a much-publicised decision of the High Court of Australia that Victorian courts had jurisdiction in defamation proceedings for internet publication restricted to damage for viewing in Victoria; far less controversial than its hype, but a good survey of the competing Commonwealth and American approaches.
More recently, in Harrods Ltd v Dow Jones, 23 May 2003, an English court held it had jurisdiction in an action in respect of a garbled April Fool's Day press release in the ten (out of 1.8 million) copies of the American edition of the Wall Street Journal sold in England. The court noted "it is perhaps ironic that the matter has already come before Judge Victor Marrero in the United States District Court for the Southern District of New York, where Dow Jones sought intervention by that court with a view to avoiding enormous expense and uncertainty as to whether it might continue to publish the offending article. After a detailed consideration of the law, the learned judge found that "... a more appropriate alternative remedy exists for the parties in proceeding with the London Action", and concluded that it was appropriate for the court to refrain from "encroachment upon the British tribunals". "
There remains room, on the European analysis, for argument as to forum non conveniens and, possibly, further arguments as to whether the effect of the decision in Marinari v Lloyds Bank can be applied to international defamation actions. But the law seems reasonably settled.
Third question: a German company sells goods over the internet to customers in England and Scotland which infringe a British trademark. Can it be interdicted from doing so and remedies sought against it under section 14 of the Trade Marks Act in England or Scotland?
The conventional answer to this question is "yes". But this is far from obvious.
Jurisdiction here could only be conferred by Article 5(3) of the Brussels Regulation which provides that a person may be sued "in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur", in this case presumably the point of sale (although this issue may fall to be decided under German law, and there is German authority that it is the place where the internet server is located, and any place from which anyone may accept the offer). Before making the doubtful assumption that this is in Britain, it is necessary to ask whether the conduct complained of comes within the sub-article at all. While a negligent or intentional infringement of a trademark is a delict, as is passing off at common law, the assumption (as in this interesting article on trademark infringement and the internet) that innocent infringement is also so is doubtful. And can remedies under section 14, in particular acounting for profits, really be said to be delictual? This question arose in a recent Court of Session case, Barr v Hadfields, when on 14 February 2003 Lord Nimmo Smith refused a motion for summary decree in a trademark infringement action against defenders domiciled in England, saying (no written opinion was issued) there was "no clear authority to allow me to reach any confident view whether trademark infringement can be regarded as a delict or quasi-delict. Trademarks like other intellectual property rights are the subject of detailed statutory provision; I am not confident one way or the other whether it can be said that somebody who infringes a trademark is to to be regarded as committing a delict rather than simply doing something prohibited by statute".
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