Melbourne mining magnate Joe Gutnick earlier this month reached a $580,000 out-of-court settlement with Dow Jones & Co, ending Gutnick’s four year-long defamation suit against the US-based publisher. But while defamation and ‘internet law’ experts worldwide have been following the case with great interest, the question of whether or not Gutnick was defamed was not what held their attention. Rather, the significance of Gutnick lies in the case’s establishment of a legal understanding of ‘publication’ as applied to materials uploaded to the internet. Gutnick also set a precedent defining the jurisdiction that may apply in cases involving internet-based defamation.

The internet is probably the clearest — and for jurists, the most challenging — example of information technology developing at breakneck speed and leaving the law far behind in its dust. Defamation is one area that is significantly uncharted territory when it comes to online matters, but there are others, including intellectual property rights and privacy law. Gutnick has made a start on mapping that area although it will require a good volume of subsequent cases before the current rough sketch can be considered an accurate guide.

The Gutnick case began in November 2000, following the publication of an article on the web version of Dow Jones’ Barron’s magazine. The article suggested Gutnick had had an inappropriate business relationship with Nachum Goldberg, who was jailed for tax evasion and money laundering. This allegation, he would argue, damaged his reputation — particularly in his home state of Victoria.

The parties began a battle to establish a jurisdiction for the case, and this fight and the accompanying arguments represent the most significant aspect of Gutnick. Dow Jones wanted the case to be heard in the US where libel laws are less plaintiff-friendly than in Australia. Protection of a free press underlies many of these laws, while the ‘public figure’ defence requires well-known plaintiffs to make a stronger case in defamation suits than that likely required of those who are not regularly in the public eye.

Gutnick himself, however, wanted the suit to be heard in Victoria where the onus is on the publisher to make their case, not the plaintiff. This difference lies at the heart of many US criticisms of Australian libel law which characterise it as archaic and unduly tough on publishers. These criticisms will likely intensify in the wake of Gutnick’s victory in the case.

In December 2002, the Australian High Court ruled that the case could be heard in Victoria, sparking legal interest worldwide. The decision established the principle that ‘publication’ is understood to have occurred where an article is downloaded — this can occur, theoretically, anywhere in the world where there is internet access — rather than where it is uploaded. Dow Jones had argued unsuccessfully that the latter principle should apply and that, because the article was uploaded to a server in New Jersey, the case should be heard in the US.

The implications of this principle are clear: plaintiffs in internet defamation cases will now be able to ‘forum shop’ for the jurisdiction most likely to rule in their favour. Given Australia’s plaintiff-friendly laws, this might well prove to be a popular destination. This has not happened yet. In Canada, however, where the principle has been adopted, a former African diplomat sued The Washington Post successfully over an article that was read on the web in Ontario. Interestingly, the plaintiff did not live in Canada at the time of publication and only moved there subsequently. The case is now subject to appeal.

Editors and publishers are now concerned the fear of being sued will compromise reporting, with magazines and newspapers choosing to ‘tone down’ what they print to avoid offending anyone. “The ruling’s potential chilling effect on anyone engaged in investigative journalism — be it of stock scams, government misdeeds or even terrorism — is clear,” Barron’s said in an editorial published shortly before the Gutnick settlement was announced.

As Gutnick himself told The Australian, Dow Jones and the other US media organisations that joined the company in the suit would have avoided the decision had Dow Jones chosen to settle immediately after the case was launched (although it might only have been a matter of time before another plaintiff sought to establish the Gutnick principle in a precedent).

In the meantime, legal experts will be watching to see whether the High Court decision has opened up a Pandora’s Box of defamation suits worldwide — including those that might be launched by corrupt governments against overseas journalists who write articles criticising their regimes.

Some experts support the idea of a worldwide set of rules governing publication on the internet, and in the wake of Gutnick’s victory, pressure for such a structure might well be expected to increase.