in Commercial Litigation

Online liability: is your business at risk?

Over the past decade, online retail has grown into the primary means of selling for many small and large businesses alike. As businesses grow and expand, so must their online aspects in order to keep pace with the habits of their consumers.

However, as the potential for online interaction with consumers expands exponentially, the laws and legal principles that are used to govern the physical world are increasingly found to fall short in their applicability to the online world.

The zGeek case in Australia was a prime example of how legal uncertainty can negatively affect online dealings. zGeeks was an online forum formerly run off an Australian server, populated mostly by Australian users. The forum, and its owner Tony Brisciani, are now the subject of a $A42.5 million defamation lawsuit in the New South Wales Supreme Court.

The Facts

The case originated with the plaintiff Greg Smith, a former partner in the now de-registered company Pisces All Media, discovering comments on the zGeeks forum in relation to a book published by Pisces entitled The Third Truth. The book claims the September 11 attacks and the Bali Bombings were achieved through the use of nuclear weapons installed by Israeli Intelligence operatives.

Unconvinced, several of the forum’s users posted comments attacking the book’s claims. Upon discovering the comments, Smith sought to defend the work, and in the ensuing ‘flame war’, allegedly defamatory comments were made by a user of the forum.

Ten days after the allegedly defamatory material was posted, Smith contacted Brisciani by email, demanding the personal details of the user who posted the material and that of Mr Brisciani, as well as demanding an apology and a retraction.

Following legal advice, the offending thread was removed from the website, however Smith pursued legal action claiming that the comments posted on zGeek were damaging to his reputation, and cost him a film deal for the work Merchant of Death.

Impact

The New South Wales Supreme Court struck out the initial claim and preliminary motion to close the zGeeks website due to a defect in the submission by the plaintiff. However Smith has made his intention to refile the claim. In addition, Smith has filed a trade mark application for the name ‘ZGeek’, and filed a breach of trademark suit, despite not being the registered user of said trademark at the time of filing the complaint.

Brisciani has announced his website is ‘abandoning Australia’ due to the lack of protection offered under Australian law. The Australian Broadcasting Act allows actions to be sought against people who made defamatory comments and those who ‘published’ them – currently, there is no evidence to the contrary that operating a web forum on which defamatory comments are made constitutes publishing.

Implications for you as the business owner

Continuous changes in technology means that online activity can suffer from a crippling lack of certainty. While some jurisdictions have made a move towards reducing the uncertainty through new legislation designed to specifically govern online activities, even the way in which jurisdiction is determined in order to apply these laws is still not entirely clear.

If you are going to operate any sort of business activity online which involves interaction with potential consumers, seek legal advice on where and how your online venture is established, in order to afford yourself the greatest possible legal protection.