Roger Clarke's 'EPubl - Commercial Considerations'

This document is part of Xamax Consultancy's offerings in relation to electronic publishing. Its purpose is to provide a simplified and non-legalistic background to commercial aspects of electronic publishing, and to identify some key issues. It addresses:

copyright
defamation
negligence and negligent misstatement
misleading or deceptive conduct
disclaimers

DISCLAIMER: Take care! In preparing this document, I did what I could, but I might not be right! And it relates primarily to the situation in Australia.

Copyright

An excellent treatment of this matter, prepared by a colleague of mine, is to be found at http://www.uq.edu.au/~uqgdemps/copyright.html

Defamation

Defamation is a STATEMENT that PURPORTS TO BE A FACT about a PERSON, which is PUBLISHED, and which AFFECTS THAT PERSON'S REPUTATION. In all jurisdictions, a NATURAL PERSON may sue in defamation, and seek recompense for harm to reputation, goodwill and feelings. In many jurisdictions, companies may also sue, although this may be subject to qualifications and limitations

It is not a requirement that the person's reputation be damaged or lowered. It is sufficient that the material causes others to think differently about the individual (which may as easily arise from unsubstantiated praise as from criticism). What is critical is that there is some statement of putative fact about the individual which can be explicit or an innuendo implied by context.

ABUSE OR WORDS OF STRONG ANGER OR DISAPPROVAL ARE NOT DEFAMATORY, unless they contain factual implication.

Publication is essential and this requires publication beyond the plaintiff. Publication takes place each time the material is read, seen or heard, and separate actions arise in each case. Computer networks may permit wide dissemination of defamatory material across State and international borders. The practical outcome of this is that differences in local defamation laws may lead to confusion as to the appropriate law to apply.

This may be a two-edged sword. On the one hand, a plaintiff may engage in a degree of FORUM SHOPPING. To be successful in an action, a plaintiff may have to show that the law of the forum and the law of the place where the tort was committed both point to liability. Hence, where publication of a defamatory statement takes place across a number of jurisdictions (e.g. across all the Australian States and Territories), the defendant might be able to avail themselves of the defences under each jurisdiction.

Liability for RE-PUBLICATION is based on whether the person republishing the material has in some way adopted or approved of the statements. Generally there will be no liability without actual knowledge of the defamatory material or some element of negligence. There is no positive duty to examine material so as to search for defamatory statements and remove them. Where defamatory material is drawn to the attention of a service provider, subsequent failure to remove the material may create a liability for re-publication.

DEFENCES against defamation suits vary greatly between jurisdictions. For example, according to Butler & Rodrick's 'Australian Media Law' (1999), TRUTH may be pleaded as a complete defence in the common law states of Victoria, South Australia, Western Australia and the Northern Territory. In the remaining 3 States and 1 Territory, an additional test is applied. In Queensland and Tasmania (which have codifed defamation law), and the Australian Capital Territory, the additional element of 'PUBLIC BENEFIT'. In New South Wales, the additional element is 'PUBLIC INTEREST'.

The other main defences in Australian jurisdictions are ABSOLUTE PRIVILEGE (e.g. parliamentary or judicial proceedings), QUALIFIED PRIVILEGE (including the implied constitutional freedom of political discussion as determined by the High Court in the Theophanous and Lange cases), FAIR COMMENT, CONSENT, INNOCENT DISSEMINATION and TRIVIALITY.

In some jurisdictions, there is a distinction between LIBEL (written defamation) and SLANDER (spoken defamation). For slander, the litigant must prove some financial loss as a result of the publication of the material. It is unclear whether electronic statements, such as e-mail, are libel or slander.

In general, a great many defamatory statements are uttered, but few are sued.

The U.S. is reputed to be the most difficult place for a litigant to win. Some regimes (such as Singapore and Malaysia) use defamation law as a means of censorship.

Negligence and Negligent Misstatement

Negligence is the failure to fulfil a duty of care to some natural or legal person. Whether, and the extent to which, a duty exists, depends on the circumstances, and especially on the extent to which the person holds themselves out to have special knowledge or competence.

In the context of electronic or other publishing, the most likely way in which a liability can arise is through negligent misstatement, i.e. the communication of information which was materially erroneous or misleading.

In general, liability is avoidable through quality assurance measures.

Misleading or Deceptive Conduct

Liability can arise from misleading conduct or deceptive conduct, as defined in s. 52 of the Trade Practices Act and its State equivalents. The Commonwealth legislation is particularly relevant to electronic publishing. The Act applies to individuals as well as corporations.

Liability arises from conduct that:

is "misleading or deceptive, or likely to mislead or deceive";
is "in trade or commerce"; and
causes someone to suffer loss.

Even if no dishonesty or negligence is involved in the person's conduct, s. 52 still applies. Hence s.52 liabilities are more likely than suits in negligence.

Disclaimers concerning the information provided will not automatically guard against liability. Their existence and prominence is, however, an important factor. The key test is whether the disclaimer is insufficient to prevent reliance on the information. Feel free to check out my disclaimer, above; but don't rely on it being effective (:-)}

Particular care is needed in relation to volatile data, since once it becomes out-of-date it may be inherently midleading.

Disclaimers

A Disclaimer is a statement by a publisher that seeks to limit the publisher's contingent liabilities.

The extent to which each particular disclaimer achieves that objective depends on the nature of the legal liability (e.g. contract, particular torts, or particular statutes), and the nature of the relationship between the publisher and the aggrieved person.

To avoid or mitigate liabilities under contract, a disclaimer must be drawn to the attention of the person who signs the contract and must be explained such that the user understands the meaning of the clause. The rule is that the wording of the disclaimer is construed against the person seeking to rely on it, and hence care is needed to make a disclaimer clear, and not excessive.

Where a person has no contract with a publisher, relies on a statement by the publisher, and suffers as a result, the primary laws that are relevant are negligence in general, negligent misstatement in particular, and, most critically, s.52 of the Commonwealth Trade Practices Act. Section 52 protects individuals and corporations against misleading and deceptive conduct. To be successful, a litigant must show a chain of causation between the statement and the loss that they suffered. The occurrence of an intervening event may be held to have broken that chain. A disclaimer has limited impact on the liability of a publisher under s.52, although the presence of a disclaimer may mitigate the litigant's claim.

Some relief from s.52 is available in relation to re-published information, however. The High Court has held that "if the circumstances are such as to make it apparent that the corporation is not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is worth, we very much doubt that the corporation can properly be said to be itself engaging in conduct that is misleading or deceptive".

It is difficult to frame an effective disclaimer, and easy to produce an ineffective one. Disclaimers couched in legalistic fine print have little effect, because they fail the test of being effective communication to the reader. For the same reason, attempts to bind the reader with terms and conditions that they have not read (e.g. because they declined a polite request to click on a hot-link called 'read our disclaimer') are generally unsuccessful. Including a statement that the reader 'accepts' the publisher's claim is more likely to harm the publisher's case than help it.

Many web-page disclaimers fail the communication test because, for example, they are at the bottom of a window and not visible on the screen, because they are dependent on a feature that some web-browsers do not support or some users turn off (e.g. Java), or because a user gains access directly to the page containing the substantive publication, without being forced to read the disclaimer first.

To be effective in law, a disclaimer would probably need to be expressed, in simple, easily understood English, at the top of every document, in large, bold-face type, using the intensely irritating 'blink' function. It may include a statement that the publisher does not vouch for the truth or accuracy of the content of documents the publisher has used in developing their own publication, e.g. Bureau of Statistics data.

To test your understanding of this section, I recommended that you now go back to the beginning of this document, and assess the effectiveness of the 'Disclaimer' I provided.

A Few Examples of Disclaimers

1. Here is an attempted Disclaimer relating to beta-version software. The first page is the Disclaimer, and the second the actual page:

http://beta.supra.com/disclaimer.html

http://beta.supra.com/download-25.html

The problems include the following:

the Disclaimer can be accidentally or intentionally avoided, and hence there is no way to prove that the person ever saw it;
the Disclaimer appears at the bottom of the page;
the page contains a lot of information;
the language is very legalistic; and
if it were an Australian company, the disclaimer would represent an attempt to exclude or modify the implied terms of merchantable quality or fitness for purpose. It would have no effect and would actually be an offence under the Trade Practices Act.

2. Here is one whose effect is confusing:

http://web2.airmail.net/ej/disclaimer.html

The intention appears to be to communicate that these are the page-owner's own opinions and no-one else's, so that his company cannot be sued (i.e. the contingent liability that it is meant to avoid is vicarious liability, which is something that can be disclaimed effectively). The trouble is that the ambit of the claim is far too broad.

3. The Australian Stock Exchange's Disclaimer looks like this:

http://www.asx.com.au/homepage.html

It appears, ineffectively, at the very bottom of the page; its claim is very broad in its ambit; it is legalistic and confusing; and it attempts to disclaim facts that have not come into being, which the courts have indicated is a ground for striking out a disclaimer.

4. This Disclaimer:

http://www.combank.com.au/yourbusiness/a02h.htm

is lost behind marketing text, and it is unclear what unintended liabilities it is intended to guard against.

5. Finally, here is a relatively good disclaimer:

http://adams.patriot.net/~crouch/flnc/annul.html

This is about the best that can be achieved, because it is very clear and to the point. Its use at multiple points on the page, and the use of bold-face type are effective ways of drawing attention to the disclaimer.

Acknowledgement. I greatly appreciate the assistance of my colleague, Gillian Dempsey, in the preparation of this material.

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Created: 1 December 1996 - Last Amended: 24 November 1997, additions to Defamation 2 December 2001 and 1 December 2003 by Roger Clarke - Site Last Verified: 15 February 2009
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