"You better watch what you say in online discussion groups, or prepare to defend yourself."
From Money Daily News :
In a move that sent a chill down the
backbone of the Internet, Web surfers
used to saying whatever they want --
damn the facts -- were put on notice this
week that at least one company is fed up
and not going to take it anymore.
The company, Presstek, filed a
defamation suit against three investment
discussion group, in essence alleging they
spread lies that cast the firm in a bad light.
And judging by the reaction of other firms
to the action, more lawsuits are just
around the corner. Presstek says publicity
about the suit sparked calls from at least a
half dozen other firms interested in filing
similar complaints.
"I think it is important for people to
understand that there are a lot of people
in American businesses who know exactly
what is going on on the Internet, and that
they are not going to tolerate unlawful
conduct," says Robert McDaniel, the
general counsel for Presstek.
McDaniel says he does not want to
discourage open discussion of his
company on the Net. "That is an
appropriate use of the Internet. But you
can influence a lot of people. And if you
do so improperly, I think that is a
problem. What bothers me is the
destruction of shareholder value using
inaccuracies and innuendo as a tool."
So where exactly does that leave
Net-based investors who thrive on the
open exchange of ideas in the
freewheeling discussion groups found in
the threads at sites like Silicon Investor
and Motley Fool?
Do you have to fact-check every
comment, or preface posts with
legal-sounding disclaimers as some
participants in the Presstek thread at
Silicon Investor took to doing in the wake
of the lawsuit? Or does the protection of
freedom of speech give you carte blanche
to say whatever you please?
The answer lies somewhere in between.
Fortunately, chat room participants do
have a long tradition of free speech on
their side, which gives them a lot of
latitude when making comments about
companies. That, plus a little common
sense, will get participants through most
discussions without getting sued.
Lawyers warn, however, that messages
posted on the Web appear virtually
everywhere in the world, so attention to
U.S. law may not always be enough.
With that in mind, we put together an
overview of what you can say in investing
chat groups, and still keep the lawyers --
the U.S. lawyers, at least -- off your
back.
First, some definitions. Defamation is
any comment that holds a person or a
company up to scorn, ridicule or
contempt; injures them or their business;
or accuses them of a crime. Libel is the
written form of defamation, and slander
is the spoken type.
Here's a guide to what you can say about
your favorite investment or short position
while reducing the risk of a defamation
suit:
Truth Truth is the fireproof defense
against defamation. You are permitted to
say anything that is true, regardless of
how bad it makes a company look.
Opinion Here again, the law gives you
a lot of latitude to say what's on your
mind. "The Supreme Court has said that
there is no such thing as a false idea,"
explains Susan Buckley, a First
Amendment lawyer with the New York
law firm of Cahill, Gordon & Reindel.
"You can only defame someone by
utterance of a false fact." So you can have
an opinion, and it does not have to be
correct. But to be protected, your opinion
has to be based on facts, at least loosely.
How loosely? This is where you get into a
gray area, but again, you have some
wiggle room. "Generally, you can get off
the hook so long as the facts are correct,"
says Floyd Abrams, also a First
Amendment attorney with Cahill, Gordon
& Reindel. "You have to have some
underlying fact that is related to your
opinion. But you get a lot of leeway."
For example, a person who noticed that
revenues declined moderately for two
quarters at a company and then said they
think it is going to go out of business
soon, would probably be protected,
Abrams said. Often, though, to be
protected you need to state the facts at
the same time you state the opinion. And
if you know your opinion is wrong at the
time you state it, you will lose in a lawsuit
- if the complainant can prove that you
knew this, of course.
Predictions Likewise, forecasts are
usually protected, because it is impossible
to say whether a prediction is true or false
at the time it is made.
Exaggeration You also enjoy an
exemption for tall tales, known as
"rhetorical hyperbole." If you say "this is
the worst company in history," for
example, you are protected, because it is
obviously an exaggeration, and a
statement that can not be proven right or
wrong.
Public figures You also get extra
protection when you say negative things
about a "public figure." To win a libel suit,
a public figure has the additional burden
of proving that a statement was made with
malice, in addition to being defamatory
and false. "Malice" means the writer
intended to injure, and either acted with
knowledge that the statement was false,
or acted with "reckless disregard" for
whether the statement was true. So you
can make defamatory and untrue
statements about a public figure, but if
they were not made with malice, you are
off the hook. A non-public figure only has
to show that the statement was
defamatory and untrue.
The tricky part here is that not all
companies are considered public figures.
"The law looks at the degree to which the
business has become involved in public
debate about matters of public interest,"
says Abrams. All cigarette companies, for
example, are public figures. "But a
company that makes a product that is not
inherently controversial may be a private
figure." The more a company tries to
attract business by advertising, however,
the more likely it is to be a public figure.
"But the law is still developing," says
Abrams. "It is still in a chaotic state on this
question."
Public forum And don't forget that a
website is a public forum -- not to be
confused with more private forms of
communication like the telephone. This
matters because it has an impact on the
amount of damages you can be sued for.
When asking for money from defendants,
a company has to demonstrate how much
damage was done. It is easier to show
that defamation in a public forum, as
opposed to a private conversation,
harmed the company.
Wired world The issue of defamation
on the Internet raises the thorny question
of where something is actually published
when it appears online. Courts, though,
are quickly lining up on the side that says
if a statement or Website appears
somewhere, it appears everywhere.
This means that writing comments on the
Internet exposes you to libel laws around
the world. And that's a problem, because
many legal systems don't protect you as
much as in the U.S. Take the U.K., for
example. "All the plaintiff must show is
that he was defamed," says Ed Mishkin, a
lawyer for Cleary, Gottlieb, Steen &
Hamilton in New York. "Then it is up to
the defendant to show the statement was
true." In the U.S., the plaintiff has the
challenge of proving the statement false.
What's more, in the U.K. there is no
higher test for public figures, like in the
U.S.
That explains, of course, why many
lawyers chose to sue international
publications for libel in the U.K., rather
than in the U.S. And there is no reason to
think it would be any different when it
comes to the Internet.
pathfinder.com@@Ikgq9QQAAhPSsuLd/cgi-bin/boards/read/267/4 |
