It has already started ....
Friday, July 10, 1998
Philip's move to unmask Internet critics raises concern
TORONTO (Reuters) - Canada's beleaguered Philip Services Corp. has again
stirred controversy after moving to force America Online Inc. and other
Internet service providers to release the names of people who criticize it
on the Internet.
The waste management firm has won a dozen court orders in Canada aimed at
forcing some Internet providers to reveal the identities of subscribers
whom, Philip said, were posting defamatory and sexually harassing notes,
racial slurs and generally persecuting Philip management.
The court orders, once served, include America Online, its offshoot
CompuServe, PsiNet Inc., and others.
As a result of the action by Philip, based in Hamilton, Ontario, Yahoo
Inc. has removed some messages posted on its bulletin board. At least one
Canadian service provider has identified the originators of some of the
material, Philip said.
Philip spokeswoman Lynda Kuhn said some notes had gone too far and staff
members who followed the chat had become angry. "It got so abusive that
employees were watching the board and saying: 'Why can't the company do
something about this?' "
Kuhn said the other, nondefamatory discussion was free to continue. "We
have no interest in stopping activity in the board, people are free to ...
criticize
the company. This is not an issue of freedom of speech."
Philip, which restated up to three years of earnings due to rogue copper
trading and uncovered more heavy losses in 1997, has seen its stock drop
from a
52-week high of C$27.90 to close at C$4.95 Friday.
Rick Broadhead, co-author of the Canadian Internet Handbook, said the
legal action by Philip was ground-breaking in Canada and could force people
who chat on the Internet to curb any potentially libelous remarks that
might spark more company retaliation.
"It will be a wake-up call for a lot of people because they think they
are protected and can masquerade under an anonymous address on the Net and say
things that are potentially libelous," Broadhead said.
Tim Pinos, commercial litigator with the Toronto law firm Cassels Brock &
Blackwell, assailed Philip's move. "Either they're really thin-skinned, it's a
diversionary tactic or it's both."
"People post crap on the Internet," Pinos noted. "You don't take it
personally."
"To what extent does nonauthoritative stuff on the Net about stocks
impact the stock price or ... the reputation of a publicly traded company,
when you've
got the same thing happening from, frankly, much more credible and
legitimate sources?" Pinos asked.
"Except they (the legitimate sources) are not name-calling, they're not
being abusive, they're not using the the Internet style of slagging people."
"When it has a measurable impact, then you take action," he concluded.
One analyst who covers Philip, but declined to be identified, called the
court orders "irrelevant."
"It's getting so petty," he said. "(They) just don't realize that it's
just not worth focusing any energy on and they continue to allow themselves
to be
distracted."
Some of Internet critics, under the pseudonyms such as skeptic666 and
scrapgal, discussed the stock price tumble and grumbled about co-founder and
former Chief Executive Allen Fracassi, among other members of management.
The firm, Fracassi, current Chief Executive Felix Pardo, and others have
been named in more than 20 shareholder lawsuits that allege they artificially
inflated 1997 earnings and inventory, among other questionable financial
practices.
America Online spokeswoman Tricia Primrose said the court order had not
been served yet to its Dulles, Va.-based headquarters. However, its usual
policy was to alert its subscribers so they could react, and then release
the the names within 10 days.
Broadhead backed the court orders, saying the law should be upheld. "You
can't have a virtual free-for-all ... They're breaking the law and they
have to be
held accountable."
Kuhn said the company was still gathering information, evaluating it and
deciding on appropriate action.
If Philip moves to sue the critics, Pinos said, a defense could be that
the comments were true or fair comment, which is opinion reasonably derived
from
the facts.
Broadhead said more companies may follow Philip's example. "It sets a
precedent. Are we going to see companies across Canada do the same?"
People will learn to have proof before making a defamation public post.
GB
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