The astonishing growth of the Internet over the past 10 years has brought profound changes to the business world. It has also had a great impact on the law, raising new issues that were almost unimaginable before the Internet became a widespread tool for communication. An important issue for corporate counsel is that of defamation. As is well known, the Internet has the power to build reputations and launch careers overnight; yet, it has a darker side as well – the power to damage reputations and destroy careers just as quickly. Lawyers need to be aware of this new development, since we have entered uncharted territory that poses significant risks for companies and their employees.

Power has shifted

Fortunately for the legal profession, much of the framework that defines defamation remains unchanged. Individuals – including corporate entities – have the right to a good name, and not to have their reputations disparaged without legal justification. Not surprisingly, then, the law governing defamation applies to the use of Internet communications under the same basic principles as other forms of communication. Protecting an individual’s good name must, of course, be balanced against the right to freedom of speech, and the tension that exists between the two interests continues unabated in the Internet Age.

What has changed, however, is the ease with which defamatory statements can be made. Email, websites, bulletin boards and chat rooms have given individuals unprecedented power to defame. These innovations provide a single person with the means to damage a reputation instantly, in relative anonymity, while reaching a potentially global audience. As a majority of the Ontario Court of Appeal noted in Barrick Gold Corp. v. Lopehandia, large corporations no longer automatically hold an advantage in a reputational battle. With the Internet, every individual is a potential David in his struggle against Goliath.

The increased ease of defamation has brought with it a correspondingly elevated potential for harm. While newspapers or television broadcasts have relatively limited circulation and are traditionally confined to circumscribed geographies, defamatory statements on the Internet are subject to no such limitations. They can be copied, linked and repeated endlessly, and they can be accessed anywhere in the world where someone can log onto the Internet.

With the Internet, defamation now knows no borders, and this raises one of the thorniest issues in defamation law: jurisdiction. Whereas jurisdiction was previously a relatively simple matter of determining where a malicious or defamatory statement was published and where it was read, the Internet has rendered the process of determining jurisdiction considerably more complex. Not only can such a statement be disseminated anywhere in the world, it can also be uploaded anywhere as well. The courts are only now beginning to address the novel issues this raises – from “forum shopping” around the globe by those with a grievance, to the ability to enforce judgements in jurisdictions other than where a case was heard. Taken together with the ease of publication, this jurisdictional complexity makes the Internet that much more “defamation-friendly.”

Technology is changing, and the law needs to adapt

Canadian courts have recognized this new reality in assessing defamation cases. They have acknowledged that an intention to inflict maximum harm on a plaintiff by publishing to a global audience merits a corresponding increase in the damages awarded. They have also decided that the anonymity of the Internet is relevant, since its impersonal nature may contribute to the believability of a defamatory statement.

Yet the courts are also struggling. Their decisions have typically been narrow in scope, eschewing general principles to rely instead on highly specific, fact-based analyses. The courts’ hesitation derives, in large measure, from the rapidity with which communications are evolving. They have little case law to draw on and are facing an issue that is, in many ways, beyond their current scope: when a technology changes society as fast and as significantly as the Internet has, courts face new challenges. Ultimately, the response may be best left to the legislatures, not the courts, to work toward consistency and uniformity among jurisdictions. Meanwhile, the courts will continue to grapple with the application of older principles to challenging new scenarios.

General counsel must be proactive

In such an uncertain environment, it is all the more important for general counsel to be vigilant. Not only are the stakes now potentially higher, the ease with which defamatory statements can be made increases the likelihood that such statements will occur. People publishing through a website, discussion group or email may incorrectly view such statements as a less formal type of communication and, armed with little or no understanding of the law, refrain from the editorial and legal checks that are afforded to professional media outlets. In addition, in many cases it is difficult to identify who made a statement on the Internet and tracing an author may be costly and time-consuming.

This applies as much to committing libel as to defending against it. Employees with no legal training may expose their company to legal liability and damages with reckless emails or web postings that they mistakenly believed did not constitute publication. So, counsel must ensure that everyone in a company understands what they may and may not communicate on the Internet. It may be particularly challenging to control statements by disgruntled or former employees, but counsel can take steps to address this through policies, Codes of Conduct, and in some cases confidentiality agreements.

Greater vigilance also boils down to speed of response. Speed is vital not only because communications spread so fast on the Internet, but also because a number of issues must be considered in addressing a potentially defamatory statement. Initially, the issue is a legal one: Is a statement in fact defamatory? Or is it true, fair comment or protected by a legal privilege? This issue raises several other inquiries: What are the notice and limitation periods under the relevant legislation? Does the notice period for other media apply to Internet communications and what is the window of opportunity for launching a lawsuit? What other remedies may be appropriate and available to address or respond to a perceived harm?

Once the legal questions have been answered, counsel must then consult with senior management to assess an appropriate response. The ensuing damage simply may not be enough to warrant getting a statement removed, and legal action may only make things worse for an entity’s reputation: a lawsuit can be complex, costly and lengthy and, in the end, may generate negative publicity far in excess of that associated with the original statement. These are strategic corporate questions that may outweigh narrower legal considerations.

Where are we headed?

The use of the Internet continues to grow around the world, and the most troubling aspect of this growth for defamation law is jurisdictional. Not only is technology evolving faster than the law, but it also respects no national boundaries. Some Canadian courts have recently commenced the task of moving the country’s defamation regime closer to that of the United States, and a growing compatibility between jurisdictions may some day reduce the difficulty of enforcing foreign judgements. Yet the challenge remains: electronic communication is proliferating and has the potential to do untold harm, whatever (and wherever) remedies might be available after the fact.

For general counsel, then, the ultimate answer to such a challenge lies in proactivity coupled with vigilance. A proactive approach to potentially harmful electronic communication includes addressing the use of electronic communication in corporate policies, Codes of Conduct, and confidentiality agreements, where necessary. It also means educating employees on the general principles and protocol for electronic communications and establishing procedures for being alerted to potential problems – whether they originate from within or from outside the company. By being vigilant about such communications, general counsel will be able to react quickly when issues do arise, consulting with counsel and senior management to devise the most appropriate strategy.