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December 10, 2002, 9:00 AM ET, Alert No. 564.
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High Court Rules Australia Has Jurisdiction Over Dow Jones Based on Web Publication
12/10. The High Court of Australia issued its opinion in Dow Jones v. Gutnick, a case involving three procedural issues (jurisdiction, choice of law, and convenient forum) in a tort action brought in Australia for an allegedly defamatory news story published on the Internet by Dow Jones, a U.S. publisher. The Court held that because of publication on the Internet, the Australian courts have jurisdiction, that Australian law applies, and that the case should proceed in the trial court in the Australian state of Victoria.

Dow Jones publishes the Wall Street Journal and Barrons, both in paper, and on the Internet. Dow Jones is incorporated in the state of Delaware, and is based in New York City in the state of New York. The web servers containing Barrons news articles are located in the state of New Jersey.

Joseph Gutnick resides in the town of Melbourne, in the state of Victoria, in the nation of Australia.

Barrons ran a news article titled "Unholy Gains" that referenced Gutnick. Gutnick filed a complaint in the Supreme Court of Victoria against Dow Jones. He alleges that he has a reputation, and that Dow Jones has defamed him. He further seeks monetary damages.

Dow Jones entered a special appearance for the purpose of contesting the jurisdiction of the Victoria court. The trial court (Supreme Court of Victoria) ruled that publication of the allegedly defamatory statements occurred in the Australian state of Victoria, on the basis that it could be downloaded on the Internet by web users in Victoria.

Dow Jones appealed to the Court of Appeal of Victoria, which "refused leave to appeal". Dow Jones then brought the present appeal, to the High Court of Australia. The High Court dismissed Dow Jones' appeal and issued a lengthy opinion.

The High Court wrote in its opinion that "The principal issue debated in the appeal to this Court was where was the material of which Mr Gutnick complained published? Was it published in Victoria? The answer to these questions was said to affect, even determine, whether proceedings in the Supreme Court of Victoria should, as Dow Jones contended, be stayed on the ground that that Court was a clearly inappropriate forum for determination of the action." It answered that publication occurred in Victoria.

The Court elaborated that "defamation is to be located at the place where the damage to reputation occurs. ... In the case of material on the World Wide Web, it is not available in comprehensible form until downloaded on to the computer of a person who has used a web browser to pull the material from the web server. It is where that person downloads the material that the damage to reputation may be done. Ordinarily then, that will be the place where the tort of defamation is committed."

And hence, since the alleged tort occurred in Victoria, the courts of Victoria have jurisdiction to hear the case. Moreover, the law of Victoria is applicable. Finally, the Court also rejected the argument that the U.S. would provide a more convenient forum. The High Court did not address the merits of the defamation claim. The case will now proceed on the merits in the Australian state of Victoria.

The Court noted that Dow Jones raised the "spectre" of "a publisher forced to consider every article it publishes on the World Wide Web against the defamation laws of every country from Afghanistan to Zimbabwe", but concluded that this the point is without merit.

As a consequence of this ruling Dow Jones will have to defend against a defamation action in Australia. Others who publish on the Internet could also be subjected to defamation lawsuits in Australia. Moreover, if the courts of other nations were to adopt the same analysis as the Australia High Court, any Internet publisher anywhere in the world could be sued in any court anywhere in the world.

There are, however, some ameliorating aspects of the opinion. First, it does not permit unlimited forum shopping. It permits a person to bring a defamation action where that person has a reputation. In the present case, Gutnick lives in, and is known in, Victoria, Australia. Second, there is the matter of enforcement of judgments. A judgment of a foreign nation may be enforceable in that nation. Assets of the publisher within that nation may be seized to satisfy a monetary judgment. Further publication may be enjoined. However, the foreign court will likely be powerless to enjoin further publication on web servers located within the U.S., or to seize assets of the publisher within the U.S. If Gutnick wants to actually recover money beyond the value of Dow Jones' assets in Australia, or to obtain meaningful injunctive relief, he would have to bring suit within the U.S.

Seven justices participated. Four joined in the majority opinion. A review of the citations in the opinion of the Court reveals that most of the cases relied upon as precedent precede the World Wide Web. Indeed, some date from the 19th Century. The Court rejected the notion that the novel nature of the Internet should change the Court's application of long standing principles of the laws of defamation, jurisdiction, and choice of law. It simply extended and reformulated pre-existing legal principles.

However, Justice Kirby wrote a lengthy concurring opinion. He concurred in the result, but suggested that the current laws need to be re-examined. Or, as he put it, "When a radically new situation is presented to the law it is sometimes necessary to think outside the square."

He continued that "The genius of the common law derives from its capacity to adapt the principles of past decisions, by analogical reasoning, to the resolution of entirely new and unforeseen problems. When the new problem is as novel, complex and global as that presented by the Internet in this appeal, a greater sense of legal imagination may be required than is ordinarily called for." He suggested that this may be the case for tax law and commercial transactions law, in addition to defamation law.

People and Appointments
12/9. President Bush announced his intention to nominate John Snow to be Secretary of the Treasury. See, White House release and remarks by Bush at a White House event announcing the nomination. Sen. Charles Grassley (R-IA), who will be reinstated as Chairman of the Senate Finance Committee in January, stated in a release that "From what I know, he has several interesting attributes. One is his extensive business experience. We need a Treasury secretary who understands job creation. Another is his earlier comments about cleaning up corporate wrongdoing. I agree that restoring confidence in corporations is a key part of rejuvenating economic growth." Sen. Grassley also wrote about outgoing Secretary Paul O'Neill in a second release. "I worked very closely with Paul O'Neill to get the largest tax cut in a generation passed through Congress. Mr. O'Neill deserves a lot of credit for his work on the tax relief package. I enjoyed Paul O'Neill's candor about everything. More of his unreserved, honesty is needed inside the beltway. Paul O'Neill serves as an example of unselfish service for the good of the American people that more of corporate America should follow."

12/9. Verizon announced that Daniel Whelan, President of Verizon Pennsylvania, will retire on December 31. James O'Rourke, who is currently regional sales vice president for major metropolitan areas in Verizon's Consumer Sales and Service division, will succeed Whelan, effective January 1, 2003. See, Verizon release.

12/9. Microsoft hired Ken DiPietro to be corporate vice president of human resources. He will report to CEO Steve Ballmer. He previously was vice president of human resources for the Americas at Dell. See, MSFT release.

More News

12/9. The World Trade Organization's (WTO) Appellate Body issued its report [78 pages in PDF] titled "United States -- Countervailing Measures Concerning Certain Products from the European Communities". The U.S. imposed tariffs, or countervailing duties, on certain steel product imports. Various European nations complained to the WTO. The WTO established a Panel to consider the complaints. The Panel concluded that the relevant U.S. legislation is inconsistent with the Agreement on Subsidies and Countervailing Measures. The Appellate Body's report reverses this conclusion. However, the Appellate Body upheld the Panel's finding that the U.S. acted inconsistently with that Agreement by imposing and maintaining countervailing measures on steel products from privatized steel companies in the European Communities without determining whether subsidies continued to exist.

12/9. The U.S. Court of Appeals (5thCir) issued its opinion [17 pages in PDF] in Quick Technologies v. Sage Software, a trademark infringement and unfair competition case. The Appeals Court affirmed.

FCC Releases Local Phone Competition Data
12/9. The Federal Communications Commission (FCC) released a report [20 pages in PDF] titled "Local Telephone Competition: Status as of June 30, 2002. The report states, among other things, that "Total CLEC switched access lines increased by 10% during the first half of 2002, from 19.7 million to 21.6 million lines. By comparison, total CLEC switched access lines increased by 14% during the preceding six months, from 17.3 to 19.7 million lines." It also states that "About 11.4% of the 189 million total switched access lines were reported by CLECs, compared to 9.0% a year earlier."

The report also provides data and trends on the competitive local exchange carriers' (CLEC) use of their own facilities, resale of services of other carriers, and use of unbundled network elements (UNEs).

The report also states that cable telephony lines increased by 16% in the first half of 2002, and now account for about 1% of all switched access lines.

The report also states that mobile wireless telephone subscribers increased by 13% in the first half of 2002, to nearly 129 Million.

The report was prepared by the Industry Analysis and Technology Division of the Wireline Competition Bureau. This report is based on data collected from FCC form 477. However, this report focuses on switched access lines. It does not contain data on either basic Internet access or broadband lines.

Tuesday, December 10
10:45 AM -12:00 NOON. Assistant Secretary of the Treasury for International Affairs Randal Quarles will speak as part of a panel titled "The US-EU Agenda on Financial Services" at the European Institute's Trade and Investment Seminar. Location: Swissotel -- The Watergate, Monticello Room, 2650 Virginia Ave., NW.

12:15 PM. The FCBA's Cable Practice Committee will host a luncheon. The speaker will be Marsha MacBride (FCC Chief of Staff). The price is $15. No walk-ins. For more information, contact Lisa Cordell at 202 939-7900. RSVP to Location: NCTA, 1724 Massachusetts Ave., NW.

Deadline to submit comments to the National Telecommunications and Information Administration (NTIA) regarding the wills, codicils, and testamentary trusts exception to the E-SIGN Act. The Electronic Signatures in Global and National Commerce (E-SIGN) Act provides, at Section 101, for the acceptance of electronic signatures in interstate commerce, with certain enumerated exceptions. Section 103 of the Act provides that "The provisions of section 101 shall not apply to ... a State statute, regulation, or other rule of law governing the creation and execution of wills, codicils, or testamentary trusts". The Act also requires the NTIA to review, evaluate and report to Congress on each of the exceptions. See, notice in the Federal Register, October 11, 2002, Vol. 67, No. 198, at Pages 63379 - 63381.

Wednesday, December 11
9:30 AM. The FCC will hold a meeting. See, agenda. Location: FCC, 445 12th Street, SW, Room TW-C05 (Commission Meeting Room).

10:00 - 11:30 AM. The FCC will hold a public forum to unveil the new concept designs for online filings. Location: FCC, 12th Street, SW, Conference Room #1, 8th Floor.

10:20 - 10:45 AM. The Department of Commerce (DOC) will host an event for the signing of a Protocol Agreement between the U.S. and the P.R. China pertaining to technology. Commerce Secretary Don Evans and Chinese Minister of Science and Technology Xu Guanhua will sign the agreement. The DOC stated in a release that the agreement "reaffirms each country’s continued commitment to strengthen the on-going bilateral dialogue on technology, innovation and entrepreneurship." The DOC also stated that "Future cooperation will focus on exchanging perspectives on a range of issues related to technology innovation, standards, technology transfer, financing research and development, and intellectual property rights protection." For more information, contact Trevor Francis at 202 482-4883 or Location: Secretary Evans' Conference Room, 5th Floor, DOC, 14th and Constitution Ave., NW.

12:15 PM. The FCBA's Mass Media Practice Committee will host a brown bag luncheon. The speakers will be Brooks Boliek (Hollywood Reporter), Bridgette Greenberg (Communications Daily), Doug Halonen (Electronic Media), Ted Hearn (Multichannel News), Bill McConnell (Broadcasting and Cable), and Leslie Stimson (Radio World). RSVP to Barry Umansky at 202 263-4128 or barry.umansky Location: National Association of Broadcasters (NAB), 1st Floor Conference Room, 1771 N Street, NW.

Thursday, December 12
9:00 AM. The President's Council of Advisors on Science and Technology's (PCAST) Subcommittee on Federal Research and Development Investment and its National Benefits will hold an open public forum on federal technology transfer mechanisms. See, notice in the Federal Register. Location: RAND Washington Office, 1200 S. Hayes St., Arlington, VA, Room 4204 (which is accessible from the Pentagon City metro stop).

12:00 NOON. The Cato Institute will host a Capitol Hill briefing titled "Yellow Light on Total Information Awareness". The scheduled speakers include Wayne Crews, Robert Levy, and Charles Peña. See, notice and online registration form. Location: 1539 Longworth House Office Building.

The FCBA will host its annual Chairman's Dinner. See, registration form [PDF]. Location: Washington Hilton and Towers.

Day one of a two day conference hosted by the Practicing Law Institute and the FCBA titled "Telecommunications Policy and Regulation". At 12:15 PM FCC Commissioner Kevin Martin will deliver a keynote address. Location: Reagan International Trade Center.

Friday, December 13
9:15 - 11:30 AM. The American Enterprise Institute (AEI) will host a panel discussion titled "Intellectual Property: A Positive Side for Developing Country Business?". The speakers will be Michael Finger (AEI), Ron Layton (LightYears IP), and others. Location: AEI, 12th floor, 1150 17th St., NW.

9:30 AM. The U.S. International Trade Commission (USITC) will meet regarding the preliminary countervailing duty investigation regarding DRAMs and DRAM Modules from Korea (Investigation No. 701-TA-431). See, notice published in the Federal Register. Location: Main Hearing Room, ITC Building, 500 E Street, SW.

Day two of a two day conference hosted by the Practicing Law Institute and the FCBA titled "Telecommunications Policy and Regulation". Location: Reagan International Trade Center.

EXTENDED TO JANUARY 17. Deadline to submit reply comments to the FCC in response to its Notice of Proposed Rulemaking (NPRM) [15 pages in PDF] in its proceeding titled "In the Matter of Digital Broadcast Copy Protection". This NPRM proposes that the FCC promulgate a broadcast flag rule, and seeks comment on this, and related questions. This is MB Docket No. 02-230. See also, FCC release [PDF] and Order [PDF] of October 11, 2002 extending deadlines.

Monday, December 16
The Supreme Court will be in recess from December 16 through January 12.

12:15 PM. The FCBA's Professional Responsibility Committee will host a brown bag luncheon. For more information, contact Frank Montero at 202 663-8936. RSVP to Location: Arnold & Porter, 555 12th St., NW.

Deadline to submit comments to the National Institute of Standards and Technology (NIST) regarding its draft publication [90 pages in PDF] file titled "Security Metrics Guide for Information Technology Systems". This is NIST Special Publication 800-55. It was written by Marianne Swanson, Nadya Bartol, John Saboto, and Joan Hash in the NIST's Information Technology Laboratory's Computer Security Division. Send comments to marianne.swanson

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