RUSSELL JONES & WALKER
LAST month Aim-listed oil company Nighthawk Energy went to court to force two investment chatrooms to reveal the identities of people who had been posting “persistent defamatory and untrue postings” about the firm. This is the first time that such a case has been undertaken, and it could offer a course of action for firms that have been the victims of malicious postings on websites.
Specialist business websites and blogs have helped spread information about firms on the internet. But when false rumours about performance are posted on these sites the damage can be considerable and enduring. Now companies are beginning to realise the severe negative impact of such blog postings on their share price and trading reputation.
It is always difficult for the target of such rumours to decide whether to ignore them or to try and deal with them either through public relations or the courts. Frequently, corporate gossip will spread as quickly as the latest antics of footballers and celebrities.
But there is a quick and relatively straightforward way to deal with damaging and false information. Like an individual, a company can sue for defamation. Defamatory allegations that damage a firm’s trading reputation or negatively affect its business are actionable, and companies are understandably keen to protect themselves. Increasingly, they are finding that they can obtain the identity of what appear to be anonymous publishers of defamatory posts on the internet, and potentially sue for defamation.
This is possible through the use of what are called Norwich Pharmacal orders – where you can apply to the court for a third party to disclose information when it has innocently become caught up in the “wrongdoing of another”. The third party can be compelled to disclose the identity of the “wrongdoer” so that proceedings can be brought.
Organisations that host bulletin boards or which invite comments in response to articles on websites are usually protected from action against them for defamation by Section 1 of the Defamation Act. This protects what are known as “innocent disseminators” – those who are merely a conduit for the publication of the defamatory material. Because most bulletin board hosters do not moderate content before it is published, they are not considered to be publishers and can rely on the protection of Section 1.
However, if defamatory allegations are posted then the hoster is “caught up in the wrongdoing”. This means that the company which has been defamed can apply for a Norwich Pharmacal order against the firm that published the defamatory material to disclose the email address of the person who posted it. It is also possible to use internet service providers to get at the underlying IP address for that email – sometimes necessary because the person who posts the email will often disguise their identity. Once details are obtained from the internet service provider, it should be possible to obtain the address of the registered user of the fictitious email address. The good news for firms that are defamed is that these orders are generally obtained without objection from the third party. And because the courts are familiar with them, they are easy and inexpensive.
Of course, the person who posted the defamatory allegations is no more at risk than any other defendant in defamation proceedings. They can rely on the same defences of truth, fair comment or qualified privilege as any defendant can in such a case if they can argue that the matter is of public interest.
But Norwich Pharmacal orders mean that the poster of a defamatory allegation cannot simply hide behind a mask of anonymity or attempts to disguise their true identity. Because of the damage that persistent defamatory allegations can have on an organisation these orders can be a very useful tool to a company that needs to protect its reputation from untrue allegations.