Fallen Angel: Demon Faces Defamation Claim

June 30, 1999

Kit Burden is a Senior Assistant Solicitor at Barlow Lyde &Gilbert Kit specialises in IT, IP and commercial contract issues.

As the volume of communication via the Internet by both social andbusiness users continues to rocket upwards, attention has increasingly focusedon the role played by Internet Service Providers (ISPs), in particular inrelation to the postings made to the newsgroups and bulletin boards which theyoperate. Although there have been precedents set by the courts in variouscountries around the world (including the US and Germany), the UK has not hadany case law on these issues – until now. On 26 March 1999, Mr Justice Morlandhanded down a judgment in respect of a strike out application which is likely toreverberate around the Internet community for some time to come.

Background to Godfrey v Demon

Demon Internet (Demon) are one of the better known and successful ISPs,founded in June 1992 and more recently acquired by Scottish Telecom. Aside fromstraightforward provision of access to the Web and e-mail facilities, one of theadditional services provided by ISPs such as Demon is the ‘hosting’ ofnewsgroups on its servers. Such newsgroups provide a forum for the posting ofmessages from users of the Internet (who need not be subscribers to the ISPs ownservices), and will often be focused on particular subjects of social, academic,political or religious interest. Once posted, the message is capable of beingaccessed and read by anyone whose own ISP offers access to the newsgroup inquestion.

One such newsgroup was at the alt.soc.culture.thai usenet area, hosted byDemon. On 13 January 1997, material was posted to the newsgroup which purportedto originate from the claimant, Lawrence Godfrey, a London lecturer in physics,mathematics and computer science. In fact, despite quoting Mr Godfrey’s e-mailaddress, the material was not produced by him and was, in the words of MrJustice Morland, ‘squalid, obscene and defamatory’.

On 17 January 1997 Mr Godfrey, having become aware of the presence of theoffending material on the newsgroup hosted by Demon, sent a fax to Demon’smanaging director informing him that the material was ‘forged’ and demandingthat Demon take action to remove it from its server. However, Demon did not takeany action (albeit that it is unclear whether this was by deliberate decision oroversight) until 27 January 1997, when the material on the server was routinelydeleted.

Mr Godfrey sued Demon for libel, on the basis that as the ISP who controlledthe server on which the relevant newsgroup was based, it was effectively apublisher of the defamatory material within the meaning of the Defamation Act1996.

The Previous Case Law

This is the first defamation case involving an ISP as a direct defendant toreach the English courts, although by no means the first time that the use ofthe Internet and e-mail in particular has given rise to legal liabilities forparties in the UK. The best known example is probably that involving NorwichUnion, which agreed in an out-of-court settlement to pay Western Provident £450,000for defamatory statements made by its employees on its internal e-mail system.Other examples have included disputes between academics as to allegedlydefamatory comments made about each other on Internet bulletin boards (see forexample the Australian court decision of Rindos v Hardwick). However,none of these cases have involved an examination of the potential liability ofthe relevant ISP, as opposed to the actual author(s) of the allegedly defamatorystatements.

In the United States, on the other hand, the potential liabilities of ISPshave been considered both by the judiciary and by the legislature. For example,in 1991 one of the largest ISPs, Compuserve, was sued in respect of the contentsof an electronic publication called ‘Rumourville’ which it had no part inproducing or editing, but which was distributed using its network (Cubby vCompuserve, 776 F.Supp 135). The court ruled in favour of Compuserve,apparently in reliance upon an analogy between the role of Compuserve with thatof a library or bookshop from which a ‘publication’ containing defamatorymaterial could be obtained.

In contrast, in the case of Stratton-Oakmont Inc v Prodigy Service Co(NY Sup Ct, 24 May 1995), the plaintiff (an investment bank) was the subject ofallegedly defamatory statements posted on a bulletin board operated by Prodigyby an unknown individual. Stratton-Oakmont sued Prodigy on the basis thatProdigy had exercised a degree of editorial control over the contents of thebulletin board in question (ie in contrast to the approach of Compuserve in the Cubbycase, referred to above). The court agreed, and ruled that Prodigy had‘arrogated to itself the role of determining what is proper for its members topost and read on its bulletin boards’. Moreover, as a result of the contentsof a ‘Board Leader Agreement’ between Prodigy and the Board Leaders of eachbulletin board, the court concluded that Prodigy could be said to have beenacting as an agent for the Board Leader and therefore shared responsibility forthe contents of the bulletin board. The net result of this was a finding by thecourt that Prodigy was to be seen as a ‘publisher’ of the defamatorystatement.

This ruling prompted Congress to enact s 509 of the TelecommunicationsDecency Act 1996 in order to provide some measure of protection for ISPs.Specifically, s 509 provides that an ISP is not to be considered as a‘publisher’ of material provided by a third party, and also protects ISPs inrelation to any actions taken by them in good faith to exclude or restrictaccess to material which the ISP might consider to be ‘obscene, lewd,lascivious, filthy, excessively violent, harassing or otherwiseobjectionable’.

The practical effect of s 509 was seen in the 1997 case of Zeran v AOL(958 F.Supp 1124), where AOL was sued in respect of a bulletin board messagewhich had again been posted by an unconnected third party. The Court of Appeals(fourth circuit) referred to the Telecommunications Decency Act and ruled thatits effect was to create ‘federal immunity to any cause of action that wouldmake [ISPs] liable for information originating with a third party user of theservice’. The Court of Appeal even went so far as to say that all claimsseeking to construe the role of an ISP as being analogous to that of a publisherwould likewise be barred, on the basis that the court felt that Congress hadmade a ‘policy choice’ not to seek to deter ‘harmful’ online material bypinning liabilities upon intermediaries such as ISPs, as opposed to the actualauthors of the material in question.

The Decision in Godfrey v Demon

In the light of the jurisprudence from the US, it might have been anticipatedthat a similar line would be adopted by the English courts. However, Morland Jquickly indicated that he was unlikely to take such a course, by emphasising the‘divergence’ of approach in English and US law relating to defamation. Hetherefore concluded, although he went through the US authorities referred toabove in some detail, that they would be of ‘limited assistance’ in respectof a defamation action in the English courts.

Instead, Morland J looked first and foremost at the provisions of theDefamation Act 1996 (the Act). Section 1(1) of the Act provides that it will bea defence to a libel claim to show that the defendant:

  1. was not the author, editor or publisher of the statement complained of;
  2. took reasonable care in relation to its publication; and
  3. neither knew nor had reason to suspect that what he did caused or contributed to the publication of a defamatory statement.

Section 1(3) goes on to specify certain activities which, of themselves, willnot suffice to make a defendant into an author, editor or publisher of adefamatory statement, and the list includes those involved with processing,making copies of, distributing or selling copies in an electronic medium andoperating or providing any equipment, system or service by means of which thestatement is retrieved, copied, distributed or made available in electronicform. Section 1(3) also provides that an operator of or provider of access to acommunication system is not responsible for statements transmitted or madeavailable by those over whom the operator has no effective control.

In the light of the above, it can perhaps be understood why Demon may havebeen confident of its prospects of successfully defending Mr Godfrey’s claim.Indeed, Morland J concluded that Demon was not the publisher of the defamatorystatement complained of. However, he also concluded that the additionalrequirements specified in s 1(1) of the Act, ie to take ‘reasonable care’ inrelation to the publication of the statement and to have no knowledge or reasonto believe that it was causing or contributing to the publication of adefamatory statement, caused ‘insuperable difficulties’ to Demon by reasonof the fact that Mr Godfrey’s fax had put it on notice of the defamatoryposting to its newsgroup.

In the light of this, Morland J ruled that Demon could not avail itself ofthe defences in s 1 of the Act, and that it had ‘published’ the defamatorystatement on each occasion that a subscriber to its service accessed thenewsgroup which contained it (and so transmitted the relevant information fromthe storage of Demon’s server). It was the ‘hosting’ of the newsgroupwhich was key to the ruling in this regard, as Morland J appeared to concludethat it was this fact that took Demon outside the category of simple operatorsor providers of access to communication systems, for the purposes of s 1(3) ofthe Act.

Morland J accordingly struck out Demon’s Defence, although in doing soindicated that he was minded to grant leave to Demon to amend the Defence andthat, on the basis of the likely contents of the amended Defence, the eventualaward of damages to be awarded to Mr Godfrey would be small.

As Demon immediately announced its intention to appeal, the Internet ServiceProvider Association denounced the ruling, claiming that it was not technicallyfeasible for an ISP to monitor all information passed to and from itsnewsgroups, and that the natural consequence of the ruling would therefore bethat ISPs would need significantly to reduce the services offered tosubscribers, and in particular would cut back on the availability of newsgroupsand bulletin boards. Yanan Akdeniz, of the Cyber Rights and Cyber Libertiesgroup, complained that the ruling would compel ISPs to be ‘defendant, judgeand jury’ at the same time in relation to third-party messages which theyreceived complaints about.

However, Mr Godfrey himself claimed that the case had resulted in ‘immensemisunderstanding’ and that his case did not represent any form of attack onthe principles of free speech. Instead, he said a distinction was to be drawnbetween freedom to state views and opinions, and an ‘imaginary’ right tomake defamatory statements and get away with it.


Undoubtedly the central feature of the case is the fact that Demon was awarethat the defamatory statement concerning Mr Godfrey had been posted to anewsgroup which was present on one of its servers, was capable of being accessedand read by innumerable third parties, and that its purported author haddisclaimed responsibility for it and had complained of its defamatory nature.Notwithstanding this knowledge, Demon did not remove the material from theserver which hosted the newsgroup, despite having the means to do so. In sodoing (or rather not doing), it could be said that Demon was exercising a formof editorial control and, on the wording of s 1 of the Act, could clearly besaid to ‘know or suspect’ that it was contributing to the distribution of adefamatory statement. At the very least, as Morland J concluded, it took Demonoutside the category of simple providers of access to a communications system (iethe Internet), and so prevented Demon from availing itself of the protection ofs 1(3) of the Act.

However, if this is indeed the effect of the caveats to the defence providedin s 1 of the Act, it would appear to render the apparent protection for ISPs ins 1(3) largely illusory, as any form of notification to an ISP of a complaintabout the content of a message on one of its servers would be sufficient to putthe ISP on ‘notice’, and therefore require it to make some form of decisionas to whether the material was defamatory. In such circumstances and in view ofthe likely consequences of taking no action, it is hard not to conclude thatISPs will take the safe course and delete the relevant message without detailedconsideration of its contents. As Demon’s press release of 26 March 1999states:

‘Complainants may be able to force ISPs to police and censor any item of information on their servers. The way is opened for scurrilous and unsubstantiated claims that would undoubtedly curb the freedom of speech by internet users’.

It would therefore appear that the scales are being tipped too firmly infavour of complainants, who are potentially able to ‘police’ not onlystatements which are personally defamatory, but also other materials which theybelieve to be objectionable, safe in the knowledge that they take on nofinancial risk themselves in so doing (as they do not need to incur the costs ofa legal action to determine whether the statement was, in fact, defamatory).Moreover, such complainants have the added comfort of knowing that there is the‘deep pocket’ of the ISPs and, in all likelihood, their insurers to targetin the event that their complaints are ignored.

It seems likely that further legislation will be necessary to correct theposition and the Government has a timely opportunity to do so in the form of theElectronic Commerce Bill, which will in any event need to address the generalissue of liabilities of intermediaries involved in e-commerce (eg trusted thirdparties).

In this regard, I would submit that the US case of Zeran v AOL (seeabove) probably goes too far, in that I believe it would be unreasonable toallow ISPs to abrogate entirely any responsibility for the material madeavailable to the world via their servers. Other options to be considered mightinclude the following:

  • making it a defence for an ISP to show that it had no knowledge of the statement in issue prior to the date of the complaint, and had exercised no editorial control over the contents of the newsgroup in question
  • leaving the Act as it stands, but creating an independent cause of action in respect of the making of unfounded threats of libel actions (ie as per the approach taken by the Trade Mark Act 1994)
  • allowing ISPs to use disclaimers to indicate that they have no control of or responsibility for the contents of a particular newsgroup etc, potentially in conjunction with the creation of an Internet industry mediation/review body which could make independent judgments as to whether material being complained of should be suspended/removed from display on the Web pending the resolution of the dispute between the actual author and the complainant – however, this option would in turn require the Government to address the potential liabilities of the independent body!
  • Making it a defence for ISPs to withdraw/remove offending items as soon as they are notified of a complaint about them (although this would be likely to result in de facto censorship in many instances).

As a postscript, one should spare a thought for Mr Godfrey. His claim againstDemon is one of many similar claims launched around the world, which havereportedly already netted him an estimated AUS$10,000 in an out of courtsettlement from an Australian PC Users Group and other victories against NewZealand Telecom and the Toronto’s Star’s online organisation (Newsbytes newsnetwork, 26 March 1999 – www.newsbytes.com).However, with Demon committed to fight this case to the Court of Appeal andbeyond with the backing of the rest of the ISP industry in order to reverse adamaging precedent, and with the warning by Morland J that the eventual award ofdamages will in any event be small, Mr Godfrey can look forward to a long andcostly legal battle.