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A whirlpool of legal risk

We’ve blogged about the dangers of loose lips in online forums before. For example,  a woman who made an anomymous post or comment in an online forum was tracked down by Australian entrepreneur Dick Smith. He regarded the post as defamatory and extracted an apology plus a significant portion of his legal fees.

From a recent case of forum comment litigation, perhaps the most notable takeaway is the plaintiff's realisation of the awesome power of the court. We don't have in mind the Supreme Court of Queensland where the case was instituted; rather, the court of public opinion.

The Facts

Whirlpool is an online forum, a website featuring posts primarily focused on broadband and the internet.

Several Whirlpool users vented through various posts on Whirlpool threads about the shortcomings of 2Clix software. 2Clix is an Australian licensor of accounting software.

Given the popularity of the Whirlpool forum, these posts critical of 2Clix appeared near the very top of Google searches for “2Clix”. Some of the frank criticisms included:

  • “Do not believe them if they tell you anything else…”
  • “[The system] was a dog, ran like a dog.. my dealings with 2Clix support were shocking…”
  • “[referring to the sales person] What a shonk!”
  • “… [I] wouldn’t touch 2clix with a barge pole…”.
  • “…Seems to me there are breaches of the Trade Practices Act in the way 2clix has dealt with customers."
  • “…I would not go within a cooee of 2Clix Software.”

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2Clix allegedly contacted Whirlpool repeatedly and requested the posts be taken down. Ultimately 2Clix elected to commence litigation, filing a Statement of Claim in the Supreme Court of Queensland. 2Clix claimed “injurous falsehood” and damages for A$150,000. 2Clix clearly was not prepared for what was to happen next.

Importantly 2Clix's claim was not for defamation. Lightbulb presumes this was because 2Clix did not fall within the exception to the rule, introduced in recent years, that corporations may not sue for defamation.

On receiving the Statement of Claim Whirlpool made the litigation very public. It published the document online, opened a forum about the case, and announced it would defend the claim. Whirlpool also established a facility accepting donations to cover its legal fees.

The blogosphere and mainstream media latched onto the story. 2Clix came under heavy criticism for resorting to legal action. A common argument was that 2Clix was seeking to shoot the messenger, Whirlpool.

About one month after filing 2Clix withdrew its claim.

2Clix appears to have re-branded its software offerings in what may be its most PR savvy move so far.

The Context

web2onfire

Lightbulb makes no comment as regards the merits of the criticism online of 2Clix.

However,  the criticisms of 2Clix on Whirlpool were undeniably strong stuff. They explicitly state that not only is the software poor, but the company behind it is dishonest, and additionally has breached trade practices law.

It's common for a forum such as Whirlpool to thrive on expressions of frank opinion. Often they are strongly critical of companies, products and services.

Hints for legal risk minimisation for comments and forums

Moderators, owners or operators of websites with forums or comment facilities face potential legal action. They must learn to recognise and distinguish lawful content from content that may be legally actionable, eg under the laws of trade practices, defamation or injurious falsehood.

Legal best practice in this area involves at a minimum three broad requirements:

  • Prepare: the site should have comprehensive Terms of Use regulating the behaviour of those who contribute posts or comments.
  • Monitor: actively monitoring and reviewing all content and posts uploaded to the site for a range of potential legal exposure points including defamation, injurious falsehood, intellectual property infringement and more.
  • Take Action: where appropriate, censorship or moderation of posts to remove offending material will minimise risk.

For those who feel defamed or injured by forum content, there are less neat solutions. Recognising that 2Clix legal action was not advisable from a PR perspective alone, what should it have done if the criticism was unlawful, not justified, or potentially malicious content from a business competitor?

Certainly, we can say with the benefit of hindsight that an improved 2Clix public relations response would have been preferable. Also, if legal recourse was unavoidable, 2Clix should have been better prepared for the backlash. Our PR colleagues tell us that providing your own information and reasoning is vital.

Ultimately the withdrawn 2Clix case demonstrates a clever and creative response by Whirlpool. It harnessed its strength - the power of public opinion (and even public finance). But it is perhaps a lucky escape for the self-professed community forum with little resources. Larger corporations, more capable of mounting their own combined legal and PR campaign, might not have backed down so easily, leaving Whirlpool to fight a costly and potentially life or death legal battle.

As the further reading list below illustrates, we specialise in in legal-proofing websites, blogs and online forums. Call for a conversation.


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