December 1995 Computer Audit Update

NEWS

Australian business community questions who’s liable on the Internet?

Online services are creating a high level of

interest in the Australian business community.

Companies see online access, whether to a

proprietary network or to Internet, as an essential

part of modern business but there are contractual

traps in going online, because in some areas it is

unclear how existing Australian laws will apply in

practise to online providers.

In Australia, a major law firm, Freehill

Hollingdale & Page, reports: “One area of

uncertainty is whether service providers and

other intermediate bodies who facilitate the

spread of material through networks may be

liable for illegal or improper material that may be

posted on or through the system by users.”

The law firm notes there has been much

public debate about whether to regulate the

content of online systems, and if so, how.

Concern arises because the content may be

defamatory, obscene, an infringement of

another’s intellectual property rights, or illegal in

a wide variety of other ways. To deal with public

concerns, some online service providers are

introducing controls over the content posted by

users to their public bulletin boards or online chat

sessions.

Control methods include screening software,

requiring or encouraging online moderators, and

detailed compliance obligations in users

agreements and guidelines.

Companies choosing to go online will need to

sign contracts with the service providers who

provide network access, and many important

issues will need to be addressed contractually.

These include the allocations of liability for various risks as between users, content providers

and service providers. However, there are no

standard terms and conditions for such contracts,

nor accepted practices for how risks should be

allocated, says the law firm.

Who is responsible for content ? Suppose

one subscriber to a proprietary network defames

another online, who is the liability of the online

services provider? So far there have been no

Australian cases which decide the liability of an

online service provider, as opposed to a user, for

material placed by the user on a computer

bulletin board.

Freehill Hollingdale & Page continues: “In

Rindos v Hardwick, an unreported 1993

decision of a single judge of the Western

Australian Supreme Court, it was held that a user

who used a science anthropology computer

bulletin board to defame a colleague was liable

for defamation. However, it was the individual

who was sued, not the provider of the University

electronic bulletin board on which the material

appeared. The court did not consider whether or

not the owner or operator of the bulletin board

might also have been liable.”

The law firm concludes that the liability of

online service providers in Australia is therefore

unclear. It is likely, however, that United States

decisions will be influential in this area: therefore

those who take active steps to control the content

of online systems may still expose themselves to

liability, because a recent United States decision

demonstrates that the greater control a person

has over content, the more likely that person may

be liable for the content.

On the other hand an online service provider

who takes no steps to control content may be

negligent and unable to rely on any defence of

innocence. The extent of control required to avoid

such a risk has not yet been explored by

Australian courts, and will depend on many

factors. Until then, online service providers and

others who manage online services, need to

strike a balance between too much and too little

control.

Frank Rees

01995 Elsevier Science Ltd 15