The pre-trial ruling today found in favour of Laurence Godfrey who is suing Demon for allegedly housing defamatory content.
Godfrey alleges that obscene remarks were posted in Demon's popular "newsnet" newsgroup that purported to be from him. The online remarks -- which Mr Justice Morland said were "squalid and obscene" -- have been traced back to an unknown, non-Demon user in the US. Yet Demon has found itself in the dock.
The company's defence is that of 'innocent distribution' -- a move Godfrey's solicitors Bindman and Partners have rejected.
Demon, now owned by Scottish Power, fears today's decision bodes ill for the Internet industry because it means courts are grouping ISPs in the same category as publishers -- a notion Demon vehemently rejects. "If someone insulted you in a pub and you decide to sue that person, would you then go on to sue the pub owner for housing the defamatory remark?" said a Demon spokesperson. "More than one million messages are posted in our newsgroups every day. Why would we want to control that? Legally, we must clarify whether an ISP is really a publisher," the spokesperson added.
Nicholas Bohm, a solicitor at Norton Rose said: "The scales are not weighted... if a person can ban a publication by a simple complaint without taking any financial risk or responsibility himself."
The ruling, if not reversed on appeal, not only threatens to damage the Internet industry, but also users, proponents of freedom of expression and electronic commerce, according to observers.
UK civil liberties group, Cyber-Rights & Cyber-Liberties defended Demon slamming the court decision as unacceptable. Yaman Akdeniz, director of the group said: "The decision will have a chilling effect on Internet communications and will force UK ISPs to take a pro-active role in relation to Internet content. This is most undesirable and unacceptable. The Defamation Act does not give adequate protection to ISPs."
Akdeniz claimed it was totally unacceptable for an individual to blame the ISP over defamatory remarks, "the current state of UK law forces the ISPs to be the defendant, judge and the jury at the same time. Notice should not be enough in such cases," Akdeniz said.
Although Demon has appealed against the ruling, if held responsible the Internet industry could face copycat complaints, according to David Furniss, Director of ScottishTelecom's Internet Services. He said: "The ruling suggests that Internet Service Providers should be held liable for the information that they transmit between one party and another. This potentially opens up the Internet industry at large to millions of similar, unjustified complaints."
Furness also warned that the practicalities of monitoring Internet messages will force ISPs to restrict their services. "This decision will affect not only the way ISPs operate their services, but impact the entire concept of freedom of information that has been the driving force in the development of the Internet."
This is not the first time Godfrey has sued content carriers. The University of Minnesota, Carmel University and Melbourne PC users Group have also received writs.