Advise me on libel issues.

In My Humble Opinion
1

Okay, I know you’re not my lawyer, not licensed to practice in my jurisdiction, etc. What I’d like is some general advice that might help me in preparing to speak to my ($400/hour) lawyer, and maybe by better acquainting me with the issues, save a little of his time (and my money).

I publish a business newsletter and have an article from an industry veteran whom I have frequently published before. But his latest article has me worried about the potential for a libel suit, since in it he alleges that certain people have committed what I believe are crimes.

Although he doesn’t specify the time frame, all the events described took place more than 10 years ago. He has “hidden” the names of the people in question by the impenetrable ruse of combining the first few letters of their first and last names, so that John Doe, for instance, would become Jodo. And he has changed the name of the main company involved with a similarly transparent device. If the company were Microsoft (it’s definitely NOT Microsoft), he would call it Macrohard.

In short, anyone who has been in our industry for a decade or so would probably know, or easily be able to figure out, who the people and companies he refers to are, just as though he had printed their real names.

And here’s where the libel issues come in. The article alleges that this company and its principals engaged in industrial espionage against another company to make a clone of a patented machine. It claims that engineers surreptitiously gained access to several of the patented machines and took them apart to make measurements and examine their workings, then used that knowledge to make their clone machine.

I assume that these are criminal acts, and that the people “accused” in the article might decide they have a libel case against the author and me. I’ve heard that truth is a defense against libel, but at this remove of time, it might be hard to definitively prove the claims. The author was involved with the company, and was in a position to know most of the details in the article, but I don’t know what documentation he might have to back them up. Indeed, his article describes the care the principals took in making sure that few people knew about their activities and that those who did were sworn to secrecy.

FWIW, the case has been something of an open secret in the industry, and this account generally agrees with rumors I have heard for some time, although it is more detailed than anything I had heard before.

Also, I believe that the company holding the patent sued the other one at some point, but I don’t know the outcome of that case. The copiers made and sold a few of the machines, but did not succeed in the marketplace, despite the fact that one of the primary patents expired within a couple of years of the incidents in the article. The copying company is not in business any longer, although one of the principals is still attempting to sell the clone machines.

So the questions in my mind are:

  1. Is this form of industrial espionage in fact a crime?
  2. Whether it is or not, would alleging this behavior be grounds for a libel action?
  3. Does the author’s fainthearted attempts at hiding people’s identities offer any protection at all? Would more effective obfuscation?
  4. Would documenting the article’s claims be effective in preventing a libel suit? If so, what kinds of documentation would be needed?
  5. Does the statute of limitations enter into any of this?
  6. Does the “open” nature of this secret (since I’ve heard the rumors, I assume others in the business have, too) offer any protection?
  7. Anything else I should consider?

I have a standard contract with my contributors that says that the author warrants that the information is true and they will defend libel actions, but I suspect this would not keep me from getting caught up in any suit that was filed.

Thanks for your suggestions.

2

The situation is complex, so you really should discuss this with a real lawyer. (Of course, any advice on libel is uncertain, even from a lawyer, since it is a civil issue, which means you can be sued, and can even lose it if their lawyers are better than yours.)

  1. I’m not sure whether industrial espionage is a criminal offense. It probably shouldn’t be – we’re talking company secrets, not state secrets. As long as no laws are broken in getting the information (e.g, burglary), it more likely to be a civil issue rather than a criminal one.

  2. Even if legal, it could be grounds for libel if the party determines it is defaming their reputation.

  3. If the participants can be identified by their descriptions in the article, the obfuscation of their names will give you scant protection.

  4. Solid documentation would be very useful. It’d have to be hard evidence, though.

  5. Again, if the party determines this is defaming their reputation, I don’t believe there is a statute of limitations.

  6. I don’t think it’d give you any protection, unless it has been reported elsewhere.

  7. One issue may help: Libel is an untrue assertion of fact. If you report this as a rumor, not a fact, you’re in much better shape.

But don’t go by me. Discuss this with a real lawyer.

3

IANAL, but going by memory:

If they sue for libel, you have the right to go through their documents and prove that the really did do it. So if they’ve got anything to hide, suing for libel is not a good idea. And even if they’re completely innocent, it’s bad publicity.

I really want to see this article, if/when it comes out, btw!

4

Thanks for the input, guys. I hadn’t thought about the discovery issues. If you’re right about that Sanders, that might make a difference, since I’m reasonably sure the basics of the story are true. Can anyone say more about this issue?

Thanks for your interest in the story. The problem with this article is that this author is the only contributor I actually pay, and that plus the legal costs could make this story much more expensive than it’s worth. There’s no way this article can earn me $1,000, but that’s what it could cost me. Looked at that way, I should probably just spike it.

But it’s such a good story…

5

Yes, industrial espionage is a crime. Intellectual property is property and stealing property is a crime. Now, it may not have been a crime 10 years ago but that’s not really relevant.

The statute of limitations for the original criminal act does not enter into a defamation suit, but there is a new SoL that starts tolling from the time of publication.

Obviously the easiest way to avoid all of this is not to publish the article. You will also want to refrain from discussing the rumors and the article in any identifiable detail because that in itself can constitute defamation if the person you’re telling about it can figure out who you’re talking about.

6

But if you are sued for libel, the burden is on those suing to prove the claims are false.