Unvarnished law: review site shows why UK is playing digital economy catch-up

Out-Law Analysis | 15 Apr 2010 | 10:29 am | 5 min. read

OPINION: A new site is encouraging anonymous comments about how well you do your job. Libel lawyers would kill it if it launched in the UK, but they can't touch it in California. This reveals a gulf between our laws that impacts on our digital economy.

American websites enjoy protections that do not exist in the UK, and Unvarnished is a site that highlights some of the differences. Parliament had an ideal opportunity to examine these differences as part of its work on the recently-passed Digital Economy Act. It didn't bother.

Thinking of poaching an engineer from Google? Go to Unvarnished, search for 'Google' and you'll see lots of them, each marked out of 10 for skill, productivity, relationships and integrity. Don't hire Bruno: he gets a 2 for productivity. Matthew, though, gets a 10 for everything and glowing testimonials. Poach Matthew!

Unvarnished raises interesting questions about our digital culture. Entire careers can be reduced to a star rating and a rant (think Amazon with a 'humans' department). While you can respond to the ratings and anonymous comments that appear on your profile, you can't remove comments just because you don't like them, even if they're libellous.

Who needs LinkedIn's testimonials, all controlled by the subject, many of them solicited and sycophantic (but also attributed) when you can read uncensored, unattributed warts-and-all appraisals at Unvarnished?

There is a similar site for rating lawyers, Avvo.com (a lawsuit against it raised the intriguing question of whether a score can be libellous), but this is a one-stop-shop for everyone. Your reputation just got harder to manage.

What I want to focus on are some of the legal questions raised by Unvarnished, in particular the difference it reveals between US and UK laws. Basically, America gives its web businesses legal perks.

Among the many problems with the UK's recently-passed Digital Economy Act was its name. It's a law that does little to stimulate the digital economy. Rather, it appears to defibrillate our analogue economy in a frenzied attempt to postpone its final breath.

Politicians have said that they want the next Facebook or Google to launch in the UK but these giants of the web, and start-ups like Unvarnished, enjoy more than just sunshine by locating their businesses in California. Unvarnished is a case study in some of the reasons why.

The site would fail if its business was based in the UK. If it was based here, an engineer described as "untrustworthy" would go straight to Unvarnished and say, "Hey, that's libellous! Take it down!" The owners would comply because, if they don't, they could be paying out in damages. The law says a host must take down a libellous comment "expeditiously" once made aware of it, or run the risk of being liable for it. It can be hard to determine if a statement is libellous or not, so hosts don't like running that risk.

It's different in America. There, section 230 of the Communications Decency Act gives Unvarnished broad immunity from liability for comments written by users. It's a powerful shield and we have no equivalent.

Someone could sue Unvarnished in a UK court under UK libel laws. That our libel laws are absurd, and that our courts are the forum shopper's destination of choice, is well known. (English courts were used when an American living in America sued another American living in America over comments that appeared on an American website; and publishers continue to risk infinite liability for online comments).

Section 230 will protect Unvarnished, even if a UK court rules against it, provided the company isn't silly enough to open an office here. The UK judgment will be unenforceable. For that, Unvarnished can thank New York-based author Dr Rachel Ehrenfeld.

Dr Ehrenfeld published a book in America called Funding evil: How terrorism is financed – and how to stop it. It claimed that a Saudi billionaire banker, Khalid bin Mahfouz, had provided monetary support to al Qaeda and other terror groups. Bin Mahfouz denied the claim and sued Dr Ehrenfeld.

The English High Court was able to hear the claim because 23 copies of the book had been ordered online by UK customers, and a chapter of the book was accessible in the UK via ABCNews.com. Dr Ehrenfeld did not defend the action and the court ruled in favour of bin Mahfouz. He won a summary judgment from the English High Court.

Dr Ehrenfeld went to court in New York to seek a declaration that the award of damages and costs against her should not be enforceable there. The US Court of Appeals for the Second Circuit ruled against her. Her defeat was a catalyst for reform.

Last April, the state of New York passed the Free Speech Protection Act. In October, the state of California passed the Anti-Libel Tourism Act. These laws make foreign libel judgments unenforceable unless, in effect, a US court would have ruled the same way. Plans for a federal law were supported by the Senate Judicial Committee earlier this year. (Since then, each of the UK's main political parties has pledged to reform libel laws, so the next few months could be a closing-down sale for forum shoppers – though federal lawmakers may decide that it's best not to wait for that.)

Individuals can still sue each other over Unvarnished reviews, if a defamed person subpoenas Unvarnished for the defamer's identity – though such cases are harder to win in America than in the UK, partly because of its Constitutional rights and partly because most states, including California, have anti-SLAPP protection. But Unvarnished has nothing to fear from the UK's libel laws.

I have mixed feelings about the site. I spoke to founder Peter Kazanjy this week and I'm convinced he will regard his business as a failure if it becomes a repository of nasty comments. He anticipates mostly positive reviews. Kazanjy talked me through his takedown procedures and said "anything that's even close to the line we will remove" – though that's obviously a discretionary call. I looked at several profiles and found only positive comments and mostly positive ratings. Still, the masking of reviewers' identities makes me uncomfortable.

I also have mixed feelings about the broad immunity afforded to hosts in the US. That immunity is inconsistent: it doesn't protect all content. It allows a libelous rant to remain on the web for years, even if it destroys a person's reputation, yet it can demand that song samples are taken offline immediately, without the copyright owner needing to prove any damage.

Hosts in the UK don't enjoy this immunity. And whether or not you like the idea of Unvarnished, it serves to highlight the fact that a website built on user-generated content is better protected in America than in the UK. That impacts on our digital economy, so it's the sort of issue that you might think our politicians would have considered when planning a law called the Digital Economy Bill. Sadly they did not.

By Struan Robertson, editor of OUT-LAW.COM. The views expressed are Struan's and do not necessarily represent those of Pinsent Masons. You can follow Struan at Twitter.com/struan99.