EU & Competition news

Mathew Firsht and Applause Store Productions Limited were recently awarded £22,000 for libel and breach of privacy in relation to a fake personal profile and group on Facebook (Applause Store Productions Limited and Firsht v Raphael [2008] EWHC 1781 (QB)).

This was the first libel and privacy case concerning Facebook to reach trial and sends a stark warning to both individuals and companies about the potential threats posed by social networking websites. 
 

Fake profiling

Mr Firsht, a non-Facebook user, was surfing the internet and discovered that someone had set up a fake Facebook profile in his name. The profile included a photograph of Mr Firsht and a mixture of true and false personal information such as his date of birth and religious views. Mr Firsht was also falsely stated to be gay and had been added to a number of gay groups on Facebook. In addition, a group had been created in his name called “Has Mathew Firsht lied to you?...”. The group made false and defamatory allegations concerning the ability of Mr Firsht and his company, Applause Store Productions, to pay their debts. 
 

The fake profile and the group were accessible on Facebook for 16 days until Facebook took it down immediately on request by Mr Firsht. However, by that time it had potentially been viewed by many Facebook users, including friends and acquaintances of Mr Firsht. The fake profile had been added as a member of the London Network, which at the time had over 700,000 members, all of whom would have been able to access the fake profile and the group.
 

As the profile and group had been created anonymously, Mr Firsht obtained a court order requiring disclosure from Facebook of any registration information for the user who created the fake profile and the group, the internet protocol (IP) address of the computer that was used to create the profile and group, and details of activity on Facebook undertaken from computers using that IP address.
 

The information provided by Facebook showed that the fake profile and group had been created from an IP address that was traceable (through a broadband provider) to the flat of an old school friend of Mr Firsht with whom he had fallen out (the defendant). 
 

The defendant denied responsibility for the fake profile and the group, claiming that he had a party on the night in question and that a group of strangers attended the party, stayed overnight at his flat and would have had access to his computer at all the relevant times. A year later, he was exposed as a liar in court and was ordered to pay £15,000 libel damages to Mr Firsht, £5,000 libel damages to Applause Store and £2,000 damages for breach of Mr Firsht’s privacy. He was also ordered to pay indemnity costs, with an interim payment of £30,000 costs within 14 days.
 

Implications for companies

The case highlights not just the potential reputational risks for companies posed by social networking websites but also the potential liability of their employees for material posted on them.
 

Reputational risks. Applause Store is not the first company to be targeted by Facebook users. There have been a number of other high-profile examples: HSBC was forced to reverse its decision to charge students for overdrafts following a Facebook campaign; Kettle Chips was forced to instruct a crisis PR team to help deal with reputational issues because of a Facebook group called “Boycott Kettle Crisps”; and 118 118 was publicly embarrassed when a group of employees started a Facebook group dedicated to trading insults about their customers and which, it was reported, included the allegation that one employee had taken customer numbers and written them on the walls of a public toilet.
 

It will not always be appropriate for companies to take action against defamatory websites and social networking groups. A heavy-handed approach may simply inflame an already embarrassing situation. However, there often comes a point where companies cannot continue to turn a blind eye to defamatory material on the internet, particularly when the material rises into the top ten of the Google rankings and begins to impact on the company’s bottom line. 
 

Earlier this year, the housing group Gentoo (formerly Sunderland Housing Group) and its chief executive successfully sued a group of individuals and a company in Sunderland which had carried on a sustained and malicious campaign of libel and harassment on the internet over a two-year period. An anonymous website had falsely accused the company and its directors of corruption and nepotism, which led to serious reputational damage to the company and affected its ability to win key contracts. 
 

By identifying the anonymous individuals behind the campaign and obtaining injunctions and damages, the company was able to demonstrate to key stakeholders that the allegations were all false and that business could return to normal.
 

In Gentoo, as in Firsht, a combination of computer tracing techniques, novel court orders, and careful evidence gathering were used in order to trace the individuals concerned and obtain injunctions against them. The cases show how by identifying anonymous internet users and taking decisive legel action, even the most seemingly intractable internet campaigns can be stopped. 
 

Potential liability. Employers are not necessarily liable for the acts of employees who access Facebook at work. However, if an employer knows what the employee is doing and fails to take steps to stop it, then the employer may risk being vicariously liable for the actions of the employee. The employer would also be potentially liable if one of its directors or senior officers authorises an employee to publish defamatory or private information, for example, about a competitor.
 

Many companies already have monitoring policies, which allow them to regulate or prevent employees’ use of social networking sites such as Facebook. Indeed, it is advisable for employers to be vigilant not just concerning the time spent by employees on social networking websites but in relation to other websites visited by employees at work such as blogging sites and so-called “sucks” websites, which are often used to criticise companies and products. 
 

Even if an employer cannot be said to be vicariously liable for the acts of its employee, to have an employee sued for defamation regarding activities taking place at work would be highly embarrassing for any company. Any news about Facebook tends to be big news and can travel across the world very quickly. It is therefore vital that companies have the policies in place to ensure that employees do not abuse the internet at work.
 

Keep one step ahead

It remains to be seen whether Firsht will set a trend for more libel and privacy claims relating to Facebook and other social networking websites. One difficulty for claimants is that even if the defendants can be identified, they are often not worth suing financially. But for companies, the reputational damage caused by a defamatory internet campaign or scandal means that the legal route cannot be ignored. The key is to act quickly before it is too late.