This has spawned a broader range of public exchanges with both customers and the public as they share ideas on company sites, and as company staff participate on others’ sites in official or quasi-official roles.

There may fewer customers slipping an falling on visits to stores or offices. However a new array of liabilities come with life online, which which larger firms may seek to mitigate with insurance.

• Online Defamation – even “private” online conversation can be construed to be public if they take place on social platforms, consider Finkel v. Facebook. Further, Staples suffered a ruling for defamation for making a truthful but harmful statement in a mass email.
• Data Privacy – the firm, or vendors doing work on their behalf, may lead to the breach of personally identifiable information (PPI) or company confidential information. If you’re doing business in the EU, or conducting credit card transactions additional laws may increase your liability.
• E-media and Internet Liability – new opportunities for false advertising, libel and slander are harbored in causual comments by staff or fast moving blog posts.
• Negligent Network Security – for failure of security measures to prevent a denial of service, unauthorized access, theft of electronic data, inadvertent transmission of a virus or other malicious code using your firm’s infrastructure.
• Infringement of Intellectual Property (IP) Rights –recent  copyright law and trademark law rulings are replete with unexpected outcomes.
• Cyber Extortion – for threats to disrupt your businesses online operation as a threat of extortion.

How to know if your firm needs cyber insurance
If your firm is going heavy into the digital realm, you absolutely need processes to mitigate these risks. But what factors make ponying-up cyber liability insurance more necessary?

• Deep pockets and high visibility.  (reward for litigants)
• Aspirations to use emerging technology on a wide scale. (entry to untested legal ground)
• Audiences for which error can be extremely costly. (risk of client certainty)

Next up: liability coverage for personal online use
In considering this I’ve also found resources on ways to cover your personal liability of non-professional blogging and use of social media. Remember, doing something without pay doesn’t insulate anyone from liability for their own actions. Continue reading the next post.

That’s the kind of positioning money just can’t buy. Imagine producing software whose inevitability is proclaimed on the editorial cover of magazines.

The second feature I noticed was the listing of the Government CIO 50. This made me think of Massachusetts’ then-CIO, Peter Quinn, who didn’t think Windows was inevitable.

Back in 2005, he set a course to take take the state off most licensed software.

• Step 1: Firefox, not IE.
• Step 2: Any software built for the state is made so it can be released as open source and traded or built on by other states.
• Step 3: Use standard open-source applications instead of the Miscrosoft Office suite.

Things were proceeding well.  Massachusetts was forward-looking, saving money, and leveraging the efforts of others.

Then two things happened.

1. His boss, Governor Mitt Romney decided to run for President. Imagine what funding Microsoft would put forward to prevent the first open-source-state elected President. After all, if government could stop paying for licensed software, what business or personal users would follow?
2. A story was planted in the Boston Globe. It reported concerns that Mr. Quinn had improperly accepted travel to open source conferences. The story was later proven to be untrue, but it was enough to show that the pressure to resign as CIO would be intense.

It was the shot heard ’round the e-government world. CIOs got the message loud and clear. Your boss doesn’t want Microsoft as an enemy, and neither do you. Microsoft will claim that open source reduces compatibility, and makes government more expensive. And they’ll fight fiercely to weed such initiatives out, by weeding you out.

And so Microsoft’s winevitability grew unchecked.

This week, Microsoft issued its largest patch ever for 34 new vulnerabilities. The inevitable apparently still needs some work.

Now, a New York teenager has sued Facebook and a handful of its users for discussing her in a private Facebook group. Harvard’s Citizen Media Law Project and Eric Goldman provide details on the case, Finkel v. Facebook, 102578-09 (N.Y. Supreme Ct. complaint filed Feb. 24, 2009).

The idea that Facebook should be liable for four teens trash-talking another is dismissable. However, the individual teens are charged with defamation as well.  Further, the complaint also alleges that the students’ parents are liable for negligently failing to supervise their children.

There are several hurdles, including how to measure the harm caused by this private correspondence between four people, and whether this discussion was discovered through means which would violate the privacy of the participants. Social media participants are figuring out what the limits of speech are in this medium, and the courts will eventually be asked to determine where legal penalties begin.

Various bullying statutes would potentially criminalize this conduct, which seems to approximate private speech. It doesn’t seem likely that such a case would gain steam. Then again we live in a time where truth may fail as a defense to defamation in Massachusetts, which is to say…anything can happen.

The blog e-patients describes how the firm Medical Justice is helping doctors avoid consumer ratings, and the prospect of defamatory statements, by getting patients to sign an agreement saying all their conversations are the doctor’s property, trade secrets, which the patient isn’t allowed to tell anyone.

A closer read of Medical Justice’s website suggests their agreement restricts patients from publishing reviews and accounts of treatment, though they can still tell relatives and health care officials about any concerns they may have.  The site objects to this arrangement being called a gag order instead of a “mutual privacy agreement.”

What’s the Real Benefit?
There are lots of ways around the agreement. Patients can still tell relatives, who can post under their own names, or they can post anonymously.  However, this thin claim of IP rights is enough to file a take-down notice, and many services will comply.  The logic getting an anonymous post taken down could go “all my patients have given me full rights to public information about our case, so either I own the IP in the post, or this is a defamatory post from a non-patient.”

Medical Justice watches social media sites for the names of doctors who have contracted to use these agreements, and then files take-down notices.

Considering how many insurance claims are in part paid for with public dollars, requiring patients to give up speech rights for publically subsidized medical treatment approaches absurdity.

Indeed, social media can be biased, and certainly non-representative.  But this attempt to bully social media away is foolish. Asking patients to sign over their rights to discuss their treatment publicly as a condition for treatment just seems desperate at best, and repulsively unfair at worst.

The appeals court held that Staples failed to adequately raise the constitutional issue:

Staples now contends that it raised the issue in its initial brief. But that brief simply acknowledged that the statute was not constitutional as applied to a matter of public concern.  Staples did not timely argue that the present matter was a matter of public concern or that the statute was unconstitutional as applied to matters of private concern.  That Staples did not timely raise the issue is also made clear by the fact that it has not, until now, filed the notice required for a challenge to the constitutionality of a state statute. See Fed. R. App. P. 44(b). The issue is waived, and the fact that the issue raises constitutional concerns does not save the waiver.

The court also indicated that the constitutional issue is “not so clear that the panel should have acted sua sponte to strike down a state statute.”  In this most ominous section of the order, the First Circuit pointed out that Staples “still does not cite a case for the proposition that the First Amendment does not permit liability for true statements concerning matters of private concern.”

The court appears to discount this possibility, relying on language from two Supreme Court cases — Philadelphia Newspapers v. Hepps and Dun & Bradstreet v. Greenmoss Builders — to suggest that speech on matters of private concern does not enjoy full First Amendment protection. Importantly, however, the court refused to take any position on the constitutionality of the Massachusetts statute (of necessity, given that the whole thrust of the order is that Staples waived the issue).

Judge Juan Torruella of the US Court of Appeals for the First Circuit has allowed Alan Noonan, a sales director fired by Staples, to pursue his libel claim against the company.

Staples’s executive vice president, Jay Baitler, sent an email to some 1,500 employees stating that Noonan had been terminated for violating the company’s travel and expense policies. Noonan sued for defamation, and his case was initially dismissed because the defamation was a true statement.

However on appeal, Judge Torruella relied on a 1902 Massachusetts law.

“The defendant in an action for writing or for publishing a libel may introduce in evidence the truth of the matter contained in the publication charged as libellous; and the truth shall be a justification unless actual malice is proved”

Mass. Generals Laws, Chapter 231, Section 92

The court concluded to send the case back for jury trial to consider whether there was “malevolent intent or ill will” in the publication of that email.

Dan Kennedy in Media Nation notes that Judge Torruella ignored a 1964 ruling in Times v. Sullivan, in which the US Supreme Court redefined “actual malice” so that it now pertains only to statements made with deliberate falsity, or with “reckless disregard” for the truth.

Lee Gesmer opens his excellent coverage of the case with an Oscar Wilde quote:

It’s perfectly monstrous the way people go about nowadays saying things against one, behind one’s back, that are absolutely true.”

But what if the presence of malice was the only test for defamation?
That seems to be what the appellate ruling, and this arcane law, lead to. Mean speech would be actionable in court. This would rule out most of what passes for political speech by commentators and candidates today.  And it punishes just about anyone speaking in anger.

The appellate court failed to comment on the First Amendment issues inherent in punishing truthful speech. After all, how free can speech can be if it can’t be intentionally hurtful or offered in anger?

Alan Noonan hurt Staples.  Whether with malice or not, Staples hurt him back by circulating a truthful statement about his dismissal. With the absense of a privacy obligation, that sounds like protected First Amendment speech.  Whether its a good business practice can be debated, but its protection under the First Amendment shouldn’t be.

Hurtfulness shouldn’t be allowed to trump truthfulness in free speech.

Jones responded by sending Read an email that claimed such a negative feedback was detrimental to his business and threatened to sue Read unless he removed his comments. Despite being given a full refund, Read refused. Jones refers to Read’s comments as “unfair, unreasonable and damaging.”

Libel is publishing a false or defamatory statement which damages someone’s reputation. However, the truth is always a defense against libel. As long as the specifics of Read’s claim are documented, I would hope the case will be thrown out. Plus, Jones as much as admitted those facts – they are not in dispute.

I doubt Jones has any merit to his argument. However, what may be interesting about this case is how eBay responds to it. They created the conditions for the dispute by virtue of the feedback mechanism. It is eBay that demotes a seller’s standing among listings according to the buyer’s feedback. Although Jones agreed to those terms of use as a seller and is trying to avoid negative consequences by bullying a customer, the fact that such a case has proceeded this far will force eBay to review some of its policies. Legal blow-ups outside eBay’s dispute resolution process is probably bad for the company’s reputation.

In fact, eBay makes changes to the balance of power between seller and buyer all the time.  Earlier in 2008, eBay removed the ability for sellers to provide feedback on buyers. If Jones had had this avenue to answer Read’s claims, perhaps the court system would not have been bothered by this suit.

In the end, the greatest damage to Jones’ reputation has been done by Jones himself.