DEALING WITH CYBERSMEARERS

                       Today, most public companies and many private companies face varied threats from individuals using the Internet in ways which harm these businesses or their management. Whether the harmful use appears in a sponsored discussion board or on a special purpose web site, the terms employed for this unwelcome publicity range from the “cybergripe” to the “cybersmear” to the “cyberattack.”

                  The cybergripe typically refers to postings in a customer or shareholder forum in which most of the commentary is negative. The cybersmear refers to more serious cybergripes which are false, defamatory or otherwise actionable. For simplicity, this article will use the term “cybersmear” to encompass the range of negative commentary appearing on the Internet specifically directed against a business.

                  The problem: Many public company discussion boards sink into a routine of rumors and recriminations. Occasionally, some of these rumors are serious enough to affect the stock price. The poster may be attempting to take advantage of these stock swings on the basis of his or her trading position. Beyond the short term effect on stock prices, some postings may accuse management of assorted misdeeds or criminal acts. They may disparage the business or products of the company. And some postings may divulge sensitive business information, whether it relates to sales strategy, customer names or confidential technical information.

                  In early cases involving cyberlibel, companies that believed their reputations had been damaged by anonymous Internet postings tried to get around this problem by suing the underlying Internet Service Providers ("ISPs"). Not only are ISPs clearly identifiable, they also are more likely to have the financial wherewithal to pay damage claims than will many anonymous posters.