10 March 2004

Eversheds

http://www.eversheds.com

Cybersmearing

We have looked at cybersmearing in the past on e80 but a new Canadian case Vaquero Energy & Waldner v Nick Weir brings the issue back into the spotlight again. In this e80, we will look at this case. We will follow this up with another e80 looking at other cases on cybersmearing and what can be done about it.

What is Cybersmearing?

Cybersmearing does what it says on the tin. It is the smearing of an individual or company online. Cybersmearing can take a number of different forms including websites, message boards, e-mail and auctions. We have seen a number of cases on both sides of the Atlantic which show that this type of practice is not uncommon and we have also seen the catastrophic effect cybersmearing a company can have on its share price.

What happened in this case?

The case concerned a financial message board known as Stockgroup and Vaquero an oil and gas company in Calgary. Waldner was Vaquero's CEO hired to consolidate the business. In 2002 Waldner became aware of a number of messages on Stockgroup's site from two anonymous posters which accused Waldner of being 'insane, retarded, managing the company for his own benefit' and compared him to Osama bin Laden, Hitler and Saddam Hussein. 48 messages were discovered sent over a four month period.

The messages were eventually traced back to Weir who had spoken to Waldner a couple of times and had written to ask for a place on Vaquero's board. Proceedings were served on Weir and the postings stopped the day they were served. Weir then started a class action lawsuit against the company. Weir said the messages were not his but the court heard detailed evidence against him including evidence related to IP addresses and the use by both of the anonymous posters of 123456 as their password.

The judge found Weir liable for defamation. She said that there was no evidence of financial damage to Vaquero and order Weir to pay it 10,000 Canadian dollars. The messages directed at Waldner had caused him real concern and he was awarded 40,000 Canadian dollars in damages. Punitive damages were also awarded of 25,000 Canadian dollars

Jonathan Armstrong
Eversheds LLP
jonathanarmstrong@eversheds.com
Direct dial: 0113 200 4658
www.eversheds.com

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