The lawsuit filed by 2Clix against Whirlpool forum creator, Simon Wright, could have a "chilling effect" on reasonable and factual comments people may make on Internet forums, according to David Vaile, executive director of the Cyberspace Law and Policy Centre at UNSW.
"The issue is that Whirlpool is a public and very broad source of information used by people to find out the best deal, the best product, what is going on, and is based on people sharing anecdotes," said Vaile.
"If they [Whirlpool] lose here, the main effect won't be that the comments are taken off, but rather they will be hit with a huge (damages and legal) bill and that could mean the end of Whirlpool."
"If that happens, it has a chilling effect on everybody, ISPs and the content hosting community, because they are all thinking 'that could be us next'."
Vaile points out that if successful, 2Clix's lawsuit will pave the way for legal attacks on any Internet content hosts who want to defend the right of their subscribers to say what they want to say.
While 2Clix's claim relates to the common law tort of 'injurious falsehood', Vaile says it illustrates shortcomings in Australia's defamation, copyright and censorship laws.
"There is a historic compromise reached between ISPs, the Internet content hosting community and the government. It's in Schedule 5 of the Broadcasting Services Act, and it's a special partial protection regime for both ISPs and Internet content hosts."
"What it boils down to is that if you don't know, you are not liable. It excused both ISP and Internet content hosts of the potentially economically unworkable option of having to monitor, moderate and control everything they facilitate, regardless of whether the contributors are named or anonymous."
"The trade-off is once they do become aware of it, they don't get that protection any longer."
But Vaile says that if they implement a conscious monitoring regime, like Whirlpool does, they are in a catch-22 situation because they have a monitoring process and therefore can't act surprised when it is brought to their attention.
"Under Australian law you are damned if you do, and damned if you don't. If you try to moderate you are deemed to know everything and are responsible for everything, so you get no protection."