Case study – Global copyright and defamation laws and judgments. Axact vs Student Network Resources (SNR).

A case that highlights the lack of unified global copyright and defamation laws, and the business and financial ramifications this has to on-line industries, is Axact Pvt limited vs Student Network Resources.

The case
On November 14, 2007, Axact Pvt limited filed a complaint in New Jersey against ‘Student Network Resources’, SNR to stop it from making or publishing any false statements against Axact.

In its complaint Axact maintained that Student Network Resources, a company involved in selling term paper to students, had used a screening name ‘Essayfraud.org’ and held itself out to be a watchdog’ organization that investigates plagiarism in academia. Axact’s claim revolved around the posting of defamatory material against Axact on this site. The complaint by Axact listed 5 causes of action: Defamation, Trade Libel, Tortuous interference with prospective economic advantage, False advertising and unfair competition and Consumer fraud all against ‘Student Network Resources’. And that day a summons was issued as to ‘Student Network Resources’.

It is important to note here that Axact had earlier followed-up to determine the owner of the website, http://www.essayfraud.org, who was also the poster of the defamatory material, with a series of subpoenas of discovery in another State, Utah, through another attorney. It was through these subpoenas, that the plaintiff Axact determined that the website run anonymously as an independent fraud watch-dog organization was in fact owned by the defendants, an allegation SNR officially admitted to at a later date, in their Answer to the Complaint, as per court records.

By Dec 21 2007, a notice of appearance was filed by SNR, the defendants, through their law firm and they requested an extension of time to answer, move or otherwise respond till Jan 10 2008. After about 2 weeks, on the 3rd of January, Axact’s attorney filed exhibits of the complaint filed in November. The latter’s attorney further made a declaration on personal knowledge that the ‘foregoing is true and correct’. And within that week both parties, Axact and the defendants ‘Student Network Resources’ acting through their duly authorized counsel agreed that the time for the defendants to respond could be extended till February the 4th.

SNR responded with a counter claim on Feb 4th. Here they accepted the running of both term paper selling businesses and the maintaining of the independent watchdog website http://www.essayfraud.org, defending all the defamatory material by mentioning that all their allegations are either true or just opinions. Near the end of February, SNR further submitted an amended answer to the complaint and a counterclaim for copyright violations by Axact and sent a Rule 11 letter to its Attorney; who had also made a mistake in obtaining one of the subpoenas and so chose no longer represent Axact. At that point, as per court records, Axact would rather have pursued the case pro se.

Default Judgement in favour of SNR – compensation US $694,750
Now as is standard in the US a corporate cannot file pro se, so it appears Axact decided not to proceed with securing other counsel and so a default judgment was entered in favor of SNR. The judgement entered the statutory damages on the Defendants’ copyright claim in the amount of $300,000, attorney fees, other fees and an injunction against Axact and any Internet search engines, Web hosts and domain-name registrars that are provided with notice of the injunction on a restriction from any future copyright violations for the works of SNR (3 copyrighted papers) by Axact.

Default judgement in favour of Axact – compensation US $6,000,000
Axact meanwhile adhering to advice form their local legal consul, filed a lawsuit in Pakistan in the High Court of Sind at Karachi, for damages and injunctions amounting US $6million and other remedies. In Pakistan the defendants opted not to join the suit even after served with several court notices/summons and so Axact received a default judgment against SNR.

Conclusion
To conclude, though both countries have strong defamation laws, neither legal process lead to an effective resolution of the underlying matters. Firstly,

1. Neither party can effectively pursue and claim their default judgment compensation amounts, as no such treaty exists; this means it is highly unlikely that either the US $694,750 in favor of SNR or the US $6million judgement in favor of Axact can be collected.

2. SNR has not secured a site stoppage order, whereas Axact has secured a site stoppage order where they have the option to have SNR’s sites closed through their default judgment issued in Pakistan, as the large ‘internet search providers’ accept such international stoppage orders.

3. In terms of exposure of their cases, Companies based in the US benefit as all such US cases are extensively shared and reported on, so they benefit from a positive or default judgement, whereas in other countries cases may not be reported so widely.

Fundamentally cases such as these will lead to businesses with operations on-line filing in their countries of origin, expecting default judgments and continuing business as usual. Ultimately it appears the lawyers benefit, but there is no net gain.

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