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.

NOTE:I would request that you. provide your name and email address when posting your comment (only visible to the moderator). This will make it easier for us all to coordinate, discuss and share topics of interest.
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14 Responses

  1. Such a interesting case. dual side orders but which will apply?

  2. There is a strong need for a global treaty on defamation. For example in countries like Pakistan, Defamation cases can lead to severe criminal charges.

  3. Why don’t the US courts issue stoppage orders? I think that’s important.

  4. You’ll all be interested to learn that quite a few of the hundreds of sites mentioned in these cases, are in fact wholly owned and operated by my firm’s client BASCOE and always have been. This case has strongly and completely needlessly affected our client. I first heard about this case after the firm’s client was contacted by its internet service provider regarding a few of its sites that were listed in a default order. Our client has no idea why its’ sites have been mentioned in these cases and on no occasion did either parties’ legal consul try to confirm who actually owned these sites and BASCOE was never contacted, asked or even informed that such litigation was in progress and was neither served any legal notice.

    As everybody has heard of Bascoe Pakistan, I’m sure the legal representatives of both parties could easily have found these facts out with a little research. Everything was based on an assumption and no burden of proof was put on any party.

    Regardless the judgments don’t actually apply to my firm’s client as it falls out of the judgments’ jurisdiction however I knew I had to act immediately due to the risk to our client’s revenues.

  5. I don’t know how many other companies are suffering from such blanket filings, that search engines and directory sites jump to adhere to.

  6. So your client is getting random orders against its sites? Why did the judge issue such an order, isn’t it beyond the default judgement parameters to involve a random third party in such as case. Shouldn’t the court have put the burden of proof on Axact or even SNR before issuing the default judgement against these sites?

  7. The judge acted appropriately, the order clearly informs hosting companies, and search engines etc. to be careful that Axact does not use SNR’s 3 copyrighted papers on any of its sites. It is not the court’s responsibility to do the research that Legal consuls should do themselves.

  8. Student Network Resources is a great site. My classmate recommended SNR and I think its really useful.

  9. I want to specialize in copyright law so found this post really interesting and just read up on the cases. You’re right about the court order, Samia, and how the lawyers should have done more. Apparently Axact’s attorney Andrew Napolitano was already contesting a legal malpractice case against him – http://www.legalmalpractice-nj.com/CM/GlennInTheNews/NJ-Appeal-Tests.asp. I think selection of a lawyer should be done carefully. I’ve found in such situations most clients usually have realistic expectations from such cases, but it should be the responsibility of the lawyers to follow through.

  10. As moderator, in addition to creating content for the site, my role is to manage and guide the community.

    I have to strongly point out, recent posts that I have had to moderate fall against the nature of this blog. Our legal blog looks at topics solely from a legal point of view, we are not a paid view and will not communicate further any such views whether from professionals or companies.

    We have stopped all such comments. I would like to categorical state: This forum is not the place to discuss things in a negative fashion – this is irrelevant to the nature of the site.

    We are not interested in looking at or posting any Energy scam or FTC ruling against sites whether or not owned by SNR as it has no relevance to this case.

    Neither are we interested in posting any comments or views from Lawyers, or Axact, and are not related to SNR. Please avoid writing SNR is a great company or Axact is this.

    Both companies received default judgments – now whether any default judgement has been given in either country this is not based on merit – in fact the definition of a default judgement is – a judgement entered against a party who has failed to plead (i.e., answer) or to otherwise defend against a claim that has been brought by another party. And such a judgement can be entered either by the clerk or the court.

    This is not a court it’s a blog and we are not here to prove who site this is or that is or saying sites are banned when that is not what’s written in the court order, or how SNR’s copyright was infringed only a day after the copyright was obtained. If you have relevant points at the legal level, please only discuss those.

    The case-study above is posted solely to discuss the lack of a global legal framework in Defamation and copyright cases and the legal fraternities views about how such a system could be developed. So if you have any quote or legal statement that you would like to discuss then please do so.

    I’m sure if this case-study was not related to the IT industry I would not be having to deal with these sorts of responses and they would not be posted to this blog.

    Once again I urge all participants to maintain the neutrality and factual basis of this forum.

    Thankyou
    Pakistan Legal Guy
    pklawyers@gmail.com

  11. In light of further posts made to this blog, I would like to categorically state that the Pakistan Neutral legal Forum is solely for people in the legal fraternity with a legal interest, it is not for any professional, corporate or other use. Different sides have sent comments in a very legal way, trying to convince us of their point of view. Let me clear to the few individuals who hold

    1 – SNR’s view: an opinion of a judge, in default cases, is not based on merit meritorious so to quote it is not relevant. Furthermore, please review the US order, it does not claim that the sites belong to Axact or puts the burden of proof on Axact. The order states such copyrights will not be violated in future by these sites which clearly means the sites are not to be shut and we are not interested in who owns these sites.

    2- Axact’s view: in your matter, if you discuss about energy scam and easy websites or related topics. With regards to all these topics and what exists in terms of default rulings the full burden of proof again is on you. Regardless, if your order or ban exists then follow it up directly by yourselves.

    Please both the sides this is a legal matter. Defamation, particularly online, is one of the more contentious areas in the regulation of global information networks so please participate with a global perspective. As a Legal Forum what we want to know and what we are interested in is: A Pakistani order exists and an American order exists, how will the two be reconciled? What should happen in cases such as this.–

    1. What should be the standard method for handling defamation cases across the globe?
    2. Should an international body be created to execute such standards, along the lines of WIPO and its Protocols.
    3. How should it be done particularly in the light of Internet related questions.
    4. What ICAAN’s role be?
    5. Should specialist defamation attorneys be required to obtain certification / be formally qualified for such global legal practices.
    6. What about action by aggrieved individuals/institutions against publishers or other entities domiciled in different jurisdictions. For example: Defamation law in Australia means that defamation actions can be taken where an article is read rather than where it is written. In 2008 alone, three high profile defamation cases have hit the headlines in Malaysia.
    7. Jurisdiction-shopping by plaintiffs, in some instances choosing launching action in another country against a publisher that is located in their own country.
    8. Disagreement about defenses by public figures
    9. The nature of remedies (criminal sanctions? apologies? exemplary or other damages and court costs?)
    10. How will countries welcome such a standard framework – for example in March 2007 the UN rights council adopted a global religious defamation act, but the resolution was adopted by a 24-14 vote with nine abstentions.

    This is the direction of this blog

    I look forward to high caliber comments by academics, professionals, students or other qualified persons.
    Thanks
    Pakistan Legal guy
    pklawyers@gmail.com

  12. I think compulsory basic Training programs should be designed for such complicated topics, especially about on-line business issues, that all lawyers have to study, like once every 6 months. For example here Judge Freda L. Wolfson or other judges who have seen international copyright & defamation cases and specialist lawyers and journalists from many countries can be asked about international Legal principles in this field. That should be put-together into a training program with recent developments, a review of recent awards at first instance and on appeal and procedure before proceedings begin. This can be placed in a centralized website where all lawyers should review. In fact we should do this for all legal topics, rather than saying things like the LLB curriculum has too many compulsory subjects.

  13. A revised order was enacted on the above on Jan the 6th requiring a transfer of all domains. This revised order was issued without any motion and is neither searchable on-line, its PDF is just an image.

    I’m a Lawyer from Pakistan, and my client, a complete ‘non-party’ in the above mentioned case owns quite a few of the sites listed in the orders. We heard about this revised order when our domain registrar received the order. I am researching about this case and came across this Blog and have decided to comment about it.

    Apparently even BASCO has a few of these listed sites, my client’s company has some, in fact everyone in this industry knows who the major companies are and what their sites are. So weren’t any of us contacted.

    The complete detail of my client and of the ownership of these domains by my client are with the domain registrars. If an action is to be taken against any website it is a legal procedure as per ICAAN and other globally recognized bodies for due process to obtain its owner’s information through a subpoena to the domain registrars and if the domain owner information is fake then the domains are automatically cancelled as per the ICANN rules. In my client’s case the information is 100% accurate.

    However the defendant’s attorney Peter L. Skolnik has misguided the court by stating that the domains are owned by Axact as the IP’s on which they are hosted are owned by Axact. This logic to prove ownership has no standing in any international law as IP addresses are almost always owned by service providers and not the owners of the website.

    The fact that no complaint or attempt has been made by the defendants or the defendant’s attorney Peter L. Skolnik to reach the owner of the websites clearly shows that in an attempt to file the counterclaim against Axact they wanted their competitors sites (not owned by Axact) to be closed down. No copyright violation has ever been done by my client through any of his websites.

    So one day a site will be transferred to SNR, the next day Axact will make a move and some will be transferred to Axact. What is this? What kind of order has the judge allowed, without any due process. After extensive research I’ve come to find even if there is a Copyright issue on 2 websites they never result in a transfer of all that companies’ websites, let alone other companies websites. This case sets a dangerous precedent.

    Between the Defendant and Judge, I have reservations about what’s happening here. I’ve written a letter to the honorable judge Freda L. Wolfson to clarify the matter in full detail.

    Ultimately an order like this revised order will lead to people not buying domains in America. For example China has default judgments, many other countries have default judgments, if every country’s interest can’t be safeguarded then countries will start creating it own personal internets to safe-guard their businesses.

  14. This is an interesting development if a precedent has been set and I appreciate the poster doing my job as moderator to give any updates about cases or news on my blog.

    If a precedent has been set important broader issues need to be looked into
    (i) If legal procedure as per ICAAN and other globally recognized bodies for due process is to obtain its owner’s information and to properly inform them through a subpoena then is this transfer or such a judgement valid?
    (ii) Can multiple separate companies or ‘non-party’ companies websites be clubbed together in such an order?
    (iii) Can a revised order be passed without a motion?

    Let’s remove ourselves from solely discussing Axact & SNR here and discuss the over-reaching topics and the broader issues in greater detail. For this I’m creating a new post on the topic https://pklawyers.wordpress.com/2009/01/15/intellectual-property-law-internet/

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