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The Financial Post
Saturday, July 11, 1998

Internet providers on defensive after Philip ruling

by Keith Damsell

Corporate Canada is enthusiastic but Internet providers are feeling defensive after struggling Philip Services Corp. won a court order that may curb investors' online chat.

"What's wrong about making people more responsible?" asked Toronto corporate lawyer and Internet surfer Derrick Tay. "Accountability is not a bad thing."

On Thursday, it was disclosed Philip had won court orders that will force Internet providers to turn over the names, addresses and messages of chat group users who have been criticizing the company and its officers since April.

The industrial waste recycling and metals firm has become the focus of angry and malicious gossip on the Internet after a copper trading scandal earlier this year that left it with losses of about US$200 million.

Recent Internet postings about Philip included personal attacks on its executives, including racial slurs and threats, the company said.

On Friday, some people leaving messages in chat rooms showed no fear of the firm's legal manoeuvre and were continuing to make the kind of comments that led Philip to go to court.

Others thought the ruling could boomerang on Philip. "What if the writers have evidence that what they have written is true? What if those providing negative information are current and valued employees?" said one user, dubbed "philiphasreallydoneitnow".

The ruling is expected to have broad implications for investors who talk on the Internet. If the court order remains unchallenged, their anonymity will disappear.

The decision is believed to mark the first time a Canadian court has waded into privacy issues in cyberspace. Jurisdiction over the Internet remains uncertain. The information highway is still largely self-regulated, but is not above the rule of law, including libel.

"The law is the law and you're not immune if you're speaking anonymously", said Rick Broadhead, author of the 1998 Canadian Internet Handbook.

The potential end of secrecy has won strong reviews from companies and investors alike.

"The identity of people who make attacks should be disclosed", said Hugh Leggatt, spokesman for Placer Dome Inc.

Since early 1997, the Vancouver company's legal battle with Crystallex International Corp. over control of a Venezuelan gold property was fodder for online critics. Placer Dome received its share of "cheap shots" during the battle, but never took legal action, Leggatt said.

Misinformation was much more damaging for Crystallex shareholder Roger Bird. Chat room assurances about the company's gold claim prompted the Florida-based investor to snap up stock. When Crystallex lost its case last month, his losses topped US$61,000.

"I was naive", he said. On the Internet, "there's a huge credibility factor ... you have no idea ... who anybody is".

But customer privacy remains a "paramount principle" for the 120 members of the Canadian Association of Internet Providers, said president Ron Kawchuk.

"It's important for us to recognize the value of someone's privacy", said Nadir Desai, chief executive of the Canadian subsidiary of U.S. Internet giant PSINet Inc. His firm is reviewing the Philip court order.

The court's ruling "isn't addressing the issue" of Internet security, said Scott Remborg, Internet senior vice-president at MediaLinx Interactive LP. MediaLinx operates Sympatico, the Stentor group of phone companies' Internet service. The developing technology of cyberspace means e-mail containing hate messages may not even stem from the Internet provider in question, Remborg said.

By Friday afternoon, several Internet providers had complied with the court order.

"We haven't decided what we want to do with the information", said Philips spokeswoman Lynda Kuhn. "The goal was to stop the defamation."


Copyright © 1998 by The Financial Post. All Rights Reserved. Reprinted with permission.