Reverse defamation, the Newsweek Bitcoin story, and Satoshi Nakamoto

A recent Newsweek story identified one Dorian Satoshi Nakamoto, a 64-year-old engineer living in Southern California, as the Satoshi Nakamoto who is said to have created Bitcoin. Dorian Nakamoto denies it, and there’s talk of a possible lawsuit.

But wait — how can Dorian Nakamoto sue, if the story didn’t damage his reputation, but instead portrayed him as a programming genius? The answer lies in the “false light” tort, sometimes labeled “false light invasion of privacy” but in practice having little to do with privacy. Where defamation law offers recovery for falsehoods that injure reputation, the false light tort offers recovery for falsehoods that injure the subject’s feelings, if the falsehoods put the subject in a false light that “would be highly offensive to a reasonable person.”

Indeed, one leading false light case involves a falsehood that wrongly made someone out to be a hero. Julian Messner Inc. published a supposed biography of baseball great Warren Spahn, written by one Milton Shapiro; the biography was aimed at children. The biography was largely fictionalized, but, in keeping with its genre and target audience, didn’t say things that made Spahn look bad (and thus wasn’t libelous). Rather, it made him look more heroic than he was, including by falsely claiming that he had earned a Bronze Star:

Two chapters of the book are devoted to Spahn’s experiences in World War II. The book mistakenly states that Warren Spahn had been decorated with the Bronze Star. In truth, Spahn had not been the recipient of this award, customarily bestowed for outstanding valor in war. Yet the whole tenor of the description of Spahn’s war experiences [involving many details] reflects this basic error. Plaintiff thus clearly established that the heroics attributed to him constituted a gross nonfactual and embarrassing distortion as did the description of the circumstances surrounding his being wounded.

Interestingly — and importantly for any Nakamoto v. Newsweek case — it’s not clear what level of fault a formerly private figure plaintiff like Nakamoto, suing over falsehoods that relate to a matter of public concern, has to prove to recover. (I assume here that Nakamoto can show that the story was false, and that he isn’t the creator of Bitcoin.)

Does Nakamoto just have to show that Newsweek’s investigation was negligent? Or does he have to show that people at Newsweek knew the story was mistaken when they published it, or knew it was likely mistaken and recklessly disregarded this risk? (This knowledge-or-recklessness test is often misleadingly called “actual malice,” though it has little to do with “malice” in the normal English sense of the word.) The matter, it turns out, is not settled, for complicated reasons (see pp. 250-51 of Cantrell v. Forest City Publishing Co. (1974)).

Perhaps if the case is filed, fought, and then appealed, California courts would reach a conclusion on this question, since it might well affect the result — it seems quite possible that, if the story is in error, the reporter was negligent, but it seems less likely that the reporter deliberately lied.

Eugene Volokh teaches free speech law, religious freedom law, church-state relations law, a First Amendment Amicus Brief Clinic, and tort law, at UCLA School of Law, where he has also often taught copyright law, criminal law, and a seminar on firearms regulation policy. Before coming to UCLA, he clerked for Justice Sandra Day O'Connor on the U.S. Supreme Court and for Judge Alex Kozinski on the U.S. Court of Appeals for the Ninth Circuit. Volokh is the author of the textbooks The First Amendment and Related Statutes (4th ed. 2011), The Religion Clauses and Related Statutes (2005), and Academic Legal Writing (4th ed. 2010), as well as over 70 law review articles. Volokh is also an Academic Affiliate for the Mayer Brown LLP law firm.
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Eugene Volokh | March 17