David Jones Limited has dropped its landmark case against The Australia Institute and its former executive director Clive Hamilton over the institute’s controversial 2006 paper “Corporate paedophilia — s-xualising children by advertising and marketing”.

A David Jones spokesperson confirmed to Crikey this morning: “The proceedings against TAI and Clive Hamilton have been discontinued by agreement from both sides.”

A win for DJ’s could have ushered in a new era of corporate combativeness, but instead their strategy has backfired spectacularly.

The Australia Institute’s accompanying media release to the 2006 study stated:

Children are increasingly being portrayed in clothing and posed in ways designed to draw attention to adult sexual features that they do not yet possess … Children are being eroticised in the interests of the corporate bottom line.

It is particularly disturbing that this exploitation of young children appears to be becoming accepted as mainstream. Major retail chains such as David Jones and Myer have jumped on the bandwagon…

Only David Jones pursued legal action, a decision that many have dubbed an dumb PR move. The action sparked a flood of negative publicity in which every article tied the David Jones brand to the unfortunate term “corporate paedophilia” while the Myer name faded into the background.

“I am very pleased with the outcome,” former Australia Institute executive director Clive Hamilton told Crikey. “I am very concerned that, since the gazetting of the uniform defamation laws in 2005, a number of corporations have used provisions of the Trade Practices Act to take legal action against their critics in civil society…”

The decision to drop action under the Trade Practices Act could have far reaching consequences for other cases of this nature, such as Gunns’ action against the so-called “Gunns 20”.

“The use of Trade Practices Act (which is intended to protect consumers) by large corporations to silence their critics is something that must be opposed whenever it is done,” Brian Walters SC, former president of Liberty Victoria and author of Slapping on the Writs, told Crikey.

“This was a particulary startling example because here we have a non profit making think tank commenting on an issue of public importance and if the consumer protection provision of the Trade Practices Act can be used to silence them it would be a significant inroad into free speech in Australia.”

In a statement of claim filed in the Federal Court under Section 52 of the Trade Practices Act (outlawing misleading or deceptive conduct), David Jones said it had suffered “loss or damage” as a result of the actions of the institute and Dr Hamilton. It contended that the institute had refused to issue a corrective news release or to remove the David Jones advertisements from the electronic appendix attached to the discussion paper.

The statement said: “David Jones does not knowingly cause the publication of material which can be used by paedophiles for their s-xual gratification.”

Since corporations can no longer sue for defamation some, like the Australian Wool Growers Association’s action against PETA’s anti mulesing campaign which was recently dropped, have pursued action under the Trade Practices Act.

So what does DJ’s decision to drop the case mean for other cases of this nature?

“In itself it doesn’t create a judicial precedent because there was no judicial decision,” Walters told Crikey.

“But I think there would be many red faces around the board of DJs Limited. Not only are these kinds of actions fraught with legal difficulty but they are likely to be a PR disaster as well as costing a lot of money.”

“Look at the McLibel case, when big corporations take on small people it can really hurt them,” says Walters.

“It must have cost DJs considerably to get out of it at this point, but also in terms of publicity.”

As for the depiction of children in advertising, Miley Cyrus’ nudity notwithstanding, Hamilton told Crikey that since the Australia Institute’s paper was released there has been a marked change in advertising standards.

“I have noticed that some of the more ‘respectable’ advertisers have changed the way they present children in their advertisements. There are signs that some major companies are being much more careful in how they use children in their advertising,” says Hamilton.

“The Senate has launched an inquiry into the sexualisation of children and The Australian Association of National Advertisers has recently released a new code of conduct that for the first time outlaws the sexualisation of children in advertising.”

Acting Executive Director of the Australia Institute Ms Susan Harris Rimmer said, “….We are pleased that the Australia Institute can now move forward with its research on the wellbeing and rights of children in Australian society.”