A federal court Monday lifted a preliminary injunction against eight people accused of defaming ZiaSun Technologies (ZSUN) in "cybersmear" postings on Internet stock message boards.

The defendants, who came to be known in cyberspace as the Ziasun 8, included Internet message board poster Floyd Schneider and other posters on stock message board

Silicon Investor

. Internet message board posters, who had worried the injunction would have a

chilling effect on stock board postings, cheered the dismissal of the case, on a technicality.

But the posters are far from in the clear just yet. ZiaSun, a little-known company whose shares trade on the over-the-counter bulletin board, vowed to refile the case to overcome the court's technical objections. And Schneider, a well-known poster who's known as "the Truthseeker" and "Floydie," remains subject to a preliminary injunction obtained by a ZiaSun shareholder.

Venue Questions

Citing improper venue, U.S. district court in Seattle granted the defendants' motion to dismiss ZiaSun's suit, which was filed in June 1999. The company won a preliminary injunction against the posters on Jan. 21.

Monday's dismissal motion was filed by defendant Stephen Worthington, a.k.a. Auric Goldfinger, who was ecstatic on the message boards. "Moo ha ha Case dismissed!" he posted on Silicon Investor. "Auric Wins!"

But ZiaSun says it won't let this technicality get in its way. "High-priced lawyers find a way to jump through a loophole," says ZiaSun spokesman Mark Harris. ZiaSun had filed the suit in Seattle, the location of Silicon Investor's headquarters, where much of the alleged cybersmear campaign occurred. But the court noted that the eight defendants live in various locations throughout the U.S. "We will file a motion of reconsideration, and then we'll look to move the venue," says Harris. "We feel the court did not base this on merits of the case; it's obviously a technicality."

The Other Case

In a related case, ZiaSun shareholder Bryant Cragun last month also won a temporary restraining order against Schneider, preventing Schneider from making false and defamatory statements about Cragun or his family.

Schneider still faces the case filed by Cragun. Schneider says he failed to serve opposition papers by Feb. 7, as the restraining order stipulated. Dan Pascucci, Cragun's lawyer, says, "Our motion resulted in a preliminary injunction. Schneider recognizes he doesn't have a leg to stand on."

In light of Worthington's victory, Schneider says he is in the process of retaining Worthington's lawyer, and intends to fight back. "I think I'll be vindicated when I have an attorney," Schneider says.