Just this April, Mouthshut suffered a legal setback when the Bombay High Court ruled in favour of Sharda University against some user reviews critical of it. The court directed Mouthshut to delete the reviews. According to its order, the website had been ‘publishing [and] transmitting information which is private and confidential in electronic form...’. It also gave the plaintiff the option of suing Mouthshut’s CEO in order to punish him with ‘imprisonment... for a term which may extend to three years and with fine which may extend to five lakh rupees...’
In a 2010 case, Mouthshut was sued by Doctor Health Clinic, a provider of homeopathic skin-and hair-care services in Bangalore. The clinic objected to user reviews that said that the clinic, contrary to its claims, could not stop hair-fall. Some reviews also advised balding people that they were better off not going to the clinic. Said the takedown notice that Mouthshut got from the clinic’s lawyer: ‘The above comments have caused grievous injury to the name, fame, standing and reputation of my clients. The freedom of expression of these... members on your website cannot come without accountability.’ The website refused to take the reviews down, resulting in a civil court case in Bangalore that began last December. The court has not only ruled against Mouthshut, but also banned it from publishing reviews of the clinic in the future—whether fair or not.
While the article bangs on about (the legitimate concerns of) free speech and online censorship, it doesn't really address the issue from the side of the affected companies. IMO, the core issue for the site revolves around something that its founder, Faisal Farooqui, notes in passing—mouthshut is where end users come when "they want to vent". Consequently, the vast majority of reviews are negative in nature. Perhaps a balance of positive and negative reviews will serve the site well as companies will come to appreciate the benefits of user feedback and crowd-vertising.