So we saw him off. Last week, in a victory for both medicine and free speech, Matthias Rath dropped his libel suit against the Guardian. But it seems amazing that the courts of this country allowed him to pursue this case. Rath, a German doctor, appears to have encouraged South Africans with HIV to stop using anti-retroviral drugs, and take his vitamin pills instead. Several of them died. It's an important story, which shows journalists are of some use after all. But the Guardian stood to lose hundreds of thousands of pounds for having the impudence to publish it.

This newspaper is big enough to look after itself. But the legal net that Rath used is now being cast to catch ever smaller fry. In the past few days, Sheffield Wednesday Football Club has dropped its cases against some of its fans. I am now allowed to write about the worst example of legal bullying I have ever seen.

The club has had serious problems, on and off the pitch, and many of its fans use an internet forum - owlstalk.co.uk - to discuss them. They make the kind of comments you would expect to find on any talk board, and which would normally be forgotten within 15 minutes. Two and half years ago the club launched its first suit. Only now have the people who posted these comments emerged blinking from the labyrinthine nightmare of English law.

As Geoffrey Robertson and Andrew Nicol explain in their excellent book, Media Law, England's defamation laws date back to a statute created in 1275. The criminal offence of scandalum magnatum was devised to protect "the great men of the realm" from stories which could stir the people against them. Three centuries later, the Star Chamber allowed noblemen to launch civil actions for libel, to provide them with an alternative to duelling.

They made prolific use of this privilege until Fox's Libel Act of 1792 determined that the claimant (the person bringing the case) had to prove that the words used against him were false, malicious and damaging. This means that libel law 216 years ago was more liberal and more in tune with the principle of free speech than it is today.

During the 19th and 20th centuries, Robertson and Nicol show, "the common law was re-fashioned to serve the British class system from the perspective of ... the Victorian club". To protect wealthy people from criticism, the courts reversed Fox's burden of proof. They created a presumption that any derogatory remark made about a gentleman must be false. This remains the case today. Defamation differs from all other civil or criminal laws in Britain: the burden of proof is on the defendant.

The law remains the privilege of gentlemen, by which I mean people who are able to afford costs that often exceed £1m on each side. Cases tend to be resolved by sheer financial might, as the plaintiffs bankrupt the defendants, or force them to give in before their money runs out. This ensures that the law retains its 13th-century function. It guarantees that most attempts to hold the wealthy to account founder before they are launched, as people bite their tongues for fear of losing their homes.

Since 1879, corporations have also been able to sue for libel. The inequality of arms this causes is compounded by the fact that there is no legal aid for defamation cases. Lawyers are now allowed to fight these suits on a no-win, no-fee basis, but this freedom is double-edged: if a defendant loses, he could end up paying double the claimant's legal costs.

This is the context in which Sheffield Wednesday went to court to demand the names and email addresses of 14 people who had posted comments on owlstalk. Here are some of the comments over which the club complained. "What an embarrassing, pathetic, laughing stock of a football club we've become." "Another day, another blunder. I doubt even Leeds were in such a mess this time last summer, and look what happened to them." "I am waiting with bated breath to hear who the Chuckle Brothers have signed after their trip to watch players abroad. With the amount of money they have to spend and the wages they can offer the best we can hope for is that little known Transvestitavian International I Sukblodov, who last scored in a brothel."

Such comments were deemed by Sheffield Wednesday's lawyers to be "false and seriously defamatory messages" which had caused grievous injury to the delicate flowers who ran the club. (They should try posting an article on the Guardian's Comment is Free site.) The lawyers threatened "proceedings to include claims for injunctions, damages, interest and legal costs (which could be substantial)". The judge threw most of the application out, but instructed the forum's host to reveal the email addresses of four of the posters, whose remarks seem to me to be almost as trivial as those he dismissed. This took place a year ago, and the long shadow of the law hung over the posters until the club's lawyers dropped the case last week.

Another case dates back to February 2006, when the club sent a warning letter to a fan called Nigel Short. When he received the letter he offered to apologise and to change his comments, but the club rejected this. He was able to fight it only because he found a lawyer - Mark Lewis of George Davies Solicitors in Manchester - who was incensed by this case and was prepared to represent him. "I've had two and a half years of worrying I was going to lose my house," Short tells me. "It's been hell. If Mark hadn't done this no win, no fee, I would have been bankrupt by now."

In November 2007, Short was diagnosed with throat cancer. The case continued. But on Wednesday September 3 he announced that his treatment had been successful. On Friday September 5, the club dropped the case and agreed to pay his costs. It issued a press release which suggested it had done so because of "Mr Short's medical condition". I asked the club whether it had abandoned the case because it knew that Short would now live to fight the action. It has refused to answer my questions.

The point of this story is not that the directors of Sheffield Wednesday have behaved like a bunch of petulant bullies. It's that the law equips them to do so. Most people see this as an issue only for journalists. But the internet ensures that the law of defamation now threatens anyone who stands up for what he believes to be right.

This autumn the English branch of PEN, which defends the freedom to write, will launch a campaign against our libel law. But where are the rest of you? Where are the petitions, the public protests, the lobbies of parliament? Why is this 13th-century law still permitted to stifle legitimate dissent? Wake up, Britain: your freedoms are disappearing into the pockets of barristers and billionaires.

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