Is the New York Times botching its legal defense against Sarah Palin’s libel claim? In June the Times published an editorial containing fake news about the former Alaska governor and GOP vice-presidential candidate. Now the newspaper is seeking to have her lawsuit dismissed. But Mrs. Palin’s legal team says that Times lawyers are demanding a legal standard that would effectively make it impossible for any public official to win a libel case.

In the June editorial, which followed the shooting of Rep. Steve Scalise and others,...