This has been a big year for Janet Malcolm, who writes for The New Yorker about psychoanalysts, journalists, murderers, and other interesting folks.

First she touched off a cyclone of journalistic indignation and soul-searching by asserting in a widely discussed article that "every journalist… is a kind of confidence man," seducing his subjects to gain their trust and then "betraying them without remorse."

And now she has won a ruling that every journalist has a First Amendment right to "fictionalize quotations," as a federal appeals court put it in dismissing a $10 million libel suit by a man who came across as a deluded egomaniac in quotations attributed to him by Malcolm.

In the 2-1 decision, the U.S. Court of Appeals for the 9th Circuit held that a writer may attribute to a public figure words that he did not speak, words depicting a vain, foolish, and dishonorable braggart, so long as the made-up quotations are arguably similar to things he did say.

This new constitutional right to "interpret" in the guise of quoting could enable Malcolm’s journalistic "confidence man" to dispense with seducing his subjects and proceed directly to betraying his readers.

Even if Malcolm did both, the court held on Aug. 4, she did not libel Jeffrey Masson in the two-part 1983 article and subsequent book trashing his reputation.

Masson is a psychoanalyst and scholar who was fired from a job at the Sigmund Freud Archives in 1981 after he had enraged the psychoanalytic establishment by going public with evidence questioning the integrity of Freud’s work.

Malcolm put quotation marks around several damning comments and self-characterizations attributed to Masson- "intellectual gigolo," for example-that he says she simply made up.

She has said, "I invented nothing," and that Masson uttered all the quoted statements in interviews with her-some of which, speaking of seduction and betrayal, took place while he was a guest in her home.

There are reasons to doubt her. They include Malcolm’s belated admissions that some of the most damning Masson "quotations" were not said at the time and place minutely described in her article and-contrary to what she had said earlier-are nowhere to be found in their "more than 40 hours of tape-recorded conversations."

Documentary evidence also shows that she altered and truncated some quotations on the tapes, in one case omitting 33 of the words in a 40-word sentence and thus creating by juxtaposition the false impression that Masson had said he was "the wrong man" to be asked to do "the honorable thing" in his dispute with the Freud Archives.

Sparing Malcolm, The New Yorker, and Malcolm’s book publisher the perils of a jury trial on who is lying, Judge Arthur Alarcon ruled for the 9th Circuit that they could not be held liable even assuming, for purposes of the defendants’ summary judgment motion, that "the quotations were deliberately altered."

He upheld a lower court ruling for the defendants on the ground that "the fabricated quotations are either ‘rational interpretations’ of ambiguous remarks… or do not ‘alter the substantive content’ of unambiguous remarks actually made by the public figure"-in this case, Masson.

But in a 47-page dissent, Judge Alex Kozinski said that "to invoke the right to deliberately distort what someone else has said is to assert the right to lie in print," and "debases the journalistic profession." He is right.

It should go without saying that such fabrication is a gross breach of journalistic ethics. But prominent media lawyer Floyd Abrams told The New York Time that the court was right to shield it behind the First Amendment, because "a libel case is not a journalism seminar."

It’s true that libel law should not be loosed on every breach of journalistic ethics. But this is a case of bad journalism making bad law. As Kozinski says, "When a writer uses quotation marks in reporting what someone else has said, she is representing that those are the speaker’s own words or something very close to them."

If that representation is knowingly or recklessly false, and the fictionalized quotation makes the purported speaker look bad, there is no good reason to cloak it with First Amendment protection.

A quotation does not advertise itself as an exercise in mind reading or a "ratienal interpretation"; it carries special weight with readers because it purports to be the genuine item, the words the person spoke. In any event, Malcolm’s alleged fabrications smack of deliberate distortion.

Her article and subsequent book, published by co-defendant Alfred A. Knopf Inc., were based mainly on her interviews with Masson about his run-in with more established psychoanalysts who ran the Freud Archives.

As one reviewer described it: "Malcolm’s portrait of Masson is devastating: largely through his own words, he emerges as a feverish jumble of vanity, self-destruction, childishness, and ruthlessness."

His own words? One of the dozen or so statements attributed by Malcolm to Masson that he denies, and that are not to be found on her tapes, is that he would soon be acclaimed as, after Freud, "the greatest analyst who ever lived."

The 9th Circuit held that even if Masson had never said this, it was close enough to other "egotistical and boastful statements" that he had made to absolve Malcolm.

In other words, because Malcolm had reason to think Masson egotistical and boastful, she had a First Amendment right to invent a wildly egomaniacal statement and pretend to her readers that he had made it.

Malcolm also quoted Masson as saying that if he had been allowed to move into the London home and archive of Freud’s daughter, Dr. Anna Freud, he would have made it "a place of sex, women, fun."

Masson may not have said this, Judge Alarcon ruled-and the tapes and editing records suggest he did not- but it was close enough: "[T]he ‘sex, women, fun’ quote is consistent with Masson’s description of his life style and conception of ‘fun.’ "

How’s that? Alarcon cited Masson’s tape-recorded statements that he would have given wild parties at the Freud house-nothing about sex so far-and an unrelated conversation in which Masson had told Malcolm of his sexual exploits years before.

"In effect," as Judge Kozinski put it, "the majority is saying that, because of his wayward youth, Masson is the kind of guy who probably would use the Freud house for ‘sex, women, fun,’ and therefore Malcolm was entitled to make him say so to the world."

A third statement attributed to Masson by Malcolm described his relationship with Anna Freud and Dr. Kurt Eissler, another board member of the Freud Archives:

"They loved to hear from me what creeps and dolts analysts are. I was like an intellectual gigolo-you get your pleasure from him, but you don’t take him out in public."

Masson says the whole quotation was a fabrication. Judge Alarcon ruled that "while it may be true that Masson did not use the words ‘intellectual gigolo,’ Malcolm’s interpretation did not alter the substantive content of Masson’s description of himself as a ‘private asset but a public liability’ to Eissler and Anna Freud."

Besides, Alarcon said, Masson had made lots of "provocative, bombastic statements," so what harm was there in putting one more in his mouth?

But as Kozinski stressed, "intellectual gigolo" carries an especially damning connotation of "professional dishonesty," and "makes him out to be a clown" in a way that an accurate quotation would not have done.

If Malcolm thinks Masson a conceited ass, she has a right to say so. She has no right to indict him by putting words in his mouth.

The Masson-Malcolm case may not be over. He plans to appeal. And Kozinski, a former Supreme Court law clerk who knows how to catch eyes up there, waved a little flag in a footnote by suggesting that the decision creates "a square conflict with the District of Columbia Circuit"-and with a 1984 opinion by then Judge Antonin Scalia, no less.

A slightly fictionalized quotation might say: "Read my lips. Hear this case"