The alternative is that the wronged party gets shafted for a huge amount of money for either defending themselves against something illegitimate or pursuing damages from someone who wronged them. "ok looks like you weren't a naughty boy, you win, enjoy five or six figures of debt for daring to defend yourself".
Realistically the ONLY damages Billy Mitchell incurred were his legal fees. Jobst's lies about him didn't cost him anything. A fair judgement would've been for Jobst to pay Billy's legal fees and be forced to issue a retraction of his lie, without any other punitive judgement being awarded. In addition to being fair, it would also disincentivize people like Billy from suing over petty bullshit like this, because he wouldn't actually gain anything from it.