Protection Racket or Libel Suit?

CNet News.com has reported that

... as part of VDA's business model, vendors are asked to pay for the bugs it discovers, or its consulting services, otherwise VDA threatens to sell the bug to a third party or make the details of the security flaw public.

Is VDA's founder Jared DeMott just another racketeer? Or is there a libel suit on the winds?

Findlaw says that most states define extortion as "the gaining of property or money by almost any kind of force, or threat of 1) violence, 2) property damage, 3) harm to reputation, or 4) unfavorable government action."

"Pay up or else!" seems to be what CNet is reporting about VDA. But then again, I'm no legal scholar.

Apparently neither is Mr. DeMott.