Totally empty threat from an empty suit.
Kerry is very much within the legal definition of a "public person", and in order to prove libel, Kerry's lawyers would have to prove that they knowingly lied, or showed a callous disregard for the truth. The publicity that would be generated from such a charge would be devastating to Kerry.
This old "vast rightwing conspiracy" charge every time somebody criticizes a Democrat has worn pretty thin... and after the whacking that Bush has taken from Kerry's surrogates like Michael Moore, Kerry is in a pretty weak position to complain that these other vets aren't being fair.
Damn DNC lawyers can't even get their terms straight. Libel is printed defamation, slander is spoken defamation. Since this is a TV ad and the charges against Kerry are spoken, the charges can't be "libelous".