Negative SEO is talked about quite often between websmasters and SEO companies, you will find forums, blogs and websites given you different opinions on this matter.
Negative SEO means can you do SEO that will actually decrease your website rankings for example keyword stuff, build spammy links, crafty redirects or many other methods of black hat SEO.
We believe this can not be done because the web would become even more spammy than it already is with companies targeting competition.
Quite often Google and other major search engines will make updates to their algorithms and this causes websites to drop in rankings, this gives an effect of negative SEO but we generally beleive that where a link may have had a value of 2 it now has a value of 0.
The same happens with keywords within content, using the correct amount of keywords gives you 10 points, too many keywords may only give 2 points and not using the keyword at all could 2 points. If search engine decide to change the 2 points to 0 points this again would give a negative result.
The only possible way search engines may manually mark you down is if you link out of your site to spammy sites, sites with malware etc, this is because you have control of who you link too.
You do not have control of who links to you and it would be crazy if major search engines started given negative points for incoming links.