Commercial Disparagement and Defamation

Commercial disparagement and defamation are inherently
“competitive” torts, involving injury to a competitor’s
reputation, or the reputation of its products or services. Often,
such claims involve disparaging comments by one competitor
about another.1 Frequently, acts of commercial disparagement
or defamation are joined with claims under sections 1 and 2 of
the Sherman Act. Such conduct also may give rise to claims
under the Lanham Act,2 state unfair competition laws,3 and the
common law of tortious interference.4 – Eds.
A. Introduction
This chapter focuses on the common law torts of commercial
disparagement and defamation. Although conceptually similar, these
torts address different types of conduct, have different elements and
evidentiary standards, and are subject to different defenses.5 In addition,
this chapter briefly examines First Amendment limitations on the
1. See,e.g., U.S. Healthcare, Inc. v. Blue Cross of Greater Phila., 898 F.2d
914, 922-26 (3d Cir. 1990) (allowing plaintiff in comparative advertising
campaign to join disparagement and defamation actions with Sherman Act
claims); accord Fedders Corp. v. Elite Classics, 279 F. Supp. 2d 965, 969
(S.D. Ill. 2003). But see Am. Prof’l Testing Serv. v. Harcourt Brace
Jovanovich Legal & Prof’l Pub., Inc., 108 F.3d 1147, 1153 (9th Cir. 1997)
(“[w]hile the disparagement of a rival or compromising a rival’s employee
may be unethical and even impair the opportunities of a rival, its harmful
effects on competitors are ordinarily not significant enough to warrant
recognition under § 2 of the Sherman Act.”).
2. 15 U.S.C. § 1125(a). Section 43(a) is examined in Chap. 3.
3. See id.
4. See Chap. 5.
5. See generally R
ESTATEMENT (SECOND)OF TORTS § 623A cmt. g (1977)
LAW OF TORTS § 128 (5th ed. 1984) [hereinafter PROSSER & KEETON].
86 Business Tort Law
regulation of commercial speech, which may be relevant to the defense
of such claims.
B. Commercial Disparagement and Defamation Distinguished
Although similarities exist between commercial disparagement and
defamation, the two are distinct torts.6 While defamation law protects
the plaintiff’s character and reputation, disparagement law defends the
quality and reputation of the plaintiff’s products, goods, or services.7 A
communication regarding the plaintiff’s products that also impugns the
integrity of the plaintiff’s business, however, may be actionable as both
defamation and disparagement.8 The Eighth Circuit framed the
following oft-cited test for determining when disparagement crosses the
line into defamation:
[W]here the publication on its face is directed against goods or
product of a corporate vendor or manufacturer, it will not be held
libelous per se as to the corporation, unless by fair construction and
without the aid of extrinsic evidence it imputes to the corporation
fraud, deceit, dishonesty, or reprehensible conduct in its business in
relation to said goods or product.9
6. Compare RESTATEMENT,supra note 5, § 558 with id., § 623A; accord
Atiyeh Pub., LLC, v. Times Mirror Magazines, No. Civ.A.00-CV-1962,
2000 WL 1886574 at *4 n.2 (E.D. Pa. Dec. 7, 2000); Williams v. Burns,
540 F. Supp. 1243, 1247-48 (D. Colo. 1982); Gen. Prods. Co. v. Meredith
Corp., 526 F. Supp. 546, 549-54 (E.D. Va. 1981); Crinkley v. Dow Jones
& Co., 385 N.E.2d 714, 719 (Ill. App. Ct. 1978); see also Hamlet Dev. Co.
v. Venitt, 463 N.Y.S.2d 514, 515 (App. Div. 1983) (“although defamation
and disparagement in the commercial context are allied in that the
gravamen of both are falsehoods published to third parties, there is a
7. See id.; U.S. Healthcare v. Blue Cross of Greater Phila., 898 F.2d 914, 924
(3d Cir. 1990); Polygram Records, Inc. v. Superior Court of California,
216 Cal. Rptr. 252, 254 (Ct. App. 1985); Cuba’s United Ready Mix, Inc. v.
Bock Concrete Found’s, Inc., 785 S.W.2d 649, 651 (Mo. Ct. App. 1990).
8. Crinkley, 385 N.E.2d at 720; see also RESTATEMENT,supra note 5, § 573
cmt. g; § 623A cmt. g.
9. Nat’l Ref. Co. v. Benzo Gas Motor Fuel Co., 20 F.2d 763, 771 (8th Cir.
1927); see U.S. Healthcare, 898 F.2d at 924.

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