Commercial Disparagement and Defamation

• Pages: 85-103

CHAPTER IV

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)

[hereinafter RESTATEMENT]; W. KEETON, PROSSER & KEETON ON THE

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

distinction.”).

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.