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San Diego Businesses: What is Trade Libel?
In a competitive marketplace, you advertise your San Diego business and you try to set yourself apart from competitors. So, you make a few statements about your competitor; you do a bit of “trash-talking.” Sometimes, these statements go too far and slip over the legal line into what is called “trade libel.” This article will provide some basic information on trade libel.
San Diego Business Law: Trade Libel is a Form of Defamation
As the courts phrase it, defamation “… is an invasion of the interest in reputation.” In regular language, defamation is saying something untruthful that damages the reputation of a business or a person. To prove defamation in court, you must prove these elements:
- Intentional publication of a statement of fact — not just an opinion
- The statement is false
- The statement is unprivileged
- The false statement causes injury to the person or business
See Smith v. Maldonado, 85 Cal. Rptr. 2d 397 (Cal. App. 1st Dist. 1999); and Cal. Civ. Code, §§ 45, 46. In all cases of alleged defamation, whether libel or slander, the truth of the offensive statements or communication is a complete defense against civil liability, regardless of bad faith or malicious purpose. “Publication” means:
- Intentional — not accidental or negligent
- Communication — done in any manner (voice, writing, email, photo)
- To some third person — one person is sufficient
- Where that third person understands the communication
- And understands the derogatory nature of the communication
When the statement is ambiguous, maybe innocent on its face but false because of “innuendo” or other circumstances, the victim must also show the extrinsic circumstances, and how the third person reasonably understood the statement to be derogatory or damaging to the reputation of the victim.
San Diego Business Law: What is Trade Libel?
As noted, trade libel is a form of defamation, but different and distinct. In general, business libel means the publication of any false statements concerning the quality of services or products or property of a business which are intended to cause that business financial harm where the false statements do, in fact, cause financial loss.
As with regular defamation, truth is an absolute defense and opinion is not considered a statement “of fact.” Jokes will not be considered trade libel, though they might get an entertainer sued. See Polygram Records v. Superior Court, 216 Cal. Rptr. 252 (Cal. App. 1st Dist. 1985). Further, the publication must be intentional — so negligent or accidental publication will not result in liability. Further, the victim of the business/trade libel must actually suffer loss of sales or other damage. Where the financial loss cannot be shown, there will be no liability.
However, it must be emphasized that COMPETITORS have more leeway. The American economic system encourages competition among and between firms, thus, competitors have a conditional privilege to make comparisons between their products/services with those of others. As long as the comparisons are not FALSE, such comparisons and criticisms of a competitor’s product are acceptable and not libelous. Appeals to personal taste are also privileged (and might be a form of opinion in any event).
Contact San Diego Corporate Law Today
If you would like more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard provides a full panoply of legal services for San Diego and California businesses. Mr. Leonard has been named a “Rising Star” three years running by SuperLawyers.com and “Best of the Bar” by the San Diego Business Journal. Mr. Leonard can be reached at (858) 483-9200 or via email.
