When can I pursue a trade libel or commercial disparagement case?

On Behalf of | Jan 11, 2021 | Business Litigation |

If your business has recently suffered from trade libel or commercial disparagement, rest assured that California law provides recourse whereby you may seek compensation for lost profits.

Understanding state trade libel laws and case law may help you know whether you have a reasonable claim or whether you should pursue other legal options to recover damages.

Trade libel

Trade libel, or commercial disparagement, is a type of defamation claim that applies to businesses rather than individuals. For example, a person may write a bad review of your company online and cause you to lose customers and revenue. Or a competing business may issue an advertisement or statement damaging your reputation. In these and similar situations, you may be able to recover your losses if you can prove three things.

To bring a successful trade libel case, you will need to demonstrate to the court that the statement in question explicitly referred to your company or product, that it clearly disparaged your company or product, and that the statement was untrue. You will probably need to demonstrate exactly how this statement caused your business harm. For example, you may have customer feedback saying someone did not buy a product because of the statement, or you may be able to show a clear correlation in reduced revenue.

Defenses

In California, as with most states, a true statement provides an absolute defense, so you will need to prove that the statement was false. Generally, courts in most states will recognize a statement as true so long as the spirit of the statement was true, even if some of the details were wrong, but this will depend on individual circumstances.

The other party may also claim that the statement did not cause you actual harm, that the statement was a mistake or unintentional or that they were simply repeating what they heard from a reputable news source. A court will consider these and other relevant factors when making a ruling.

Compensation

If you bring a successful claim, you may be able to receive compensation for all lost profits and revenue, including potential lost future profit from reputational harm or career consequences.

FindLaw Network