Sticks and stones may break my bones, but words will…negatively impact your business due to reputational damage that shrinks your potential customer base and your ability to turn a profit. When a person or another company makes false statements about your company or the services or products you offer, it is not just mean—it is defamation. In the legal world, defamation is sometimes called trade libel or commercial disparagement.
There are specific elements you need to prove to have a court find a person or entity liable for business defamation. When someone leaves negative reviews containing false statements about your staff or your company, or complains about your products without cause, you may need to decide whether to take legal action. If your reputation or financial standing is at risk, you need to take a closer look at the elements of business defamation and decide if legal action is right for you and your business.
What Is Business Defamation?
Business defamation occurs when a false statement of fact is communicated to a third party verbally (slander) or in a written or graphic form (libel). Courts are generally very careful in deciding defamation cases due to the intersection of the First Amendment guarantee of free speech.
To prove defamation, you must be able to show:
- There was a false statement, written or verbal, that was held out as fact.
- The false statement was communicated to a third person (or persons).
- The person or entity that made the false statement meets the requisite degree of fault.
- You suffered damages to your company’s reputation because of the statement.
A claim of defamation is subject to certain defenses that the person or entity can raise if you bring legal action, such as the truth of the statement itself. Each state may have different interpretations of the elements and potential defenses of defamation, so it is important to be aware of what applies where your business has relevant jurisdiction. However, in many states, making a statement that is so obviously harmful, such as alleging criminal conduct or professional incompetence, may constitute as defamation per se, exempting the requirement that specific damages be proved. If a court finds that defamation has occurred, the law of the relevant state will control the type of damages which may be available.
Should a Company Sue for Business Defamation?
When faced with defamation, you may choose to evaluate the options available that do not involve litigation, which can be a lengthy and costly process. Often, a simple cease-and-desist letter to the defaming person or entity can resolve the issue more quickly, ultimately protecting the business from further harm. If the defamatory comments are published online, businesses also have the option of contacting the website’s host to request the comment be removed, which is often possible due to many websites’ terms of use.
If the less time-consuming and expensive options do not seem like viable solutions or are not successful, a lawsuit may be a necessary course of action. One variable for consideration is whether a lawsuit will not only provide your company with an award for damages but also serve as a disincentive against additional defamatory statements.
Trying a defamation suit in court may send a strong message to those who might be otherwise inclined to make false statements about your company, products, or services.
Before deciding to file suit, certain risks should be considered. The legal process may require you to disclose sensitive or proprietary information about your business. It is also possible that the act of filing a lawsuit will result in repetition of the defamatory statement in multiple outlets and by multiple sources, thereby bringing additional unwanted attention to the defamation.
How Does a Business Prepare for Legal Action?
Once you make the decision to pursue formal litigation, it is critical that you begin to gather all of the documents and witness statements to support your case. This includes the defamatory statements, any repeated statements or publications, and evidence of the harm the statements caused your business. Harm may include direct financial impact (e.g., lost profit) and indirect financial impact (e.g., loss of potential customers).
Proactivity will be important when it comes to public opinion. You will want to be sure to draft a message for the media and your customer base that enhances your business’s reputation and takes control of the narrative.
Maintaining a set of talking points and a brief messaging campaign will be essential to avoid additional damage to your business’s reputation while your case makes its way through the court system.
In most instances, you will also want to ensure that your team is aware of why you are pursuing legal action and what the company’s messaging is throughout the lawsuit. Stress the importance of continuing to provide the best customer service and products possible. You will also want to monitor social media and industry websites to manage new issues before they become real problems.
How Do I Protect My Business?
Business defamation is not to be taken lightly. The damage of even just one negative review that alleges something generally distasteful to the public can be serious and irreversible. Contact the business lawyers at Feldman & Feldman today to protect your reputation by deciding carefully whether—and what type of—legal action is appropriate for your situation, and proceed with appropriate care and consideration for the entirety of the situation.