The popular adage says, “sticks and stones may break my bones, but words can never hurt me.” For small businesses, this saying could not be further from the truth. The negative words and opinions of the public can have severe implications for a company's reputation, financial profitability, and long-term success. This is especially true with the rise of social media, which greatly expands the reach of negative remarks and risk of negative implications for the business. If an individual or company makes false or misleading statements about your business, you may be able to bring a trade libel suit against them.
What is trade libel?
Trade libel is a type of legal injury similar to defamation. It involves the use of false and disparaging statements against a business regarding the quality of its goods or services which results in pecuniary harm. In other words, it is when a person or company spreads negative and false claims against a business that causes financial damage. Unlike a defamation suit, trade libel is specific to businesses.
Trade libel laws differ from state to state, but there are a few characteristics that remain relatively consistent across state lines:
- The statement must be false. If a competitor says things that are factually correct, but negative about your business, you will not succeed in a trade libel suit. Additionally, if the statements are merely an opinion or for the purposes of poking fun at another, it may not succeed in court.
- The statements must be published. In most instances, this publication occurs through spoken or written language.
- The statements must have caused you financial harm. This final element is often the most difficult to prove. It is not sufficient to merely prove that false comments were spoken. If you pursue a trade libel suit, you must be able to show that the statements caused you to lose money.
In some jurisdictions, plaintiffs must also show that the offending party acted with malicious intent. A company or individual has malicious intent if they knowingly or with reckless disregard for the truth publish false information. Plaintiffs asserting suits in these states have an additional hurdle that further complicates their ability to satisfy the requirements of such suits.
When asserting a claim for trade libel, proving that your company suffered financial loss as a direct result of another's false statements is not as easy as one would imagine. However, one common way to depict this harm is to show that you have lost business. Clearly identifying changes in the business income that correlate directly to the publication of the statement can often serve as evidence to establish that your business has been harmed.
Avoiding Lawsuits Against Your Company
An additional area of concern for a small business owner is ensuring that your company does not become the offending party. In many instances, trade libel suits can arise from poorly managed marketing practices and ineffective or non-existent social media policies. To avoid becoming a trade libel defendant, ensure that your marketing practices 1) never involve spreading false statements about competitors and 2) create a robust social media policy that outlines the way your employees are allowed to speak about other competitors.
Schedule an Appointment
If you believe that you may have a claim for trade libel or want to make sure your business does not become a defendant in such a suit, make an appointment to visit our office. As business lawyers, we can walk you through the process of protecting your business's name and reputation, and help you implement measures designed to provide such protection. Call us today to set up a meeting.