Also known as: product disparagements · disparagement of product · disparagement of products · trade libel · commercial disparagement · injurious falsehood
Written by attorneys · grounded in primary & secondary sources — see below
A tort imposing liability on one who publishes a false statement disparaging the quality of another's property or product. The publication must be a substantial factor in causing pecuniary loss with no superseding legal rule relieving the publisher of responsibility. Recovery is limited to direct pecuniary losses and reasonable expenses incurred to counteract the falsehood.
Select any source to read its text and confirm it supports the definition.
Terry sent bulk messages to Valley Harvest and neighboring farmers claiming Black Grain's seed batch failed germination tests. The statements were false. Valley Harvest canceled its season order within hours and told other farmers, causing Black Grain to lose an entire season's revenue. The rapid cancellations and explicit references to the falsehood show it operated as a substantial factor in the pecuniary loss.
Star Sustainability distributed a report to Pinnacle Conservation and other factories stating Noon Environmental manipulated pollution samples. Multiple factories canceled monitoring contracts within weeks and cited data-integrity concerns. Noon Environmental incurred direct revenue loss from the terminated contracts plus expenses to regain clients. The losses flowed immediately from third-party reactions to the publication.
Marilyn sent Delta Museum a dossier alleging Central Museum had sold forgeries. Central Museum had no history of forgeries and the statements were false. Delta canceled planned acquisitions after receiving the dossier. Because the facts stated were untrue, the publisher remains subject to liability for the resulting lost sales.
A procurement officer emailed State A's contracting office that Contractor Corp routinely lied about minority subcontracting goals. Contractor Corp sued for injurious falsehood. The plaintiff must establish both the existence of its legally protected bidding interest and the injurious character of the statement when those issues are raised.
Consumer Reports published a critical review of Bose loudspeakers containing an unusual metaphor about sound dispersion. Bose sued for product disparagement and the district court found actual malice. The appellate court applied independent review to the malice determination under the First Amendment.
A magazine article accused a prominent attorney of communist affiliations and other misconduct. The attorney sued for product disparagement of his professional reputation. The Supreme Court held that public figures must prove actual malice to recover for false statements injuring their interests.
The plaintiff must show the publication was a substantial factor in bringing about the pecuniary loss and that no rule of law relieves the publisher of liability because of the manner in which the loss occurred. Direct temporal proximity and explicit references by third parties to the falsehood support a finding that the publication was a substantial factor.
Recovery is limited to pecuniary loss that results directly and immediately from third-party conduct, including impairment of vendibility, plus expenses reasonably necessary to counteract the publication such as litigation costs. Proof may come from specific identified persons or from the aggregate conduct of unidentified persons.
…388 U. S., at 170 (opinion of Black, J.). Such a rule would, indeed, obviate the fear that the prospect of civil liability for injurious falsehood might dissuade a timorous press from the effective exercise of First Amendment freedoms. Yet absolute protection for the communications media requires a total sacrifice of the competing…
…opinion Opinion of Justice Stevens An unusual metaphor in a critical review of an unusual loudspeaker system gave rise to
Yes. The publisher is not liable if the facts stated or implied as justification for any opinion are true. The defense applies even when the statement concerns a matter of public concern.
The plaintiff must prove the existence and extent of its legally protected interest affected by the falsehood and the injurious character of the statement when those issues are properly raised. The plaintiff also carries the burden on causation and damages.
Courts have applied the actual malice standard from New York Times v. Sullivan to product disparagement claims brought against media defendants. The Supreme Court has accepted the application of that standard for purposes of deciding individual cases without definitively resolving whether it must always apply.
No. Concurrent market forces do not automatically sever the causal chain. The question remains whether the false publication was a substantial factor in producing the loss even when other economic conditions also influenced third-party decisions.