Business disparagement is a form of defamation, but directed at a business. In general terms, business disparagement, as defamation, is stating something false — provably false — about a business that causes injury or damage to the business. Importantly, expressed opinions are NOT defamation. Business disparagement can come in two forms — oral and written. The first goes under the legal term of “slander” and written defamation is legally called “libel.”

Defamation law is nuanced and varied around the country and generally depends on state law. For example, in Michigan, a business suing to prove slander or libel must provide evidence and prove five legal elements. These are:

• A false statement about the business
• The false statement was published to third parties — there are exceptions such as when the communication is privileged
• The false statement was made with at least negligence as to the truth of the statement
• The business suffered damage or injury
• The damage/injury was caused by the false statement

When dealing with “public figures,” the knowing or intent element has a higher standard. With “public figures,” it must be shown that the statement was made with “malice.” Ill will, spite or even hatred is not enough to show actual malice. Rather, actual malice is shown when it is proven that the statement was made with knowledge that the statement was false or made with reckless disregard for whether the statement was false. There is a high standard when attempting to prove malice. The customary standard is “preponderance of the evidence,” but malice must be proved with “clear and convincing “evidence.”

What Can My Business Do?

What a business can do to combat business disparagement depends on the situation. If your business has been disparaged, the first step is to seek legal advice and counsel from experienced defamation attorneys and litigators. Obviously, litigation is an option and, sometimes, it is the only viable option particularly if the disparagement is coming from a competitor in the marketplace. In such a circumstance, presumably, the competitor can be located and has sufficient assets to pay a money judgment if awarded. Of course, success will depend on the nature of the statement made and proving the other necessary elements.

If the disparagement is coming from current or former employees, litigation may also be a good option since injunctive relief might be possible in addition to money damages. This type of lawsuit depends on what sort of employment contracts and agreements have been signed. Non-disparagement clauses in employment agreements are enforceable in most states and can provide the basis for both injunctive relief and damages if violated.

Trade Libel vs. Defamation: Understanding the Distinction

Business disparagement is sometimes called “trade libel” or “injurious falsehood” to distinguish it from personal defamation. The distinction carries legal significance. Traditional defamation protects a person’s reputation. Trade libel specifically protects a business’s economic interests against false statements about its goods, services, or business practices. Under the Restatement (Second) of Torts § 623A, the elements of a trade libel claim require the plaintiff to prove actual economic loss as a direct result of the false statement — a higher burden than general defamation, which presumes some damages. Courts in many states have required trade libel plaintiffs to identify specific lost customers or transactions, not merely a general decline in revenue.

In contrast, general business defamation claims — statements that damage a business’s reputation broadly — may allow presumed damages in some jurisdictions without proof of specific economic harm. The applicable standard often depends on whether the statement concerns matters of public concern, the nature of the business as a public or private entity, and whether the plaintiff is characterized as a limited-purpose public figure.

Online Reviews and Social Media: The New Battleground

The most common context for business disparagement claims today involves online reviews and social media posts. A competitor, disgruntled former customer, or terminated employee can publish a false statement about a business to a global audience instantaneously. The legal framework for addressing these statements involves several complicating factors:

• Section 230 immunity — Platforms like Google, Yelp, and social media sites are generally immune from liability for third-party reviews under Section 230 of the Communications Decency Act. The business must pursue the individual poster, not the platform.
• Anonymous reviewers — Many disparaging reviews are posted anonymously. Identifying anonymous posters requires filing a John Doe lawsuit and obtaining a court order compelling the platform to disclose the poster’s account information. Courts balance the poster’s First Amendment right to anonymous speech against the plaintiff’s right to pursue its legal remedies.
• Opinion vs. fact — Not every negative review is actionable. A statement like “this is the worst restaurant I’ve ever been to” is pure opinion. A statement like “this restaurant’s employees have been cited for food safety violations” is a factual claim that, if false, may constitute actionable disparagement.
• Anti-SLAPP statutes — Many states have enacted anti-SLAPP (Strategic Lawsuit Against Public Participation) statutes that allow defendants in defamation and disparagement cases to file early motions to dismiss if the statement concerns a matter of public concern. If the motion succeeds, the defendant may recover attorneys’ fees, which creates risk for businesses pursuing marginal claims.

Remedies Available to Businesses

When a viable business disparagement claim exists, the following remedies may be available:

• Compensatory damages — The business may recover actual economic losses caused by the false statement, including lost sales, lost contracts, and reputational harm that can be quantified through lost business valuation.
• Punitive damages — Where the statement was made with actual malice, courts may award punitive damages to deter future misconduct. In states that follow the clear and convincing evidence standard for actual malice, the threshold to unlock punitive damages is high but not insurmountable.
• Injunctive relief — Courts can order the defendant to remove the false statement and refrain from publishing similar statements in the future. Injunctive relief is typically sought on an emergency basis where the disparagement is ongoing and causing continuing harm.
• Attorneys’ fees — Some state statutes allow prevailing plaintiffs in defamation cases to recover attorneys’ fees, particularly where the statement was made in bad faith.

Contact Revision Legal

Revision Legal’s business litigation attorneys represent businesses of all sizes in defamation, trade libel, and business disparagement cases. If your business has been the target of false and damaging statements — whether online, in press coverage, or by a competitor — contact us today for a consultation.