FEATURES
Defending Against Claims of Trade Libel
Clifford S. Davidson, Sussman Shank LLP
T
he internet and social media
have significantly increased
the opportunity for direct
comparison of competing
products. Companies widely
disseminate information about competitors’ products through the use of YouTube® videos with the hope of convincing
consumers that their
products are superior.
Bloggers constantly provide in-depth reviews
of companies and their
products.
The ease with which
consumer
information
Clifford S. Davidson
is spread creates significant potential
for claims of trade libel.1 Recent Oregon
cases, some of which are discussed or cited
below, illustrate this point. This article describes the tort of trade libel and discusses
some of the procedural and substantive
defenses available to our clients.
What Is Trade Libel and How Does It
Differ from Ordinary Libel?
Trade libel is an intentional disparagement of the quality of property that
results in pecuniary damage to the plaintiff. A plaintiff must plead and prove that
a defendant maliciously published false
allegations regarding the plaintiff, and
that as a result of such publication, the
plaintiff has suffered special damages or
pecuniary harm.2
Trade libel differs from libel of a natural person in several crucial respects.3 First,
the trade libel plaintiff has the burden of
proving falsity. (In other libel cases, truth
usually is available only as a defense.)4
Second, a trade libel plaintiff must
prove that the defendant acted maliciously. Malice in this context means
that the statement was published (1)
with knowledge that it was false, or with
reckless disregard of whether it was false
or not; (2) with a high degree of awareness of its probable falsity; or (3) when
the defendant in fact entertained serious
doubts as to the truth of its publication.5
In ordinary libel cases, a defamatory publication may be actionable irrespective of
the defendant’s mental state.
Finally, a trade libel plaintiff must
prove special damages resulting from
the defamation. Libel against a natural
person can be actionable per se; damages
are presumed.6
of Fluke’s thermal imaging equipment to
FLIR’s. The video depicted the results of
dropping the companies’ cameras from
varying heights and encouraged viewers
to purchase Fluke’s products (“Why waste
money on tools that break?”).7 FLIR sued
Sierra Media and Fluke alleging, among
other things, trade libel based on the
video—which FLIR claimed contained false
statements. Fluke moved for summary
judgment on this claim.
The court entered summary judgment
in favor of Fluke. Although the court
found that a reasonable juror could have
found the drop-test video false, it found
that no reasonable juror could have concluded that Fluke’s motives were malicious:
Trade Libel and Legitimate Competition
The strong public interest in legitimate corporate competition and dissemination of consumer information has led to
the development of certain limitations on
recovery for trade libel. Perhaps the most
important limitation is that the plaintiff
must establish that the defendant’s primary purpose in publishing a statement
was to injure the plaintiff. A showing that
the defendant intended simply to promote
its own products is insufficient.
A recent case in the District of Oregon,
FLIR Sys. v. Sierra Media, Inc., demonstrates
the practical application of this principle.
FLIR Systems is an Oregon corporation
that manufactures infrared cameras and
similar equipment. Sierra Media is a
marketing company that represents Fluke
Corporation, a Washington manufacturer
of infrared cameras. Fluke and Sierra created a video that compared the durability
The evidence that Fluke developed a line of cameras that was
rugged enough to better survive
a drop from two meters, and saw
that as a marketing advantage
of its products that was worthy
of promotion, suggests it had
legitimate reasons to produce
the drop test video. Whatever
adverse effects the video might
have on Fluke’s competitors were
sufficiently secondary to this legitimate purpose on this record
that Fluke is entitled to summary
judgment on this claim. The incidental harm to a competitor
that is always involved in legitimate business competition is not
compensable as trade libel upon
a showing of a false statement
being involved under Oregon
law, unless the plaintiff can show
that the primary motivation of
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TRADE LIBEL
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the false statement was the injury
of the plaintiff.8
The court also held that FLIR’s evidence could not support a finding of
malice because at most, it “suggests no
more than that Fluke could have been
more rigorous in conducting its drop test
depicted in the video. That is not enough
under Oregon law to establish malice.”9
ORS 31.150-31.155 and Potential Responses to Threatened or Actual Trade
Libel Litigation
As the FLIR case illustrates, trade libel
may arise in the context of comparative advertising. It also may arise through product
reviews and public commentary. In order
to avoid the chilling effect that tort liability
might have on the dissemination of such
consumer information, Oregon law provides defendants with a means to dismiss
lawsuits where claims arise from speech
on issues of public interest. Consumer
information and reviews of businesses
generally qualify for protection under ORS
31.150-31.155, though the specific circumstances of each case dictate whether those
statutes apply. 10 Under those statutes,
known as the “anti-SLAPP” law (Strategic
Litigation Against Public Participation),
once a defendant demonstrates that the
statute applies, the plaintiff must produce
competent evidence demonstrating prima
facie support for its claims. If a plaintiff
fails to do so, then the complaint is dismissed without prejudice and defendants
are awarded their attorneys’ fees.11
Although a plaintiff’s required showing is a “low bar,”12 it may be difficult for
a trade libel plaintiff to demonstrate the
requisite malice, in light of the principles
discussed in the FLIR case. Further, in some
situations, the plaintiff may need to show
malice with “convincing clarity.”13 Even
threatening to file an anti-SLAPP motion
can be an effective way of convincing a
plaintiff to dismiss its lawsuit. Note, however, that a frivolous anti-SLAPP motion
can result in defendant’s paying plaintiff’s
fees.
Whether the anti-SLAPP law applies or
not, a trade libel defendant may raise several privileges. For example, if the statement at issue is made to an administrative
agency in furtherance of the purposes of
that agency, then the defendant might be
absolutely immune from liability.14 That
might apply to statements made in the
process of submitting bids or bid protests
to public agencies.15 Or, if the defendant
published the statement to a party who
also possessed a business interest in the
matter described, the statement may be
subject to a qualified privilege, whereby
the defendant is immune unless the statement was made in bad faith. Reminding
plaintiff’s counsel that plaintiff must overcome these defenses can be an effective
deterrent to litigation.
Conclusion
Trade libel defendants often have a
number of defenses available to them.
The manner in which an allegedly libelous
statement is published usually dictates
which defense strategies are the most effective. The challenge for defense counsel
thus continues to be the application of
established defenses to new means of
communication.
Endnotes
1. Product comparison can give rise to
other claims, as well, such as Lanham
Act violations. This article does not
consider such claims.
2. Woodard v. Pac. Fruit & Produce Co.,
165 Or 250 (1940)(claim of slander
of title to harvested crop); FLIR Sys v.
Sierra Media, Inc., 903 F Supp 2d 1120,
1135 (D Or 2012) (applying Oregon
law).
3. As the US Supreme Court has explained, the right to sue for defamation “reflects no more than our basic
concept of the essential dignity and
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worth of every human being – a concept at the root of any decent system
of ordered liberty.” Rosenblatt v.
Baer, 383 US 75, 92 (1966) (Steward,
J., concurring).
4. However, if the libel is on an issue of
public concern, the plaintiff bears the
burden of proving falsity.
5. FLIR, 903 F Supp 2d at 1136-37 (quoting McNabb v. Oregonian Pub. Co., 69
Or App 136, 140 (1984) and Fodor v.
Leeman, 179 Or App 697 (2002)).
6
Hinkle v. Alexander, 244 Or 271 (1966).
7
FLIR, 903 F Supp 2d at 1127.
8
Id. at 1137-38.
9
Id. at 1137 (citing Fodor, 179 Or App
at 702).
10 Wong v. Jing, 189 Cal App 4th 1354,
1366 (2010) (under California statute
upon which Oregon statute was
based, consumer information qualifies
for protection); Neumann v. Liles, 261
Or App 567 (no clear error where trial
court determined that ORS 31.15031.155 protected online business
review).
11 This article does not address antiSLAPP motions in detail. For more
information, see http://www.sussmanshank.com/webfiles/Winter%20
FBA_Newsletter.pdf.
12 Neumann, 2014 Ore App LEXIS 296 at
*14.
13 Christian Research Institute v. Alnor,
148 Cal App 4th 71, 84 (2007).
14 The law is somewhat unsettled in this
area, given the Supreme Court’s opinion in DeLong v. Yu Enterprises, 334 Or
166 (2002). However, a long line of
cases prior to that decision provides
an absolute privilege.
15 See Phoenix Trading, Inc. v. Loops, LLC,
732 F3d 936 (9th Cir 2013) (applying
Washington anti-SLAPP law which,
like Oregon’s, is interpreted consistent
with California’s anti-SLAPP law).
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