Legal Definitions - trade libel

Trade libel refers to the act of making false, damaging statements about a business, its products, or its services in a written or recorded format. These false statements must be published to a third party and cause financial harm to the business.

It is a specific type of defamation that targets the commercial reputation of a company or its offerings, rather than the personal reputation of an individual. For a claim of trade libel to succeed, the plaintiff typically needs to prove that:

• A false statement was made about their business, product, or service.
• The statement was published or communicated to a third party.
• The person making the statement knew it was false or acted with reckless disregard for the truth (malice).
• The statement caused specific financial harm to the business.

Here are some examples to illustrate trade libel:

• Example 1: Competitor's False Advertisement

  A company that manufactures organic snacks publishes an advertisement in a national magazine falsely claiming that a rival's best-selling snack bar contains artificial preservatives and harmful chemicals, despite knowing this to be untrue. As a result, the rival company experiences a significant drop in sales and loses several distribution contracts.

  This is trade libel because the competitor made a false statement about the rival's product in a written format (magazine advertisement), published it to a third party (the magazine's readers), and it directly caused financial harm to the rival company by damaging its reputation and sales.

• Example 2: Disgruntled Former Employee's Online Review

  After being terminated, a former employee of a local plumbing service posts multiple reviews on various online review platforms, falsely stating that the company uses substandard parts, overcharges customers, and employs unlicensed plumbers. These claims are entirely fabricated, but they lead to a noticeable decline in new customer inquiries and several existing clients cancelling their service agreements.

  This situation exemplifies trade libel because the former employee made false statements about the plumbing service's business practices in a recorded format (online reviews), which were accessible to the public (third party), and directly resulted in financial harm to the business through lost customers and damaged reputation.

• Example 3: Unsubstantiated News Report

  A local television news station airs a segment alleging, without proper investigation or evidence, that a popular bakery uses expired ingredients and unsanitary practices in its kitchen. The report includes footage of a different, unrelated bakery and falsely attributes it to the popular establishment. Following the broadcast, the bakery experiences a dramatic decrease in foot traffic and online orders, forcing them to lay off staff.

  This constitutes trade libel because the news station broadcasted false statements about the bakery's business operations in a recorded format (television segment), which was disseminated to a large audience (third party), and directly caused substantial financial harm to the bakery's business.