What is the difference between defamation and trade libel?

False statements can damage your business in multiple ways. A competitor might spread lies about your company’s ethics or make untrue claims about the quality of your products. While both scenarios involve harmful misinformation, the law treats them differently. Knowing whether you are dealing with defamation or trade libel is essential to protecting your business and pursuing the right legal remedy.

Defamation: An attack on character

Defamation is a false statement of fact about your business or leadership that damages your reputation. In New Jersey, defamation includes libel and slander under common law principles. This can include accusations of unethical behavior, dishonesty or incompetence.

For a defamation claim in New Jersey, you must show:

• The statement must be a false assertion of fact, not an opinion
• The statement was told or written to at least one third party

The level of fault required depends on whether the business is a “public figure” or a private entity.

Trade libel: An attack on products and services

Trade libel, also known as commercial disparagement, focuses on false statements about your products or services rather than your overall reputation. Unlike general defamation, trade libel is much harder to prove because it requires “special damages.”

If you want to file a trade libel case, a general claim of reputational harm is not enough. You must prove a specific financial loss, such as a canceled contract or a documented drop in sales directly linked to the false statement. Additionally, you must prove the person knew the statement was false or acted with reckless disregard for the truth.

Taking legal action

False statements can disrupt more than your reputation or product sales. You may see declines in customer confidence or hesitation from partners. Sometimes the harm from both defamation and trade libel may overlap. A false statement about a product may also damage your overall reputation.

If false statements are harming your business, consider seeking legal counsel who can help evaluate your situation.