Product Disparagement: Protecting Your Product's Reputation

Key Points

To recover losses caused by damage to reputation or product

disparagement, corporations may look to the tort of injurious

falsehood and remedies under the Trade Practices Act.

Corporations should be prepared to engage with the press so

that if product disparagement occurs the correct position may be

communicated to the public as quickly and efficiently as

possible.

The right of most corporations to sue for defamation was

abolished with the commencement of Australia's uniform

defamation laws (UDA) on 1 January 2006.

The rationale for the change was that defamation law had

developed to protect personal reputations and corporations and

products do not have personal reputations to protect (only

commercial reputations).

So what can corporations do to defend their interests when their

commercial reputations are attacked or their products

disparaged?

There are alternative legal options, including the economic tort

of injurious falsehood and remedies under the Trade Practices Act.

Although these options might previously have been rejected in

favour of a defamation action, they are increasingly significant to

corporations since the introduction of the UDA. However, as these

options are only available in the particular circumstances (see

below), it is also important for corporations to consider

alternative strategies.

A corporation should be prepared to:

Identify the appropriate audiences in the event that it must

make a statement in relation to a crisis - for example, is the

audience the corporation, its shareholders, its consumers, or the

public generally? To avoid the corporation, its shareholders, its

consumers or the media finding out information (often inaccurate

and damaging information) from another source, it may be necessary

to make a comprehensive statement to the appropriate audience.

There are various ways that this may be done - ASX release, website

announcement, even a press release. It depends upon what is being

said or suggested, and by whom.

Engage with the press. As a corporation cannot sue to protect

its reputations in Australia or sue media entities under the Trade

Practices Act (see below), it is all but compelled to engage with

the press.

Injurious falsehood

Injurious falsehood is the publication to a third party of a

false and malicious statement about a plaintiff's business,

property or goods that causes actual damage, and is also known as

slander of goods or product disparagement. "Goods"

includes not only specific goods, but any type, class or kind of

goods manufactured, sold, or otherwise dealt with in the course of

any person's trade...