Business Disparagement 101 (And One Really Bad Idea)
The phrase “fake website” strikes fear into the hearts of all parents of teenagers. Typically, fake websites/Facebook pages, etc. are invented by kids whose computer skills far outweigh their ability to weigh consequences. It’s pretty rare, if not unheard of, to see a business create a bogus website about a competitor.
But a Houston/Clear Lake area country and western dance hall allegedly decided to do just that. In a suit just filed in the Harris County District Courts, one country/western bar (names withheld to protect the innocent) sued a competing CW bar for business disparagement. According to the petition, CW Bar 1 had scheduled its grand opening. At or near that time, competing CW Bar 2, which does business in the same area of town, created a false website for CW Bar 1. The website allegedly contained photos of two men engaged in a homosexual encounter, and stated that CW Bar 1 “is the #1 gay and lesbian country nightclub in the Houston area”.
The petition claims that CW Bar 1 is not a gay/lesbian nightclub, and that it unsuccessfully tried for months to convince the owners of CW Bar 2 to take down the website. Therefore, it sued Bar 2 for business disparagement, and claims that the website caused it loss of business and damage to reputation in the amount of $5,000,000.
Business disparagement is similar to libel/slander, but arises in the context of business competition. To prevail on a claim for business disparagement, a plaintiff must prove:
1. The defendant published disparaging words about the plaintiff’s economic interests;
2. The words were false;
3. The defendant published the words with malice;
4. The defendant published the words without privilege; and
5. The publication caused special damages.
As of today, CW Bar 2 has not responded to the suit. It will be interesting to see what defenses, if any, it will claim. While at first glance this would seem to be a slam dunk for CW Bar 1, there are several potential grounds of defense that an aggressive trial lawyer might utilize to try to at least slightly muddy the waters. For instance, it me try to show that few people actually saw the website and thus the damages were minimal. By far the best defense, however, would have been not to have created the fake website in the first place.
Call us if you need advice about a business disparagement claim.