A competitor tells your largest customer that your parts fail inspection. A former vendor posts that your product is unsafe. Or the attack is aimed elsewhere, and someone says your owner pays bribes. Each statement can cost you the same account. Illinois law does not treat them the same way, and picking the wrong theory can lose a case that should have had some life in it.
The dividing line is this: a false statement about the quality of what you sell points toward commercial disparagement and the Illinois Uniform Deceptive Trade Practices Act, and a false statement about the integrity or character of the company or its people points toward defamation. Some statements do both. Most lawyers and business owners reach for the word defamation first, and that habit can be a mistake.
What is the difference between defamation and commercial disparagement?
They protect different things. As the First District put it, “Defamation protects interests of personality. Commercial disparagement protects property interests.” Allcare, Inc. v. Bork, 176 Ill. App. 3d 993, 1000 (1st Dist. 1988). The court described a “clear line of demarcation” between the two. Id.
The leading example is Crinkley v. Dow Jones & Co., 67 Ill. App. 3d 869 (1st Dist. 1978). A former corporate executive claimed that a newspaper article tying him to payoffs disparaged his services. The court held that the article “may have impugned plaintiff’s integrity,” but “did not disparage the quality of his services as an executive,” and so the disparagement theory failed. Id. at 876. Commercial disparagement has “consistently been applied to statements which disparage the quality of one’s goods or services.” Id.
Allcare applied the same test to a business accused of Medicare fraud. The company argued that the accusation hurt its business because third parties would stop dealing with it. The court was unmoved, observing that in almost every case of defamation of a business, it could be alleged that third parties stopped dealing with the plaintiff. 176 Ill. App. 3d at 1000. Lost business does not convert an attack on character into an attack on the product. The appellate court in American Pet Motels, as described in Allcare, reached a similar result on an accusation of unlicensed veterinary practice, because the statement did not say the plaintiff’s business practices were substandard, negligent, or harmful. Id.
What does the Deceptive Trade Practices Act add?
It gives a statutory route to an order stopping the statement. A person engages in a deceptive trade practice when, in the course of business, the person “disparages the goods, services, or business of another by false or misleading representation of fact.” 815 ILCS 510/2(a)(8). The court in Crinkley said this provision substantially embodies the common law tort. 67 Ill. App. 3d at 876. The statute has three features a business owner should know. A plaintiff need not prove “competition between the parties or actual confusion or misunderstanding.” 815 ILCS 510/2(b). A person likely to be damaged may be granted injunctive relief, and “[p]roof of monetary damage, loss of profits or intent to deceive is not required.” 815 ILCS 510/3. And fees or costs may be assessed against a defendant only on a finding of willful conduct. Id.
That is a different remedy from the money judgment most people imagine. If the priority is to stop a false statement from spreading, this may be the first place to look. If the priority is to recover lost sales, the Act’s remedy section alone does not get you there, and the case will have to rest on other theories as well.
Can the same statement be both?
Yes. Crinkley recognized that one statement can constitute both defamation and commercial disparagement, and Allcare acknowledged the point. 176 Ill. App. 3d at 1000. A statement that a company’s product is dangerous because its owner knowingly falsifies test results attacks both the goods and the people. A careful complaint analyzes each sentence separately and pleads each theory only where the words support it.
Why does the choice matter so early?
Because the words decide the theory, and the theory decides the remedies, the proof, and the deadlines. Illinois defamation law has its own demanding rules, which we have discussed in how Illinois businesses and professionals fight back against defamation. A claim labeled the wrong way can draw a motion that costs months. Businesses should also ask whether the statement was made in commercial advertising or promotion, because federal false advertising law may apply to a competitor’s claims, and whether it was aimed at a particular contract or customer, which can raise tortious interference. Statements of fact are the raw material for all of these. Pure opinion is another matter, and the party complaining should be honest with itself about which one it has.
What if you are the one accused?
The same line helps a defendant. A demand letter that calls a statement “trade libel” while complaining about an accusation against a person, or a defamation claim that in truth objects to criticism of a product, may have chosen the wrong tool. Truth, opinion, and the difference between fact and comparison all belong in the response.
Three steps matter when the statement surfaces. First, capture the exact words, the speaker, the date, the audience, and the medium, because the analysis runs on the language itself and online posts can disappear. Second, separate what was said about your goods or services from what was said about your integrity, and test each against the facts you can prove. Third, collect evidence of what the statement has done, such as customer emails, cancelled orders, and sales records, before the trail goes cold, and be careful not to answer with a false statement of your own.
A false statement about a business can hurt without ever becoming a good lawsuit. It becomes a good lawsuit when the theory fits the words. Getting that right at the start is usually cheaper than finding out at the motion to dismiss.
If a false statement is costing your business customers, or you have received a demand claiming that you made one, we can help you sort out what the law actually protects. Call DiTommaso Lubin, P.C. at 630-333-0333 for a free consultation, or contact us online.
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Peter S. Lubin and James V. DiTommaso are Chicago business litigation lawyers who try cases throughout Illinois. Peter is a graduate of the University of Chicago Law School, where he has taught trial practice for decades, and he has been recognized as an Illinois Super Lawyer. He has served as lead counsel in more than one hundred class actions and has handled more than one hundred shareholder, LLC, derivative, breach of fiduciary duty, and fraud matters, on both the plaintiff and the defense side. Crain’s Chicago Business credited him with the largest class action settlement of the year for a $40 million recovery in Erikson v. Ameritech, and the firm has been named DuPage County Law Firm of the Year. The firm and its lawyers have represented clients such as McDonald’s, Motorola, and Experian, and have litigated against companies including AT&T and General Motors. James DiTommaso, a graduate of Chicago-Kent College of Law with a certificate in business law, has served with the Illinois Appellate Court and has argued a case before the Illinois Supreme Court. He litigates these disputes in the Illinois trial and appellate courts and in the federal courts. When you hire this firm, the lawyers whose names are on the door are the ones who handle your case.
This post is for general information and is not legal advice.