Stanford Engineering, Inc., and Cornell Code Corporation market competitive software products. Stanford launches an advertising campaign claiming that Cornell, instead of testing its software before it is marketed, has its customers "test" the software by using it. Cornell knows this is not true but begins to lose sales to Stanford. On what grounds could Cornell sue Stanford for injury to Cornell's reputation?

Question

What will be an ideal response?

Answer 1

Cornell could sue Stanford for the harm it is causing to Cornell's reputation on the ground of defamation. Defamation occurs when a party makes a false statement that injures another's reputation. In this problem, any defamatory statements likely take the form of libel (defamatory statements in written or printed form). To bring a suit on this ground, Cornell would have to show Stanford's publication of false information¾that is, its communication to a third party. If Cornell is considered a public figure, it will also need to prove that Stanford made its statements with actual malice¾that is, with either knowledge of their falsity or a reckless disregard for the truth.

Publication of false information about another's product, alleging that it is not what its seller claims, also constitutes the tort of slander of quality, or trade libel. To bring a suit on this theory successfully, Cornell would have to show not only that a third person refrained from dealing with it because of the improper publication but also that there were associated damages.

Cornell might also include a claim based on the tort of misrepresentation, or fraud. Misrepresentation leads another to believe in a condition that is different from the one that actually exists. This tort requires several elements: (1) misrepresentation of facts or conditions with knowledge that they are false or with reckless disregard for the truth, (2) intent to induce another to rely on the misrepresentation, (3) justifiable reliance by the deceived party, (4) damages suffered as a result of the reliance, and (5) a causal connection between the misrepresentation and the injury.