At issue in this matter is whether Cornell Code Corporation (Cornell) has a viable cause of action against Stanford Engineering, Inc. (“Stanford”) for defamation and/or predatory business practices where Stanford has created an advertising campaign claiming that Cornell has its customers “test” its software through use, rather than testing it prior to sales.
Though untrue, Cornell is losing sales to its competitor, Stanford.A claim for defamation, or for wrongfully harming one’s reputation, requires the following elements: 1) a false statement, 2) that was understood to be about a claimant, and which in fact resulted in harm to the claimant, and 3) that such false statement was published to a third party as with respect to the claimant (Cross, Miller; 2015; p.282). With respect to tortious business interference, a predatory business practice, a business is prohibited from unreasonably interfering with another company’s business, while attempting to capture a greater share of the market” (Cross, Miller; 2015; p.292).
Given the facts as stated, presuming that Cornell does indeed pre-test its software before releasing for sales, Cornell most likely has a viable claim for defamation or wrongful harm to its reputation as a result of Stanford’s actions. The allegations by Stanford set forth in the ad were clearly intended to be about Cornell, have resulted in a loss of market share for Cornell and in favor of Stanford, and were obviously public and constitute publication to a third party. As such, Cornell would likely prevail on a defamation claim.
Likewise, with the business interference claim, making defamatory statements about a competing business, which include falsehoods publicized to third parties, and which is detrimental to the claimant’s market share, clearly constitute such a tortious action, and Cornell is again likely to prevail.