Making claims about competitors: Tiscali vs BT

Companies can defame each other, and it can be content that kicks off an expensive legal case.

It is easily done. Libel is simply the act of writing and publishing something that damages the reputation of someone else. Publishing means allowing a third party to view it. In 2009, BT made itself the target of a legal assault by internet service provider Tiscali. The crux of the matter was a letter BT sent to Tiscali customers inviting them to switch to its own broadband.

At the time, Tiscali looked likely to be taken over (and indeed was, by Talk Talk). So BT mailed the company’s customers suggesting that any upcoming deal could affect service quality. It also included a link to BT’s site, which made the same claim.

The main contention was in the letter’s headline: “Tiscali chief plots sell-off”.

BT’s letter with the offending headline

Tiscali sued BT, claiming the text contained an innuendo that Tiscali was not being honest with its customers and was therefore defamatory.

BT’s defence, which won, pleaded that it would be wrong to assume the copy meant Tiscali was dishonest in its dealings with its customers.

Since the Defamation Act (2013) came into force in 2014, it has been harder for companies to sue for defamation in the eyes of legal observers.

This is because any successful claim will need to provide evidence of “serious financial loss” to the company. If the company is already suffering from a recession or poor sales, then any defence can point to this as the cause.

At the same time, if you lose a defamation case then the consequences can be severe.

In 2013, US home builder Lennar Corp sued a Californian developer, claiming it had organised a smear campaign against it. A Florida jury found in its favour and Lennar was awarded a total of $1 billion.

This may be at the extreme end of libel awards but, in an age of fake news, when thousands of people shared the “Pope endorses Trump” story, one should respect the power of the written word.