A corporation’s reputation is among its most valuable assets—and among the most difficult to repair once damaged. When a competitor misrepresents your products, a disgruntled former customer wages a campaign online, or a bad actor exploits your trademark to discredit your brand, the question is not whether to respond but how.
The available tools are more varied, and in some cases more powerful, than most in-house counsel appreciate. This article surveys the legal tools available to corporations whose reputation is under attack, and the strategic considerations that inform which tool to reach for.
Defamatory attacks on corporate reputation
Perhaps the most obvious threat to a corporation’s reputation is defamation. Defamatory statements strike directly at corporate reputation — whether about the company itself or about a key executive closely identified with it in the public eye. To establish defamation, a corporation must prove that the impugned words lower the corporation’s reputation in the eyes of a reasonable person — a standard that corporations are generally well-positioned to meet.
Despite that relatively accessible threshold, there are several strategic considerations for a corporation before deciding to sue.
Importance of showing specific losses. For individual plaintiffs, courts are generally willing to presume general damages without proof of specific harm. For corporations, however, substantial general damages awards are unlikely without proof of specific financial losses or at least loss of goodwill. Companies should be prepared to demonstrate real, quantifiable harm — and to build that evidentiary record early.
False statements of fact vs. unflattering opinions. Successful claims are more likely to occur when the damaging statement is a false factual allegation. Customer statements of opinion or descriptions of subjective experience are more likely to attract the broad “fair comment” defence recognized in Canadian law. In reality, many customer statements combine factual assertions and opinion, and careful analysis is required to disentangle what is defensible and what is not.
Beware of anti-SLAPP motions. Anti-SLAPP motions are designed to prevent powerful parties from silencing discourse on matters of public interest. Particularly where there is a significant power imbalance between the corporate plaintiff and the defendant, and where the corporation cannot point to any demonstrable harm, a defamation action by a corporation may be vulnerable to dismissal on an anti-SLAPP motion. Defendants can bring these motions at the earliest stage of the litigation. The fundamental crux of the anti-SLAPP analysis requires a corporate plaintiff to show that the harm it faces because of the defendant’s expression outweighs the public interest in protecting the defendant’s expression. At this stage, corporations must normally demonstrate actual harm, not merely reputational harm.
These motions are known for being lengthy and tedious, and can require a great deal of evidence despite their intended simplicity. And the cost consequences strongly favour defendants: the legislation presumptively insulates defendants from costs when their motion fails, and awards defendants full indemnity costs when it succeeds. Before commencing a defamation action, in-house counsel should honestly assess both the quantum of demonstrable harm and the public interest dimensions of the defendant’s expression.
Anonymous defamation requires additional steps. Anonymous defamation — typically through social media, online posts, or other electronic formats — presents unique concerns. A potential plaintiff may seek pre-action discovery to identify anonymous defendants by means of a Norwich order. Obtaining identifying information is often a two-step process. First, a Norwich application is brought against the platform or website host for information about the poster, including the IP address associated with the offending content. Second, if no direct identifying information is obtained (as is often the case for accounts created using fake information), then an application is made against internet service providers for the subscriber information associated with that particular IP address. While platforms and internet service providers generally do not oppose these kinds of applications, they remain a cumbersome but necessary step in cases of anonymous defamation.
Potential for injunctive relief on summary judgment. Defamation claims do not ordinarily lend themselves to summary judgment where serious factual disputes exist. But where the defamation is obvious, pernicious, and malicious, a claimant can seek efficient relief through an injunction after a summary judgment motion. For example, in Paramount v Kevin J Johnston, the Ontario Superior Court granted an injunction on summary judgment in a case where the defendant made numerous Islamophobic statements about the plaintiff in a series of online videos — an illustration of the kind of clear and egregious case where this efficient avenue is available.
Protecting against attacks on corporate products, services and goodwill
Competitor attacks on a corporation’s products or services call for a different toolkit than general defamation — one that includes both common law and statutory causes of action, each with distinct elements, strategic advantages, and limitations.
Malicious falsehood: a better fit for attacks on goods or services. Where a corporation’s reputation is being undermined through attacks on its products or services specifically, the common law tort of malicious falsehood may be a better fit than defamation.
This tort requires the plaintiff to show that the defendant made a false statement intended to disparage the plaintiff’s property, goods, or services; that the words were published maliciously; and that the plaintiff incurred special damages as a result. Malice can be established by showing that the defendant knew the language was false, was indifferent or reckless as to its truth, or was primarily motivated by a dishonest or improper purpose.
Statutory claims under the Trademarks Act. In addition to common law remedies, sections 7(a) and 7(d) of the Trademarks Act may provide relief for corporations targeted by false statements. Importantly, these statutory causes of action dispense with the requirement of demonstrating malice.
Section 7(a) prohibits false or misleading statements that tend to discredit the business, goods or services of a competitor. Three elements must be satisfied: (1) there must be a false or misleading statement; (2) which tends to discredit the business, wares, or services of a competitor; and (3) resulting damage. The statement must pertain to a specific trademark or other intellectual property owned by the claimant and cannot be a general statement about the claimant’s business. Proof of a causal link between the statement and the harm suffered is key, although courts have been prepared to make reasonable inferences and apply a “dose of common sense” in making this assessment.
Section 7(d) prohibits false material descriptions that are likely to mislead the public as to the character, quality, quantity, composition, geographical origin, or mode of the manufacture, production or performance of the goods or services. To seek a remedy under s. 7(d), a plaintiff must first establish that its trademark has garnered goodwill in the Canadian market — without a prior reputation or distinctiveness in respect of the specific trademark, a claim under this provision will not succeed.
Damages for successful s. 7 claims can range dramatically from $15,000 to more than several hundred thousand dollars, depending on the degree of harm suffered by a corporate plaintiff.
Section 22 of the Trademarks Act provides an additional tool for corporate plaintiffs who have suffered a depreciation of goodwill. To succeed, a corporate plaintiff must establish: (1) the defendant used the plaintiff’s registered trademark in connection with goods or services; (2) the claimant’s registered trademark is sufficiently well known to have a significant degree of goodwill attached to it; (3) the defendant’s use of the trademark was likely to have an effect on that goodwill; and (4) the likely effect is to depreciate or cause damage to the value of the goodwill. A mere allusion to a trademark, without clear evidence linking the defendant’s conduct to a depreciation of goodwill, will not be sufficient.
Injunctive relief via copyright and trademark claims
Claims grounded in copyright and trademark violations may provide corporate plaintiffs with swift injunctive relief — and in some cases, a more practical remedy than defamation where the underlying conduct involves unauthorized use of a corporation’s intellectual property.
In Indigo Books & Music Inc. v. John Doe 1 (Indigo Kills Kids), anonymous defendants created websites calling for a boycott of Indigo’s stores, redirected visitors to Indigo’s competitors, and used Indigo’s logo without authorization. Indigo sought an interim and interlocutory injunction to take down the domains and remove all infringing material.
The Federal Court found that Indigo met the test for such injunctive relief, grounding its analysis in findings of copyright infringement and depreciation of goodwill associated with Indigo’s trademarks. The Court noted that the plaintiff’s strong showing on the first element of injunctive relief (a serious issue to be tried) lowers the threshold for the remaining elements of irreparable harm and balance of convenience.
Protecting against attacks on social media
Where corporate reputation or goodwill is threatened by conduct on social media platforms, intellectual property arguments can provide a practical route to getting material removed. Most social media platform policies prohibit copyright or trademark infringement in their terms of service but are more equivocal about defamatory material, which they will generally remove only with a court order.
In the right circumstances, approaching the platform directly with a well-founded claim of copyright or trademark infringement can achieve a faster and less expensive takedown remedy, albeit one without any compensatory relief.
Conclusion
Reputational threats to corporations rarely arrive with a clear label. A competitor’s misleading product claim, an anonymous online campaign, or a bad actor’s unauthorized use of a corporate trademark may each require a different legal response — and the right response is not always the most obvious one.
The choice between defamation and malicious falsehood, between common law and statute, between litigation and a platform takedown request, depends on the specific facts, the available evidence, and the remedy that will most effectively protect the asset at stake.
In-house counsel who understand the full toolkit available to corporate plaintiffs, and who engage specialist outside counsel early enough to shape the strategy, are best positioned to protect the asset that is hardest to rebuild once lost.
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Andrea Gonsalves, partner, is sought out for her sound judgment, practical advice, highly effective representation, and ability to develop a litigation strategy taking into account her clients’ interests and perspective. Andrea’s extensive experience in litigation and dispute resolution spans a wide range, with particular focus in civil and commercial litigation, defamation and media law, and administrative and regulatory law.
Justin Safayeni, partner, is an experienced litigator. His clients appreciate his clear thinking, sound judgment, practical advice and strong courtroom advocacy skills. Justin’s practice focuses on administrative and public law, media/defamation law and commercial litigation and appeals. He has appeared before all levels of court in Canada, including on several occasions as lead counsel at the Supreme Court of Canada.
The authors are grateful to Stockwoods LLP’s summer student, Madeleine Harvey, for her significant drafting and research assistance on this article.