Testing Systems,Inc.v.Magnaflux Corp.
United States District Court,Eastern District of Pennsylvania,1966
251 F.Supp.286
[Plaintiff and defendant were competing manufacturers of equipment,devices and systems for use in testing industrial and commercial materials.The complaint alleged that defendant circulated to plaintiff’s current and prospective customers a false report to the effect that the United States Government had tested plaintiff’s product,and found it to be only about 40% as effective as that of the defendant.Plaintiff also claimed that at a manufacturers’ convention in Philadelphia defendant’s agent,in the presence of plaintiff’s current and prospective customers “did in a loud voice state that … [plaintiff’s] … stuff is no good,” and that “the government is throwing them out.”]
LORD,DISTRICT JUDGE.This is an action for trade libel or disparagement of property….The matter is now before this Court on defendant’s motion to dismiss for failure to state a claim upon which relief can be granted.
For the purposes of this motion,defendant admits the truth of the allegation,but asserts that the action must nevertheless be dismissed because (1) the defendant did no more than make an unfavorable comparison of plaintiff’s product with its own;and (2) even assuming that the statements were actionable,plaintiff has failed to allege his damages with the required specificity….
It would serve no useful purpose to dwell at length on the issue of unfavorable comparison.Suffice it to say,as the defendant properly points out,that a statement which takes the form of an unfavorable comparison of products,or which “puffs” or exaggerates the quality of one’s own product is not ordinarily actionable.This has long been the rule in England,where the action originated,and is now well established in the vast majority of United States jurisdictions.
However,this Court is not convinced by the defendant’s arguments that his comments amounted to mere unfavorable comparison.The modern history of the doctrine of unfavorable comparison and its permissible use in the conduct of bus-i ness traces its origin to the leading English case of White v.Mellin [1895] A.C.154.There the defendant had advertised his product as being far more healthful than plaintiff’s.In refusing relief the Court established the precedent that irrespective of their truth or falsity,statements by one competitor which compare his product with that of another are not actionable.(https://www.daowen.com)
It does not follow from this,however,that every trade disparagement is protectible under the guise of unfavorable comparison merely because the perpetrator was canny enough to mention not only the product of his competitor but also his own.The decision in White v.Mellin was founded on the near impossibility of ascertaining the truth or falsity of general allegations respecting the superiority of one product over another.To decide otherwise,explained Lord Herschell,would turn the courts “into a machinery for advertising rival productions by obtaining a judicial determination [as to] which of the two was better.One is expected to believe in the superiority of his wares,and he may properly declare his belief to interested parties.It has even been said that he may ‘boast untruthfully of his wares.’” Phila.D.Prod.v.Quaker City I.Co.,306 Pa.165 (1932)….
The fine line that separates healthy competitive effort from underhanded business tactics is frequently difficult to determine.Apart from the tradesman’s right of free speech,which must be vigorously safeguarded,the public has a genuine interest in learning the relative merits of particular products,however that may come about….
Nonetheless,there is an outer perimeter to permissible conduct.The tradesman must be assured that his competitors will not be suffered to engage in conduct which falls below the minimum standard of fair dealing.“[I]t is no answer that they can defend themselves by also resorting to disparagement.A self-respecting business man will not voluntarily adopt,and should not be driven to adopt,a selling method which he regards as undignified,unfair,and repulsive.A competitor should not,by pursuing an unethical practice force his rival to choose between its adoption and the loss of his trade.” Wolfe,UNFAIR COMPETITION,47 Yale L.J.1304,1334～35 (1938).
The defendant’s comments in the case presently before this Court do not entitle him to the protection accorded to “unfavorable comparison.” This is a readily observable difference between saying that one’s product is,in general,better than another’s ...and asserting,as here,that such other’s is only 40% as effective as one’s own.The former,arguably,merely expresses an opinion,the truth or falsity of which is difficult or impossible of ascertainment.The latter,however,is an assertion of fact,not subject to the same frailties of proof,implying that the party making the statement is fortified with the substantive facts necessary to make it.This distinction has never been seriously questioned.See e.g.,Restatement,Torts,§§ 626,627,628.The defendant in this case admittedly circulated to plaintiff’s present and prospective customers false statements to the effect that the government had tested both products and found the defendant’s to be 60% more effective than plaintiff’s.This is not the sort of “comparison” that courts will protect.
Apart from this,there is at least one additional factor which withdraws the defendant’s comments from the category of unfavorable comparison.Not content with making the admittedly false statements and allowing them to be evaluated independently of any extraneous influence,the defendant here gave added authenticity to its assertions,by invoking the reputation of a third party,the United States Government.It is unnecessary to speculate on the additional force the defendant’s remarks must have had when coupled with the purported approval of so highly credible a source.This,of course,is to say nothing of the statements to the effect that plaintiff had been “thrown out,” which by no stretch of the imagination could be termed mere comparison.
For all of the above reasons,it is the judgment of this Court that the defendant’s remarks are actionable.