Defamation watch

Croton Watch Co, Inc. v. National Jeweler Magazine, Inc. 2006 WL 2254818 (S.D.N.Y.)

Plaintiff sued defendants, Teslar (a competing watch maker) and National Jeweler Magazine over a story the magazine ran that was allegedly planted by Teslar. Teslar and plaintiff previously entered into a consent judgment resolving Teslar’s lawsuit against plaintiff for trade dress infringement. Based on Teslar’s press release, the magazine then ran a story indicating that a judge had “ruled” that plaintiff infringed Teslar’s trade dress, which included a picture with a caption that made it look like plaintiff had counterfeited Teslar’s watch (including Teslar’s word mark). Plaintiff sued for false advertising and defamation.

The court agreed that plaintiff hadn’t stated a claim for defamation because the report was substantially true. Moreover, defendants were also entitled to dismissal because of New York’s “single instance exception” to defamation, which holds that disparaging a single instance of professional conduct is not defamatory per se. Because anyone can make a single error, the law presumes that charging an individual with a single dereliction in connection with his or her trade doesn’t necessarily charge him or her with general incompetence and isn’t actionable unless special damages are pleaded and shown. Here, selling 116 units of the watch was a single violation, and didn’t charge plaintiff with general lack of character, and plaintiff failed to plead special damages.

The Lanham Act claim failed, unsurprisingly, because the story wasn’t commercial advertising or promotion, even if it was run for an improper purpose.