The Virginia Defamation Law Blog
With all the hand-wringing over fake news these days, many are wondering whether it isn’t actionable libel to publish false news accounts. Take “Pizzagate,” for example. Shortly before the election, rumors began circulating on the Internet that Hillary Clinton and her former campaign manager, John Podesta, were running a child sex-slave operation in the back of family-friendly Washington pizzeria Comet Ping Pong. As ridiculous as that sounds, the message reached a massive audience on social media and before long, the restaurant was receiving death threats and other threatening messages on Instagram, Facebook, and Twitter. People started trashing the business on Google and Yelp. Eventually, a young man from North Carolina traveled to the restaurant to personally investigate the story and rescue any sex slaves in need of his assistance. He brought an assault rifle with him. It’s probably safe to assume that Comet’s business has suffered.
If Hillary Clinton is running a child sex-slave ring, she isn’t doing it at Comet Ping Pong: the story was pure fiction. So what’s a business like Comet to do? Defamation claims are usually about the protection of individuals’ personal reputations. In this situation, false news articles were being published about Comet’s business itself rather than about any particular individual associated with the business. In short, it doesn’t matter. Corporations are treated like people in most contexts, and this one is no different. Comet could conceivably sue for trade libel, common-law defamation, tortious interference, or business conspiracy, among other claims. Let’s focus on the commercial defamation angle.
A fake news story that disparages a business’s products or services may qualify as that form of defamation known as “product disparagement” or “trade libel.” There aren’t many Virginia cases that deal with product disparagement, but a federal court sitting in Virginia has applied the following definition: “[A] person who publishes false matter disparaging the quality of another’s goods, which the publisher should recognize as likely to result in pecuniary loss to the other through the effect of the statements on the conduct of a third person, is liable to the person for pecuniary loss which results if: (1) he intended that the publication of the statement cause harm to the pecuniary interests of the other person, or either recognized or should have recognized that it was likely to do so, and (2) he knew that the statement was false or acted in reckless disregard of its truth or falsity.” (See Gen. Prod. Co. v. Meredith Corp., 526 F. Supp. 546, 553 (E.D. Va. 1981)). Presumably, a court 
applying this test to a situation like Comet Ping Pong would not restrict it to statements regarding the quality of its pizza but would apply it to cover disparaging statements about its services and environment as well.
It would appear that the fake Pizzagate story was false, it was “of and concerning” Comet, and the person who started the rumor should have foreseen that any Comet customers reading and believing the story would stop taking their kids to eat there. Liability may exist if the publisher of the accusation intended to harm Comet’s financial interests (or at least should have recognized the harm his statements would have caused to the restaurant) and acted with actual malice with respect to the truth or falsity of the statement.
Alternatively, even if a court were to reject a “trade libel” theory, Comet could sue for regular common-law defamation. While true that defamation claims are usually concerned with false statements that “diminish the esteem, respect, goodwill or confidence” in which an individual plaintiff is held (see Prosser, Law of Torts, § 111), defamation claims in Virginia are not limited to attacks on personal reputations. Corporations can be defamed, too, by such statements as those which cast aspersions on its honesty, credit, efficiency or standing in its field of business. (In fact, such a statement would likely be treated as defamation per se — see Swengler v. ITT Corp. Electro-Optical Prod. Div., 993 F.2d 1063, 1071 (4th Cir. 1993)). A fake news account describing Comet as home to a secret society of pedophiles is the type of story that would tend to lower Comet in the estimation of the community and deter third persons from dining there. All elements of a valid defamation claim would appear to be present, so yes, fake news may qualify as defamation.
Trade libel or product disparagement may also be actionable under Section 43(a) of the Lanham Trademark Act. To recover under this statute, a plaintiff must establish that the defendant made a statement that (a) is false or misleading; (b) is material; (c) is made in interstate commerce; (d) is made in connection with goods or services; (e) is a commercial statement of advertising or promotion; and (f) causes damage to the plaintiff. Note, however, that Section 43(a) extends only to false and misleading speech that is encompassed within the “commercial speech” doctrine developed by the United States Supreme Court. The fake news stories about Comet Ping Pong were not commercial statements of advertising or promotion, so if Comet were to bring legal action, it would have a stronger claim under the common law of defamation than under the Lanham Act.
Certainly, then, Comet Ping Pong could sue. Whether they should is a different story.