- This article covers the rules around libel and defamation.
- Getting the word out to media entities.
One of the questions I receive is whether Brightwork is concerned about receiving a cease and desist letter from SAP. This question is asked because at Brightwork Research & Analysis writes objective and information that is critical of SAP, as well as other entities such as Gartner, Deloitte, Accenture, etc..
This article we will cover the legal protections what is referred to as libel or defamation.
Libel Versus Defamation
The broad category of this topic is called defamation.
- In a print form, the negligent publication of false statements about a person is called libel.
- In print form, the negligent publication of false statements about a business is called trade libel.
Libel and Defamation
SAP publishes a great deal of inaccurate information on its websites, and this inaccurate information is often repeated by Deloitte, Accenture and other surrogates that make their money from implementing SAP.
Most of these statements, publications, and assertion are designed to obtain money from customers Anyone or any entity that was to question any of their statements, or were to provide evidence that anything from their case studies to their overall proposals was not true, could be considered to possibly lower the revenues of that entity.
The US has strong protections for speech. This is explained in several quotes from the Wikipedia entry on libel and defamation.
“Public officials could win a suit for libel only when they could prove the media outlet in question knew either that the information was wholly and patently false or that it was published “with reckless disregard of whether it was false or not”. Later Supreme Court cases barred strict liability for libel and forbid libel claims for statements that are so ridiculous as to be patently false.” – Wikipedia
In this case, the publisher would have to have no interest in what was true essentially.
But this exact approach is taken by people that work for SAP when commenting on other competing applications. I critiqued Steve Lucas’ post on HANA, where I found numerous inaccuracies, which while Steve Lucas himself may not know are untrue, he would have access to people within SAP that could tell him they were untrue.
Therefore, couldn’t SAP be sued under US defamation law for this by say Oracle, which Steve Lucas is essentially arguing against in his article in the link above? It brings up interesting questions.
“In 1964, however, the court issued an opinion in New York Times Co. v. Sullivan, 376 U.S. 254 (1964) dramatically changing the nature of libel law in the United States. In that case, the court determined that public officials could win a suit for libel only if they could demonstrate “actual malice” on the part of reporters or publishers. In that case, “actual malice” was defined as “knowledge that the information was false” or that it was published “with reckless disregard of whether it was false or not”. This decision was later extended to cover “public figures”, although the standard is still considerably lower in the case of private individuals.” – Wikipedia
Knowingly Publishing False Information as the Standard
This means that any entity would need to prove that the person publishing the offending information knew the information was false and was still published. This is a high standard. However, SAP knowingly publishes false information all the time. Brightwork has a series of reviews of SAP product pages, and these product pages routinely receive an accuracy rating of 1, 2 or 3 out of 10. One example of this is the article How Accurate is SAP on APO? And this inaccurate information damages other software vendors. Another example is found in SAP’s statements to Wall Street it proposes having 5,800 customers of S/4HANA, as was covered in the article SAP Misleads Analysts in Q1 2017 Earnings Call. SAP knows full well that even ASUG (a highly friendly outlet to SAP) only projected 350 customers live on S/4HANA as of 2016. This means that SAP used the number of customers to provide an inflated view of SAP’s success with S/4HANA. SAP left out the fact that many of these customers did not pay for S/4HANA and did not have plans to implement S/4HANA.
Suing SAP for Defamation?
So the question arises why SAP is not repeatedly sued for defamation. When a competitor sues for defamation, it is referred to as disparagement. The IT media landscape is awash in false information, false information that leads to purchasing decisions in favor of the entity providing the false information, and therefore damaging some other party. It is difficult to recall disparagement lawsuits between software vendors. Interestingly, while researching this paper, I found something called non-disparagement clauses in employment contracts that bar an employee from writing anything negative about the employer. These do not hold up in court and California has banned these types of clauses outright. It looks something like this.
“Any disputes between the parties remain confidential. Customers shall not make or encourage others to make any public statement that is intended to, or reasonably could be foreseen to, embarrass or criticize the company or its employees, without obtaining prior written approval from the company. – Today
“I’m seeing these types of clauses in more and more contracts – doctors, dentists, architects and software providers,” she said.
When Zavian went to see a new doctor, she found a non-disparagement clause in the paperwork she was asked to sign.
“It said I was not allowed to say anything, not even something positive, about my experience,” she recalled. “They refused to take it out and I refused to be seen. So, I walked out.””
These anti-disparagement clauses prevent individuals from posting negative reviews, even if they are true.
Response to Online Reviews
This is in response to the online reviews where many companies only want positive reviews listed. This also brings up an interesting change in the power dynamic. Companies have historically been used to controlling information. So they communicated what they wanted to through advertising. But the Internet has provided a forum for consumers to provide their experiences to other consumers. This is very similar to what Brightwork Research & Analysis does. The traditional information model with say SAP is that SAP communicates as much information as it wants, and that information has no guarantee of accuracy. IBM, Deloitte and Accenture and many other consulting companies then repeat that information with a focus on profit maximizing. Again, there is no adherence to any principle of accuracy. Then media entities, which receive money from SAP, which range from Gartner to ASUG to Diginomica receive money from SAP and often repeat what SAP’s marketing department tells them. Brightwork Research & Analysis is the opposite of this. We verify what these entities write. Brightwork does not release information to sell anything but objective advice. SAP, on the other hand, is using media output to provide a generalized overestimation of its applications. These entities mentioned are not research entities, they publish information to sell software or consulting services connected to the software.
Non-disparagement clauses have also been used to limit the speech of employees who were being replaced by H1-B workers.
Types of Defamation With a Lower Standard of Evidence
Defamation claims change if certain types of statements are made.
“Common law establishes that a defamation claim can only be brought if damages stem from the fabricated statement. In Nevada, defamation claims can be presumed to cause harm if they fall within one of four categories, known collectively as defamation per se:”
- Criminal Accusations;
- Certain Health Accusations;
- Accusations of Moral Turpitude;
- Accusations of Professional Incompetence. – KellyWarner
Large Pockets Versus Small Pockets
However, it does not take any real evidence to bring a libel or defamation lawsuit, and a company with large pockets, like an SAP or Deloitte, can bring such a lawsuit and spend millions if they need to without having any concern for how much money it takes and how much time it takes. They can claim anything that is unappealing to them is false.
They don’t have to win the lawsuit; they only have to consume the time and money of the offending party.
Responding to a Defamation Claim
How one responds to a defamation claim is of course quite important.
“When you are served with a Complaint, notify your Editor and your attorney immediately. In the normal course you have only twenty days to answer the Complaint. On occasion the opposing party will give no extension and your attorney may need all that twenty days to investigate the case and prepare a response. Accordingly, it is very important that you notify your lawyer immediately.
Once you are aware that a lawsuit may be filed, be careful to preserve evidence. If you are contacted by anyone outside your paper about the case, refuse to discuss it and keep careful notes of what was said. The foundational elements for admitting evidence are essentially the same as those for a good news story. Record what was said, by whom, when, where and how (i.e. by phone, in person etc.).
In general, as the defendant in a defamation case, you can expect to see a process which proceeds as follows: 1.) Normally, before an Answer is filed, your attorney will file a Motion to Dismiss the Complaint. This is an attempt to defeat some or all of the allegations of the Complaint. For example, the Complaint may seek general damages for defamation, which would be barred by an adequate retraction. A Motion to Dismiss would try to get rid of that claim so that it would not even have to be answered.
Following the filing of the Answer the parties generally engage in discovery. Since the reputation of the Plaintiff is a direct issue in any defamation case, discovery may be very broad, indeed. In addition, the Plaintiff will try to discover your notes and sources.
When your attorney is satisfied with the amount of discovery obtained (often that will focus on the Plaintiffs damages) the next step will often be a Motion for Summary Judgment. That motion asks the court to decide that based on the uncontradicted facts shown by Affidavits and other evidence, you are entitled to win as a matter of law.
6.) If the Motion for Summary Judgment is not granted in its entirety, you will probably proceed to trial. Keep in mind that a trial is often only one step in a process which leads to appeals. Judges may allow Plaintiffs to do things with which Courts of Appeal disagree. Newton v. NBC, 930 F.2d 662 (9th Cir. 1990).”
Ending the Defamation Suit Quickly
Defamation suits can be ended quickly by invoking several privileges.
- “The other common privilege is qualified privilege, which protects the press from defamation charges for written or spoken statements unless they can be proved to be malicious.” – Balance
- “The policy behind the privilege is that openness and transparency are desirable when it comes to issues of public importance, and the media should not be hindered from reporting on or discussing such issues (i.e., by looking over their shoulder for a potential defamation lawsuit).” – AllLaw
- “First and foremost, truth is an absolute defense to a defamation lawsuit. If the statement that is the subject of the suit is true, and you can prove it, your attorney can move to have the plaintiff’s claim dismissed. No one is punished for speaking the truth, even if it is an ugly truth.” – AllLaw
- In a defamation action, truth is an absolute defense. In general, a defendant need not prove that the statement at issue is true in every respect – only that it is substantially true, or that the “gist” or “sting” of the statement is accurate. The burden of proving falsity, however, always rests with the plaintiff. – Axis Pro
Getting the Word Out to Other Media Entities
If SAP or Deloitte or other powerful entity were to bring a trade libel or libel suit against Brightwork Research & Analysis, one of the strategies we would employ is to get the word out the other media entities. The bigger the media entity, the better. And it would most likely be the larger media entities that do not have large amounts of SAP advertising. In studying many examples of where SAP or Deloitte or other entity uses its power against a customer, they tend to be more willing to do so in private. Once the details are published, their behavior changes significantly.
Using an Attorney to Defend Libel and Defamation
For a small entity that is telling the truth when it publishes, there is almost no way for the offended party to win the lawsuit under US libel and defamation laws, and the offending entity knows it.
But what is a risk is “bleeding out” due to legal fees. This is why it makes sense to use the attorney sparingly and instead do most of the legwork unless one has an internal legal team to rely upon. Having worked with legal teams as an expert witness, we have learned that much of the legwork does not use the attorney’s time. The attorney can be limited to offering advice, filing documents with the court, making the limited court appearances, etc. This topic is mitigated by something called libel insurance, which will be discussed shortly.
And a way of leveling the playing field is to publish the details of what the large entity is doing and to publish more supporting information regarding the disputed claim. A large entity like SAP can hire attorneys to look for every article published by a website, and find areas where the company can say it is defamed. It can then attempt to build a case that the publishing company published this information knowing it was false.
Losses Versus Defamation
Losses are easy to propose but more difficult to prove. A single article may sway a decision maker to choose one application from one vendor versus another. The entity could say that because of an article was written by Brightwork, a deal that they were about to win, was lost causing tens of millions of dollars in damages. But it is an interesting question as to whether the standard is that the sale was lost only because of the offending article.
Interestingly, the rise of social media is increasing the need for libel insurance.
“Big insurance companies have offered libel protection for years, but the popularity of social media has lent more gravity to the coverage. In 2011, the Insurance Information Institute published a paper on the industry’s role in social media liability. At the time, a third of businesses said they purchased insurance for cyber risks, which include libel and slander.” – Bloomberg Technology
Libel insurance reduces the ability of the offending party to bring a frivolous lawsuit that is only intended to bleed out the offending party. Insurance can be important, even though libel lawsuits are rare.
“Allstate sees personal injury claims, which include libel, on fewer than 1 percent of policies annually, compared with fewer than 10 percent for home and automobile claims.” – Bloomberg Technology
But they are more expensive.
“Even in weak cases that get tossed by judges, attorney’s fees can range from $10,000 to $20,000, said Darren Oved, a partner at Oved & Oved LLP and a First Amendment lawyer. A case that does make it to a jury can go into the hundreds of thousands of dollars.” – Bloomberg Technology
And difficult to win.
“Despite the rise of social media and the vitriol it brings, successful libel suits are still fairly rare because the burden of proof rests on the plaintiff.” – Bloomberg Technology
In IT generally, defamation or libel cases are extremely rare. But anyone can send cease and desist letter. A cease and desist letter is a warning of a lawsuit, but for them to be effective, the weight of the law needs to be behind them. And although the plaintiff may have no chance of winning the lawsuit, the strategy may simply be for the offended entity to bleed out the offending entity with attorney fees. But if they cannot do that, then much of the power of the cease and desist letter is lost.
Financial Bias Disclosure
This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.