One law-firm software purveyor is suing another in defamation for calling its product obsolete and suggesting it’s going out of business.
Commercial Legal Software lodged the suit in federal court in Newark against competitor Quantrax Corp. of Bethesda, Md., and an outside promoter, Lighthouse Consulting of St. Augustine, Fla.
Both CLS and Quantrax make software for attorneys specializing in commercial, consumer and medical collections, mortgage foreclosure, insurance subrogation and property management.
Lighthouse president Phillip Duff allegedly sent a blast e-mail to about 1,000 law firms in early December, stating: “If your [sic] using CLS you know they are going away because the system has reached its lifespan.”
The message went on to say Quantrax’s product is superior because it is designed for collection agencies and then modified to meet the needs of collection law firms. The message closed with “Call me to arrange a demo.”
CLS claims that there are no facts to support the notion that it is in danger of going out of business and says its software products are kept up to date and are “not at the end of their lifespan.”
CLS alleges the defendants violated the Lanham Act by making false or misleading statements about CLS and its products. The suit also includes counts of defamation; defamation per se; commercial disparagement; intentional, malicious and/or negligent interference with contracts and prospective economic advantage; unfair trade practices; injurious falsehoods; product disparagement; false light and civil conspiracy.
Plaintiff lawyer Kenneth Goodkind, of Flaster Greenberg in Cherry Hill, says Quantrax is a newcomer to the collection software business that has “forsaken honest competition” in favor of defamatory attacks.
Goodkind says the relationship between Duff, Lighthouse and Quantrax is “clear from the face of that e-mail blast.” The suit says Duff and Lighthouse are “known, disclosed agents” of Quantrax and have apparent authority to solicit business for it.
Duff and Lighthouse helped Quantrax design a new logo and website and assisted it with “direct marketing, internet-based advertising and search engine optimization,” according to Lighthouse’s site.
CLS seeks injunctive relief, a declaratory judgment that the defendants’ conduct was deliberate and willful, an accounting of defendants’ profits relating to the alleged defamation and compensatory and punitive damages.
CLS says that the statements are per se defamatory and that it does not need to show that it suffered special damages. In Biondi v. Nassimos, 300 N.J. Super 148 (1997), the Appellate Division said that if a defamatory statement constitutes slander per se, a plaintiff may establish a cause of action not only without proving special damages, i.e. damages of a pecuniary nature, but without proving any form of actual damage to reputation.
Duff declined to comment on the case. Representatives of Quantrax did not return a reporter’s calls.
The suit, Commercial Legal Software v. Lighthouse Consulting, filed Dec. 20, has been assigned to U.S. District Judge Susan Wigenton and U.S. Magistrate Judge Madeline Cox Arleo.