We’ve covered on the blog several examples of troubling non-disparagement clauses preventing consumers from speaking out about their bad experiences with businesses (for instance, see here and here). From our experience, these seem to be cropping up more and more.
I’m pleased to report on a counterexample. The company Madwire Media, a marketing firm, used to include this clause in its standard contract:
Non-Disparagement: The parties to this contract agree that neither shall make any disparaging comments or accusations detrimental to the reputation, business, or business relationships of the other except in connection with any legal proceedings. In the event the client publishes or otherwise disseminates any false, disparaging, defamatory or derogatory information about Madwire Media, its employees, its business, or its services, Madwire Media reserves the right to terminate this Agreement. Upon termination any outstanding balances will immediate come due. In addition, the parties hereby agree that any dispute arising out of any disparaging, defamatory or derogatory information published by client about Madwire Media, or any other provision of this contract, or any other dispute that may arise between the Parties, shall be settled by confidential binding arbitration in Denver, Colorado by a single attorney. Such arbitration shall be conducted pursuant to the Commercial Arbitration Rules (CARs) of the American Arbitration Association (AAA). The Parties agree that any published statements will be removed pending the outcome of the arbitration. Each party also agrees that the arbitrator shall have the authority and right to grant temporary and permanent injunctive relief and that the prevailing party shall be entitled to enter judgment in any court and that it shall be entitled to recover reasonable attorney’s fees.
A non-disparagement clause and arbitration clause wrapped together beneath a cloak of confidentiality – not consumer friendly at all.
But I’ve learned this month that Madwire plans no longer to use that clause. Madwire customers should still be alert to the fine print, of course (as we all should). Still, it’s heartening to see a company do the right thing for its customers by dropping this noxious clause. Let's hope in the future we see less of these clauses coming up in the first place.