By Roger Parloff

(FORTUNE Magazine) – WITH ITS DECISIVE WIN LAST MONTH in a suit brought against it by the Sharper Image, Consumer Reports magazine appears to have successfully completed its run through the most harrowing legal gantlet of its 68-year existence. The case was the third in a trio of major product-disparagement suits that the magazine's publisher, Consumers Union, has had to face down in recent years. The previous two were brought by Japanese auto giants Isuzu and Suzuki after certain of their SUV models failed the magazine's rollover tests. CU's victory over Sharper Image is potentially the sweetest, since it calls for the retailer to reimburse the magazine for its costs and attorneys' fees, which Consumers Union estimates at more than $500,000. At presstime an attorney for Sharper Image said it had not yet decided whether to appeal.

CU's vindication began in April 2000, when a California jury found that it owed nothing to Isuzu (though the jury also said that certain statements in the article were false). CU's next victory came this past July when Suzuki, on the eve of trial, voluntarily dropped its eight-year-old litigation against CU. The automaker settled for a published "clarification" and an acknowledgment by CU of Suzuki's "stated commitment" to design safety, but no money damages.

Sharper Image, which sued in September 2003, claimed that CU had falsely maligned its flagship product line--Ionic Breeze silent air purifiers--in a pair of test reports published in Consumer Reports in 2002 and 2003. The magazine had found the Ionic Breeze to be, as one article put it, "quiet but ineffective." (Ionic Breeze products accounted for 16% of Sharper Image's total sales in 2001, according to a company court filing.) In November, however, U.S. district judge Maxine Chesney of San Francisco ruled that there was "no reasonable probability" that Sharper Image could prove its case. She then dismissed the suit under California's so-called anti-SLAPP law, which is designed to deter "strategic litigation against public participation"--i.e., frivolous suits filed by big companies to silence critics.

Given CU's mission--testing consumer products and objectively reporting the results--offending deep-pocketed businesses goes with the territory. Nevertheless, CU has been sued just 15 times in its lifetime, according to its president, Jim Guest, and it has now prevailed in every case. The anti-SLAPP dismissal of the Sharper Image suit now sends a particularly powerful message, says Guest: "There's a cost to corporations trying to shut people up." -- Roger Parloff