Defamation of character is the legal term for publishing libel -- false statements about an identifiable person that cause harm to his reputation. If you can prove your facts to be true, you're not liable for defamation. To win a defamation suit, the claimant would need to prove that what you wrote is false and that it has harmed his reputation. For example, if you write in your autobiography that Joe's Diner is a grease pit with health department problems, and Joe can produce evidence that it isn't true and that business has gotten worse because of your book, he may have a case. Opinion, however, is not considered libel. You could repeat, "I hated the home fries at Joe's" in every chapter and be on safe legal ground.
Avoiding Invasion of Privacy
Legally actionable invasion of privacy occurs when you disclose information about an identifiable individual that is previously unknown, factual and not newsworthy. Famous people are considered generally newsworthy. You may know that your former boss beat her husband, but telling the world -- unless she is famous or was convicted of it in court -- is a bad idea. If, on the other hand, she used to beat you, you are considered an interested party and the story is yours to tell; she may still sue, but is unlikely to prevail.
The New York Times best-seller list memoir "Running With Scissors" includes graphic depictions of extreme child abuse. The Turcotte family sued author Augusten Burroughs and St. Martin's Press for both defamation and invasion of privacy. Family members said the writer was fabricating and exaggerating. The case was settled out of court when Burroughs paid an undisclosed amount of money and agreed to acknowledge in future editions that the Turcottes remembered things differently, that he meant them no harm, and that he and his publisher were sorry for any unintentional harm done to them. Many memoirs contain similar disclaimers, pointing out that parts of a book are "reconstructed from memory," or that some identities have been disguised, and unless you have carried a tape recorder with you at all times, this may be a good idea.
If it hadn't been clear that the Finches in "Running With Scissors" were based on the Turcottes of Northhampton, Massachusetts, Burroughs could not have been sued. The plaintiff in a defamation or invasion of privacy suit needs to prove that readers can easily figure out who the author is talking about. Just changing a name or a physical description may not be enough to protect you against a claim if other details make it obvious who you are writing about.
The Bottom Line
The definitions of defamation of character and invasion of privacy, unlike many laws, are somewhat subjective. No matter how careful you are, if you're writing about anything controversial, the possibility exists that someone may feel defamed or invaded. Telling the truth, avoiding gratuitous insults, respecting the privacy of the innocent and acknowledging your own fallibility is the best course. If you're working with a publisher, the company's legal team will examine your manuscript for possible problems. If you are self publishing, consider having your work vetted by a professional editor or an attorney who specializes in these issues.