Before diving into the mud with this individual, the first step is to remember that at this point you are operating on hearsay. Perhaps his comments were taken out of context, perhaps the story was exaggerated, or perhaps nothing was said at all. In a word, you should initially gather as much factual data as possible. If you find that this person has been bashing you, then it is time to say something.
Your approach should be a conversation, not a confrontation. Give him the facts of what you heard, and then ask him what happened. Perhaps there is some explanation or clarification that can put the matter to rest. However, if the first words out of his mouth are, "Who told you that?", the odds are that he engaged in precisely what he is being accused of doing.
If you determine that you were indeed a target of his mudslinging, you should indicate that you not only want an apology for yourself, you want it delivered to anyone who heard his malicious comments as well. If he refuses to do so, the next stop is your manager's office.
Slinging mud about your co-worker is lowering yourself to his level, but defending yourself is not.
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