Legal entities – companies – have so far been able to claim compensation for an interference with their reputation only when such interference occurred within the context of unfair competition. For this to apply, however, the company had to be in a competitive relationship with the person causing the harm; in other words, the tortfeasor had to be a competitor of the legal entity in the course of its business activities. This type of protection was therefore granted only to a limited extent and exclusively to business entities. Non-business legal entities could not realistically enter into a competitive relationship with a potential wrongdoer at all.
Outside the framework of unfair competition, affected entities could only request that the wrongdoer cease the harmful conduct, remedy its consequences, compensate the damage caused, or surrender any unjust enrichment obtained as a result of such conduct.
Although this list is relatively extensive, the Constitutional Court, in its landmark decision Ref. No. Pl. ÚS 26/24, concluded that legal entities were not provided with sufficiently effective protection. According to the Court, this is mainly because none of the above mechanisms can prevent non-pecuniary harm. Especially in the era of information technologies, where information spreads much faster and can hardly be fully removed from the public space, it is impossible to completely eliminate the adverse effects of such non-pecuniary harm. Moreover, in claims for damages or unjust enrichment, the injured party is required to quantify and prove the damage incurred or the enrichment gained—something very difficult for business entities and practically impossible for non-business legal entities in cases of reputational harm.
In contrast, in claims for adequate satisfaction, the decision on the appropriate amount lies within the discretion of the court, which is to determine what amount is reasonable in the specific case. The legal entity is not required to prove this. The Constitutional Court therefore concluded that there are no reasonable grounds to deny legal entities the right to seek adequate satisfaction for interferences with their good reputation, even when the interference does not occur within the scope of unfair competition.
The Court thus held that the same provisions previously applied only to non-pecuniary harm caused by unfair competition must now also be applied to these types of interferences.
