For a long time, legal practice was dominated by the view that moral damage is a category inherent exclusively to natural persons, as it has traditionally been associated with physical pain, emotional distress and suffering.
This approach was partly based on a literal interpretation of Article 23 of the Civil Code of Ukraine, which provides that moral damage consists of physical pain and suffering experienced by an individual in connection with injury to health, unlawful conduct directed against such person, members of his or her family or close relatives, or in connection with the destruction or damage of property. The amount of monetary compensation for moral damage is determined by the court depending on the nature of the offence and the extent of physical and emotional suffering.
However, the modern understanding of the institution of moral damage is significantly broader.
The legislator expressly recognises the possibility of moral (non-pecuniary) damage being inflicted upon a legal entity, including, in particular, damage in the form of harm to its business reputation.
Defamation, dissemination of false information, discrediting business activities, or other actions infringing upon the reputation of a business entity may constitute grounds for claiming compensation for moral damage.
In this context, the issue of compensation for moral damage to legal entities has become increasingly relevant, especially given the growing importance of reputational assets in business and public communications.
The Plenum of the Supreme Court of Ukraine, in Resolution No. 4 dated 31 March 1995 “On Judicial Practice in Cases Concerning Compensation for Moral (Non-Pecuniary) Damage,” defined moral damage as non-material losses resulting from moral or physical suffering or other adverse consequences caused to a natural or legal person by unlawful acts or omissions of others.
DEGA Partners has successfully represented and protected its clients in a number of court disputes related to the unlawful use of trademarks and other intellectual property objects.
During the proceedings, the courts established violations of the clients’ exclusive proprietary rights consisting of the unauthorised use of designations identical or confusingly similar to registered trademarks. As a result of the judicial review, the clients’ claims were satisfied. The courts ordered the infringers to compensate moral damage caused by unlawful actions that impaired the business reputation and other non-pecuniary rights of the respective intellectual property owners.
In the course of the examination of evidence submitted by DEGA Partners, the courts established that the defendants had unlawfully used the trademarks on websites without authorisation and despite express prohibition by the rights holder, contrary to the principles of good faith and in disregard of the legitimate demands of the claimant as the trademark owner.
Good faith, as one of the fundamental principles of civil law, represents a standard of conduct characterised by honesty, openness and respect for the interests of the other party to a contract or legal relationship.
The doctrine of venire contra factum proprium (prohibition of contradictory conduct) is based on the Roman maxim non concedit venire contra factum proprium — no one may act contrary to his or her prior conduct. The essence of this doctrine lies in the principle of good faith. Conduct that contradicts previous statements or behaviour, upon which another party has reasonably relied to its detriment, is deemed inconsistent with good faith and fair business practice.
This legal position was articulated by the Supreme Court (Joint Chamber of the Civil Cassation Court) in its decision dated 10 April 2019 in case No. 390/34/17 and has subsequently been applied by the Grand Chamber of the Supreme Court in similar legal matters.
Business reputation of a legal entity — including companies, individual entrepreneurs, attorneys, notaries and other professionals — is understood as the public assessment of its entrepreneurial, professional or other activities performed as a participant in social relations (goodwill). This definition is provided in Resolution No. 1 of the Plenum of the Supreme Court of Ukraine dated 27 February 2009 “On Judicial Practice in Cases on Protection of Dignity, Honour and Business Reputation of a Natural and Legal Person.”
The business reputation of a legal entity comprises the prestige of its trade name, trademarks and other intangible assets among consumers of its goods and services.
The tangible carriers of business reputation include the commercial name, trademarks, other means of individualisation, the goods themselves, advertising materials and any communication with consumers. These objects frequently become the subject matter of infringements involving the unlawful exploitation of reputation.
Due to the close connection between goods and a trademark, the latter provides the public with information about the goods and enables trademark owners to stimulate and maintain demand. The importance of legal protection of a trademark lies not only in its function for the producer, but primarily in the role it plays in protecting consumer interests.
DEGA Partners has successfully demonstrated before the courts that unlawful use of a trademark in a domain name and on a website causes harm to a company’s business reputation, as consumers are misled regarding the origin of the goods, their market introduction, their configuration and the availability of the manufacturer’s warranty.
It is crucial for companies to protect their brands, as consumers tend to associate negative product experiences not with the seller, but with the manufacturer — the trademark owner — thereby forming a negative perception of the brand among both current and potential customers. An average consumer reasonably attributes responsibility for product quality to the trademark owner and the manufacturer. If a seller misleads customers regarding the characteristics or quality of goods, such conduct primarily damages the company’s reputation.
Importantly, judicial practice in Ukraine is increasingly evolving in favour of intellectual property rights holders, protecting their reputational interests and holding infringers financially liable in the form of compensation for moral damage to legal entities.
The court decisions obtained by DEGA Partners confirm the effectiveness of the firm’s legal position and demonstrate the importance of proper judicial protection of trademark rights and other intellectual property assets amid the growing number of cases involving unfair exploitation of brands and innovative developments.
We would be pleased to assist you in protecting your brand and your name!