Disgorgement of Profits in Greece

© Springer International Publishing Switzerland 2015
Ewoud Hondius and André Janssen (eds.)Disgorgement of ProfitsIus Comparatum – Global Studies in Comparative Law810.1007/978-3-319-18759-4_13

13. Disgorgement of Profits in Greece

Eleni Zervogianni 

Aristotle University of Thessaloniki, Law Faculty, Thessaloniki University Campus, 54124, Thessaloniki, Greece



Eleni Zervogianni


Disgorgement of profits, as a remedy, is not alien to Greek private law, but the relevant legal framework seems to be rather fragmented. Disgorgement damages are confronted with skepticism, since according to the (still) prevailing opinion in Greece the aim of damages is primarily compensatory. Pragmatic approaches, though, led to the enactment of special provisions in the late 1980s and early 1990s for the infringement of certain immaterial goods, following the German model of the so-called ‘triple damage calculation’ (dreifache Schadensberechnung). The protection of intellectual property rights has been further enhanced through substantive and procedural rules, enacted for the transposition of Directive 2004/48/EC into Greek law. Disgorgement of profits may be attained, at least in theory, through other private law institutions as well, namely agency without authorization (negotiorum gestio) and unjust enrichment, but in practice few claims are brought on these legal bases. When there is a contractual relation between the parties, the creditor may claim the gain that arises out of the impossibility of performance as a ‘substitute’, while special provisions regulate the disgorgement of profits in case of breach of fiduciary duties. Finally, further private law instruments, such as collective claims, may lead to results functionally comparable to disgorgement damages, even if this is not their main aim. The paper concludes that from a de lege ferenda perspective the adoption of disgorgement damages as a general remedy, following the pattern of Art. 6:104 of the new Dutch Civil Code, would serve better the practical needs.

DamagesDisgorgement of profitsImmaterial goodsNegotiorum gestioPersonality rightsRight of publicityTort remediesUnjust enrichment

EMLE (Hamburg), PhD (Athens), is Lecturer at the Law Faculty of Aristotle University of Thessaloniki, Greece. The author would kindly like to thank Associate Professor Angelos Kornilakis and Dr. Dimitris Tzakas for their useful suggestions.



There can be little doubt that Lord Hatherly’s famous quote “This Court never allows a man to make profit by a wrong”,1 reflects an imperative of justice and is thus in principle shared by all legal systems. The disgorgement of illegal gains is essential not only from a moral, but also from a deterrence perspective: If the wrongdoer anticipates that he will not be able to keep his profits, he will have no incentives to engage in such an activity in the first place. Nevertheless, this approach has been proven to be quite a challenge in its implementation, as it seems that in reality wrongful conduct often does pay at the end. This is especially so when the behavior of the wrongdoer does not lead to physical damage of a resource but rather to the infringement of immaterial goods (such as intellectual property rights, the right of publicity of a person or trade secrets) or to the breach of other statutory provisions which, among other objectives, aim at the protection of legal interests of private persons as well (such as regulations on competition law, unfair business practices or insider trading).

Under Greek law, an unlawful behavior may give rise to both criminal and administrative sanctions as well as to civil liability.2 This notwithstanding, it is not seldom that the expected benefits from the unlawful act outweigh the expected costs of the wrongdoer either because the sanctions are themselves inadequate or because the probability that they will be imposed (and enforced) is low. This can be attributed to a number of factors, varying from informational asymmetry leading to difficulties regarding the identification of the wrongdoer, the proof of the conditions of liability or the assessment of the extent of the accrued profits, to the inertia as to the initiation of the relevant proceedings. Given that each of the instruments for the disgorgement of profits has different strengths and weaknesses a combination of all seems desirable.3

This paper focuses on disgorgement remedies in Greek private law. Such remedies are not based on a single legal ground, but are rather dispersed over the private law system. Special provisions on disgorgement damages exist as to certain types of infringements, especially to intellectual property rights (section “Disgorgement Damages”). The claim for disgorgement of profits may be also based on institutions of civil law other than damages, namely on false (or non-genuine) agency without authorization (negotiorum gestio),4 on unjust enrichment or, if the gains arose out of breach of contract, on the creditor’s claim for the ‘substitute’ (section “Legal Grounds for the Disgorgement of Profits Beyond Damages”). In addition, further instruments may indirectly skim-off the wrongdoer from unlawful profits. The special collective redress mechanism established in consumer law provides such an example and may thus qualify as a functional equivalent to disgorgement damages (section “Functional Equivalents to Disgorgement Damages in Private Law”). Following this analysis, the paper concludes with a de lege ferenda proposal for the adoption of disgorgement damages as a general remedy, following the pattern of Art. 6:104 of the new Dutch Civil Code.

Disgorgement Damages

The Aim of the Law of Damages

According to the traditional approach, which is still the prevailing one in Greece, the main aim of damages is to compensate the victim.5 Following the principle of restitutio in integrum the plaintiff is entitled to full compensation for his (pecuniary) losses, meaning that he should be placed in the position he would have been in, had the damage not occurred.6 Compensation is thus in principle tailored to meet the exact needs of the specific victim, who is at the focal point of the whole procedure, while the circumstances under which the damage occurred or the degree of fault of the wrongdoer are in principle immaterial.7 This rule, which is primarily meant to protect the victim, sets at the same time an upper limit on damages, in the sense that these shall not exceed the loss that the victim has actually incurred.8

The deterrence effect of compensation is widely acknowledged, but it is considered as a positive side-effect rather than as an aim in itself.9 To the extent that full compensation of the victim serves both purposes, as it is usually the case in negligently inflicted damage to property assets, no difficulties arise. This is no longer the case when deterrence considerations advocate for the imposition of damages, which exceed the victim’s actual loss. Based on the primacy of the compensatory aim of damages, the prevailing opinion objects to this possibility, unless an exception to this rule is explicitly provided by the law.10 Hence remedies such as punitive damages are considered alien to the Greek legal system, though not per se contrary to the Greek ordre public.11

The Particularities of Immaterial Goods and the Shortcomings of the Traditional Approach

The application of the traditional approach to damages does not lead to satisfactory results in case of infringement of rights on immaterial goods, such as copyrights, patents, trademarks, trade secrets, or even aspects of a person’s identity. Such goods are non rival in their use, in the sense that the use by one person does not prevent the simultaneous use by another person, which comes at zero marginal cost.12 Moreover, their enforcement, i.e. the exclusion of third parties from making use of them, comes at high cost. It is for this reason that, when it comes to such goods, the free-riding problem is acute.13

On this premises, and especially because the consumption of immaterial goods is non-rival, their infringement does not lead to the reduction of the rightholder’s assets, but rather to lost profits, like e.g. the decrease of the sales of the original product due to the availability of counterfeit products or the loss of royalties that the rightholder would earn in order to provide his consent for the use of his right by another person.14 Setting evidentiary difficulties aside and assuming that these lost profits are indeed refunded to the rightholder, he will then be indeed placed in the position he would have been in, had the infringement not occurred. Nevertheless, only by coincidence will his loss match the profits of the wrongdoer. Often the wrongdoer’s profits are higher than the lost profits of the rightholder, especially if the former had greater skills regarding the exploitation of the right, as compared to the latter.15 The issue is even thornier in cases in which the holder of the right did not wish to exploit it commercially. Typical such cases arise when it comes to the violation of the right of publicity of a person. Namely, according to Greek case-law, if the person whose image has been unlawfully published in the press claims that he would not have consented to its commercial use, he is not entitled to compensation for pecuniary harm, on the grounds that, had he not given his consent, he wouldn’t have derived any profit from the use of his image anyway.16 In such cases the victims may be only granted damages for their non pecuniary losses.17

In all preceding cases, the specific damage inflicted to the rightholder, more often than not, does not correspond to the benefit of the wrongdoer and thus the unlawful behavior of the wrongdoer pays. As a result compensation for lost profits it is not a suitable remedy to confront violations of immaterial rights.

Special Provisions on Damages for the Infringement of Intellectual Property Rights

Before the Directive 2004/48/EC on the Enforcement of Intellectual Property Rights

In view of the particularities of immaterial goods, special provisions regarding their protection were gradually enacted in Greece in the late 1980s-early 1990s, following the German model of the so-called ‘triple damage calculation’ (dreifache Schadensberechnung).

Law 1733/1987 on patents grants to the patent holder whose right has been culpably infringed the choice to claim, alternatively, damages based on his actual loss (in the form of lost profits), the license fees he would have been entitled to, or the profits of the wrongdoer.18 Similar provisions have been enacted for the protection of topographies of semiconductor products,19 as well as for industrial designs.20

Law 2121/1993 on copyrights went even a step further as compared to the aforementioned provisions. Namely, it provides that when a copyright is infringed the rightholder shall claim both pecuniary and non pecuniary damages for his loss, while it also stipulates that compensation for pecuniary damages shall not be less than double the license fees that are due in such cases. Hence the legislator opted for the assessment of damages on the basis of the abstract calculation method, in order to facilitate the victim to ground his claim.21 It further stipulates that instead of compensation, the copyright holder can claim the enrichment of the wrongdoer or the profits the latter derived from his unlawful activity, even if he did not act culpably.22

From a legal-dogmatic point of view it has been debated whether the plaintiff’s claims for the license fees and for the profits of the wrongdoer qualify as compensation claims, assessed according to the abstract calculation method, or whether they rather constitute special claims based on unjust enrichment or false agency without authorization.23 Given that the conditions of these claims are explicitly stated in the law, their legal categorization is of rather limited practical significance.24 In any case, these provisions are well justified from a policy perspective, have a strong deterrence effect and, despite evidentiary difficulties especially regarding the proof of the wrongdoer’s profits, they have considerably enhanced the protection of the rights they apply to. Where no such provisions exists, like e.g. in trademarks (until 2012), the right of publicity or even trade secrets, it has been maintained in the legal literature that the existing provisions should apply by analogy.25 Nevertheless, courts have been rather reluctant to do so.26

Changes Brought About by the Transposition of Directive 2004/48/EC into Greek Law

Directive 2004/48/EC ‘on the protection of intellectual property rights’ has further enhanced the protection of these rights through both substantive and procedural rules, the most significant of which, for the aims of this analysis, are the following:

Damages According to Art. 13 of the Directive

Art. 13 of the Directive grants to the holder of the right that has been infringed a claim for damages and provides that:

When the judicial authorities set the damages: (a) they shall take into account all appropriate aspects, such as the negative economic consequences, including lost profits, which the injured party has suffered, any unfair profits made by the infringer and, in appropriate cases, elements other than economic factors, such as the moral prejudice caused to the rightholder by the infringement or (b) as an alternative to (a), they may, in appropriate cases, set the damages as a lump sum on the basis of elements such as at least the amount of royalties or fees which would have been due if the infringer had requested authorisation to use the intellectual property right in question.

In order to comply with the Directive, the Greek legislator repeated the provision of Art. 13 of the Directive (with the exact same wording) in the special law on patents,27 which applies also for industrial designs and semiconductor products.28 Similar provisions, have been included in the new law on trademarks which entered into force in 2012.29 As regards copyrights, no amendment to Law 2121/1993 was deemed necessary, since it already granted greater protection to the holder of the copyright, as compared to Art. 13 of the Directive.30 This enhanced protection of copyrights under Greek law is considered compatible with Directive 2004/48/EC, since this Directive is of minimum harmonization.31

The provisions of Directive 2004/48/EC leave no doubt that for the European legislator the primary aim of damages, at least in cases of infringements of intellectual property rights, is deterrence. Art. 13 of the Directive, as well as the provisions which incorporated it in Greek law, move past the traditional approach, according to which in the assessment of damages it is the victim who stands at the focal point, and turn their attention to the wrongdoer. As Professor Marinos aptly put it “(…) the European legislator is neither interested in legal-dogmatic, national categories nor thinks in this way, but he is almost exclusively orientated to the efficient realization of his aims in each national legal system (…)”.32

Measures Addressing the Informational Asymmetry Between the Parties

In intellectual property rights’ infringements, the plaintiff faces considerable problems as to the proof of his damage and/or the profits of the wrongdoer. In order to achieve its goal, Directive 2004/48/EC includes procedural rules regarding the presentation to the court of evidence which lies in the control of the wrongdoer,33 while it also grants to the plaintiff the right to information on the origin and distribution networks of the goods or services which infringe his intellectual property right.34

The Greek law on copyrights has been amended in order to comply with the Directive already in 2007,35 while the reform of the laws regarding other intellectual property rights followed in 2011–2012.36 It is worth noting that the relevant Greek provisions go a step further than the Directive, stating that if the party who has been ordered to present evidence to the other party refrains from doing so, without due reason, the allegations of the latter are considered admitted. After the incorporation of these provisions in Greek law, the overall level of protection of intellectual property rights has indeed increased.37

Legal Grounds for the Disgorgement of Profits Beyond Damages

In the absence of a special provision on disgorgement of profits, the civil law instruments which are better fit for this aim are false agency without authorization and unjust enrichment. Notwithstanding the difficulties as to the proof of the wrongdoer’s profits, both possibilities have been thoroughly examined in the context of the right of publicity and it is therefore on these cases that lays the focus of the analysis. Contract law remedies may be also of interest if there is a contractual relation between the parties.

False Agency Without Authorization

Agency without authorization (negotiorum gestio) is a legal institution that deals with cases in which a person manages another’s affairs without being instructed by the latter, or otherwise entitled, to do so. In such a case the intervenor (gestor) shall act in the benefit of the principal and according to his actual or presumptive will.38 If, on the contrary, the gestor knowingly39 treats the affairs of another person as his own and in his own benefit, the agency without authorization is characterized as ‘false’ (or non-genuine). The gestor is then liable in tort,40 but he also bears all obligations that stem from the law in cases of agency without authorization, i.e. he is obliged to restitute to the principal whatever he acquired by reason of the management of the latter’s affairs as well as render account for the affair he managed.41

On these premises, false agency without authorization can be used as a legal basis for the disgorgement of unlawful profits. According to the prevailing opinion, every infringement of an absolute (erga omnes) right of another (e.g. intellectual property rights or, more importantly given the lack of special provisions, the right of publicity) constitutes an intervention in another’s (i.e. the rightholder’s) affair.42 However, the field of application of this provision is constrained by the fact that the gestor must have acted intentionally.43 Hence, unlike the special claims for disgorgement of profits in case of violation of intellectual property rights, the provisions on false agency without authorization do not apply if the infringement has been negligent (even grossly negligent).44

Case-law on disgorgement of profits on the legal basis of the general provisions on false agency without authorization is rather poor. It seems that in practice few claims are brought on this basis. Even if such a claim is brought, the courts acknowledge the possibility of disgorgement of profits on this legal basis, but they then seem rather reluctant to proceed to its application.45 This is evident in the decision 4661/2004 of the Multi member Court of First Instance of Athens. In this case the plaintiff, who was a model, brought a claim against the owner of a magazine for the unauthorized publication of (half-naked) photos of hers and demanded damages for her non pecuniary harm, as well as 60 % of the profits from the circulation of the issue of the magazine in which her photos were included. The court ascertained that in acting so the magazine had infringed the plaintiff’s right on her own personality, and in particular it had violated her right on her own image. It thus granted the plaintiff damages for her non pecuniary harm. It nevertheless rejected her claim for the disgorgements of the magazine’s profits, on the ground that the magazine did not manage the plaintiff’s affairs, but rather the affairs of the photographer, who had the copyright over the photos. This line of argumentation is hard to follow and has been thus heavily criticized in the literature.46

Unjust Enrichment

An alternative legal basis for the disgorgement of profits is unjust enrichment. According to Art. 938 of the Greek Civil Code, whoever is liable in tort shall grant to the victim whatever he acquired from his tortious activity on the basis of the provisions on unjust enrichment. Following Art. 904 of the Greek Civil Code “whoever has become richer without legal cause from the property or at the cost of another person shall return the benefit”. It is generally accepted that enrichment from the property of another does not occur only when a person has used a property asset of another, but also when he has employed means which fall within another’s legal sphere, like e.g. the unauthorized use of the name or the image of another for advertising purposes.47 Disgorgement of profits on the basis of unjust enrichment is possible even if the beneficiary did not act culpably.

Nevertheless it will often not be possible to disgorge the full profits of the beneficiary on the basis of unjust enrichment. According to the prevailing opinion the beneficiary shall retain the part of the profits which he acquired due to his own efforts and capabilities (e.g. using of his networking and know-how).48 The distinction between the profits that should be returned on the basis of unjust enrichment and the profits that the beneficiary is entitled to keep is particularly difficult and is, ultimately, decided on the basis of experience-based knowledge. In addition, unless the defendant acted in bad faith, he shall return the enrichment only to the extent he was still richer at the time he was served the claim.49 He shall thus subtract the expenses that he incurred before he had been served, provided that they are directly related to the object of his enrichment (e.g. hiring of specialized staff for the commercial exploitation of the infringed right).50

In practice the significance of unjust enrichment in the disgorgement of profits is rather limited. This is mainly due to the fact that according to the prevailing opinion in case-law, the claim of unjust enrichment is subsidiary to other claims,51 meaning that it can be brought only if no other claim is available. This opinion has been heavily, and rightly, criticized in the legal literature for lack of legal foundations.52

The Claim for the ‘Substitute’ as a Contract Law Remedy

The ‘Substitute’ in Case of Impossibility of Performance

If the performance of a contract is impossible through no fault of the debtor, the latter is released from his obligation.53 Even so, the debtor shall grant to the creditor any eventual ‘substitute’ (surrogatum), i.e. everything that has devolved upon him as a result of the impossibility of performance.54 If the impossibility of performance is due to the fault of the debtor, as it is presumed, the creditor is entitled to damages instead.55 Nevertheless, according to the prevailing opinion, if the creditor ‘waives’ his right to compensation, he can still claim the substitute.56

Given that this ‘substitute’ may arise out of a subsequent contract that the debtor has concluded, which eventually led to the impossibility of performance of the initial contract, e.g. when the debtor transfers the object of the sale to a third person (lucrum ex negotiatione),57 it can serve for the disgorgement of the debtor’s profits that arise out of breach of contract.58 It is immaterial whether the debtor is still in possession of the gains at the time he is served the claim.59 It is debated, though, whether the creditor is entitled to the whole substitute, even if he could not have acquired such gains himself, e.g. because the debtor acquired this profit due to his own special skills or due to extraordinary circumstances.60

The Right of Subrogation in Case of Breach of Fiduciary Duties in Particular

In case of breach of fiduciary duties the law often provides special remedies for the disgorgement of the wrongdoer’s profits. A characteristic such example can be retrieved from the legislation on limited companies and on public limited companies. Namely, the relevant laws include special provisions according to which the directors or/and managers of such companies shall refrain from any activity which is competing with the company’s business, unless the general assembly of the company has consented to this activity. If the directors or/and managers fail to get this consent, but they nevertheless enter into a transaction in their own name or in the name of a third party, the company can claim either compensation or the benefits they derived from this activity.61

Functional Equivalents to Disgorgement Damages in Private Law

Apart from the remedies that aim specifically at the disgorgement of unlawful profits, further mechanisms may lead to comparable outcomes. The most significant ones in Greek law are the following:

Monetary ‘Satisfaction’ for Non-pecuniary Loss for Infringement of the Right of Publicity

In all cases of infringement of the right to one’s personality, as well as in all torts, the law provides that the victim shall seek monetary ‘satisfaction’ for his non pecuniary loss.62 According to the prevailing opinion, the function of this remedy is compensatory.63 The reason that it is named ‘satisfaction’ rather than compensation relates to the difficulties as to its assessment. Indeed, it lies upon the judge to decide on the amount that will be granted to the victim, after taking into consideration all relevant circumstances.64

Despite the fact that the punitive aim of such damages is in principle rejected, a closer look into the criteria on the basis of which judges assess these damages may lead to a different conclusion. More concretely, the judges do not only look at the victim, but also at the wrongdoer. Factors such as the degree of fault of the wrongdoer, his motives, the nature of his activity as profit or non-profit, as well as his financial situation in general, are often taken into account.65 This assumption regarding the latent punitive aim of monetary satisfaction for non pecuniary losses seems to be reinforced by special laws which set minimum amounts of damages for such losses, sometimes exceedingly high, for certain types of violations, such as e.g. in case of libel by the mass media.66

On these premises, and out of equity considerations, judges seem sometimes to employ monetary satisfaction for non pecuniary losses in order to remedy legal deficiencies, especially in cases in which the legal framework is not comprehensive.67 Thus the high amounts that are granted to the victims as non pecuniary damages for the infringement of their right to publicity may factually lead to the disgorgement of the profits of the wrongdoer. In the aforementioned case of the model whose photos have been published by the magazine without her consent,68

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