Disgorgement of Profits in Slovenian Law

© 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_21

21. Disgorgement of Profits in Slovenian Law

Damjan Možina 

Civil and Commercial Law, University of Ljubljana, Ljubljana, Slovenia



Damjan Možina


In Slovenian law, complete disgorgement of profits is possible only in criminal and administrative law (via public enforcement, to the benefit of the state budget), but generally not in private law (via private enforcement, to the benefit of the plaintiff). The scarce case law indicates that seizure of benefits gained by criminal act or minor offense rarely occurs in practice. An easier to apply functional equivalent of the disgorgement of profits is monetary penalty (when prescribed). In tort law, wrongfully gained profit may be disgorged by way of a damages claim only to the extent that it represents legally relevant damage (lost profit) of the wronged person. It would seem that tort law is more concerned with preventing the wronged party from getting more in damages than its damage (loss) amounts to, than it is with preventing the wrongdoer from keeping profit gained by wrongful infliction of damage (and exceeding the “loss” of the wronged party). An exception applies to infringements of copyright where damages may be multiplied to up to three times the actual damage. In contract law, the damages are generally limited by foreseeability, but this limitation does not apply in cases of intentional or reckless breaches, which can be seen as a way of preventing (profitable) breaches and achieving some extent of disgorgement of profits.

Wrongfully gained profitDisgorgement of profitConfiscation of benefitsDamagesLoss

is an Associate Professor of Civil and Commercial Law at the University of Ljubljana, Slovenia.



Everyone agrees that unlawful conduct should not pay. A wrongdoer is not allowed to profit from his own wrong1 – a timeless statement of natural justice that Slovenian judges, as well as presumably the judges of other countries, would have no problem signing on to. One would expect that this principle of both private and public law is reflected in the legal remedies in both areas of law. Criminal and administrative law explicitly prescribe that no one is allowed to keep benefits gained by a criminal offense or minor offense and the state can seize any benefits gained in this way.

In private law, there is no general remedy aimed at the disgorgement of ill-gotten gains. Tort law2 – the area of private law primarily concerned with the consequences of wrongs between individuals – aims at restitution for wrongfully caused damage (loss) to the wronged person, rather than at the disgorgement of profits from the wrongdoer. Damages should compensate for but also not exceed the loss (damage) of the wronged person. There is some discussion in the legal literature as to whether in cases of violations of personality rights by the media damages for immaterial loss (pain and suffering) should be higher than the actual loss in order to provide an incentive to the publisher not to (systematically) infringe the rights of individuals. This discussion is not reflected in the case law. Copyright law contains a damage multiplier that also functions as a means of disgorgement of profits: in the event of infringements, the amount of damages can be up to three times the amount of the loss or three times the amount of “the usual fee”. There are some possibilities regarding the disgorgement of profits in the law of unjustified enrichment, but they have rarely been used in this respect thus far. According to a basic principle of contract law, damages in the event of a breach of contract are limited to the damage that was foreseen or foreseeable by the debtor. However, if the breach is intentional or fraudulent, the creditor may demand restitution for the entire damage caused by the breach. This “growth” of liability can also be seen as a means of disgorging profits, but it is not used in this manner by the courts.

Most Slovenian lawyers would translate the “disgorgement of profits” or the “skimming-off of profits” as the “seizure” or “confiscation of benefits” (“odvzem premoženjske koristi”), which is an institute of criminal law and administrative law. In private law, the term “disgorgement of profit” is unknown. However, Slovenian private law knows the duty to forfeit profit gained by (some type) of wrongful conduct in the following two situations:


if someone (a “gestor”) intervenes into another man’s affairs not with the intention to help him but rather to keep the benefits (so called false negotiorum gestio), he is obliged to hand over to the principal all the benefits gained, in addition to damages, if the principal so demands.3



Corporate law knows a similar provision in relation to the non-competition clause: If a person violates the prohibition of competition, the company may, in addition to damages, demand that all benefit gained thereby be handed over to the principal.4 In both of the mentioned cases, the duty to hand over any benefits so gained applies only if the wrongdoer had intentionally violated the rights and interests of the wronged person.


Tort Law

The basic principle of Slovenian tort law is found in Art. 131 (1) of the Obligations Code: if someone has wrongfully caused damage to another by his own fault, he has to make good the damage.5 Fault (negligence) is presumed until proven otherwise; however, intention and recklessness have to be proven by the plaintiff. The focus of tort law is on the damage (loss) of the wronged party and not on the profit the wrongdoer might have gained. The primary aim of tort law is the reparation of (material and immaterial) damage. The wronged party is to be put as much as possible into the position in which it would have been if the damage had not occurred.6 It follows that, in principle, the wronged party may not be awarded more in damages than its loss (material and immaterial) amounts to – in other words, the wronged party may not “profit” or become “enriched” by damages. For this reason, any benefits the wronged party may have received from the event giving rise to the damage should be deducted from the damage (compensatio lucri cum damno).7

Damage refers to either material or immaterial damage. Material damage is calculated in two ways: either as the cost of restitution (e.g. repair) or as a reduction in the value of property (assets), including the prevention of an increase in value, i.e. lost profit.8 If, due to his wrongful conduct, the wrongdoer has gained profit that the wronged person was reasonably expecting, the wronged person may demand damages for lost profit. However, the case law has not expressly discussed this effect as it is only concerned with the loss of the wronged party. Immaterial damage relates to physical or emotional suffering or fear; here a monetary claim for damages is not seen as the “reparation” of damage, but rather as the “equitable satisfaction” of the wronged person.9

With regard to material damage, an exception applies to cases where a “thing” was destroyed or damaged intentionally; here the damages do not cover only the “objective” loss (calculated either as the cost of reparation or the reduction in value, both in market terms), but also the special (subjective) value the thing had to the wronged party (pretium affectionios).10 These damages contain a certain punitive element as the extent of the sanction depends on the degree of fault. On the other hand, a certain immaterial element (the emotional connection of the wronged party to the “thing”) is taken into account when calculating material damage. Even though it is difficult to imagine that the wrongdoer would profit by destroying or damaging a thing, the focus is still on the loss of the wronged party and not on the profit of the wrongdoer, even if the damages are higher than the objective “loss”.

In the legal literature there is some discussion as to whether damages may exceed (material and non-material) loss where the latter is the result of a media company violating the personality rights of individuals. If the media company profits by violating personality rights, disgorgement of profit cannot be claimed by a damages claim for lost profit, since, in most cases, it was not the intention of the wronged person to commercialize his or her personality in such manner. Thus, damages for non-material loss remain the only option. Neither the case law nor the legal literature approach these situations from the viewpoint of disgorging profit, the discussion rather focuses on the “punitive” element of damages. The prevailing view seems to very much oppose the idea of punitive damages; they are seen as being inconsistent with principles of private law; penalization is reserved exclusively for criminal law.11 The latter, inter alia, guarantees the defendant the constitutional procedural rights that, if tort law included punishment, the defendant could be deprived of in a civil procedure.12 However, some younger authors underline that damages in the amount of the actual (immaterial) loss do not protect personality rights effectively against media corporations.13 One of the reasons is that the wrongdoer – the media company – gets to keep the profit exceeding the immaterial loss of the wronged person, which is clearly unacceptable. The prevailing case law rejects the idea of punitive damages. However, a recent judgment of the Supreme Court shows that a change of attitude is not impossible: the Court discussed the question of from whom punitive damages may be sought – the liability of the public hospital and state health insurance fund [at issue in the case] would “punish” all the beneficiaries and was rejected. It would seem that such a claim could be upheld under different circumstances.

The conflict between these contradictory principles, i.e. the unacceptability of the wrongdoer being allowed to keep the profit gained by a wrong (and exceeding the damage), on the one hand, and the principle that the wronged party should not “profit” from damages, together with a negative attitude towards punitive measures in civil law, on the other, is resolved in favour of the latter.

Intellectual Property Law

In principle, infringements of intellectual property rights give rise to liability in tort according to the general rules of the Obligations Code. There are, however, two important exceptions that only apply to infringements under intellectual property law.

The first one is the possibility of an alternative calculation of damages in addition to the general rules: an amount that corresponds to the usual royalty or license fee for legitimate use. This is applicable to infringements of copyrights,14 patents, trademarks, industrial designs, and topographies of integrated circuits.15 According to the case law, this not as a special case of calculating (abstract) damages, but a case of restitution due to unjust enrichment as a result of the expenses that the wrongdoer has “saved”.16 An analogy can be drawn by using another person’s property that is regulated as a case of unjust enrichment in Art. 198 of the Obligations Code; “property” is understood in a broad sense, including rights, such as intellectual property rights.17 This can also be seen as a case of the disgorgement of profits in the sense of the disgorgement of the expenses the wrongdoer has saved.

The second exception only applies to copyright infringements. In addition to damages calculated either on the basis of general rules or as the usual fee, the wronged person may demand from the wrongdoer a “civil penalty”. According to Art. 168 (3) of the Copyright and Related Rights Act, the wronged party may, irrespective of any damage, claim up to three times the amount of the usual fee for legitimate use of such rights, if the infringement was intentional or reckless. The punitive character of the provision stems from the fact that damages representing a multiplied loss (triplum) is available only in cases involving intent or recklessness and also from the fact that such may be claimed regardless of actual damage. It is the wronged party and not the state who receives the “penalty”. The damages multiplier is an important exception to the principle that the wronged party may not gain more in damages than its damage (loss). The effect of the “civil penalty” is also that the wrongdoer is disgorged of the profit to the extent that it exceeds “normal” damages (up to three times this amount). In the literature and case law, the disgorgement viewpoint is not discussed. It seems somewhat odd that the Industrial Property Act, which was adopted subsequently, does not contain a similar provision regarding the infringement of patents, trademarks, and industrial designs. Although such situation is comparable with copyright infringement, the application of a “civil penalty” for the infringement of industrial property rights is neither discussed in the literature nor applied by analogy by the courts.

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