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Legal entities goodwill

Protection of name and goodwill of legal entities

Entrepreneurs registered in the Commercial Registrar, whether natural person or corporation are entitled to protection of their business name. The regime of the registration of the business name is  specified in the Commercial Code. Also the name of not registered entrepreneurs is protected. The protection is derived from § 135 New Civil Code, Act No. 89/2012 Coll.

1.Legal entities shall have their name; the name must be specified at the moment of their establishment.

2.Should the name of a legal entity be used unlawfully, the legal entity may demand with a court that the unlawful user omits the use and remove irregular state; the legal entity may also demand an adequate satisfaction that may be required even in money.

3.The provision of paragraph 2 shall adequately apply to an unlawful infringement of goodwill of a legal entity.

Upon unlawful and unauthorized use of the name, the legal entity may require omitting the use, remove of the wrongful state and also proportionate compensation, either moral – apology in media, letter of apology, publishing the statement of the legal entity or even monetary compensation for non-pecuniary loss (the monetary compensation is lower than by the natural person, usually not exceeding 100.000 CZK/3300£).

A person who causes real damages by unlawfully violating the right to protection of name or goodwill of the legal entity shall be liable for these damages according to the provisions of liability for damages (real damages and lost income).

The protection of the name and reputation as a personality right are not subject to statute of limitation. However the requirement for compensation – damages are subject to statute limitation – 3 years subjective (from the date the legal entity realizes that the harm was done or the harm threated) or 10 years objective (from the harm).

The principles derived from the case law:

The Supreme Court 30 Cdo 1385/2006

The goodwill is presupposed. The contrary statement must proof Defendant. Whether the legal entity has a bad reputation might be derived from the circumstances of the particular case, e.g. debts, corruption of the stator body etc.

The Supreme Court 30 Cdo 842/2004

The harm to the reputation might be caused by issuing untrue information about the legal entity. But decision of Supreme Court 32 Odo 1159/2004 adds, that not all untrue information might cause harm, only the severe one.

The Supreme Court 30 Cdo 1526/2000

If employee or statutory body infringe legal entity name or reputation, the legal entity who employs the employee is liable.

The Supreme court 23 Cdo 3796/2010

The use of the name of the region or municipality is infringing the name of the legal entity.

The protection is also possible to require under unfair competition law according to the New Civil Code. Unfair competition means conduct in economic competition which conflicts with the accepted practices of competition and which may be detrimental to other competitors or customers. In concreto: a) conduct contributing to mistaken identity; b) parasitic use of the reputation of another competitor’s enterprise, products or services; c) disparagement.

The last option is the protection of the name under the Trademarks Act, Act No. 441/2003 Coll. when the name of the legal entity is registered in the Trademark Registrar by the Industrial Property Office.

The New Civil Code (in force from 1.1.2014) is going to protect among the name and reputation also privacy of the legal entity. What is the privacy will have to be subject of the theory and case law.

The procedure of bringing the claim in respect of breach of the right to name or reputation of legal entities

The competence have Regional Courts in the Czech Republic. The location of the Regional Court depends on the seat or habitual residence of the Defendant. The jurisdiction have the Czech courts when the Claimant – legal entity has its seat in the Czech Republic, is registered in the Czech republic or has the business connection to the country.

The court fee for a motion to commence proceedings with a pecuniary performance: a) to obtain pecuniary satisfaction up to 200,000 CZK (8,000€; 6.666£) is the court fee 2,000 CZK (80€; 66£) b) to obtain pecuniary satisfaction for amounts above 200,000 is the court fee 1% of the required amount.

Barristers´consulting and representation fees are subject to the agreement on provision of legal services concluded between the barrister and the client. See post from May 24, 2013 “The costs of bringing the defamation/libel claim in the Czech republic.”

Latest practical example:

Article about the legal entity that produces the butter that does not meet the requirements. The court hearing take place 4 years and the merit is to prove the chemical and technical procedure.

The newspaper referred to the shop where the drugs were sold but issued the picture of the nearby standing shop. The entrepreneur sued that this might have cause the loss of the goodwill. Was not proved.


 

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Barrister

Dear readers and followers, I would like to make an announcement that I have opened my own legal office. The website of the office is www.ondrejova.cz

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