Immaterial damages can now be awarded in unfair competition cases

In Serbia, unfair competition is regulated by the Law on Trade, enacted in 2010. On February 7 2013 a set of amendments to the law came into force. The amended law explicitly provides that immaterial damages (harm to business reputation) can be awarded in unfair competition cases.

The amended law defines ‘unfair competition’ as an act committed by one trader against another trader (ie, a competitor) which violates the code of conduct and good business practices, and which is damaging or may be damaging to the competitor. The sale of goods featuring designations, data or shapes that may create consumer confusion as to the source, quality or other characteristics of the goods is listed as an example.

The amended law introduces detailed provisions on civil remedies. A trader can request that the court:

• establish that an act of unfair competition has been committed;
• prohibit the continuation of the act; and
• order the removal of the consequences of the act, as well as the payment of compensation.

The law explicitly provides that both material and immaterial damages (for harm to business reputation) can be claimed. The court will award immaterial damages if it considers that the claim for damages is justified, taking into account:

• the gravity, duration and intensity of the violation;
• the effect of the violation on the trader’s business;
• the value of the infringed property; and
• the aim that is to be achieved through the payment of compensation.

Ideally, this will encourage the Serbian courts to award more generous damages.

An action must be initiated within six months of the date on which the merchant becomes aware of the act of unfair competition and the identity of the perpetrator, and no more than three years after the act of unfair competition was committed. Previously, the law did not provide for time limits for such actions.

The amended law represents an important piece of legislation for the fight against lookalikes, and the detailed provisions on civil remedies which were introduced with the amendments represent good news for brand owners.

Gordana Pavlovic, Cabinet Pavlovic, Brussels and Belgrade