Disgorgement of profits: Gain-based remedies throughout the world

Abstract

In academic discourse it is often said that “tort must not pay”. However, the legal reality looks very different. Infringements of e.g. competition law, unfair commercial practices law, capital market law, intellectual property rights, or personal rights by mass media, or the breach of fiduciary or confidentiality duties are—for various reasons—generally highly profitable for the wrongdoer. Thus, in practice unlawful conduct regularly pays as the illegal profits remain with the wrongdoer. A general idea of disgorgement of unlawful profits does not exist yet. This general report considers the question whether or not “disgorgement of profits” is a keyword to be introduced in legal discourse and how the law may be shaped in order for illegal profits to be disgorged as efficiently as possible and thus to reduce the incentives for unlawful behaviour. According to the approach selected here, it is the private law instruments, in particular what is called “disgorgement damages”, which are the centre of attention. Can their use contribute to an increase in efficiency and what national experiences are on hand? Which legal circumstances should be necessary for their application and what are the requirements?