Protecting Business Reputation: How to Safeguard Your Company from False Information?

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10 Jan, 2025

In today's business environment, corporate reputation is the invisible thread that connects a company with its clients, partners, and society. The business reputation of a legal entity is the general perception or image that the public holds about it based on its actions, performance, and communications. Although built over many years, it can be destroyed instantly due to the spread of false or negative information. Misinformation, whether disseminated through media or social networks, can undermine customer and partner trust, effectively erasing years of hard work. Protecting a business's reputation is not just a matter of prestige but a crucial element for business survival in an era of intense competition. The dissemination of false information serves as grounds for legal protection.

Does the Law Stand Guard Over Business Reputation?

A legal entity’s business reputation is a key asset that affects its stability and is protected by law. According to Article 94(1) of the Civil Code of Ukraine (hereinafter – the Code), a legal entity has the right to the inviolability of its business reputation. Article 277 of the Code states that a person whose reputation has been harmed by false information has the right to respond and demand a retraction. False information is defined as that which does not correspond to reality or is presented inaccurately, meaning it contains facts about events or phenomena that either did not happen at all or occurred but are misrepresented (incomplete or distorted).

Liability for disseminating information in the public sphere is based on general principles of proof (although, until recently, the law presumed negative information to be false). The plaintiff must prove not only the fact of the dissemination of negative information but also its inaccuracy. At the same time, according to Article 30 of the Law of Ukraine “On Information,” value judgments, including criticism, subjective opinions, or satire, are not grounds for liability if they do not contain factual statements or defamation. This provision ensures a balance between reputation protection and freedom of speech while complicating the legal qualification of statements in disputed cases.

Therefore, an effective defense strategy in defamation disputes must consider both the evidence base and the legal nature of the statements made.

Court Chronicles: When Rulings Protect Reputation

An analysis of current case law shows that when companies face criticism, courts consider public interest and the limits of permissible evaluation. In addition to proving the fact of information dissemination, its inaccuracy, and its negative impact on the company's reputation, courts require plaintiffs to provide evidence of damage to their business reputation (Supreme Court ruling of 14.11.2023 in case No. 910/8562/22). Plaintiffs also bear full responsibility for correctly identifying defendants in a case. If a lawsuit is filed against only some of the responsible parties, the court cannot, on its initiative and without the plaintiff's consent, involve other defendants in the case as co-defendants; it rules solely on the claim presented and against the named defendants (Supreme Court ruling of 25.03.2023 in case No. 910/12415/21).

Given that each case in this category is unique, courts have ruled that differing approaches to determining negative statements and value judgments in various cases cannot be considered as inconsistent with the Supreme Court’s previous rulings (Supreme Court ruling of 06.08.2024 in case No. 922/2993/21).

Considering the above, the effectiveness and thoroughness of a company's response to interference with its business reputation—and, consequently, the choice of legal counsel—determine the success of future litigation to protect this intangible asset.

International Perspectives on Business Reputation Protection

Businesses expanding beyond Ukraine find themselves in a complex maze of international regulations. Although no single global law on reputation protection exists, international standards influence national practices. For example, EU Directive 2005/29/EC on unfair commercial practices establishes clear rules against misleading advertising, serving as a guideline for Ukrainian companies operating with European partners.

The European Court of Human Rights (ECHR) case law adds another layer to legal protection. In Lingens v. Austria, the court emphasized that freedom of speech is sacred but not absolute. Reputation deserves protection if defamation causes actual harm. This balance is crucial for Ukrainian businesses seeking to challenge disinformation abroad or defend against it at home. Additionally, in some jurisdictions, spreading false information may result in civil and criminal liability. For instance, defamation or insult may constitute grounds for criminal prosecution, depending on the country’s laws.

The international context of reputation protection remains multidimensional, requiring businesses to adapt to legal standards in various jurisdictions. European directives and ECHR case law shape the guidelines for Ukrainian companies operating in global markets while simultaneously posing challenges in maintaining proportionality between freedom of speech and reputation protection. Accordingly, businesses should integrate legal protection mechanisms that account for both local legislation and international practice to counter unlawful information threats effectively.

The Art of Defense: Practical Steps for Businesses

In a world where information is both a weapon and a shield, protecting business reputation is a matter not only of honor but also of survival. The procedure for safeguarding business reputation includes several key steps. First, it is essential to verify and establish the fact of information dissemination, its inaccuracy, and its negative impact on the company’s reputation. Next, the entity or individual responsible for spreading the information should be identified, and evidence proving the violation should be collected. This may include media publications, recordings of speeches, or other materials confirming the spread of false information.

However, if your company is already facing a reputational threat, do not wait for the wave of defamation to wash away your achievements. Timely reaction and professional documentation of all violations are crucial to securing a solid evidence base and legal position and obtaining compensation for damages. Engage legal counsel when you become aware of the false information to ensure an effective and efficient defense.

When deciding how to respond to the dissemination of false information, it is essential to remember: an information scandal will eventually fade, but unchallenged statements can linger in digital archives for years, even decades, shaping a misleading perception and impacting business reputation. International companies increasingly conduct thorough reputation checks before establishing business relationships, and failing to refute false claims can be more than just an oversight - it can be a strategic mistake with delayed but inevitable consequences.

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