While the appropriation of a competitor’s confidential information does constitute an act of unfair competition, it does not automatically give rise to compensation for financial loss. Only moral damage is presumed, while any material loss or lost profit must be precisely demonstrated.

Defamation can only be characterised as such if it has been made public: internal emails, even if critical, are not sufficient. It must be proven that these emails were sent to a third party.

Court of Cassation, Commercial, Financial and Economic Chamber, 7 January 2026, No. 24-18.085

Procomm-MMC, a company specialising in video transmission solutions for the defence sector, accused a former employee, Mr [W], and the competing company Full Motion Video Systems (FMVS), of which he had become a director, of various acts of unfair competition: appropriation of confidential information, disruption of its commercial network, misappropriation of customers and disparagement.

The Paris Court of Appeal upheld certain breaches, while limiting compensation to moral damages (€40,000) and damages related to the handling of the dispute (€12,000). Both companies appealed.

The Court of Cassation provided two clarifications, both on the proof of damage and on the classification of disparagement.

Economic damage cannot be presumed

The Commercial Chamber first laid down a clear rule, which clearly distinguishes between the fault and its consequences in terms of compensation:

« While damage, even if only moral, necessarily follows from an act of unfair competition involving the appropriation of a competitor’s confidential information, a competitor who claims, in addition to moral damage, material damage […] must provide proof thereof. « 

Thus, contrary to what Procomm claimed, the mere misappropriation of privileged information is not sufficient to constitute a compensable economic loss. The Court rejects any automatic link between the fault and material damage, whether it be a loss suffered, a loss of profit or a loss of opportunity.

Applying this principle, it upheld the Court of Appeal’s decision to dismiss the claims for economic compensation on the grounds that no causal link had been established between the alleged acts and the alleged losses.

Denigration requires effective publicity

On the other hand, the Court censured the ruling on the grounds of denigration. It reiterated a classic but often overlooked requirement:

« Denigrating remarks can only constitute an act of unfair competition if they are made public. « 

However, in order to convict FMVS, the Court of Appeal had relied on internal emails sent by Mr [W] to a generic company address, criticising in particular Procomm’s late payments and lack of communication. Although these comments were deemed to be damaging to the company’s commercial image, they had not been addressed to third parties.

The Court of Cassation noted the insufficiency of the reasoning:

‘In so ruling, without finding […] that the disputed internal emails had been sent to a third party to FMVS, the Court of Appeal failed to provide a legal basis for its decision.’

The appeal was therefore upheld on the grounds of the damages awarded based on the alleged disparagement.

The ruling of 7 January 2026 is in line with established case law, but it offers an educational and structured formulation.

It reiterates that unfair competition is not a system of strict liability:

– fault does not exempt one from proving economic damage,

– and disparagement requires proof of dissemination to the public or third parties.

By Olivier Vibert, partner at Kbestan, business law firm in Paris and Evreux