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Directors’ personal liability for IP infringements committed by their company

Directors’ personal liability for IP infringements committed by their company

10th September 2021 - Published by Kuits IP team

It is well-known that a limited company is a distinct legal entity from its directors, shareholders and officers. What is less well-known is that this “corporate veil” cannot always be used to protect directors from personal liability resulting from the actions of their company. This is particularly so in the case of the infringement of intellectual property rights.

This has again been highlighted in two recent cases: Lifestyle Equities C.V. & Anor v Ahmed & Anor [2021] EWCA Civ 675 and Easygroup Limited & Ors v Easyway SBH & Anor (Rev 1) [2021] EWHC 2007 (IPEC). Both cases concerned infringement of the Claimants’ trade marks, and in both instances directors were joined as Co-Defendants with the company on the basis they were jointly and severally liable for the infringement committed by the company.

What does the Court consider?

In determining whether a director is personally liable for an infringement committed by the company, the Court will take the following into account:

1. Has the director been sufficiently involved in the infringing activity to make them jointly liable? In particular, have they assisted the company in carrying out the infringing act by directing, procuring or authorising the acts pursuant to a common design?

2. If the answer to this is yes, does the fact they are a director give them a defence? The director will only likely have a defence on this basis if they have done no more than carry out their constitutional role in the governance of the company, for example voting at board meetings.

The directors in the two recent cases were found to have taken an active role in bringing about the infringing activities and as such were personally liable for the infringement.

The lesson to take from this is that where a director has an operational role beyond a mere constitutional role, it should be assumed that they could be personally liable for any infringing activities carried out by the company. This could well be the case even where the director has no improper motive and had no knowledge that the activities in question amounted to an infringement.

Get in touch with an infringement law specialist today

Directors wanting to limit their exposure are advised to seek legal advice before their companies engage in activities which have the potential to infringe a third party’s rights. For more advice, please contact IP Partner Claire Meyers on 0161 838 7816 or email clairemeyers@kuits.com.

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