Intellectual Property Infringement: Directors' Personal Liability

• Published date: 22 June 2022
• Subject Matter: Corporate/Commercial Law, Intellectual Property, Corporate and Company Law, Directors and Officers, Trademark
• Law Firm: Humphreys Law
• Author: Mr Robert Humphreys

Remedies for intellectual property infringements include damages or, at a successful claimant's election, an account of profits. Damages are as of right and intended to restore the claimant to the position they would have been in had the infringement not occurred. Account is an equitable remedy at the discretion of the court and is intended to deprive a guilty defendant of the profits they have made through the infringement.

What if the primary infringer is a company; can its directors personally be liable as accessories? And, if the claimant has opted for an account, are the directors liable just for the profits they have made personally or the profits made by the company?

These were the main issues before the English Court of Appeal in Lifestyle Equities CV v. Ahmed (2021). The Court of Appeal's decision shows that the corporate veil may not be as opaque as some may have hoped.

The facts briefly were that at trial the defendants were found to have infringed the registered trade marks BEVERLEY HILLS POLO CLUB words and devices and also to have passed off those names and trade marks.

Insofar as relevant, the two defendant companies in question had gone into insolvent administration and the claimant pursued an account of profits against the two accessory director defendants.

On the issue of whether the directors were liable to account only for the profits they themselves made or for the whole profits made by the companies, the Court of Appeal found for the directors. This was fortuitous for them since liability for the whole of the profits would have been substantially (around 4/5 times) higher.

Regarding whether the directors were accessorily liable at all, the...