World Trademark Review quotes Charlotte Duly on a recent Supreme Court director liability ruling
min readBrand owners are likely to be left disappointed by the UK Supreme Court ruling (Lifestyle Equities C.V. and another (Appellants) v Ahmed and another (Respondents) that company directors cannot be found liable for the infringing acts of their companies if they personally acted in good faith and without ‘essential knowledge’ of the infringement.
The decision could limit brand owners’ ability to bring claims against IP infringers
Commenting on the decision, Charlotte Duly, Head of Brand Protection, says:
This decision is good news for company directors as it confirms they are only jointly liable with their company for trade mark infringement if they know the activity the company is undertaking is wrong. However, brand owners may fear this decision will reduce their ability to enforce judgements, particularly where the defendant company is found to have infringed and is subsequently dissolved, as happened in the present case.
The decision is a reminder that liability for trade mark infringement is strict, with no requirement for the infringer to have knowledge or intent to infringe. However, knowledge is a key requirement for accessory liability; the directors must have knowledge of the essential facts which make the act wrongful (in this case trade mark infringement). Where directors do not know that the company is infringing a trade mark, they will not have such knowledge.
The decision also provides interesting clarification as to remedies, in this case an account of profits. Remedies are available against trade mark infringers even where they did not intend to infringe. It is normally only the party found to infringe who could be ordered to pay the trade mark proprietor any profits they have made from the infringement. Third parties, in this case the directors, could not be ordered to pay profits made by the company from the infringing activities, as the entities were regarded as separate (and the directors were not jointly liable). Loans to directors and salaries are not regarded as profits.
Brand owners might be disappointed by this decision but there may be a different outcome in a case where a director is involved with a company or companies that are habitual infringers, but as always this will depend on the facts. Brand owners should ensure they are vigilant for third party use and take action swiftly to inform infringers of their rights.
Read the full piece in World Trademark Review here (subscription required).
