Personal Liability of Director for IP Infringement
If a company is sued for infringement of intellectual property rights, can the director be held personally responsible? One of the benefits of incorporating a company is that the company’s shareholders and directors are not personally liable for the debts and liabilities of the company. That’s a basic proposition of corporate law. Of course, there are exceptions. In the 2006 decision in Krav Maga Enterprises, LLC v. Edge Combat Fitness Inc., the Federal Court allowed the addition of a director in a lawsuit for trade-mark infringement. Essentially, if the director or officer is engaged in “deliberate, willful and knowing pursuit of a course of conduct that is likely to constitute infringement or reflects an indifference to the risk of it” then the director can be tagged with personal liability. This is not a new idea. The Federal Court of Appeal has established this type of liability in cases such as Mentmore Manufacturing Co. Ltd. v. National Merchandise Manufacturing Co. (1978), 40 C.P.R. (2d) 164 in a case of patent infringement and another decision of the Federal Court adding a personal defendant in Dimplex North America Ltd. v. Globaltec Distributors Ltd. from 2005, a case also alleging patent infringement.Â
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[…] Can a director be personally liable for trade-mark infringement?  We raised this issue in our October 25th post. A recent Federal Court decision has re-examined this question. Generally, directors and shareholders are considered to be legally separate from their corporation and are not personally on the hook for the debts or liabilities of that corporation. If the corporation breaches its contractual obligations, defaults on a loan or infringes someone else’s intellectual property rights, then it is the corporation, not the individual, who is liable. […]