Director’s Liability for Trade-mark Infringement

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.

In the case of Petrillo v. Allmax Nutrition Inc., 2006 FC 1199 (CanLII), the plaintiff brought an allegation of trade-mark infringement against both the corporation and Richard Glover and Michael Kichuk, the directors of that corporation.  The individual defendants brought a motion to have the lawsuit dismissed against them personally.  They succeeded.  In coming to its decision, the court made several important points:

One, even though a small company may be controlled by one or two individuals who may function as shareholders, directors and officers, the authorization required for personal liability will not be inferred merely from the fact that a company is closely controlled.  Secondly, the court said that “it is not enough for a Plaintiff to assert personal liability on the part of an officer or director of a company in a statement of claim, in the hope that evidence to support the allegation will be uncovered during the discovery process.  A lawsuit is not a fishing expedition.” (at para. 36)

In the end, no evidence was brought forward to implicate the directors personally and so the lawsuit against them was dismissed. 

Calgary – 14:02 MST

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