Yes, company directors can in certain circumstances be sued personally for infringement of copyright and other intellectual property rights, said the Court of Appeal.
Topic: Directors’ liability
Who: MCA Recordings Inc & Ors v Charly Records Ltd & Ors
Where: Chancery division of the High Court, London
When: October 2001
In a case involving allegations of breach of copyright in music recordings, MCA sought judgment against a director of one of the defendant companies. The company in question was the holding company of the other corporate defendants and hence could be said to exercise ultimate influence over the activities in question. At first instance the court found the director personally liable, but this decision was appealed. The appeal judges held that if a director did no more than carry out his normal constitutional role in respect of the acts in question he could not be personally liable. In intellectual property cases, however, the director could be liable personally if he “intended and procured and shared a common design that the infringement took place.” The evidence before the court amply supported such a factual finding, so the appeal was refused.
Why this matters:
Drawing aside the veil of incorporation and fixing a company director with personal liability is something a claimant will sometimes want to do, particularly if there is not a corporate defendant in the frame that is worth powder and shot. This case shows that if a company officer can be shown to have been directly involved in conduct giving rise to an infringement of either copyright or another intellectual property right such as trade mark infringement, he or she may well be in the firing line. Time to check out the terms of your directors’ personal liability cover!