Trade Mark Infringement and Directors’ Personal Liability

Trade Mark Infringement and Directors’ Personal Liability

What Is Trade Mark Infringement?

Trade marks are words or symbols used in association with goods or services in order to identify a company or its products. Trade marks are a form of intellectual property and are protected either by registration or (where registration has not been obtained) by established use. Trade Mark infringement takes place where, inter alia, one party uses another party’s registered Trade Mark without consent resulting in a likelihood of confusion on the part of the public which includes the likelihood of association with the Trade Mark.

Directors’ Personal Liability

As a matter of law, corporate entities are legal entities in their own right, separate legal entities from their directors and shareholders. This separation protects directors and shareholders from personally liability for the debts, obligations and liabilities of their companies. The protection is commonly referred to as the “corporate veil”. There are however circumstances, including where claims for Trade Mark infringement have been made, that the corporate veil can be lifted, and directors may be personally liable for or in connection with the acts of the company.

Grenade (UK) Ltd v Grenade Energy Ltd and Another

The Court lifted the corporate veil in the 2016 of Grenade (UK) Ltd v Grenade Energy Ltd to ward summary judgment against a defendant director. The case is a useful reminder of when a sole director (and shareholder) can be held liable for a company’s infringement. The claimant, who owned the Trade Mark “Grenade” brought proceedings against the defendant company and its director for Trade Mark infringement and passing off. The defendant company admitted Trade Mark infringement but the defendant director argued that he should not be held liable for the actions of the company.

The Court held that the burden was on the director to show that the company’s infringement was not caused or controlled by him. As the defendant director was unable to identify anyone else who could be held responsible for the company’s infringing conduct, the Court awarded summary judgment against the director in favour of the claimant. The Court held that the director ought to be held jointly liable with the company on the basis that he, as the sole officer of the company, had to be responsible for the company’s actions.

The case presents an important lesson for sole company directors in particular. They may not be able to hide behind by the corporate veil in a Trade Mark infringement claim where they have absolute control over the relevant company’s actions and cannot point to another actor behind the company’s conduct.

South Bank Legal is a London law firm specialising in intellectual property disputes including claims where company directors are sued in their personal capacity. For a confidential discussion about any of the issues discussed above, please feel free to get in touch.