Sometimes described as the ‘corporate veil’, the limited liability of directors can be pierced by their conduct relating to trade mark infringement by their company.
How can this happen?
Directors must act in good faith in the ordinary course of business of the company. Where decisions are made by directors (whether intentional or recklessly indifferent) that cause the company to infringe a third party’s trade mark, directors can be held personally liable as a joint tortfeasor at common law. This is particularly so in the case of sole directors who solely benefit from the profits of the company and are considered the guiding mind of the company.
What can directors do?
To avoid being personally liable for a company’s infringement of a trade mark, directors should take adequate steps to avoid infringing third party trade marks by conducting the appropriate searches. These can be completed by your trade mark attorney. Further, when a director is put on notice of potential or actual infringement, the director must take all reasonable steps to avoid infringement, which can include acting swiftly in seeking legal advice and removing the ‘alleged’ infringing mark permanently or until a resolution can be reached.
The consequences of trade mark infringement can result in expensive court proceedings and large awards of damages. If you are a director of a company with a trade mark/proposed trade mark, and you are aware of a similar mark being used by a third party, you should seek legal advice to reduce the chance of infringement and personal liability as a director. If you would like further information and assistance, you can contact Kim Cousins-Smith.