Company Director Personally liable for Patent Infringement?

A director of a company has been found personally liable for a patent infringement by a UK Court on the grounds that he had advised a client of his company to import recordable CDs which subsequently infringed Phillips’ patent.

The dispute arose after Princo Digital Disc had its licence withdrawn by Philips yet continued to import the Discs without Philips’ consent, consequently infringing its patent rights.

As a result, Philips successfully sued Princo (which lost its argument that the Patent was invalid) and furthermore sued Arthur Kuo, Managing Director of Princo submitting that he should be found personally liable for the infringement.

Kuo, on behalf of Princo undertook to indemnify its client Aventi, in the event that it faced legal costs as a result of the infringement.

The Judge, Justice Pumphrey, stated that the test as to whether Kuo should be found personally liable, was whether he “was sufficiently involved in the company’s torts”. The Judge found that he should not be found automatically liable because he was company director, however in these
circumstances Justice Pumphrey wrote:

“He was the business manager of the company. He was responsible for the cultivation of Aventi as a customer, and it was his decision to give the indemnity… I have no doubt that the indemnity was given to encourage Aventi to remain a customer and so to continue to infringe in the United Kingdom”.

The key factor in deciding that Kuo was personally liable was the encouragement that he had given to Aventi to continue importing the infringing articles, and his independent authority in making decision to the company made him sufficiently involved in the infringement and should therefore be jointly liable.

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