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In the recent decision UPC_CoA_534/2024, the Court of Appeal overturned the decision of the Munich Local Division that had held that the managing directors for each of the companies belonging to the Belkin Group were liable for infringing activities.
The Munich Local Division considered that the directors had acted as intermediaries under Article 63 (1) UPCA and were therefore also liable for the infringing acts. Article 63(1) UPCA specifies that "...[t]he Court may also grant such injunction against an intermediary whose services are being used by a third party to infringe a patent".
However, the Court of Appeal considered that "[an] "infringer" within the meaning of Article 63 UPC Agreement ...[is] someone who does not themselves commit the acts referred to in Article 25 UPC Agreement, but to whom the acts of the principal perpetrator are attributable because they are an instigator, accomplice or accessory" (see reason 189 of the English translation, courtesy of Pierre Veron (emphasis added). The Court of Appeal acknowledged that a managing director may also be liable for patent infringement as an instigator, accomplice or accessory. Nevertheless, they considered that the mere position of managing director does not inherently make a director a co-perpetrator or accomplice to a patent infringement.
The Court considered a managing director can only be held liable if their actions go beyond the typical duties of a managing director. For example, the Court referred to situations where directors deliberately use the company to commit patent infringements or if the managing director knows that the company is infringing a patent and fails to take action to stop the patent infringement. In fact, the Court of Appeal went as far to say a " ...managing director's liability for patent infringements by the company solely on the basis of his general management, control and organisational duties is therefore ruled out" (see reason 195 of English translation by Pierre Veron (emphasis added).
Similarly, the UK Supreme Court considered in Lifestyle Equities CV and another v Ahmed and another [2024] UKSC 17 that a director can only be considered liable in an infringement action in circumstances where he/she knew all of the "essential facts" making the acts of the primary infringer (the company) actionable and had an intention to procure those acts.
The Courts recent decisions reassure directors that their role alone does not necessarily expose them to personal liability for company actions.
On the other hand, whether in proceedings before the UPC or UK Courts, claimants seeking redress against company directors would be well advised to put them on notice about all the relevant infringement facts as soon as is reasonably possible.
J A Kemp LLP acts for clients in the USA, Europe and globally, advising on UK and European patent practice and representing them before the European Patent Office, UKIPO and Unified Patent Court. We have in-depth expertise in a wide range of technologies, including Biotech and Life Sciences, Pharmaceuticals, Software and IT, Chemistry, Electronics and Engineering and many others. See our website to find out more.
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