In Boegli Gravures SA v (1) Darsail (2) Andrei Pyzhov, the High Court summarised when a director will be personally liable for an intellectual property infringement committed by the company.
Boegli was the proprietor of a European patent for a system of embossing packaging foils using rollers.
Darsail began selling a competing roller system. Mr Pyzhov, a director and shareholder of Darsail, had invented the system. Darsail advertised it for sale on its website at www.darsail.com. Boegli made a trap purchase of Darsail’s machine using an individual who went under the alias ‘Mr Green’. Boegli then commenced patent infringement proceedings against both Darsail and Mr Pyzhov claiming that Mr Pyzhov was personally liable for Darsail’s patent infringement.
Mr Justice Arnold found that Darsail had infringed Boegli’s patent.
On the question of Mr Pyzhov’s personal liability for the patent infringement, Mr Justice Arnold held that a director will not be liable for an act of IP infringement committed by a company where the director has done no more than carry out his or her constitutional role in the governance of the company (voting at board meetings). A director will only be liable where he or she has taken steps in relation to the infringement which go beyond the exercise of constitutional control and intends, procures or shares a common design with the company that the infringement takes place.
None of the following facts were enough to make Mr Pyzhov personally liable:
- Mr Pyzhov was one of just three directors;
- Darsail was a small company (with around 12 employees);
- Mr Pyzhov generally knew about anything that happened within the company;
- Mr Pyzhov had invented Darsail’s infringing roller system; and
- Mr Pyzhov controlled the content of Darsail’s website and had registered the domain name darsail.com.
However, the following facts did point to Mr Pyzhov’s liability:
- Mr Pyzhov personally dealt with ‘Mr Green’ and concluded the contract with him on behalf of Darsail;
- He, together with his two co-directors, made the decision to supply Darsail’s rollers to Mr Green;
- Mr Pyzhov gave instructions to Darsail’s staff concerning the sale to Mr Green.
These facts were sufficient to make Mr Pyzhov personally liable since he was involved in committing the actual act of patent infringement (the sale of the infringing roller system to Mr Green). His actions went beyond merely performing his constitutional role in the company. Mr Pyzhov was jointly liable with Darsail.
This decision does not create new law but is nonetheless useful in setting out succinctly when a director will be jointly and personally liable for an act of intellectual property infringement by the company. This decision extends beyond patent infringement to all types of IP infringement.
Click here for a copy of the judgment