Can directors be liable for intellectual property infringement?

If you are a director of a company, you might be surprised to learn that, in certain circumstances, you can be sued personally alongside your company for the infringement of intellectual property rights such as trade marks and copyright. In fact, directors are often made defendants to such claims, and directors cannot avoid liability simply by arguing that the company has separate legal personality.

It is fair to say that the Supreme Court’s ruling in Lifestyle Equities CV v Ahmed [2024] UKSC 17 has made it more difficult for claimants to successfully establish director liability by highlighting that, for a director to be held liable as a joint tortfeasor, the director must have knowledge of the essential facts giving rise to liability.

On the other hand, it is important to highlight that, in most cases where directors are sued for infringing intellectual property rights, the defendant company is a small private company and operated day to day by the director(s) personally, and it is obvious that the acts of the company do infringe the rights of third parties. This will be the position in straightforward counterfeiting cases, for example.

Background

A claimant seeking to enforce intellectual property rights against a company may also seek to extend liability to its directors on a joint and several basis. This is generally motivated by two considerations:

• the director may have personal funds which are unavailable to the corporate defendant to cover any compensation or costs award, particularly where the company is undercapitalised and/or becomes insolvent; and

• personal liability will enable the claimant to obtain an injunction against the director restraining them in their individual capacity from continuing to infringe the claimant’s rights through another vehicle.

These considerations are most relevant in the context of small or closely held companies, where a director (or small group of directors) often exercises significant, or complete, control over operations and has detailed knowledge of the company’s day-to-day trading activities. In fact, in many cases the director is the only employee of the company and has personally undertaken the infringing activities. In such cases, the distinction between the director and the company is largely formal.

The principle of separate legal personality means that a company is a legal person distinct from its shareholders and directors. Coupled with the principle of limited liability, this ordinarily ensures that liabilities incurred by the company are its own and not those of the individuals behind it. This separation will generally be respected unless exceptional circumstances justify otherwise, which is often described as “piercing the corporate veil”.

Directors may still incur personal liability without the need to pierce the corporate veil, however. Where a director personally commits, procures or participates in a tort, such as trade mark infringement, liability arises under ordinary principles of tort law rather than as an exception to the doctrine of separate legal personality. This is an example of accessory liability, under which a director may be held personally liable alongside the company while the company’s separate legal personality remains intact.

There are two basic elements required to establish accessory liability against a director:

• participation; and

• knowledge.

Participation

Participationmay occur where a director:

• procures, induces, or substantially assists the commission of the tort; and/or

• acts in pursuit of a common design with the company.

In practice, these routes often overlap. The threshold for participation is low; the involvement must be more than trivial but need not be extensive.

Directors and shareholders are not liable merely by virtue of performing their constitutional roles in a company, but a director cannot rely on the defence that they acted through legitimate corporate processes such as properly conducted board meetings or shareholder resolutions if their involvement otherwise satisfies the requirements for accessory liability. The emphasis is on the director’s acts, not the method by which they acted.

Knowledge and the Lifestyle Equities precedent

The key contribution of Lifestyle Equities lies in its clarification of the knowledge requirement for accessory liability. It had previously been established that an accessory need not realise that their acts were unlawful. While the Supreme Court confirmed this position, it emphasised that accessory liability does require knowledge of the essential facts that constitute the infringement, even if the company’s liability is strict, as in the case of trade mark infringement. This does not mean that the director must understand the law sufficiently to appreciate that a particular act is unlawful. Ignorance of the law is no defence. Rather, the director must be aware of all the features that render the conduct unlawful.

A director can therefore only be liable if they:

• know the essential facts which make the conduct tortious; or

• wilfully turn a blind eye to those facts.

The court did not provide an exhaustive definition of “essential facts” but indicated that these are the core factual elements necessary to establish the tort; in this context, the features that give rise to intellectual property infringement.

In his judgment, Lord Leggatt observed that knowledge may be absent where the relevant facts remain uncertain or open to genuine dispute. Where there is legitimate scope for different views, particularly on issues such as likelihood of confusion or damage to reputation in trade mark infringement cases, a director may fall short of the required knowledge and therefore escape liability. This was the case in Lifestyle Equities itself, where the owners of the rights to BEVERLY HILLS POLO CLUB brought a trade mark infringement claim relating to the use by the defendants of the SANTA MONICA POLO CLUB mark. The court found that the directors were not personally liable even though they carried out the infringing acts and induced the company to infringe.

Critically, Lord Leggatt also stated, obiter, that if a director were procuring the sale of counterfeit goods, it would likely be evident that they knew the essential facts of the case. After all, they would be “slavishly copying” an identical mark in relation to identical goods. In Lifestyle Equities, the directors were not involved in producing or selling counterfeit products but in a complex trade mark dispute. This illustrates that, in straightforward infringement cases like selling counterfeit goods, it should still be possible to establish liability against directors.

Another straightforward type of case in which we have recent experience, is the prevention of the sale of unlawful parallel imports into the UK from outside the EEA. This is also a relatively clear-cut case of infringement. Whilst there have not yet been any reported parallel import cases applying Lifestyle Equities, it seems that, for the director to be liable, the“essential facts” are likely to be that the director knew: (a) of the trade mark; (b) that the trade mark was on the products and/or in marketing material for the products; and (c) that the products originated from outside the EEA. It is not necessary to show that the director knew that dealing in unlawful parallel imported products would amount to trade mark infringement.

Application in subsequent cases

The courts’ application of the Lifestyle Equities principle demonstrates the practical consequences of the decision, which is to uphold the liability of directors where appropriate in straightforward infringement cases and to make it more difficult in more complex infringement cases.

In Wang Zeng International Limited v Bing Bing Foods Ltd [2026] EWHC 360 (IPEC), the director of Bing Bing Foods Ltd was held jointly liable for trade mark infringement with the company for selling goods under identical trade marks to those owned by the claimant. As the company’s sole director, shareholder and controlling mind, the director was fully aware of its operations and had also been explicitly notified of the then alleged infringement. He continued trading regardless. Both participation and knowledge were therefore readily established on the facts. The infringement itself was also relatively clear-cut, leaving little room for ambiguity. It is worth highlighting that the company secretary was not held liable, as all he did was undertake his constitutional role within the business and he did not direct, procure or authorise the infringing acts.

In Morley’s (Fast Foods) Limited v Nanthakumar [2024] EWHC 1369 (IPEC), one of the defendants, “KK”, was a franchisor of fast-food establishments, and the other defendants were his franchisees. The judgment concerned his recent franchise of “Metro’s”, which was found to infringe the Morley’s trade mark. One of the issues was whether KK could be held liable as an accessory to the other defendants’ acts of trade mark infringement on the basis that the franchising agreements amounted to him authorising and/or procuring such acts.

While this is not a case of director liability, the judgment applies the same principles of accessory liability, including the Lifestyle Equities principle.

When considering whether KK satisfied the knowledge requirement, the judge noted that he had previously made other attempts to imitate the Morley’s brand (for example he used the term “Mowleys” in a similar livery). He had even agreed to rebrand from “Mowleys” following a settlement agreement to resolve a previous dispute with the claimant. The judge found this relevant, as it demonstrated both that he had knowledge of the trade mark and that he understood the risk of confusion between the marks.

By contrast, in Aga Rangemaster Group Ltd v UK Innovations Group Ltd [2024] EWHC 1727 (IPEC), the claimant failed to establish the director’s liability for trade mark and copyright infringement for fitting an electric control system to AGA cookers which would convert them from running on fossil fuels to electricity. Although the director exercised day-to-day control of the company and was aware of some of the underlying facts, it could not be shown that the director knew of certain critical elements, including: (a) the existence of the 2D and 3D Aga trade marks; (b) that the defendants were using those marks or similar ones in relation to identical goods; (c) the claimant’s reputation and the distinctive character of the marks; and (d) that the defendants’ acts were liable to impact on the origin functions of the claimant’s marks or give rise to a likelihood of confusion. Many of these issues were genuinely arguable and were debated before the court. As a result of this ambiguity, no personal liability could be attached to the director.

Because Lifestyle Equities was decided while these proceedings were ongoing, the pleadings did not fully address the knowledge requirement, and there was limited cross-examination of the director on that issue, resulting in evidential gaps. It is likely that subsequent cases will involve a more detailed examination of the knowledge requirement.

In Martin v Bodegas San Huberto SA [2025] EWHC 1827 (IPEC), a wine importer and distributor was found liable for copyright infringement and passing off due to its importation into and sale in the UK of wine bottles with labels containing a design similar to an artistic work of the claimant.

The director of the company was also found to be liable as a joint tortfeasor, although only in relation to certain acts of infringement. For both the copyright and passing off claims, the director was not held liable for acts undertaken before the receipt of initial pre-action correspondence from the claimant, because the director was not aware of the existence of the claimant’s work before that date.

The director was held liable for acts of copyright infringement taking place after receipt of the initial notification from the claimant but was not held liable for acts of passing off taking place after this date. This is because the judge held that, while the claimant’s reputation as an artist was mentioned in the pre-action correspondence, there was no mention in correspondence of the claimant’s goodwill in the UK, which is one of the requirements for a claim of passing off, until most if not all of the products at issue had been sold by the defendant.

Analysis

In small or closely held companies, such as in Wang Zeng, the director’s role as the “controlling mind” will often make it difficult for the director to deny awareness of the essential facts giving rise to an infringement. On the other hand, Lifestyle Equities may make it more difficult to establish accessory liability where the alleged infringement is genuinely disputable.

Despite initial concerns, Lifestyle Equities has not brought an end to directors’ being held liable. It has refined an existing framework by clarifying the knowledge requirement. That requirement is likely to be satisfied where the company is small, and the director is closely involved in directing the infringing activity. While the decision has had a significant impact in a range of more nuanced cases, it does not appear to have substantially impacted many of the straightforward claims that would have been brought before the decision, such as those relating to dealing in counterfeit or unlawful parallel imported products.

Practical implications

Whether a director can be liable as a joint tortfeasor is highly fact sensitive and much can depend on the content of pre-action correspondence. The directors in Lifestyle Equities had been put on notice of the existence of the trade marks, but not of the wider factual context determined to constitute infringement. The director in Bodegas San Huberto had been put on notice regarding copyright infringement but the failure of the claimant to inform the defendant specifically of her goodwill in the UK meant that the pre-action correspondence was not sufficient to demonstrate the director’s knowledge of the essential facts giving rise to a passing off claim.

Claimants should therefore seek to identify clearly in pre-action correspondence the essential facts said to give rise to all alleged infringements, and such correspondence should be addressed to the director as well as the company to ensure that the director has been put on notice. If the relevant conduct continues after receipt of this pre-action correspondence, this will then make it harder for the director to argue that they lacked knowledge of the essential facts. Early, explicit and comprehensive notification to directors is critical because this may later be important evidence that the director possessed the requisite knowledge if the matter progresses to a final decision at court.

Directors should take allegations of accessory liability seriously and seek legal advice promptly if such allegations are made against them. As the case law demonstrates, the principle of separate legal personality alone will not shield a director who is participating in infringing acts with knowledge of the essential facts giving rise to an infringement.