Landmark ruling in trade mark infringement – good news for directors

Please note that this News item is not maintained, and reflects the law as at the date of publication or update.

The Supreme Court has recently issued a landmark judgment in Lifestyle Equities CV and another v Ahmed and another [2024] UKSC 17 in relation to director liability for trade mark infringement.

In this case the company had committed various trade mark infringements. The court was asked to consider whether the company’s directors could be held liable for their company’s infringement if they did not know that a breach was being committed.

The judgment set out three key reasons as to why the defendant directors in this case were not liable for the infringement:

  1. A director cannot be liable for infringement if they have no knowledge of the infringement taking place. The judge stated that it would be “unjust” for a director to be held personally liable for this.
  2. The directors did not profit from the company’s infringement. Although the directors were still paid their salaries, this is classified as ordinary remuneration and not a profit. As no profit was made from the infringement the directors could not be ordered to account for these profits.
  3. The directors did not, themselves, commit the wrongful activity. Therefore, they should not be ordered to recompense the person who was infringed. Only those who profited directly from the infringement can be ordered to pay damages.

This decision effectively shows the court’s willingness not to hold a director personally liable for their company’s infringement if they are not aware of the infringement taking place and is a significant decision which will be welcome news for directors and will, in practice, act as a barrier in bringing claims against directors for infringement.

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