Can employees and directors be sued individually for intellectual property infringement in addition to their employer?

The short answer is yes, depending on the facts, although a recent case in the UK’s Supreme Court has made it harder to sue individual employees or directors in addition to their employer.

Background

It sometimes comes as an unwelcome surprise to named defendants in intellectual property infringement cases, but individual employees and directors are often sued in their capacity in addition to their employer.

This is sometimes done by claimants as a method of putting pressure on defendants to settle, i.e. the threat of being personally liable puts individual defendants into an unnerving situation.  Furthermore, depending on the circumstances, there could be tensions between the employer and the employee which could be created and exploited if both are sued.

Set against these tactical ploys is a genuine concern of many claimants, particularly when they are pursuing an infringer which is a SME.  In particular, a claimant may have concerns that a SME, particularly at the smaller end, may just dissolve itself and then pop-up in a new guise in the face of IP infringement proceedings.  Therefore, suing individual directors, with the intention of getting ongoing final injunctive relief against them, is often intended to make sure that the IP infringement proceedings in question represent the final say in the matter.

New case law

In a judgment dated 15 May 2024, Lifestyle Equities v Ahmed [2024] UKSC 17, the UK Supreme Court changed the law concerning the threshold for suing individuals as accessories.  Specifically, the Supreme Court held that for an individual to be liable as an accessory, that individual must have had “requisite knowledge”. This is the case even where, as in trade mark infringement cases, knowledge is not a requirement for establishing primary liability.

This new law, and the test for establishing “requisite knowledge”, was applied in a recent case before the Intellectual Property Enterprise Court (IPEC):  Aga Rangemaster Group Limited V Uk Innovations Group Limited & Ors [2024] EWHC 1727 (IPEC).  In this case, the Judge found that the claimants had established the requisite knowledge and therefore the claim against the relevant individual failed.  However, given that this case had been progressed before the Lifestyle Equities case was handed down, the claimants were at a disadvantage and may have had a better chance of demonstrating requisite knowledge if the trial had happened later.

Concluding comment

Claimants now have a new and potentially tricky hurdle to overcome when trying to establish accessory liability against individuals.  What many prospective claimants will probably do is to make sure that they fix the individual defendants with requisite knowledge as early on in the dispute as possible, often at the pre-action correspondence stage.  Conversely, the defendants may have the chance to extricate themselves from the dispute, on receipt of the initial cease and desist letter, on the basis that up until receipt of such knowledge they were not aware and thus not liable.