Can the director of a one man UK limited company be held personally liable if his product infringes a US software patent? The UK company's software product is sold in the states over the internet.
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2 Answers
In short, yes. While the "corporate veil" protects an individual from personal liability in many instances, this isn't always the case when dealing with infringement of intellectual property. A few ways the director may be held personally responsible include:
(1) The court pierces the corporate veil. If the company is undercapitalized, is used to commit fraud, or if the persons involved don't treat the corporation as a separate entity, the court may refuse to protect the director. For example, if a person sets up a corporation to facilitate his counterfeiting operation, there's a good chance that the person will be held individually liable.
(2) The court finds that the director induced infringement. Corporate officers who actively aid and abet their corporation's infringement may be personally liable for inducing infringement. You can read about how this can apply in the case Orthokinetics, Inc. v. Safety Travel Chairs, Inc., 806 F.2d 1565, 1578-79 (Fed. Cir. 1986). This usually requires some knowledge on the part of the director that he is encouraging another person (such as the company) to infringe a patent. For example, if you know of a particular patent and help your company infringe that patent, you may be liable for induced infringement even if the company (as opposed to you personally) was the entity that actually infringed the patent.
The level of personal liability can vary greatly depending on the fact. Don't assume that the company's existence alone is going to provide protection to the director. That isn't always the case. I'll echo kineticfocus's advice - speak with a lawyer; preferably one who has experience in U.S. intellectual property law.
If the personal actions of the director are sufficient, then yes. Ignore the surrounding corporate structure and answer your own question based on the facts of the case. Most patentees would sue both the person and the organization in a situation like this, if there is any indication that the person's own actions caused infringement or induced infringement.
