Generally, the owners, officers and employees of a corporation or limited liability company are not personally liable for the actions or conduct of their companies. However, a recent decision by the United States District Court for the Eastern District of Illinois illuminated when corporate officers, who directly participate in copyright or trademark infringement by their company, may be personally liable, even if the person was acting on behalf of the company.
In Asher Worldwide Enterprises, LLC v. Housewaresonly.com, Inc., Asher Worldwide Enterprises alleged that its competitor, Housewaresonly.com, Inc. copied Asher’s product descriptions and posted them on the Housewaresonly.com website without permission. Asher sued its competitor and the competitors’ shareholders and officers. The Housewaresonly.com shareholders and officers moved to dismiss the claims against them, citing the general rule that individuals are not personally liable for the actions of their company. The court refused to dismiss the claims against the individuals and concluded that individuals may be personally liable if they “acted willfully and knowingly and personally participated in the infringing activities or used the corporation to carry out their own deliberate infringement.” Other courts have also shown a willingness to impose personal liability on corporate officers when the officers intentionally and materially participated in the infringement of copyrights or trademarks.
All shareholders, officers and employees of business entities should be aware of the possibility that claims for copyright, patent, or trademark infringement can be made against them individually. If you believe that any part of your business activity might infringe on the copyright, trademark or patent rights of another company, consult an intellectual property attorney to discuss strategies for avoiding liability for infringement by your company and its officers or employees.
Ryan Siney can be reached at email@example.com