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Directors as Necessary Parties in IP Cases

Founding directors can be necessary parties in IP infringement or passing off suits, especially in cases of indirect infringement where they may have contributed to or induced infringing activities. Indian courts have ruled that directors can be held liable if they are aware of the infringement or financially benefit from it, as demonstrated in several cases. Notable cases include P.M. Diesels Ltd. v. Patel Field Marshal Agencies and M/s Power Control Appliances v. Sumeet Machines Pvt. Ltd., where directors were found liable due to their active involvement in infringing activities.

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33 views2 pages

Directors as Necessary Parties in IP Cases

Founding directors can be necessary parties in IP infringement or passing off suits, especially in cases of indirect infringement where they may have contributed to or induced infringing activities. Indian courts have ruled that directors can be held liable if they are aware of the infringement or financially benefit from it, as demonstrated in several cases. Notable cases include P.M. Diesels Ltd. v. Patel Field Marshal Agencies and M/s Power Control Appliances v. Sumeet Machines Pvt. Ltd., where directors were found liable due to their active involvement in infringing activities.

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Phoneix
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RESEARCH WORK

Q. Can you find judgments wherein founding director of a company is the necessary

party when passing off the suit or IP infringement suit is there.

In IP infringement or passing off cases, it is possible for a founding director to be a necessary

party, especially in instances of "indirect infringement," such as contributory infringement or

vicarious liability. A founding director may be held responsible if they are aware of the

infringement or have materially contributed to or induced the infringing activities.

Additionally, if the director benefits financially from the infringement, they could also

be held liable under vicarious liability principles.

For example, in cases involving indirect infringement, directors can be implicated if they play

an active role in the management or decision-making process that leads to the infringement,

even if they are not directly infringing the trademark themselves. Courts may grant relief,

such as injunctions or monetary compensation, against both the company and the directors

involved.

In several cases, Indian courts have also emphasized that company directors can face

consequences if their actions directly induce or allow infringement, making them necessary

parties in litigation concerning intellectual property rights.

1. P.M. Diesels Ltd. v. Patel Field Marshal Agencies & Others (1998)

✓ Facts: The founding directors of the defendant company were accused of passing off

the plaintiff's goods by using a deceptively similar trademark.

✓ Ruling: The court held that the directors could be made parties as they were

responsible for the day-to-day operations of the company and had an active role in the

infringing activities. This case highlights that directors can be personally liable if they

are involved in the company’s infringing conduct.

✓ Citation: P.M. Diesels Ltd. v. Patel Field Marshal Agencies, (1998) 3 SCC 172.
2. M/s Power Control Appliances & Ors. v. Sumeet Machines Pvt. Ltd. (1994)

✓ Facts: The directors of the defendant company were accused of passing off and

trademark infringement related to the Sumeet brand of kitchen appliances.

✓ Ruling: The Supreme Court ruled that directors could be named in the suit if there was

evidence that they actively participated in or sanctioned the infringing acts. The

corporate veil was pierced in this case because the directors were found to be directly

involved.

✓ Citation: M/s Power Control Appliances & Ors. v. Sumeet Machines Pvt. Ltd., (1994) 2

SCC 448.

3. Dabur India Ltd. v. Amit Jain & Anr. (2009)

✓ Facts: In a case of trademark infringement and passing off, the court considered

whether the director was a necessary party.

✓ Ruling: The Delhi High Court held that directors could be liable for the infringing acts

of their companies if they had knowledge of and participated in those acts. The

director was made a necessary party based on evidence of personal involvement in the

company's infringing activities.

✓ Citation: Dabur India Ltd. v. Amit Jain & Anr., 2009 (39) PTC 104 (Del).

4. Yahoo! Inc. v. Akash Arora & Anr. (1999)

✓ Facts: This was a domain name dispute where Yahoo! sued the defendant for passing

off by using a deceptively similar domain name.

✓ Ruling: The Delhi High Court granted an injunction in favor of Yahoo! and emphasized

that if directors were involved in the infringement, they could be held liable. In this

case, the company and its managing directors were held accountable.

✓ Citation: Yahoo! Inc. v. Akash Arora & Anr., 1999 IIAD Delhi 229

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