Thursday, 29 October 2009

Foiled! A sad tale of boss and emboss

Boegli-Gravures SA v Darsail-ASP Ltd and Andrei Ivanovich Pyzhov [2009] EWHC 2690 (Pat), a decision handed down by Mr Justice Arnold in the Patents Court (England and Wales) today, took the regular form of an infringement claim met by a denial of infringement and a counterclaim for revocation. The technology in question involved the embossing of packaging foil for cigarettes.

Two interesting points arose from the judgment: one was that neither side's expert was entirely expert (one's experience was as a buyer of machines rather than as a designer of them, while the other lacked experience in the market in question). The other was as to whether the second defendant, Pyzhov, a director and shareholder of the first defendant company, was personally jointly liable with the company for any infringing acts.

The judge found the patent valid and infringed and held Pyzhov liable. After reciting the applicable principles as annunciated in the copyright infringement dispute of MCA Records Inc v Charly Records Ltd [2001] E5WCA Civ 1441, [2002] EMLR 1 he concluded that the case for the director's liability was established on the facts:
"136. The background facts include the facts that (i) Mr Pyzhov is one of three equal shareholders and directors of Darsail, (ii) Darsail is a small company which has had a total of 9-12 employees during the relevant period, (iii) Mr Pyzhov would know about anything important that happened within the company, (iv) Mr Pyzhov was the principal inventor of Darsail’s roller technology, (v) Mr Pyzhov personally registered the domain name and controls the contents of the website and (vi) Mr Pyzhov was one of three named contacts on the website. In my judgment these facts are not enough in themselves to make Mr Pyzhov jointly liable [This must be right. They may reflect on the facility or the opportunity for Pyzhov to infringe, and on any benefit he might expect to derive from it, but none is part of a causal link to the infringements specifically alleged].

137. The facts relating to Mr Pyzhov’s involvement with the infringement are that (i) he personally dealt with Mr Green [the alias of a private investigator working for Boegli's client BAT] virtually throughout the negotiations, (ii) he together with his two co-directors made the decision to supply the Famous Flavor rollers to Mr Green and (iii) he made the decision to supply the Mayfair foil to Mr Green. In both cases he gave, or was involved in giving, the instructions to Darsail’s staff. In my judgment these facts are sufficient to make Mr Pyzhov jointly liable, since he was personally involved in committing the infringing act. He thus went beyond merely performing his constitutional role in the company".
A close call? Probably not, though claimants may have some tough calculations to make when determining whether it's worth pressing for joint liability -- particularly if the argument in favour is less strong and the likely benefits are unclear.


Anonymous said...

Is this correct?

The decision seems to turn on a literal reading of part of the judgment in MCA Records Inc v Charly Records Ltd that:

"There was no reason why a person who happened to be a director or controlling shareholder of a company could not be liable with the company as a joint tortfeasor if he was not exercising control through the constitutional organs of the company and the circumstances were such that he would be so liable if he were not a director or controlling shareholder."

To go out on a limb, I think the judge has read this as extending responsibility to those who procure the infringement rather than simply recognising that directorship is not a shield to be used by the controlling mind of the company.

I am no IP lawyer and would be grateful for your thoughts.

Anonymous said...

Hello Anonymous,

do you have a contact email that I could contact you on as i am trying to find someone to discuss this case with?