Can I be sued personally for my company? 7 Answers as of June 15, 2011

My company was manufacturing a product and found out later that it might violate someone's patent. If the patent holder sues the company, can they also sue personally the owners (if a closely held "C" corp) or the executives, or would the lawsuit and consequences be totally against the company?

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Intellectual Property Center, LLC
Intellectual Property Center, LLC | Ak Shaf
If the question relates to whether or not you can be sued, you can. In America, pretty much anyone can be sued. If your question relates to the likelihood of success on the merits or piercing the corporate veil of any such suit, I would need more facts. Generally, anyone who makes, uses, sells or imports an infringing product can be sued and if they can claim you are responsible, then they can certainly add you to a suit, along with your company who profited from your actions, or vice verse. Good luck.
Answer Applies to: Kansas
Replied: 6/15/2011
Eclipse Group, LLP
Eclipse Group, LLP | Travis Burch
They can sue the shareholders, directors, and/or officers although they must demonstrate the individuals knowingly and willfully infringed the patent at issue. Alternatively, they can get the shareholders as an alter ego of the corporation if corporate formalities were not adhered to and there is some manifest injustice or inequitable result.
Answer Applies to: California
Replied: 6/7/2011
Law Offices of Robert S. Smith
Law Offices of Robert S. Smith | Robert S. Smith
There is a substantial possibility of personal liability.
Answer Applies to: Connecticut
Replied: 6/6/2011
Devon & Associates
Devon & Associates | Marcia A. Devon
A suit for patent infringement may be brought against the individual owners/officers of a closely-held corporation if the U.S. patent owner alleges willful patent infringement. For example, if the patent owner had sent you a cease and desist letter informing you that you were infringing his U.S. patent prior to bringing suit and you continued to sell the accused product, when the suit is filed, the patent owner could allege willful patent infringement against the corporation and the individual owners/officers.
Answer Applies to: California
Replied: 6/7/2011
Michael M. Ahmadshahi
Michael M. Ahmadshahi | Michael M. Ahmadshahi, Ph.D., Esq.
If the corporation has conducted itself properly then as a general rule the owners and officers of the company are not liable for patent infringement. However, there are other theories of liability for officers of a company under contributory infringement. The officers may be liable if it can be shown that they induced the company to infringe the patent. Inducement requires prior knowledge and intent which is hard to prove. As such, if the company has acted properly and the officers acted in the scope of their employment, then the officers are not liable.
Answer Applies to: California
Replied: 6/7/2011
    Barton Barton & Plotkin
    Barton Barton & Plotkin | Maurice Ross
    Ordinarily, patent suits are brought against the company, not its individual officers, directors and executives, provided that the company has sufficient assets to satisfy a judgment. However, if an individual engages in conduct constituting or inducing patent infringement, such individual can be sued. In a situation in which the company might not have sufficient assets to satisfy a judgment, the patent owner could decide to sue the individuals responsible for infringement. If you are sued as an individual, it is possible that the company's directors and officers liability and/or patent infringement insurance (if it has this type of insurance) might cover you. Bottom line-if the patent owner discovers that the company has insufficient assets, it might decide to sue the individuals who control the company. By the way, even if the patent owner does not sue the individuals, when it comes time to collect on a judgment against the company, the patent owner may engage in typical efforts to pierce the corporate veil
    Answer Applies to: New York
    Replied: 6/6/2011
    Rhema Law Group
    Rhema Law Group | John D. Tran
    Its possible but unlikely so long as all activity was done by the company and you did not anything personally by yourself. However, if for example you commingled funds between you and your company and say did not operate it as a company (e.g. no meetings, incorrect corporate paperwork etc...) then its possible a court could "pierce the corporate veil" which in essence destroys the corporate liability protection and opens you up personally. With anything dealing patent litigation, you should definitely consult with a patent attorney who is knowledgeable with patent litigation to help advise you on your specific case.
    Answer Applies to: California
    Replied: 6/6/2011
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