Lifestyles Equities C.V. & Anor v The Copyrights Group & Ors

Permission to add defendants requires a claim with a real prospect of success. Directors are not personally liable for a company’s infringements merely because they are directors or participate in the company’s constitutional governance. The claimant must plead and support factual involvement outside that constitutional role, such as active cooperation in a common design to commit the tort.

Granting a licence for an infringing sign is not itself primary infringement. Where the alleged liability arises from authorising or procuring a company to grant such licences, there is no standalone civil liability for procuring a tort committed by another. A parent company is not liable merely because it owns the subsidiary, employs its directors, or receives the benefit of their representation of its interests.

The claimants owned EU and UK trade marks for “Beverly Hills Polo Club”. They applied to add Vivendi Village SAS and three individuals as further defendants to existing trade mark and passing-off proceedings concerning signs used in licensing and merchandising by the first to fourth defendants.

The proposed claims alleged that the individuals were jointly liable because they were directors of the first defendant and were said to manage or supervise its licensing activities. The claim against Vivendi Village SAS relied principally on its ownership of the first defendant and the employment of members of its board.

The issue was whether the proposed claims had a real prospect of success, applying the principles in Easyair v Opal Telecom [2009] EWHC 339 (Ch).

1. Application dismissed. The proposed claims against the additional defendants did not have a real prospect of success.
2. Applying Easyair v Opal Telecom [2009] EWHC 339 (Ch), the burden was on the claimants to show a real prospect of success. The proposed pleadings did not establish the necessary factual basis for liability.
3. Under the principles summarised in MCA Records Inc v Charly Records [2001] EWCA Civ 1441, directors are not liable simply because they are directors. Acts performed only in the constitutional role of director do not make them joint tortfeasors, even where those acts render the company liable. Active involvement outside that role must be pleaded and supported.
4. The evidence did not support sufficient involvement by the proposed individual defendants in the licensing activities. Evidence about board meetings and constitutional decision-making was irrelevant to the alleged liability.
5. The first defendant’s negotiation and execution of licences were not themselves infringing acts. Granting a licence for an infringing sign was not primary infringement. The alleged tortious act was entering into the licence agreements, which could be done only by the first defendant. Following Vertical Leisure v Poleplus [2015] EWHC 841 (IPEC) and Credit Lyonnais Bank Nederland NV v Export Credits Guarantee Department [2000] 1 A.C. 486, there was no standalone liability for authorising or procuring the first defendant to grant the licences.
6. The same reasoning applied to Vivendi Village SAS. Ownership, control, or employment of the first defendant’s directors was insufficient. It was also necessary to show that, when acting as directors, they were acting on behalf of the parent company. Representing the parent’s interests on the subsidiary’s board was not enough, consistently with Anan Kasei Co Ltd v Molycorp Chemicals & Oxides (Europe) Ltd [2019] EWHC 881 (Pat).