Corporate Managers Potentially Liable for Company’s Alleged Infringement

In an August 26, 2013 ruling, an Illinois District Court held that the individual operators of a website can be held personally liable for copyright infringement for activities occurring on the website.  Finding that the individual defendants comprised the entity’s entire workforce, the court inferred that the defendants committed copyright infringement, and declined to dismiss the copyright and trademark infringement claims against the individuals.

Asher Worldwide Enters. LLC v. Housewaresonly.com Inc., N.D. Ill. No. 1:12-cv-00568 is a copyright and trademark dispute between rival websites selling discount kitchen equipment.  The products on Asher’s website are accompanied by copyrighted product descriptions.  Asher alleged that competing websites owned by the Housewaresonly.com owners contained hundreds of the copyrighted product descriptions.  After initially filing suit against the companies, Asher amended its complaint to add the owners of the websites as individual defendants.  The website owners moved to dismiss, arguing that they couldn’t be held personally liable for the infringing activities of the entities.

As articulated by Judge Thomas M. Durkin, the 7th Circuit’s test for holding corporate managers personally liable for the infringing activities of the company is if there is a special showing that such corporate managers “acted willfully and knowingly and personally participated in the infringing activities or used the corporation to carry out their own deliberate infringement.”  Finding it at least plausible that the websites were the “alter egos” of the individual defendants, allowing them to conduct their own infringing activities while providing a shield from liability, the court found that Asher met its burden to make a special showing of the personal participation of the corporate managers of the websites.  Thus, Asher survived the individual defendants’ motion to dismiss.

As a result, owners and high-ranking managers of companies must be aware that should they personally participate in the infringing activities of their companies, they too can be held personally liable.