France's Supreme Court clarifies director liability for IP infringement

The decision, handed down on 7 October by the Commercial Chamber of the Cour de cassation (No. 25-14.170), addresses a question that has generated uncertainty in French litigation: when can the director of a company be sued personally for acts carried out through the company?

Although the case concerned trade mark infringement, the ruling has potentially far-reaching implications for IP enforcement in France. Its reasoning may extend to other IP infringements that can constitute criminal offences, opening the door to personal liability claims against directors and managers alongside the companies they manage. 

Long-standing uncertainty over personal liability 

Under French business law, directors of companies are generally shielded from personal liability towards third parties for acts performed in the exercise of their corporate functions. Personal liability arises only where the director commits a fault that is distinct (détachable) from those functions. 

Since a landmark 2003 decision, French courts have usually required proof of an intentional fault of particular seriousness that is incompatible with the normal exercise of managerial duties. In practice, however, the application of that test has been inconsistent, particularly in IP disputes. 

A further development came in 2010, when the Cour de cassation held that a fault constituting an intentional criminal offence is, by its nature, separable from corporate functions and can therefore trigger personal liability. The relationship between that principle and the traditional "particularly serious fault" test nevertheless remained uncertain. 

More recent decisions suggested a more restrictive approach towards directors involved in IP infringement. In a January 2025 judgment concerning alleged Hermès trade mark infringement, the Lyon civil court held a director personally liable after finding he had personally directed the manufacture and sale of infringing products, failed to conduct any meaningful IP clearance exercise and continued commercialisation despite receiving notice of the alleged infringement. 

The Polyter case 

The October ruling arose from the unauthorised use of the trade mark "Polyter". The company alleged to have infringed the trade mark had already been found liable by the civil courts. The trade mark owner then sought to establish the personal liability of the company's director. 

The Paris Court of Appeal rejected the claim, finding that the director's good faith could not be ruled out given alleged uncertainties surrounding ownership of the mark and the origin of the goods concerned. 

However, the Cour de cassation quashed that appeal decision and used the case to articulate two important principles that are likely to have significance far beyond trade mark law. 

Criminal IP infringement automatically constitutes a distinct fault 

The first principle is that a company director who commits a fault constituting an intentional criminal offence incurs personal civil liability towards third parties who suffer harm as a result. 

In the trade mark context, this means that where the acts committed by the director amount to the criminal offence of trade mark infringement under the French Intellectual Property Code, the requirement of a separable fault is automatically satisfied. 

The ruling confirms that rightsholders do not need to demonstrate an additional level of gravity beyond the existence of the intentional criminal offence itself. 

Civil courts must determine whether a criminal offence occurs 

The second and perhaps more significant principle concerns the role of civil courts. 

The Cour de cassation held that where a claimant alleges that a director's conduct constitutes the criminal offence of trade mark infringement, the civil court cannot avoid the issue. It must assess whether the material conditions of the criminal offence are met. If they are, the director's personal liability follows. 

The judgment therefore removes a degree of flexibility previously enjoyed by lower courts, which can no longer side-step the criminal law analysis where personal liability is sought on the basis of trade mark infringement. 

Good faith moves to the centre of the analysis 

The decision is also notable for the emphasis it places on good faith.  

Under French criminal law, trade mark infringement is regarded as an intentional offence. Intention may be inferred from the commission of the infringing acts themselves, unless evidence demonstrates otherwise. As a result, directors facing personal liability claims may increasingly need to show that they took genuine steps to verify that the products, brands or commercial activities concerned did not infringe third-party rights. 

The judgment suggests that the absence of meaningful due diligence, legal review or IP clearance procedures could make it difficult for directors to rely on a good faith defence. 

This aspect of the ruling echoes the reasoning adopted by the Lyon court in the Hermès case in January 2025, where the director's failure to undertake any prior verification of IP rights played a major role in establishing personal liability. 

Failure to comply with civil court orders may itself trigger personal liability 

The ruling contains another important finding for litigants. 

The Cour de cassation held that a director's deliberate refusal to comply with a civil court order requiring disclosure of accounting documents may itself constitute a fault separable from the director's functions. According to the court, such conduct may deprive the rightsholder of its ability to quantify and recover damages and therefore constitutes an intentional fault of particular seriousness. 

The finding may have consequences beyond IP litigation, particularly in cases involving disclosure obligations and enforcement measures. 

The issue is also live before the UPC 

The question of personal liability is not confined to France. It has re-emerged as a significant issue before the Unified Patent Court (UPC), particularly following the UPC Court of Appeal's decision in the case of Philips v Belkin in October 2025. 

That decision established, for the first time, a UPC-wide framework governing when directors may be held personally liable for patent infringement committed by their companies. The UPC Court of Appeal made clear that the mere fact of acting as a director is not sufficient. Instead, liability requires conduct going beyond typical professional duties of a managing director, such as deliberately using the company as a vehicle for infringement or knowingly allowing infringing acts to continue despite being able to prevent them. 

The court also emphasised that knowledge of the relevant facts is not necessarily sufficient. The director must generally be aware of the unlawful nature of the conduct. Significantly, directors who have obtained and relied on competent legal advice may in principle rely on that advice and will not generally be expected to second-guess it before a court has ruled that infringement exists. 

More recently, in the case of Honeywell v VeyorEx last month, the Mannheim local division of the UPC applied the framework established in the Belkin case but reached the opposite conclusion on the facts. The court found both company directors and a holding company liable after concluding that they were aware that licensed activities had continued after termination of the relevant licence agreement and had failed to take reasonable steps to stop them. 

Takeaways for businesses

The recent Cour de cassation ruling and the emerging UPC case law are rooted in different legal frameworks yet point in a similar direction. Both demonstrate a growing willingness by courts to scrutinise the conduct of the governing bodies behind allegedly infringing activities, rather than focusing exclusively on the operating company. 

For rightsholders, these developments create additional enforcement options and increase the leverage available in infringement disputes. For company managers, directors and parent companies, they serve as a reminder that they cannot simply hide behind the corporate entity to shield themselves from liability for IP infringement. 

For businesses, these developments underscore the importance of implementing robust IP compliance procedures, documenting clearance and freedom-to-operate assessments, and obtaining appropriate legal advice before launching products, brands or services. The Belkin ruling illustrates the potential significance of such advice, with the UPC Court of Appeal stating that: if the managing director seeks legal advice on the question of a patent infringement, they may generally rely on that advice until a first-instance decision has been issued establishing that their company has committed a patent infringement.