Background

Koninklijke Philips N.V. brought infringement proceedings before the UPC against several Belkin group entities and their managing directors, seeking injunctive relief, damages, and additional corrective measures. The Local Division Munich (UPC_CFI_390/2023, September 13, 2024) largely granted the claims against the Belkin group companies and ordered the directors personally to refrain from exercising their duties in any manner that would enable Belkin GmbH or Belkin Limited to continue the infringing acts.

The CoA partly overturned the decision and redefined the conditions under which personal liability of directors may arise.

The legal standards

The CoA confirmed that, under Articles 25 and 63 of the Unified Patent Court Agreement (UPCA), the term “infringer” is not limited to the person directly performing the infringing acts. The term also covers instigators, accomplices, or accessories – and a company director may also be held personally liable for patent infringement if they qualify as an infringer.

In its reasoning, the CoA emphasized that the concept of an “infringer” under UPCA Articles 25 and 63 must be interpreted autonomously in view of the UPCA as an international treaty rather than by reference to national laws. This ensures the UPC applies a uniform standard across member states, independent of domestic doctrines of accessory liability. According to the CoA, this approach is necessary to maintain the effectiveness and coherence of the UPCA’s unified enforcement system.

The CoA expressly rejected any notion of director liability based on general organizational or supervisory obligations and clarified the scope of attribution:

• No automatic liability. Merely holding a director position is not enough for personal liability for patent infringement committed by the managed company. Rather, a director is only personally liable if they commit an act that goes beyond their ordinary managerial duties.

• Liability only for deliberate misconduct. A director can be held personally liable only if they:
  • Intentionally use the company as a vehicle to commit patent infringement or
  • Knowingly tolerate an infringement, even though they could – and should – have intervened to stop it.

• Awareness of illegality required. Knowing the factual circumstances of a patent infringement is not sufficient. The director must also be aware that the relevant acts are unlawful and infringe a patent.
• Reliance on legal advice. Where a director seeks advice from qualified counsel, they may generally rely on that advice until a first-instance decision confirming patent infringement has been rendered.

These principles reflect the CoA’s intention to confine directors’ personal liability to truly exceptional cases of active or knowing involvement, rather than to the mere exercise of managerial responsibility.

Germany’s stricter approach compared to other jurisdictions

Under established German case law, managing directors can be held personally liable even for negligent failure to prevent patent infringement (e.g., where they did not implement adequate review or compliance mechanisms). An opinion from external counsel does not automatically shield a director from negligence if the infringement could have been avoided through additional diligence.

The CoA’s more cautious approach is justified by the diversity of national laws across the UPCA Member States. Several jurisdictions do not recognize a far-reaching concept of personal liability for directors and thereby differ from German case law, for example. Given this divergence, the CoA reasoned that such an extensive form of liability would have required an explicit provision by the legislator to ensure legal certainty. The CoA also noted that, in industries with dense and overlapping patent portfolios, personal liability would create unpredictable and disproportionate risks. This is particularly true given the inherent uncertainty surrounding patent validity and scope of protection.

The CoA thus establishes a uniform and restrictive European standard for director liability: Patent infringements are, first and foremost, acts of the company.

Practical implications

For directors, the Philips v. Belkin decision provides a welcome degree of legal certainty. Nevertheless, sound governance and thorough documentation remain essential. Directors should:

• Carefully document decision-making processes
• Seek and retain written legal opinions
• Act swiftly once a potential infringement becomes apparent.

For patent holders, the decision clarifies that a claim against the management of an infringing company will be worthwhile mainly if a director has knowingly steered or enabled the infringing activity, or in cases where patent and trade secret issues overlap and a director’s intentional involvement can be established. However, injunctive and damages claims will usually focus on the infringing company, not its management. This makes sense in that it directly targets the entity that conducts the infringing business and reaps the economic benefits of it.

Conclusion

The CoA’s decision provides important clarification on an issue on which national case laws diverge. It also confirms that the UPC will take a measured, pragmatic approach to individual responsibility, usually focusing enforcement on an infringing company rather than the company’s management.

For businesses operating across the UPC territory, the judgment introduces a consistent and predictable framework that reduces personal exposure for directors while maintaining effective remedies against corporate infringers.