1. In its “Liability of Managing Directors” decision (GRUR 2014, 883), Division I of the BGH [Bundesgerichtshof = Federal Court of Justice] significantly limited the personal liability of members of the corporate body of a legal entity for the latter’s anti-competitive practices. According to that decision, a statutory representative is only liable for infringing acts on the part of the company if he participated in them through his own positive acts or if he was obliged to prevent the company’s infringing acts, based on his status as guarantor under the general principles of tort law, which follow the criminal law principles for determining status as a perpetrator or accomplice. By contrast, Division X utilises the so-called unified perpetrator concept under § 139 PatG [Patentgesetz = German Patent Act].
2. The subject of Division X’s “Fibreglass II” decision (judgment of 15 December 2015 – X ZR 30/14) was a European patent which taught the use of fibreglass of a certain chemical composition which display no carcinogenic potential. Four parties were sued, including a company which manufactured insulation material for housing construction from fibreglass plates, and its managing director personally.
3. To come quickly to the point: In the opinion of Division X, the personal liability of the managing director was necessarily established, even though the lower courts had not made any further findings as to which specific actions the managing director had taken and the extent to which he was personally involved in the infringing acts (No. 106). Despite the differing liability concept of Division I, Division X saw no necessity of appealing to the Grand Civil Division [Großen Zivilsenat] regarding the prerequisites for the statutory representative of a company to be personally liable for the company’s infringements of intellectual property rights. Division X stated that the prerequisites for the personal liability of a managing director, established by Division I, had also been met in the case before it for decision (No. 109 et seq.):
4. In conformity with the legal precedent of Division I, Division X first stated: The status of the statutory representative as guarantor within the meaning of the legal precedent cannot solely be based on his obligation to properly manage the company as an active member of the corporate body (§ 43 (1) GmbHG [German Limited Liability Company Act] or § 93 (1) Sentence 1 AktG [German Stock Corporation Act]) since this obligation only exists in his internal relationship with the company and does not exist with respect to third parties. Rather, personal liability requires that the statutory representative be personally responsible for protecting outside third parties from potential risk or infringement (No. 111).
5. As a second step, Division X examined the circumstances under which the organisational obligations of a member of a corporate body to properly conduct business, which are initially solely owed to the company internally, take on an external effect toward third parties and thus result in personal liability to third parties. The Division stated that, with respect to absolute intellectual property rights, the statutory representative can take on additional personal responsibility to avoid potential risk (“in the interests of third parties” must be added) beyond that merely attaching to his position as member of the corporate body (No. 113).
Division X typically sees such personal responsibility as attaching with respect to technical intellectual property rights, i.e. when a company manufactures technical products or introduces such products to the domestic market (No. 114). In these cases, the liability of the managing director does not result from his position as managing director per se, but from his actual and legal ability -– irrespective of the legal form of the company – to control a situation that is a potential risk to absolutely protected third-party rights and the fact that it is reasonable for him to do so (No. 113). Such personal liability is also an expression of the situation of increased potential risk to which technical intellectual property rights are exposed and the fact that their protection would otherwise not be guaranteed (No. 116).
6. The situation of increased potential risk of technical intellectual property rights found by Division X has a substantial effect on the management and organisation of the relevant companies: Due to the large number of patents and the diverse types of subject matter, a company is always obligated to examine whether its products or processes are within an area protected by third-party rights before engaging in potentially patent-infringing activities (No. 115).
7. In the opinion of Division X, due to this state of potential risk, it is generally justified for the statutory representative of a company to ensure that the company’s production and sales activities do not infringe the technical intellectual property rights of third parties or at least to ensure that the fulfilment of this obligation is guaranteed by responsible employees. This includes ensuring that basic decisions regarding the business activities of the company are not made without the consent of the statutory representative and that the company employees entrusted with development, manufacture and sale take the required precautions to avoid infringing third-party patents (No. 117).
8. In light of this, in the opinion of Division X, the statutory representative of a company is generally subject to a secondary burden of explanation and proof regarding how he met his obligation to avoid patent infringements (No. 120). This constitutes a de facto “reversal of the burden of explanation” in patent infringement proceedings, so that the patent holder no longer needs to establish the personal responsibility of the statutory representative for the infringement. Division X thus stated that it generally need not make any further finding that the culpable infringement of a patent by a company was based on the culpable misconduct of its statutory representative (nos. 118 + 119).
9. Finally, Division X gave an indication of its opinion regarding the contested question of the personal liability of (executive) employees for patent infringements committed in the company (for the current state of opinion in the literature, compare Keukenschrijver/Busse, 7 ed., § 139, Marginal no. 22 and Benkard, 11th ed., § 139, Marginal no. 23). Mentioned in passing, as it were, Division X held that the considerations that support personal liability for members of corporate bodies can also apply to the (executive) employee who is responsible for managing the company activities from which the potential risk to the intellectual property rights of third parties arises (No. 113).
10. In sum, the following can be said of the “Liability of Managing Directors” and “Fibreglass II” decisions: In the areas under the jurisdiction of Division I, the plaintiff must make a detailed pleading demonstrating the personal responsibility of the managing director, if relevant. For example, the managing director is liable under the legal precedent of Division I if measures were taken that are “usually” decided at the level of senior management. This means that a legal advisor runs a substantial forecasting risk – because it has not yet been determined whether such measures must be “usual” for the specific company or whether a more typological consideration must apply. By contrast, the legal precedent of Division X does not require the plaintiff to make any pleading demonstrating the liability of the managing director. Rather, it is the task of the member of the corporate body to “exonerate” himself, so to speak, by meeting his secondary burden of explanation.
