Case: Mentmore Manufacturing v National Merchandising Manufacturing (1978) 89 DLR (3d) 195
Outcome: discussed
submitted by counsel for the Directors, the test to be applied is far from certain. One line of cases adopts what is known as the "direct or procure" test ( Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd [1924] 1 KB 1 , 14-15, while the other line of cases adopts the test in Mentmore Manufacturing v National Merchandising Manufacturing (1978) 89 DLR (3d) 195 that a director is only personally liable if it is reasonable to conclude that the purpose of the director was not the direction of the manufacturing and selling activity of the company in the course of his relationship to it but the "deliberate, wilful and knowing pursuit of a course of conduct that was likely to constitute infringement or reflected an indifference to the risk of it": at 204-205. In Allen Manufacturing Co Pty Ltd v McCallum &amp; Co Pty Ltd [2001] FCA 1838 ; (2001) 53 IPR 400 at [39] , a design infringement case, the Full Court of the Federal Court considered the two tests in the following terms: The authorities were collected and analysed by Beazley J in King v Milpurrurru (1996) 66 FCR 474 at 494-500..... Her Honour noted the existence of two lines of authority. One line supported what she called the "Performing Right Society test " : whether the director had "directed or procured" the company's infringement. The other line supported "the Mentmore test": whether the director had engaged in "the deliberate, wilful and knowing pursuit of a course of conduct that was likely to constitute infringement or reflected an indifference to the risk of it". Beazley J expressed a preference for the Mentmore test, on the basis that the Performing Right Society test did not "pay sufficient regard, either to the separate legal existence of the company, or to the fact that the company acts through its directors": see [66 FCR at 500]. However, this preference had no immediate consequence; her Honour held (again at [500]) that the appellants were not liable under either test. After listing a number of cases (at [40]-[41]) supporting each approach and considering the submissions of the parties, the Full Court went on to say (at [43]-[44]): The difference between the two tests may be more apparent than real. We are not aware of any case in which it has been held that a director or officer of a company directed or procured the company's infringing act, yet that person escaped liability because he or she did not deliberately, wilfully or knowingly pursue a course of conduct that was likely to constitute infringement or that reflected indifference to the risk of infringement. This may be because, in practice, an act of direction or procurement will generally meet the Mentmore test. It is notable that, in Mentmore itself, the Canadian Federal Court of Appeal declined (at 204) to "go so far as to hold that the director or officer must know or have reason to know that the acts which he directs or procures constitute infringement". The Court declined to do this because that "would be to impose a condition of liability that does not exist for patent infringement generally". To the extent there is a real difference between the tests, each has eloquent supporters. One day it may be necessary, in a practical sense, to choose between them. But it is not necessary to do so in this case. The position here is the same. This is not a case in which Messrs Keller and Armstrong acted only as directors of the infringing companies. Each had personal knowledge of the Designs and of the other facts and matters set out above (see [169]). To adopt the language of the Full Court, it was clear that each of Messrs Keller and Armstrong "was personally an actor invading [LED Tech's] rights: by creating the [Condor Products]" and taking the other steps outlined above. These sequences of actions were "the deliberate, wilful and knowing pursuit of a course of conduct" that was likely to constitute infringement or, at least, reflected a conscious indifference to the risk of infringement. As a result, each of the Directors also engaged in the design infringement. Each is a joint tortfeasor to the design infringement as each had "a common design" with Ren and Olsen to infringe the Designs and is jointly and severally liable to LED Tech for the damages assessed. Secondary liability under the TPA