Article 23.2 of Taiwan Company Act provides that if the person-in-charge of a company violates any provision of the applicable laws in the course of conducting the business operations of the company and causes damages to any other person, the person-in-charge shall be jointly and severally liable with the company for the damage to such other person. The Supreme Court holds that the purpose of said Article is to prevent abuse of authority by the person-in-charge of a company and to provide victims with sufficient remedies. In practice, it is common for a plaintiff to sue a company as well as its person-in-charge in an IP case based on this Article. However, should the person-in-charge of a company be jointly and severally liable for damages even if he/she has never participated in the company's alleged infringement? Or, from the plaintiff’s point of view, how and to what extent should the plaintiff prove the involvement of the person-in-charge of the defendant company in a specific infringement, so that Article 23.2 of Taiwan Company Act will be applicable?
Under Intellectual Property Court’s (IP Court) practice, if the IP Court finds that the defendant company infringes the intellectual property rights and is liable for damages, whether the person-in-charge of the defendant company should be jointly and severally liable with the defendant company for the alleged infringement is dependent on whether the alleged infringement was undertaken by the person-in- charge for the business operation of the defendant company. On this issue, IP Court used to take a more pro-plaintiff stance, and, in some cases, even held that the person-in-charge should be jointly and severally liable because he/she is the registered person-in-charge of the defendant company. For instance, in a civil case involving copyright infringement, 103 Min Zhu Shang Geng (1) No. 2, the IP Court found that a media company infringed copyright by using a photo owned by other media company without permission. The plaintiff asserted that the persons-in-charge of the defendant company should be jointly and severally liable with the defendant company based on Article 23.2 of the Company Act. The sued persons-in-charge argued that they only performed the administrative works and did not actually participate in the infringement, so that they should not be jointly liable for the alleged infringement. The IP Court in that case ruled that since they were legal representatives of the defendant company, they should be held jointly and severally liable. However, when this case was appealed to the Supreme Court, the Supreme Court held that the joint and several liability under the Article 23.2 of the Company Act should not be applicable simply because a person is registered as the person-in-charge of the company (106 Tai Shang No. 775). Furthermore, the Supreme Court held that the IP Court erred by not looking into whether the infringement by the defendant company was resulted from the persons-in-charge's violation of the law while carrying out the company's business, whether there was causation between the damage and the alleged infringement, and why they should be held responsible for preventing the alleged infringement of copyright. The Supreme Court remanded the case back to IP Court for further review (the case was later withdrawn). A similar view was upheld by the Supreme Court in 106 Tai Shang No. 1836 civil judgment for trademark infringement, where the Supreme Court held that when the court considers whether a person-in-charge of a company should be subject to joint and several liability under Article 23.2 of the Company Act, it should specifically consider whether the alleged infringement is related to the business operation conducted by the person-in-charge.
The subsequent impact of the Supreme Court's aforementioned decisions during 2018 on the IP Court is worth noting. Still, there are cases where IP Court applied Article 23.2 of Company Act broadly and held that a person-in-charge of a company should be jointly and severally liable for the alleged infringement because said person was registered as its legal representative. Nevertheless, there are cases where the IP Court applied standard that is more aligned with the latest interpretation made by the Supreme Court. In 107 Min Gong Shang Geng (1) No.2, the IP Court held that, although the plaintiff asserted that the person-in-charge of the defendant company should be jointly and severally liable for the asserted damages, the plaintiff did not prove how the person-in-charge violated the law while conducting the company's business; therefore, the IP Court rejected the plaintiff’s request. Moreover, in 105 Min Zhu Su No.31, the IP Court cited the Supreme Court’s holding in 106 Tai Shang No. 775 and held that the person-in-charge of the defendant company should take joint and several liability under Article 23.2 of Company Act only if said person’s external act results in damage while performing duties on behalf of the company. In this case, the IP Court found that the alleged infringements are not related to the performance of a duty of the sued person-in-charge; therefore, the sued person-in-charge should not be jointly and severally liable for the alleged infringement per Article 23.2 of the Company Act.
In sum, from the current practice of the IP Court, it seems that the applicability of Article 23.2 of the Company Act will be reviewed on a case-by-case basis. Thus, if the plaintiff in an infringement case wants to assert that the person-in-charge should take joint and several liability for the infringing acts of the defendant company under Article 23.2 of the Company Act, the plaintiff must meet the basic legal requirements by submitting relevant contentions and evidence to explain the business operations of the company and the duties of person-in-charge; otherwise, the plaintiff’s assertions might be rejected by the IP Court. In contrast, to counter the plaintiff’s bare-bones allegation of joint and several liability, the person-in-charge of the defendant company may pressure the plaintiff with heightened burden of proof.