Power Play
State laws generally allow a corporation’s veil to be pierced (i.e., the corporation’s separate identity from its shareholders will be disregarded…
March 26, 2013 at 07:13 AM
2 minute read
State laws generally allow a corporation's veil to be pierced (i.e., the corporation's separate identity from its shareholders will be disregarded and the actions of the corporation imputed to the shareholders) only if a shareholder has such power and ownership in a corporation that the corporation does not truly have a separate identity, and there would be an inequitable result if the shareholder was not held responsible for the corporation's acts.
The courts view piercing as an extraordinary form of relief, and they are usually reluctant to order this relief unless there's a clear need to do so, according to Prof. Lynda Oswald of University of Michigan Business School.
Thus, if piercing is required to hold company executives liable for inducing infringement, the executives will rarely be liable. This would be particularly true for executives at large companies because the executives usually own just a small percentage of stock and do not dominate the entire enterprise. Such executives would not be liable for inducement, even if they ordered their companies to commit infringement, knowing it to be infringement.
State laws generally allow a corporation's veil to be pierced (i.e., the corporation's separate identity from its shareholders will be disregarded and the actions of the corporation imputed to the shareholders) only if a shareholder has such power and ownership in a corporation that the corporation does not truly have a separate identity, and there would be an inequitable result if the shareholder was not held responsible for the corporation's acts.
The courts view piercing as an extraordinary form of relief, and they are usually reluctant to order this relief unless there's a clear need to do so, according to Prof. Lynda Oswald of University of Michigan Business School.
Thus, if piercing is required to hold company executives liable for inducing infringement, the executives will rarely be liable. This would be particularly true for executives at large companies because the executives usually own just a small percentage of stock and do not dominate the entire enterprise. Such executives would not be liable for inducement, even if they ordered their companies to commit infringement, knowing it to be infringement.
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