Can you be sued for patent infringement simply because you hold shares in the company that allegedly infringes? In ITW GSE APS & Anr. v. Dabico Airport Solutions Pvt. Ltd. & Ors. [CS(COMM) 628/2023], the Delhi High Court said no, and deleted a passive-investor defendant from a patent suit under Order I Rule 10(2) of the CPC.
A shareholder, not an actor
The plaintiffs alleged infringement of patent IN’145 through the manufacture and supply of Pre-Conditioned Air (PCA) units at major Indian airports, and impleaded several defendants. Defendant No. 3 was roped in chiefly because it was said to be a shareholder exercising control over Defendant No. 1. It applied to be deleted, contending that it neither manufactured nor supplied the units, had no operational role, and was a passive, indirect investor. The Court, applying the settled “necessary versus proper party” distinction, found that the infringing acts were attributed specifically to Defendant No. 1 (supplier) and Defendant No. 4 (manufacturer) — and that the shareholding premise was, in any event, factually incorrect and legally insufficient.
The corporate veil, and the limits of joint liability
Relying on Vodafone International Holdings v. Union of India , the Court reaffirmed that a shareholder or holding company is a separate juristic entity and is not liable for a subsidiary’s acts absent fraud or misuse of the corporate form. It situated this within the broader Indian position on multi-party infringement: the Patents Act does not expressly recognise contributory or inducement infringement, but courts have invoked common-law joint tortfeasance where parties act in concert — as in Koninklijke Philips v. Sukesh Behl (Delhi HC, January 2025), where outsourcing essential steps of a patented process was treated as collaborative infringement. Here, there was no material that Defendant No. 3 induced, contributed to, or acted in concert with the infringing acts; mere commercial interest, indirect ownership or a capacity to provide information did not make it necessary or proper. The application to delete was allowed, binding Defendant No. 3 to its statement of non-involvement.
Why it matters
For litigants, the decision is a practical boundary marker. Plaintiffs cannot pad a patent suit with investors, group companies and shareholders in the hope of pressure or discovery; impleadment needs a pleaded, fact-specific role in the infringing acts. Equally, the judgment leaves the door to genuine joint liability open — Philips shows that orchestrating or outsourcing the infringing steps can fasten liability across participants. The line is between control on paper and participation in fact. For corporate groups, it is a reminder that the veil holds in patent litigation too, until fraud or a real principal-agent or joint-enterprise relationship is shown.
Sources & further reading: Order I Rule 10, CPC; Vodafone International Holdings v. UoI; Koninklijke Philips v. Sukesh Behl.
Educational note: This case summary is general information, not legal advice.