Piercing The Corporate Veil, Tackling The "Cat And Mouse" Scenario

As known as the "corporate veil", the legal personality of a company of limited liability is separated from the personalities of its shareholders, which protects shareholders from being personally liable for the company's debts and other obligations. However, this is not always the case. In Siemens Vs. Xinchang Siemens, etc. in relation to trademark infringement [case number: (2016) Zhe Min Zhong No. 699], Zhejiang Province Higher People's Court held that, the shareholders of limited companies, especially legal representatives, may take the companies as a tool or facade to conduct infringement, obtaining unjust benefits by controlling the companies and escaping tort liability by utilizing the corporate veil. This situation mostly occurs at the source of infringement, namely, manufacturers of counterfeits, which greatly damages the interests of intellectual property holders and violates the generally accepted principles of good faith and business ethics.