UK Intellectual Property and Data Compliance for Business Leaders: Understanding Directors' Responsibilities, Fraudulent Trademark Applications, and Data Protection Obligations for Employers
In the world of business and law, two significant updates have emerged, providing clarity on director duties and data privacy for employers.
The Court of Appeal has provided much-needed clarity on the standards of honesty required for directors to comply with their duty to promote the success of the company, under section 172 of the Companies Act 2006. The new standards involve a stricter and clearer interpretation of acting in good faith to promote the success of the company for the benefit of its members as a whole.
Key points include directors genuinely acting in good faith with the company's success as their primary goal, beyond merely having good intentions or subjective belief that their decisions benefit the company. The Court's recent ruling in Saxon Woods Investments v Costa [2025] EWCA Civ 708 clarifies that a director's conduct will be assessed against an objective standard of honesty, based on the test established in Ivey v Genting Casinos [2017] UKSC 67. This means a director can be deemed dishonest if their actions fall below honest standards expected, regardless of their personal belief in their decision’s propriety.
Directors also have a fiduciary duty of undivided loyalty, meaning they must avoid conflicts of interest, cannot take corporate opportunities for themselves without express company permission, and must not act for personal gain at the company's expense. The Supreme Court in Rukhadze v Recovery Partners GP Ltd [2025] UKSC 10 reinforced this strict ethic, underscoring that directors cannot resign to exploit company opportunities personally without breaching their duties.
The duty to promote success requires directors to consider a broad range of factors including long-term consequences, employee interests, business relationships, environmental and community impact, reputation, and fairness among shareholders. This underscores that honesty extends beyond avoiding fraud to encompassing transparent, fair, and responsible decision-making in line with high standards of business conduct.
In addition to these changes, the Data (Use and Access) Act has recently been passed, providing insights on data privacy for employers. The latest GDPR for HR update also discusses its implications on workplace surveillance and equalities law. The ICO guidance on keeping employment records is part of this update, ensuring compliance with data protection regulations.
Meanwhile, in the realm of intellectual property, the UK Intellectual Property Office (UKIPO) has updated its examination procedure in response to the Supreme Court ruling on bad faith in trade mark applications. The ruling by the Supreme Court on bad faith in trade mark applications, in the case Sky v Skykick, has been applied in two opposition decisions by the UKIPO. Applicants are advised to avoid overly expansive trade mark specifications to avoid potential challenges by the UKIPO.
Lastly, the UK Financial Conduct Authority (FCA) has aligned conduct rules in banks and non-banks for serious non-financial misconduct. This move brings more behaviour within the FCA's Code of Conduct for Staff sourcebook (COCON), ensuring stricter accountability across various sectors.
For companies listed on the AIM market, moving to the Main Market of the London Stock Exchange may have benefits for larger AIM-quoted companies. The process and reasons for staying on the AIM market may also be suitable for some issuers, offering a balance between growth and regulatory requirements.
In summary, these updates underscore the importance of honesty, transparency, and responsible decision-making for directors, as well as data privacy and intellectual property protection for businesses. Directors must meet these standards not only in intention but also in honest conduct as judged by legal precedent, with courts willing to hold them strictly accountable for breaches. Businesses, in turn, must comply with data protection regulations and intellectual property laws to protect their interests and maintain a strong reputation.
- The Data (Use and Access) Act, a recent update, offers insights on data privacy, especially for employers, and the latest GDPR for HR discusses its implications, including workplace surveillance and equalities law.
- In the realm of intellectual property, the UK Intellectual Property Office (UKIPO) has updated its examination procedure, aligning with the Supreme Court ruling on bad faith in trade mark applications, such as the case between Sky and Skykick, to avoid potential challenges by the UKIPO.
