Welcomed reforms to unjustified threats
Posted in | Jul 28, 2017
UK patent, trade mark and design law currently enables a person affected by an unjustified threat to bring proceedings against infringement of a patent, registered trade mark, or registered or unregistered design (against them or someone else) to take legal action against the person who made the threat. The aim is to encourage rights holders to approach the alleged primary infringer (typically a manufacturer or importer) rather than alleged secondary infringers (typically those dealing in goods, such as retailers) when seeking to enforce rights.
This is because those carrying out what might be so-called secondary acts of infringement are generally more likely to give in to a, possibly unjustified, threat with the result that parties further up the supply chain suffer damage. The law on unjustified threats enables parties to obtain compensation for such damage. So, for example, a manufacturer might bring proceedings against someone who has threatened to bring infringement proceedings against a retailer of its products which causes the retailer to withdraw the products from sale, resulting in the manufacturer losing sales. If, ultimately there is no infringement (i.e. the threat was unjustified) the manufacturer should succeed.
To achieve this aim the current law prevents action being taken where a threat to bring proceedings is made only in relation to primary acts of infringement, e.g. manufacturing or importing products, supplying services and applying trade marks to goods or their packaging.
The current law has, however, been recognised for some time as deficient in a number of respects, largely to the disadvantage of rights holders. One issue is that is does not reflect the fact that those carrying out primary acts of infringement, such as making and importing products, will typically also be carrying out secondary acts, such as offering to sell and selling those products. So it’s not possible for a rights holder to set out a comprehensive complaint to an alleged primary infringer without making a potentially actionable threat. This is contrary to the intention of the law, as well as being contrary to the requirement in civil litigation to provide a full explanation of a complaint before commencing legal proceedings. A primary infringer may also be very difficult or impossible to locate.
Another issue is that proceedings may be brought against any person making threats. This includes their professional advisers. Alleged infringers have thus been able to use an action against the making of unjustified threats (or the threat to do so) to drive a wedge between advisers and their clients.
Changes to the threats provisions for patents were made a number of years ago. These went some way to addressing the problems, but no corresponding changes were made to the legislation governing other rights.
The Intellectual Property (Unjustified Threats) Act 2017
The new Intellectual Property (Unjustified Threats) Act 2017, scheduled to come into force on 1 October 2017, reforms all current provisions, clarifying ambiguities and provides consistency by harmonising the unjustified threats provisions for patents, designs and trade marks. Important features of the new law provides:
- A definition of what constitutes a threat based on what a reasonable person would understand from a communication – effectively confirming the position adopted by the courts on the current law and ensuring that the intention of the provisions cannot be circumvented merely by avoiding any explicit threat to bring infringement proceedings
- That threats are not actionable if made to a person who has done or intends to do a primary infringing act – enabling full grounds for complaint to be set out to alleged primary infringers without fear of making an actionable unjustified threat
- An exclusion of certain “permitted communications” from being actionable – enabling enquiries to be made to attempt to identify a primary infringer without making a potentially actionable threat and facilitating certain pre-action correspondence in general
- Permission to make a threat to bring infringement proceedings against a secondary infringer where, in spite of reasonable steps having been taken, a primary infringer cannot be identified
- A prohibition on bringing an action for the making of unjustified threats against a professional adviser, under certain circumstances – preventing the practice of using the threats provisions to frustrate the client – adviser relationship
The new legislation strikes a better balance between enabling rights holders to enforce their rights and protecting individuals and commercial entities from unjustified threats. It should enable rights holders to enforce their rights without the risk of encountering an action to bring unjustified threats, without the need to resort to what is often a rather contrived approach that does not address all of the issues head on.
Although the reforms are very much welcomed, this is still a complex area of IP law. The UKIPO’s guidance on the changes runs to some 32 pages and the consequences of making an unjustified threat can be commercially and financially burdensome for the rights holder. Advice should therefore be sought before making an approach to an alleged infringer, whether in writing or verbally.
We have extensive experience in the enforcement of IP rights and defending allegations of infringement. So if you suspect that your rights are being infringed or are in receipt of an allegation of infringement please contact us for initial advice.