Upon receiving a carelessly drafted cease-and-desist letter alleging infringement of a registered trade mark, design or patent in the UK, a counter-claim for unjustified threats is currently a popular weapon in a defendant’s arsenal with which to retaliate. As things stand currently, any person aggrieved by a threat can seek (1) a declaration that the threats are unjustified, (2) an award of damages and (3) an injunction to prevent the issuance of further threats. There are a number of exceptions in which making threats to issue proceedings are not actionable, for example, threats relating to passing-off, copyright, or the supply of services. Nonetheless, our recent blog post (here) considered how this very tactic is still frequently used by infringers to regain strategic leverage over their opponents – and their lawyers – in commercial litigation.
Having been heavily criticised for a number of years, this area of law is set to undergo significant changes, as the much debated Intellectual Property (Unjustified Threats) Bill (‘the Bill’) received Royal Assent on 27 April 2017. This means that from potentially as early as October 2017, the Bill will enact into UK law the following long-awaited key reforms:
- The position for patents, UK and EU registered trade marks, and UK and EU registered and unregistered design rights will be harmonised, in an effort to address past criticisms of inconsistency in approaches to threats provisions. This particular reform will undoubtedly simplify the interpretation and application of the threats provisions for IP owners and their advisors, hopefully resulting in fewer falling foul of them.
- A communication containing a ‘threat’ will be actionable if it relates to proceedings for infringement caused by an act done (or threatened to be done) in the UK. This potentially widens the current scope of application (the current position is that the threat must be understood as a threat to bring proceedings in a UK court) and means that non-UK rights holders and overseas advisors will need to be mindful of making threats in relation to EU-wide rights. The Bill also clarifies that actionable threats can be made in mass communications, so do not have to be addressed to a specific individual.
- It will be permissible to require primary infringers to cease secondary acts such as the selling of goods under the new regime, in contrast to the current position in which threats made in relation to the selling of goods are actionable. It will also be possible to make threats to ‘primary actors’, such as manufacturers and importers of infringing goods, in relation to specified acts without risk of liability, including also certain intended primary acts.
- A ‘permitted purpose’ defence, currently only available to threats for patent infringement, will be made available for all IP rights. This means that rights owners will be able to communicate directly with ‘secondary actors’ (e.g. retailers) in order to discover whether an infringement has taken place, or by whom.
- It will no longer be possible to sue professional advisors for making unjustified threats. This means that where a person or firm is providing legal services for which they are regulated, it will not be possible to bring a threats action against them when they send threatening communications acting upon the instructions of their clients. Their letter must make it clear that they are acting upon the instructions of their client and must identify that client.
It is anticipated that these reforms will make the threats provisions more user-friendly than at present, hence they have been widely welcomed by IP rights owners and their advisors. However, some (non-IP-owning) parties have been less positive about the changes, arguing that IP advisors will be more likely to shoot from the hip with wild or vexatious allegations of infringement, secure in the knowledge that they cannot be held liable for their threats. We don’t agree. Ultimately, the client (on behalf of whom the threats would be issued) will still be liable for any unjustified threats, so no professional representative worth their salt will issue threats without first having both briefed their client of the risk and secured explicit authorisation to proceed.