The U.K. Regime for unjustified threats of legal proceedings for alleged IP infringement has undergone major surgery but will this make it easier for IP owners to stop infringers?
Key provisions of the Intellectual Property (Unjustified Threats) Act 2017 (“the Act”) come into force on 1 October 2017, bringing some long overdue reforms to the unjustified threats regime in the UK.
The law relating to threats was originally devised to protect downstream players from unjustified threats of intellectual property (“IP”) infringement action. These provisions were considered necessary to prevent rightsholders from making such threats against the often smaller sellers and distributor (“secondary infringers”) in the supply chain who may be innocent or not have the resources or expertise to challenge the claim. They allowed such aggrieved parties to sue the rights owner for injunctive relief or damages. However the resultant legislative framework led to many problems in practice. It could even result in the undesirable situation where rights holders were discouraged from engaging in any correspondence with potential infringers for a fear of being sued for unjustified threats.
The Act seeks to deal with the main gripes and criticisms relating to the previous regime whilst maintaining the balance between the interests of rightsholders and parties that may be subject to unjustified threats. In so doing it tries to clarify what rightsholders can say in correspondence to alleged infringers, sets out the circumstances where communications with secondary infringers are permissible and introduces exemptions from liability for professional advisers under certain circumstances.
What is a threat?
To recap, a communication is considered to be a threat if the communication would be considered by a reasonable person in the position of the recipient to relate to an existing IP right and indicate that proceedings were going to be raised in respect of it. This common law definition of what constitutes a threat has now been set out in the Act.
For example, if a patent holder writes a letter threatening patent infringement proceedings to a seller of an allegedly infringing product, this threat may be considered actionable and the seller could raise an action for unjustified threats of patent infringement as a result.
What is changing?
The Act seeks to address some of the failings under the existing legislative regime and introduces the following changes:
- The Act defines “permitted communications” which are communications that can be made without being considered an actionable threat. This includes certain communications to secondary infringers that would previously have been considered threats. The Act further empowers the court to treat any other purpose as a “permitted purpose” if it considers it is in the interests to do so.
- The Act harmonises the threats provisions by bringing the law as it relates to threats for trade mark and design right infringement into line with the law relating to unjustified threats of patent infringement proceedings. For all three IP rights it is now clear that a threat can be made against a primary infringer (ie manufacturer/ importer) for secondary infringements such selling or distributing infringing articles. Previously such communications to primary infringers for secondary infringement in relation to trade marks and designs would be considered actionable threats, but under the Act this is no longer the case.
- The Act now applies to threats in relation to acts carried out in the UK. Previously, the threats provisions related to a threat of legal proceedings in the UK. However, under the Act this has been widened to cover acts done in the UK even if the proceedings might be raised elsewhere. This wording was introduced to cover the new Unitary Patent and has the effect of capturing any acts that apply to the UK.
- Under the old regime action for unjustified threats could be raised against the party making the threat or their professional advisers. This had resulted in professional advisers often seeking an indemnity from their clients when sending letters that could have resulted in threats action. This and the threat to sue the adviser could drive a wedge between client and its lawyer and could be a tactic deliberately employed by a shrewd alleged infringer’s legal reoresentative. The Act now excludes liability for professional advisers although this only applies where the communication clearly states the adviser is acting on client instructions and identifies the client in those communications.
The Act does bring in some welcome changes to the unjustified threats regime in the UK not least some consistency of approach as between the different those of registered IP. However it remains complex and no doubt will need to be tested in practice and litigation brought to clarify its effect.These changes should however encourage greater pre-action correspondence thus avoiding unnecessary court action. They should help redress the balance between rightsholders and potential infringers whilst providing some clarity as to the types of communication that can be made without risking an action for unjustified threats. These changes are laudable however the legal landscape is still far from straightforward in relation to threats, and advice should always be sought to ensure to avoid being unwittingly dragged into a threats action.