In the UK a party who receives unjustified threats that they will be sued for infringement of a patent, trade mark or design right has a statutory right of redress.
A ‘threats action’ can be used by a party to seek a declaration that a threat made against them lacked justification, to seek damages and/or to obtain an injunction preventing further threats.
The law aims to stop the IPR holder groundlessly threatening customers of competitors, who might simply stop purchasing the allegedly infringing items rather than have to face litigation against the IPR holder.
However, the law on unjustified threats has been criticised for being unclear, inconsistent and for failing to strike the desired balance between protecting intellectual property rights (IPR) and stopping unjustified threats distorting competition.
For IPR holders the law can be confusing and fraught with risk. Correspondence to potential infringers must be carefully written to avoid incurring liability for making unjustified threats. Solicitors and patent or trade mark agents can also be caught by the law, potentially causing difficulties in relationships with their clients. The law of unjustified threats continues to be a fertile source of litigation, particularly as against overseas brand owners or owners of unitary rights such as the CTM who may not be aware of this quirk of UK litigation procedure.
Proposed reforms to the law on unjustified threats
The Law Commission has published a Report and a draft Bill containing proposed reforms to the law on unjustified threats. The aim is “to clarify the law and to prevent the misuse of threats to intimidate or gain an unfair advantage in circumstances where no infringement of an IP right has actually occurred”. The reforms are concerned with “clarifying the type of communications which are permitted between parties involved in a dispute over IP infringement, and encouraging constructive discussions between the parties”. The particular objective is to “provide a clear framework within which businesses and their professional advisors can operate to resolve disputes, including attempting to negotiate a settlement before turning to litigation”.
The main proposals are:
- To bring the law relating to trade marks and design rights into line with the law as it currently applies to patents: an IPR holder will be able to challenge a “primary actor” (i.e. a party who carries out acts that can cause the most commercial damage, such as a manufacturer or importer) without fear of facing action for making unjustified threats. That will be the case even if the challenge also refers to “secondary acts” (e.g. selling).
- Communications with secondary actors, such as sellers, will escape liability in certain circumstances. For example, communications aimed at identifying whether a primary act of infringement has occurred, and by whom, may be permitted.
- Professional advisers will generally be shielded from personal liability when acting for clients.
- The law is to be extended to afford protection against threats relating to European patents within the jurisdiction of the Unified Patent Court.
The UK government is currently considering the response to its recent consultation on the Report and draft Bill. However, it apparently remains keen to implement the proposed reforms.
The draft Bill is arguably less radical than it might have been. For example, other IPR such as copyright and trade secrets remain outside the unjustified threats law, as do threats of proceedings for passing off. And IPR holders will still need to proceed with caution when challenging potential infringers. The proposed clarification of this area of the law is nevertheless welcome in trying to redress the balance towards IPR holders.