“the sword of damages…should either not be suspended, or should fall at once.”

Threatening someone with bringing proceedings for patent infringement can result in any person aggrieved by the threat bringing an action for damages. The Court of Appeal has recently repeated its rigid approach to the principle in Sudarshan Chemical Industries Ltd v Clariant Produkte (Deutshland) GmbH [2013] EWCA Civ 919.

The statutory basis for this protection from groundless threats can be traced back to a case in 1881. Mr Halsey and Mr Brotherhood made steam engines. Mr Brotherhood had a habit of systematically threatening to sue Mr Halsey’s customers for infringing his patents. When the customers received threats, they stopped buying Mr Halsey’s engines. Mr Halsey sued but was unsuccessful because the common law did not provide any protection. In 1883 Parliament stepped in to provide a statutory remedy.

The world has changed since Halsey v Brotherhood but intellectual property litigation remains complex and expensive. Those selling products that they have not manufactured tend to have little investment in them. When faced with infringement proceedings many may simply drop the product. Customers are as vulnerable to threats of infringement proceedings as they have ever been.

The case

The case was about Sudafast Yellow, an organic pigment originally developed by Clariant under the name PY 191. Sudarshan had developed its own brand of the pigment and marketed it. In 2009, Clariant wrote to Sudarshan asserting that a patent had been infringed. The letter said:

“Certainly you will not be interested in continuously effecting a patent infringement, which may involve the most serious penalties to the infringer and his customers.”

Clariant argued that the letter fell under the exceptions in the Patents Act 1977. A threat to someone “making or importing” a product is not actionable. Since Sudarshan was manufacturing the pigment, Clariant thought that their letter was protected.

The Court of Appeal disagreed. Since the letter also contained a threat to sue Sudarshan’s customers, it was actionable, even though it was only communicated to Sudarshan.

The law on patent threats is still taken seriously by the courts and this case shows that rights holders and practitioners should be very careful when protecting patent rights.