The Intellectual Property Enterprise Court has found the writer of a threatening letter liable for making groundless threats in FH Brundle v Perry [2014] EWHC 475. A reminder that, if someone is infringing your intellectual property rights, you must exercise caution if you want to threaten legal action. If you make a threat which does not comply with the rules you could find yourself on the wrong end of a claim for groundless threats. It’s not just the IP owner who can be liable for this – solicitors' firms which write threatening letters can be sued personally.

Background

Brundle was a wholesaler of metal products. Perry wrote Brundle three letters over a period of months. The letters alleged that Brundle was selling products which infringed Perry’s patent and that Perry intended to commence legal proceedings if Brundle did not provide an account of profits on relevant sales.

Brundle sued Perry for making groundless threats under section 70 of the Patents Act 1977. He won: Judge Hacon found that (i) each of the letters constituted a threat of legal proceedings (ii) Brundle was a “person aggrieved” by the threats and (iii) the threats were groundless because Brundle was not in fact infringing Perry’s patent.

Groundless Threats

There are groundless threats provisions in relation to patents, registered trade marks, registered designs and unregistered designs. The relevant legislation is s.70 Patents Act 1977, s.21 Trade Marks Act 1994, s.26 Registered Designs Act 1949 and s.253 Copyright, Designs and Patents Act 1988.

The provisions vary slightly for each IP right but in summary a groundless threat is:

  • a letter or other communication;
  • which leads a reasonable person, who has knowledge of all the relevant circumstances at the date the letter was written, to understand that the writer intends to convey an intention to enforce their rights by bringing legal proceedings in relation to one of the IP rights named above; and
  • it can be oral or written, express or implied.

What amounts to a threat is tested objectively.

It is “groundless” if there is, in fact, no infringement of the relevant IP right. Any “person aggrieved” can bring action, which means the recipient of a letter but also manufacturers, importers, distributors, buyers and/or consumers. Remedies include damages and injunctions.

There are exceptions and defences. You can, for example, threaten someone with legal proceedings for applying a trade mark to goods or their packaging (section 21(1) Trade Marks Act). It is a defence under all four pieces of legislation to show that the acts complained of were, in fact, infringements of the IP right in question. However there are exceptions to this defence.

The dangers of falling foul of the threats provisions are clear. You can rarely, if ever, know with certainty that a person is definitely infringing. The exceptions are narrowly defined and, if you do not specifically relate the threat to the excepted acts, that threat is likely to fall outside. Further, because threats can be implied, it is difficult to be sure how it will be construed.

So what’s the answer?

The threats provisions are complicated and have wide-ranging consequences. However a carefully drafted claim letter, written by a solicitor and designed to fall within the permitted exceptions, can reduce the risk of breaching the rules substantially.

Mere notification of the existence of a patent, trade mark or design is also permitted but it is important to remember that any subsequent correspondence may turn a notification into a threat. Remember that if you request undertakings, these should also comply with the permitted exceptions.

Although there are no threats provisions for passing off, copyright or misuse of confidential information, you need to be careful to avoid other liability. If for example you write a letter to an infringer's customer alleging copyright infringement when you are not sure of the position, you could be sued for malicious falsehood.