New recommendations by the Law Commission appear likely to bring about reform of the UK law relating to “groundless threats” of infringement proceedings with respect to patents, trade marks and design rights (but not copyright). Under current legislation a threat is “groundless” when there has been no infringement or where the asserted right is invalid, although threats aren't groundless – even if infringement has not taken place – in circumstances where the acts complained of would have constituted infringement if they had been carried out. Remedies available include an injunction and damages.
In patent law there is currently an exemption so that threats actions may not be brought for threats made to a primary actor, and it is proposed that this exemption should also apply for the other rights. Primary actors are those who have carried out primary acts such as the importation of goods, or applying a mark to packaging, which can cause the greatest commerical damage to a rights holder.
Communications with secondary actors will continue to be within the scope of the the threats legislation, which is expected to provide guidance as to what may be said without making a threat. The UK government and the Law Commission are debating whether it should be necessary to inform secondary actors of the “reasonable endeavors used” to find the primary actor, or whether the test of “best endeavors” used in patent law should also be used for trade marks and design rights.
At present in patent law it is possible to avoid liability for threats by showing that the threatener did not know, or had no reason to suspect, that the patent was invalid. This defence is likely to be removed. In contrast however, lawyers and registered patent or trade mark attorneys are likely no longer to be jointly liable for making threats, provided they have acted in their professional capacity and on instructions from their client. The burden of proof will be on the legal representative to show that they were acting on instructions and are therefore exempt from the threats provisions.
In the meantime, the US government is considering how it can improve a bill aimed at curbing abusive patent demand letters: the Targeting Rogue and Opaque Letters (TROL) Act. If approved, the act will give the Federal Trade Commission the power to pursue companies that demand excessive licensing fees and threaten lawsuits in bad faith. The aim is to strike a balance between protecting businesses from abusive patent demand letters and ensuring rights owners are not restricted from legitimately asserting their IP rights.