Unjustified Threats of Infringement Proceedings

Charlotte Rush | June 2017

An important aspect of managing your IP rights is enforcement.  If you discover that a person is, for example, offering on the market a product embodying your patent without permission, you may wish to sue that person for infringement, or at least let the person know that infringement proceedings are a possibility.  However, doing so carries risks, and so it is important to know the boundaries of what can be done safely when you believe your right is being infringed.

Before contacting a potential infringer, it is important to be mindful of the laws relating to unjustified threats of infringement proceedings.  Equally, for a person aggrieved by an explicit or implicit threat of infringement proceedings, it is useful to be aware of the right to sue on the basis of the threat being unjustified.

The law relating to patents, trade marks and designs protects people who are affected negatively by unjustified threats.  These provisions are intended to prevent situations whereby someone attempts to damage a competitor’s business by making unwarranted allegations of infringement.

Royal Assent was recently given to the Intellectual Property (Unjustified Threats) Act 2017, which has been created to harmonise and clarify the law relating to unjustified threats of proceedings for the infringement of various IP rights.

Definition of a Threat

As defined by the new Act, a communication contains a threat if it would cause a reasonable person receiving it to understand that a relevant IP right exists and that a person intends to bring infringement proceedings, in the UK or elsewhere, against another person.

This new definition explicitly provides protection against unjustified threats made outside the UK (so long as the infringement itself occurs, or if it has yet to occur, will occur, in the UK).  It notably applies to threats relating to European patents that may, in the future, come under the jurisdiction of the Unified Patent Court.

The format of the threat, and the intention and identity of the person making the threat, are not determinative.  For a communication to contain a threat, it is sufficient that a person receiving the communication reasonably would understand it to do so (regardless of whether or not such a person was the actual recipient).  Further, it is not necessary for the person making the threat to actually own any rights related to the IP in issue.

Excluded Threats

Any person aggrieved by a threat can bring proceedings for an unjustified threat, not just the recipient or target.  However, there are some threats of infringement proceedings relating to which an aggrieved person cannot successfully bring an unjustified threats action.  The excluded threats are those referring to so-called “primary acts,” which are usually the most vital acts for a rights-holder to prevent in order to protect their commercial activities.  The primary acts, which can generally be thought of as the acts which first bring an infringing article onto the market, are as follows:

Patents

(i)            making or importing a patented product for disposal; and

(ii)           using a patented process.

Trade marks

(i)            applying a sign to goods or their packaging;

(ii)           importing, for disposal, goods to which (or the packaging of which) a sign has been applied; and

(iii)          supplying services under a sign.

Designs

(i)            making a product for disposal; and

(ii)           importing a product for disposal.

The word ‘disposal’ in this context has a potentially broad meaning, and may include acts such as selling and distributing.

As well as acts that have actually been carried out, the new law also does not allow an action for unjustified threats where the threat relates to an intention to conduct the acts listed above.

Some types of communications containing implied threats are also protected from an unjustified threats claim, such as a communication that only provides details of a patent in order to notify a person that a patent exists and is in force.  Certain situations are specified in which this protection cannot apply.

Remedies and Defences

The remedies available for a person aggrieved by an unjustified threat are as follows:

(i)            a declaration that a threat is unjustified;

(ii)           an injunction against the continuance of the threat;

(iii)          damages for loss sustained by the aggrieved person because of the threat.

A defence for the person who made the threat is to show that the alleged act indeed constitutes (or would constitute) an infringement. Another defence for the person who made the threat is to show an inability to identify a person who carried out a primary act.  To use this defence, the person who made the threat must show they took “reasonable steps” to identify the primary actor and have notified the threat recipient of these steps.

Safe Harbour for Attorneys

The 2017 Act introduces a new safe harbour for patent or trade mark attorneys (or other legal professionals) making a communication containing a threat. An attorney can now avoid liability for making a communication containing an unjustified threat if acting on the instructions of another person in certain circumstances.  This provision removes the possibility of using unjustified threat proceedings to disrupt a client-attorney relationship.

If you know or suspect that your IP rights are being infringed, it is advisable to talk to an attorney before making any communications that could be perceived as a threat to sue.  If you are aggrieved by a threat, an attorney can provide advice on the available options.