Revised unjustified threats laws in the UK could have a global impact
Partner, Global Head of Intellectual Property
12 September 2017
The UK is introducing revised laws from 1 October 2017 to modify the existing regime regarding unjustified threats of IP infringement and to accommodate the Unified Patents Court. These changes bring the trade mark and design rules into line with the current patent position and clarify what rights holders are able to say when corresponding with IP infringers. But they also introduce new uncertainties that could apply to threats made outside the UK.
What these changes mean for IP owners
Trade mark, design and patent owners who enforce their rights in the UK need to be aware of the revised rules on threats. Mistakes in routine IP enforcement steps can leave IP owners vulnerable to a UK unjustified threats claim. There is even a risk for international businesses if they threaten to sue in a non-UK court in relation to acts that take place in the UK.
The new rules clarify what can be said in correspondence with alleged infringers and allow limited communications with secondary infringers, such as retailers of infringing product. Another change exempts solicitors from liability for groundless threats if they are acting on client instructions.
In the UK, persons aggrieved by a groundless threat of proceedings for trade mark (including EUTM), design (UK or EU, unregistered or registered) or patent infringement can sue the person making the threat and obtain an injunction to prevent further threats, as well as damages.
This regime is intended to prevent abusive claims against secondary infringers (those further down the supply chain) who might capitulate when threatened with complex IP litigation rather than dispute an unfair allegation. The current system has, however, been criticised as being overly complex, and making correspondence complicated and expensive to draft. It can also unfairly deter IP owners from approaching known infringers, for fear of satellite litigation.
The new law therefore attempts to strike a better balance between allowing IP owners to make good faith attempts to settle IP disputes and preventing abusive threats of IP infringement.
A wide range of activities may constitute an actionable threat
Under the new rules, a communication contains an actionable threat if a reasonable person in the position of a recipient would understand from the communication that:
a relevant IP right exists; and
a person intends to bring proceedings for infringement of that IP right in the UK or elsewhere;
in relation to an act done in the UK (or an act that, if done, would be done in the UK).
This test is wide and includes activities beyond cease and desist letters. IP owners should always take care when liaising with IP infringers in the UK, as the following could constitute actionable threats:
filing a VeRO notice with eBay if, for example, the validity of the IP right is in doubt or there is no intention of starting proceedings;
sending a mass communication or making a statement on a company website if the persons to whom the communication is directed would reasonably understand that the IP owner intends to bring infringement proceedings for acts in the UK;
sending a letter threatening action in a non-UK court for infringement of an EU-wide right (or UPC-enforced patent) with respect to acts taking place in the UK. For example, sending a letter threatening to sue in Germany for infringement of a EUTM if the relevant acts cover the UK (e.g. EU-wide website sales);
making threats of infringement proceedings in without prejudice correspondence; and
filing an inaccurate Customs Watch Notice or incorrectly notifying customs authorities that goods are infringing.
What communications are allowed?
1. Threats against primary infringers
Threats are allowable if they are made directly to the primary infringer i.e. those who have done or intend to do the following acts:
- Patents: making or importing a product or using a process;
- Trade Marks: importing goods or supplying services, applying a sign to goods or packaging (or outsourcing this process to a third party); and
- Designs: making or importing a product for disposal.
Importantly, if the communication is sent to these infringers, it can also refer to other acts relating to the same goods or services e.g. selling. This makes pre-action letters to these infringers simpler and cheaper to draft.
2. “Permitted communications” with secondary infringers
The new rules have clarified the limited forms of communication that are allowable with secondary infringers, who are generally those involved in selling or offering infringing goods for sale. Rights holders are able to provide basic information to these types of infringer if the following conditions are met:
(a) there is no express threat;
(b) the communication is made for a permitted purpose;
(c) the information regarding the threat is necessary for the permitted purpose;
(d) the IP owner reasonably believes such information to be true.
The new rules set out a list of permitted purposes for each IP right and a list of what information is necessary for those permitted purposes, such as providing details of an IP registration. To avoid any risk, communications with secondary infringers should be restricted to what is set out in these lists. The court does have a discretion to treat other situations as “permitted purposes” where it is in the interests of justice to do so, but it is not yet clear how this discretion will be exercised.
There is also a list of what is NOT a permitted purpose for each IP right. A broad cease and desist letter, requesting undertakings from a secondary infringer is excluded so may be actionable unless a defence applies (as set out below).
It remains a defence to a groundless threats action to prove that the threatened act constitutes (or would constitute) an infringement. However, any IP owner relying on this defence would still have the potential disadvantage of being the defendant in any action for unjustifiable threats whilst bringing infringement proceedings.
There is also a defence (new for trade marks and designs) where, despite having taken “reasonable steps” (which need to be set out in the communication), the right holder cannot identify the primary infringer and therefore needs to approach those further down the supply chain. This acknowledges the practical difficulties sometimes faced in identifying the manufacturer or importer of an infringing product and provides a useful tool for IP owners to approach known infringers in limited circumstances.
A key change in relation to patents is that there is no longer a defence if the IP right is shown to be invalid, regardless of whether the IP owner had a good faith belief in its validity at the time of making the threat. There is therefore a real risk in approaching potential infringers if the validity of the IP right isn’t clear (which can be the case in many patent and design cases).
Unjustified threats claims in the UK are rare but should not be ignored. A clever infringer can use a threats action tactically to make itself the claimant in any litigation with all the consequential benefits, such as controlling the timetable. IP owners who do not fully understand the complicated threats regime run the risk of becoming the defendant in any litigation and facing liability for damages and an injunction.
A clever infringer may also use the threats provisions to start proceedings in the UK, when the IP owner’s intention was to litigate elsewhere (or not litigate at all). Especial care should be used when seeking to enforce EUTMs, EU-wide registered and unregistered designs and UPC-enforced patents (Unitary Patents, and European Patents which have not been opted out of the UPC).
We would always recommend that you contact the London IP team to help in preparing any pre-action correspondence or taking any steps to enforce your IP rights with potential impact in the UK.