When threats are OK
Intellectual property briefing: the legislation covering threats of infringement proceedings has been rationalised and made more consistent, but still requires to be applied with care
As a result of the Intellectual Property (Unjustified Threats) Act 2017, which came into force on 1 October 2017, it is now easier to send letters before action in patent, trade mark and design infringement cases. This article discusses the key provisions.
For many years, UK-wide legislation has regulated the making of threats of patent, trade mark and design infringement. Its purpose is to encourage IP rights-holders to direct pre-action correspondence to primary infringers (i.e. the manufacturer or importer of infringing goods, or the person applying a trade mark to goods or supplying services under a mark), rather than to secondary infringers, e.g. retailers of allegedly infringing goods. IP disputes can be costly, and the legislation aims to ensure secondary infringers are not deterred from stocking products by unwarranted allegations of infringement.
Inconsistencies in the previous legislation governing the different IP rights made the provisions complex to follow. For example, in letters before action relating to primary infringers in patent disputes, it was permissible to mention acts of secondary infringement such as selling the product concerned. However, this was not permissible in letters to primary infringers of trade marks or designs.
In addition, many people not involved in IP disputes on a day-to-day basis were not aware of the provisions and inadvertently fell foul of them.
Any person aggrieved by threats of action could sue the professional adviser who made the threats as well as the IP owner.
The new legislation seeks to address anomalies and bring much needed clarity to the law.
The Act’s provisions are the same for each type of IP right covered, but set out in separate sections as amendments to other primary legislation.
The key aim remains unchanged, i.e. to encourage IP owners to send pre-action correspondence to primary rather than secondary infringers. Remedies also remain the same: any person aggrieved by a threat can sue for a declarator that the threat is unjustified, an interdict against further threats, and damages for any losses suffered.
Threats made in any communication are covered, not just letters before action – for example, verbal threats, mass communications such as adverts in trade journals, and complaints submitted to online sellers (such as eBay and Facebook) using their infringement notification procedures.
The legislation applies to threats of proceedings in any jurisdiction, in relation to infringing acts done in the UK. It clarifies that letters to primary infringers can be sent in relation to allegedly infringing activities which have not yet begun, as well as those already underway. The provisions regulating threats made to primary infringers have been harmonised, to enable acts of secondary infringement to be mentioned.
In addition, actions arising from the making of threats can no longer be brought against professional advisers, provided they are acting on instructions and name their clients.
More clarity is provided around the extent to which IP owners can communicate with secondary infringers. A safe harbour of “permitted communications” is created, being those carried out for the following purposes:
- giving notice that the IP right exists;
- discovering whether the IP right has been infringed and if so, by whom; and
- giving notice of the IP owner’s interest in the IP right, where the recipient’s awareness is relevant to any proceedings that may be brought (e.g. it affects the remedy available).
The court may also treat other purposes as permitted, in the interests of justice. However, the following are not permitted purposes, so cannot be included in correspondence hoping to benefit from the safe harbour:
- requesting the recipient to cease commercial activities in respect of the allegedly infringing product;
- requesting that the recipient delivers up or destroys the product; or
- requesting undertakings in relation to the product or process.
In addition, the permitted communication must only contain information that is necessary for one of the permitted purposes. “Necessary information” includes details of the IP right at issue, and sufficient information to enable the secondary infringer to identify the products to which the allegations relate. The person making the communication must reasonably believe its contents to be true.
It is worth bearing in mind that threats are only prohibited insofar as they cannot be justified. An IP owner with the courage of its convictions can send threatening letters to secondary infringers, but must be willing to back up the threat by bringing infringement proceedings as necessary to justify the threat, including as a counterclaim to a threats action.
There are no express provisions in the Act relating to “without prejudice” communications. It is expected that the current common law position will apply, i.e. that threats made in the course of genuine “without prejudice” communications are not actionable.
In summary, although the threats provisions have been clarified, they remain a trap for the unwary, and careful consideration should be given to the new legislation before drafting letters before action.
Susan Snedden, director, TMT, Dentons UKMEA LLP