Groundless threats can be misused to stifle inventions and distort competition. The issue is not new (threats provisions introduced for patents date back to Victorian times1). The new Intellectual Property (Unjustified Threats) Act 2017 (the Act) seeks to enhance the protection afforded to businesses and individuals against misuse of threats and foster an environment in which disputes that could be easily settled are not hauled in front of the courts. The substantive provisions of the Act come into force on 1 October 2017. Sections concerning territory, commencement and short title came into force in April 2017 (when the Act received Royal Assent). Although the Act extends the scope of some of the existing law, it is worth noting that other intellectual property rights, such as copyright, passing-off rights and breach of confidence, do not fall within its ambit.
There are two strands to the revised test for what constitutes a threat. The first part is whether a reasonable person would understand from the communication that a right exists and that the other person intends to bring infringement proceedings. This is pretty much a statutory enactment of the case law. Crucially, under the second part of the test, the question is whether a reasonable person would understand that the threat relates to an act done in the UK. This seeks to align the threats regime with the EU Unified Patent Court system (once established). Threats may be made by mass communication and no longer need to be intended to relate to UK proceedings. For example, the test could be satisfied in circumstances where a statement on A’s webpage advises that certain products, made by manufacturer B, infringe A’s patent and A will take all necessary steps to prevent any further infringement of its patent. Purchasers of the allegedly infringing product could perceive this as a threat to sue them in a country that was not in the mind of the person uttering the threat.
Due to the often complicated nature of intellectual property litigation, pre-action correspondence can be difficult. With this in mind, the Act introduces a ‘safe harbour’ of ‘permitted communications’, whereby parties can try to resolve their issues without having recourse to the courts. In order to avoid triggering the unjustified threats provisions, the communication must: (i) be made solely for a ‘permitted purpose’ (for example, to make a person aware of an existing IP right); (ii) not contain an express threat; and (iii) contain only information which is necessary for the purpose of making the communication. Therefore, asking someone to either cease doing or promise not to do something, or to destroy or hand over something, is a request which falls outside of this safe harbour.
It is, obviously, a defence to demonstrate that the threat was justified. The Act also extends the scope of a defence (which used to apply to patents only), allowing businesses and individuals to threaten to sue secondary infringers of their IP where the primary infringer cannot be found. This means that it is now possible to threaten, for example, a manufacturer or importer for trademark or design infringement. The rights holder must, however, demonstrate that it took reasonable steps (and failed) to identify the primary infringer. While it is necessary to let the recipient know what steps have been taken, it is not clear what steps will count as reasonable, i.e., whether all lines of enquiry need to be exhausted before one can reach out to the secondary infringer and rely on this defence.
Finally, it used to be (arguably) the case that professional advisers could be held directly liable for making unjustified threat claims. Provided that the client is identified in any communication, lawyers acting on behalf of their clients are now safe.
Parties should remember to seek legal advice before flexing their muscles and issuing anything that could be construed as a threat (which they may not necessarily wish to follow through on) to bring infringement proceedings as they may be, unintentionally, dragged into court. This may be commercially disruptive and have the unfavourable tactical consequence of reversing the burden of proof by requiring the party who made the threats to defend its assertions of infringement.
That said, owners of IP rights might wonder about the point of having such rights if they cannot brandish them. On that basis, they might, as many have done over the years, just take the plunge and risk a threats action.
For additional guidance, please see The Intellectual Property (Unjustified Threats) Act 2017 Business Guidance; the full text of the Act is available here.
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Section 32 of the Patents, Designs and Trade Marks Act, 1883.