Unjustified threats – change is on its way

Posted: 03/02/2017

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The law surrounding unjustified threats, often called ‘groundless threats’, looks likely to change, making it easier for businesses to try to protect their intellectual property rights.

What are groundless threats?

A business which believes that there is an infringement of its patent, trade mark or design rights can tell a competitor/third party that it believes it is infringing its IP rights and ask it to stop. However, if the competitor is not infringing and suffers loss as a result of the wrongful allegation, it can be awarded damages for the loss.

Both the IP owner and the lawyers who sent the letter alleging infringement are liable for the damages arising from the groundless threat. The current law on threats has been criticised for its lack of clarity and unequal treatment across different IP rights.

What is changing?

The Intellectual Property (Unjustified Threats) Bill has been drafted to address these criticisms and has recently passed the House of Commons.

If implemented, the Bill will amend the law in relation to unjustified threats by harmonising the threats provisions so they are the same for patents, trade marks and designs (they are currently quite different). The Bill does this by setting out criteria by which to assess whether a communication is an unjustified threat. The Bill itself deals with each of the above intellectual property rights individually but the following criteria apply to them all.

• Does the communication contain a threat? 

Yes, if a reasonable person in the place of the recipient would understand from the communication that an IP right exists and a person intends to sue (in the UK or elsewhere) for infringement of it.

• If the communication contains a threat, does it refer only to specific acts, or is the communication a 'permitted communication' for a 'permitted purpose'?

Even if the communication contains a threat, if the communication only refers to certain acts that the infringer has done or intends to do, then it is not an unjustified threat. These acts vary slightly depending on the intellectual property right in question and are detailed in the Bill.  

Similarly, if the communication is a ‘permitted communication’, it would not be an unjustified threat. The communication would be permitted where a person is making another person aware of the rights that they own and the specific acts that are causing, or are alleged to be causing, the infringement. The communication must also be made solely for a ‘permitted purpose’ and all the information relating to the threat must be necessary for the permitted purpose and reasonably believed by the sender to be true. The Bill specifically states that ‘permitted purpose’ does not include requesting a person to cease commercially using anything in relation to the infringed right, deliver up or destroy goods relating to the infringed right, or give an undertaking relating to their use of the infringed right.

It appears that a permitted communication is more akin to notifying a third party of the existence of your IP rather than asking them to stop infringing it.

If a threat is made and the communication does not solely refer to specific acts or is not ‘permitted’, then the communication is an unjustified threat. Remedies under the Bill would remain the same as under the current law in that the recipient of an unjustified threat may get a declaration that the threat is unjustified, an injunction against and/or damages from the party who made the threat. 

Why does this matter?

In essence, the Bill is important to businesses because it introduces the concept of a permitted communication. This allows the owner of an intellectual property right to notify a potential infringer of their rights without the risk that the communication would be seen as an unjustified threat, provided that they follow the provisions of the Bill. It is also a salient reminder to ensure you know what IP rights you have and be confident there is an infringement. Otherwise you may face a claim for groundless threats and have a hefty damages award made against you.

This article was written by partner Rachael Barber and Victoria Wright, a trainee solicitor in Penningtons Manches' intellectual property team.

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