Unjustified threats: the time for change is now

On 1 October 2017, the principal provisions of the Intellectual Property (Unjustified Threats) Act 2017 (the Act) come into effect. This Act makes some substantial changes to the way in which holders of relevant intellectual property (IP) rights may approach third parties which they think are infringing their IP rights without fear of a legitimate threats action. We set out here the main things you need to know.

Background and the Need for Change

Threats provisions were introduced in the UK over 100 years ago to reduce, if not eradicate, overzealous IP rights holders threatening to sue third parties for IP infringement. If a threat was found to be an unjustified threat, the aggrieved recipient was entitled to remedies including an injunction to prevent further threats and damages to address any losses (including loss of profits). The Law Commission’s report in 2012 concluded that the law of unjustified threats was failing to achieve a balance between allowing IP rights holders to assert their rights against a third party and at the same time providing redress for IP threats which were not carefully considered and justified.

Aims

The Act has three key aims:

1. To protect recipients against the misuse of threats to bully or unfairly obtain a commercial advantage.
2. To simplify the relevant rules.
3. To bring greater consistency in the way the unjustified threats provisions apply to different forms of IP (the threat provisions have related, and continue to relate, only to patents, trade marks and designs).

The New Law

In essence the new test is twofold, namely:

Part One: whether a reasonable person would understand from the communication that a patent, trade mark or design exists.

Part Two: whether the reasonable person would understand that a person intends to bring proceedings against another person for infringement of the right by an act done in the UK.

Key Changes

In some ways the new test merely brings into statute that which was accepted through case law. However, the following key changes should be noted:

• The Act applies equally to patents, trade marks and designs (which was not previously the case).
• Under the old law the threats provisions applied where there was some link between the threat to sue for infringement and the United Kingdom. Under the new law the threat must be understood to be a threat to bring proceedings for an act done (or intended to be done) in the UK.
• While there continues to be exceptions in respect of an allegedly infringing primary act (for example, making or importing), the Act extends the exemption to intended primary acts.
• In respect of trade marks, the “causing another person to apply” a sign to goods or their packaging is now clearly a primary act.
• While applicable to patents for some time, it is no longer a ground for an unjustified threat claim to assert that a letter contains related secondary act infringements (such as selling), where primary acts (such as making) are set out.
• The Act introduces a safe harbour of “permitted communications” to allow communication with different people in the supply chain, commonly secondary actors, with a reduced risk of triggering a threats action, subject to the communication meeting certain criteria.
• In assessing whether a communication is a permitted communication, the courts expressly have a discretion to rule that any non-prescribed purpose is a “permitted purpose” under the Act (although it should be noted that communications which require the recipient to stop doing something, destroy/hand over something, or undertake not to do something will not be considered to be permitted).
• There will now be a defence to a threats action brought by a secondary infringer where the rights holder can show it made reasonable attempts to find the manufacturer or importer but was unable to do so (this has been in place in respect of patents since the 2004 reforms), and that this was brought to the attention of the secondary infringer before or at the time of making the threat.
• Professional advisors who fulfil certain criteria and are merely acting on behalf of a client will now be exempt from being personally liable for threats.

Take-Home Points

While there is still much to consider before communicating a claim that someone has infringed a patent, trade mark or design, the change in the law is to be welcomed. It brings consistency to the way in which the rules apply to relevant IP rights and should make the rules easier for rights holders and professional advisors to apply in practice.

Will Sander is a UK/European Trade Mark Attorney and IP Solicitor who regularly advises clients on the enforcement of their IP rights.