Intellectual Property (Unjustified Threats) Bill

Background

UK legislation provides for protection against groundless threats of infringement proceedings by the holder of a patent, trade mark, design right or registered design. The claimant in a threats action can seek a declaration that the threats lacked justification, damages and an injunction to prevent further threats. In October 2015, the Law Commission published a draft version of the Bill, together with a final report following the government’s response to its earlier report.

In T&A Textiles and Hosiery Ltd v Hala Textile UK Ltd and others, the IP Enterprise Court had to consider whether letters sent by a rights-owner to eBay under its verified rights-owner system were a threat.

Facts

The Bill substitutes or amends the current threats provisions in the relevant legislation relating to patents, UK trade marks, EU trade marks, UK registered designs, UK design rights and Community designs.

The test in the Bill for whether a communication contains a threat to sue for infringement of a patent or other IP right is whether the communication would be understood by a reasonable person in the position of a recipient to mean that a right exists. This reflects the current position in case law. The communication must also be understood by that person to mean that someone intends to bring infringement proceedings in respect of that right for an act done in the UK. This modifies the existing law to ensure that the provisions apply to the EU unitary patent and European patents, subject to the jurisdiction of the Unified Patent Court.

There are three exceptions which may prevent a person aggrieved from suing the threatener:

• A threats action cannot be brought if the threat refers to specified primary acts, such as making or importing a product, for the particular right. This extends the existing law to cover threats that refer to intended primary acts.
• Threats are also not actionable if made to those who have done one of the primary acts. This exclusion is no longer limited to patents but extends to other IP rights, and also to intended acts.
• Implied threats made to a secondary actor will not give rise to a claim for unjustified threats if contained in a permitted communication. These permitted communications provide the framework for a “safe harbour” to allow a rights-holder to communicate with someone who might otherwise be entitled to sue for threats, by providing a means of exchanging information in order to resolve disputes. The communication must be made solely for a permitted purpose, all of the information that relates to the threat must be necessary for that purpose, and the person making the communication must reasonably believe that the information is true.
• A permitted purpose includes: giving notice that the IP property right exists; to discover if the right is being infringed and by whom; and giving notice that a person has an interest in the right in circumstances where some other cause of action is dependent on another person’s awareness of that fact. There is also guidance on what is not a permitted purpose, for example, requesting an undertaking relating to a product or process.

The justification defence remains but without the reference to the defence not being available where the right is shown to be invalid in a relevant respect. An existing defence only available to patent owners who were not aware at the time of making the threat that the patent was invalid has not been included in the Bill.

A defence currently only available to patents is extended to all the IP rights: it is a defence to show that all reasonable steps (currently best endeavours) have been taken to find anyone who has carried out, or intends to carry out, a primary act, for example the manufacturer that is the source of the infringement. If there are several possible lines of enquiry all must be pursued. The recipient of the threat must be told what the steps were before or at the time the threat is made.

The Bill also introduces a new provision preventing threats actions from being brought against professional advisers who act on instructions and who identify their client in the communication. It also ensures that the protection can apply to the EU unitary patent.

Comment

The Bill implements the Law Commission’s recommendations for reforming the threats provisions for IP rights and is long overdue, particularly in relation to trade marks and designs, in the light of patents reforms in 2004. The Bill will introduce a system that is more consistent across patents, trade marks and designs. The aim is to strike an appropriate balance allowing rights-holders to protect their IP rights, while not misusing threats in order to distort competition or stifle innovation.

A number of the Bill’s provisions leave some room for interpretation, such as the meaning of “all reasonable steps” in the defence in section 70C(3) of the Patents Act 1977, and equivalents for other IP rights, in relation to where attempts to find the primary actor were unsuccessful. There also remains uncertainty as to what amounts to an unjustified threat in certain situations, as shown in T&A Textiles. The Bill fails to clarify this issue.

Source: Intellectual Property (Unjustified Threats) Bill, 19 May 2016, www.gov.uk/government/collections/intellectual-property-unjustified-threats-bill.

First published in the July 2016 issue of PLC Magazine and reproduced with the kind permission of the publishers. Subscription enquiries 020 7202 1200.