The Intellectual Property Enterprise Court has dismissed an action for copyright infringement, and allowed a counterclaim for unjustified threats of registered design infringement in relation to a notice under eBay’s Verified Rights Owner (VeRO) system.
A claimant in a threats action can seek a declaration that the threats lacked justification, as well as damages and an injunction to prevent further threats (section 26(1), Registered Designs Act 1949) (1949 Act) (section 26 (1)). However, if the design owner shows that the threats were justified and its registered design is being infringed, the claimant will not be entitled to this relief unless he can show that the registration is invalid (section 26(2), 1949 Act) (section 26(2)).
A mere notification that a design is registered does not constitute a threat of proceedings within the meaning of this section (section 26(3)).
The High Court has held that, although it was a difficult question, it was arguable that a notice under the VeRO system was a threat, and granted an interim injunction (Quads 4 Kids v Campbell  EWHC 2482 (Ch)).
The High Court has refused an application by defendant design owners to strike out a claimant eBay seller’s action for threats under section 26(1) and section 253 of the Copyright, Designs and Patents Act 1988 based on a VeRO notice (Cassie Creations Ltd v Blackmore and another  EWHC 2941 (Ch)).
T alleged that bed linen products sold by H infringed the copyright in its original artistic works. T also alleged that H had infringed its UK registered design in respect of a label for packaging.
H counterclaimed for invalidity of the registered design on the grounds of two alleged prior uses, and for groundless threats of proceedings for infringement of the registered design. The alleged threats fell into two categories: threats to two third party companies; and two communications sent to eBay about H’s listing. T claimed that these threats were justified, and that H had not suffered any loss or damage resulting from them.
The court dismissed T’s action for copyright infringement in relation to its bed linen products. The alleged infringing designs had been imported into the UK before to the creation of the T’s drawings and so the claim for infringement of its artistic copyright failed on the basis that there had been no copying. T’s registered design in respect of a packaging label was invalid as H’s alleged infringing packaging had been made available to the public before the registration of the design.
T’s notice of claimed infringement to eBay at most threatened proceedings for copyright infringement, which is not actionable. It would not be taken as threatening eBay, or any other person, with proceedings for infringement of the right in the registered design and so it was not actionable under section 26(1). Although it was not necessary on the facts here to decide this point, the court’s provisional view was that the initial notice of infringement could be a threat in line with Cassie Creations.
However, the second letter from T to eBay was a clear threat, even though it was written in the context of a complaint about the VeRO system, because it:
- Was written by T’s solicitors on their headed notepaper.
- Specifically mentioned T’s registered design right.
- Mentioned that court proceedings had been issued against the manufacturer of the infringing items.
- Linked the infringing items to the sellers who were selling the products on their website.
- Invited confirmation that the infringing items had been removed from the website.
The first impression of an ordinary reader in the position of the actual recipient would be that this was a clear threat.
T’s letters to two of H’s customers also constituted threats under section 26(1). Here, the justification defence under section 26(2) was not available because of the finding that the registered design was invalid.
This decision provides a useful summary of the law relating to threats, confirming that the test to determine whether a communication is a threat is an objective one.
The initial impression which the letters would have on a reasonable addressee is the critical factor.
However, the question of whether the notification of infringement under the VeRo system is a threat within the meaning of section 26(1), or merely gives notice asserting registered design rights, remains undecided. The court noted that the issue was being raised as a small part of a one-day action in the Intellectual Property Enterprise Court and as a result had been the subject of less argument than in Quads 4 Kids or Cassie Creations, both of which took place in the High Court. Still, the court’s provisional view was the notification was a threat.
Case: T&A Textiles and Hosiery Ltd v Hala Textile UK Ltd and others  EWHC 2888 (IPEC).
First published in the December 2015 issue of PLC Magazine and reproduced with the kind permission of the publishers. Subscription enquiries 020 7202 1200.