David Gourlay gives SLN readers a rundown of the Intellectual Property (Unjustified Threats) Act 2017.

Care is always needed when making allegations of IP infringement in the UK. This is because unjustified threats may be actionable. The current law has been criticised for being overly complex and long-standing reforms are about to take effect. The key provisions of the Intellectual Property (Unjustified Threats) Act 2017 come into force on 1 October 2017. The Act introduces much needed consistency into UK law by aligning the rules for patents, design rights and trade marks on the making of unjustified threats. It also introduces greater certainty for those alleging IP infringement.

What has the 2017 Act changed?

Threatening to take legal action for alleged infringement of IP rights has long been a tactic for businesses. In the UK, laws giving protection against the making of groundless threats have existed for over a hundred years. The current provisions give any aggrieved person certain remedies, namely the right to seek an interdict / injunction, a declarator and/or damages. In the face of an action for unjustified threats the party who made the threat must prove that their IP rights have been infringed.

Existing UK laws on unjustified threats have proven to be unsatisfactory with different rules applying to patents, trade marks and design rights. Professional advisors have also been at risk of incurring personal liability for making threats when acting on behalf of their clients.

The new Act seeks to strike the right balance between the ability of a rights holder to protect their IP right and providing adequate protection to persons affected by unjustified threats. The 2017 Act also ensures that patents, trade marks and design rights are subject to the same rules.

Actionable threats

A new two-part test has been introduced which sets out the principles that a court will apply in order to decide whether a communication contains a threat to sue for the infringement of a patent, trade mark or design.

The test is as follows:

Test 1: whether a reasonable person would understand from the communication that a patent, trade mark or design exists.

Test 2: whether the reasonable person would understand that a person intends to bring proceedings against another person for infringement of the right by an action done in the UK.

Exceptions

Any person aggrieved by a threat may bring an action unless an exception applies. Therefore if a communication does contain a threat, consideration must be given to whether someone is allowed to bring a threats action. For example the Act provides protection for customers and those within the supply-chain, such as retailers and suppliers, against unjustified threats. It does so in part by clarifying how a rights holder can identify and approach the “source” of infringement. The exceptions are as follows:

Exception 1: actions for unjustified threats are not available where the threat relates to an allegedly infringing primary act. For example, for patents manufacturing or importing a product or using a process would fall within the “primary actor exception”.

Exception 2: actions for unjustified threats are not available if the threat is contained within a “permitted communication”. These act as a safe harbour for communications that would ordinarily amount to an actionable threat. For example communications can be made by rights holders to discover by whom the right has been infringed or to give notice of a right where the existence of the right may not be obvious, without threat of action by the infringing party. This means that rights holders can approach those further down the supply chain, i.e. secondary infringers such as retailers in an attempt to identify the source of infringement. However, if a rights holder makes a threat and asks someone (i) to stop doing something, (ii) to destroy or hand something over or (iii) to promise not to do something in respect of the IP right, these will not be regarded as “permitted communications”.

Professional Advisors

Under the new law, there will be no liability for professional advisors who send actionable threats so long as they are acting on the instructions of another person and that person is identified in the communication.

Remedies for threats

The remedies for a threats actions remain the same as before, namely an interdict / injunction, damages and a declarator that the threats were unjustified.

Defences

The following defences will be available to rights holders who have made a threat:

Defence 1: “justification defence” where the rights holder can show that the act which is the subject of a threat is shown to be an infringing act or would be infringing if carried out.

Defence 2: “no primary actor can be found” – under certain circumstances businesses can take advantage of this defence where they have threatened to sue an alleged secondary infringer when a primary actor (i.e. a manufacturer or importer) cannot be found.

What does all this mean?

The Act has helpfully brought the provisions for trade marks, patents and design rights together. There are now specific exceptions to unjustified threats that allow for permitted communications under certain circumstances and bring clarity to the types of threats that can and cannot be made in IP infringement disputes. However, the law remains complex and specific advice should always be taken before making allegations of IP infringement.