On learning of infringement, an aggrieved rights holder’s thoughts tend to turn quickly to a sharply worded cease and desist notice aimed at stopping infringement in its tracks or paving the way to swift court action.  Rights holders need to take care before making threats.

Rights holders beware

Unjustified threats in trade mark, design right and patent claims carry the risk of action by the alleged infringer for remedies including injunctive relief and damages. The rationale is to deter unscrupulous rights holders from making spurious claims to prevent legitimate competition.  However, an unjustified threats action, whatever its merit, can serve to drag a legitimate rights holder into court, as the defendant, placing it on the back foot.

Reform

The regime, to date, has derived from a patchwork of sources with differences between threats in relation to trade marks, design rights and patents.     

The new Intellectual Property (Unjustified Threats) Act 2017 will serve to provide greater clarity and consistency, by laying down a harmonised regime fortrade marks, design rights and patents, when it enters into force (it is expected to become effective in October 2017). 

The key points

They are:

• The Act introduces a new two-part test to determine whether a communication constitutes a threat.  It will if a reasonable person would understand from it that: (1) a relevant intellectual property right (i.e. trade mark, design right or patent) exists; and (2) that a person intends to bring proceedings (anywhere in the world) for infringement of that right by an act done, or which would be done, in the UK.
   
• Threats in relation to so-called “primary” acts of infringement are not actionable.  They include making or importing articles which infringe. 
   
• “Secondary” acts of infringement include supply or retail sales of a product made or imported by someone else.  The Act is intended to divert threats away from secondary infringers, but threats are permitted where “reasonable steps” have been taken to identify the primary infringer without success.
   
• The Act introduces a safe harbour of “permitted communications” which are not actionable.  Permitted communications notify the existence of a right or seek information to discover whether or by whom a right has been infringed (but do not extend to requests to cease doing anything, requests to deliver up or destroy products or requests for undertakings).
   
• The Act protects regulated professional advisers from unjustified threats actions provided they make threats in their professional capacity and on the instructions of their client who is identified in the threatening communication.

Impact

The Act will provide welcome consistency and strikes a better balance between allowing rights holders to protect their interests whilst providing shelter for genuine competitors against unjustified threats. 

As ever, there are some issues which remain to be resolved, such as what will constitute “reasonable steps” to identify a primary infringer before threats can safely be made to a secondary infringer. 

It is important to note the new regime will not extend to other intellectual property rights including copyright, passing off, breach of confidence or domain name disputes.

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