Groundless Threats and Trademarks

The Law Commission have, after a request from the Department for Business, Innovation and Skills (BIS) and the Intellectual Property Office (IPO), reviewed the  law of groundless threats of infringement proceedings for patents, trade marks and design rights and have now published a final report.

These are all valuable IP rights. To own a IP right is a promise of reward for innovation and creativity which may generate large amounts of money to the proprietors and the proprietors have the right to protect their IP rights against infringement. The risk with this right however, is that it can be misused to clear away competitors from the market, this is the main reason for the threats provisions importance. The threats provisions are part of a statutory regime, aiming to strike a balance between the effective enforcement of an IP right and the development of new ideas and inventions.

A groundless threat is one where there is no infringement, alternatively where there is no real intention to follow the threat up with enforcement proceedings or where the threat is made in respect of an invalid right, as these are unenforceable. These threats usually work due to the threatened party’s fear of a potential IP litigation, as these, because of the need of specialist courts, judges, experts and advisers, are known to be extremely expensive and disruptive. This allows a proprietor to, quite easily, abuse its IP rights. If this happens, the threatened party has a right to bring a groundless threats claim and may have a right to seek an injunction to stop the threats being made, to damages and to a declaration that the threats are unjustified.

The report concludes that protection against groundless threats in relation to patents, trade marks and design rights should be retained, but reformed. Today the threats provisions differ between patents, trade marks and designs, there is a desire to make the threats provisions more consistent between the three. The Law Commission’s report therefore includes recommendations to bring the provisions in relation to trade marks and design rights in line with the ones for patents. There are also recommendations to allow communications with ‘secondary actors’ (e.g. retailers or suppliers of the infringing goods) where the purpose behind it is legitimate and solely commercial. As legal advisors are acting in their professional capacity on their client’s instructions, they should no longer be jointly liable for making the threats.

It is unclear how quickly the new legislation to put the reforms into effect will be enacted. This cause of action already exists within European law (regulations regarding unfair competition in articles 101-102 Treaty on the Functioning of the European Union), one possibility is therefore to abolish the provisions altogether and replace them with a new cause of action based on the European unfair competition law.

By Malin Persson