Out-Law / Your Daily Need-To-Know

Law Commission proposes changes to 'groundless threats' IP laws

Out-Law News | 22 Apr 2013 | 10:26 am | 3 min. read

A law reform body has proposed changes to the law that would make it easier for businesses seeking to protect their trade marks and design rights to make threats of legal action against alleged infringers of their rights without fear that those threats could be the subject of court action. 

The Law Commission said it wants to reform the "threat provisions" contained in UK intellectual property (IP) rights legislation (174-page / 452KB PDF) after identifying problems with the current regime. Currently companies accused of infringing patent, trade mark or design rights can launch legal proceedings against rights holders where they believe threats of legal action against them are groundless. However, different provisions exist depending on which IP right is at issue.

The Law Commission said that its main aim is to prevent the "prospect of groundless threats action from impeding genuine pre-litigation negotiations over legitimate disputes." It proposed that the categories of "primary infringers" with whom rights holders can communicate without fear of groundless threats litigation being launched against them should be expanded and that trade mark and design rights holders should also have new rights to communicate with "secondary infringers".  

Companies accused of primary infringement of trade mark and design rights generally cannot use the threats provisions laid out in statute to pursue rights holders over groundless threats. A primary infringer generally is a business or a person who can be identified as the trade source of the infringement and in some circumstances will be a manufacturer of competing products or an importer. A secondary infringer can be other persons such as customers or retailers.

The Law Commission has proposed that the categories of communications that can be made by a trade mark or design right holder with secondary infringers without being considered a "groundless threat" should be extended and broadly brought in line with patent law reforms that took effect in 2004.

Patent law reforms introduced in 2004 exempted a number of communications sent to secondary infringers from the rules governing groundless threats where the communications concerned "factual statements and assertions about the patent".       

The Law Commission has said that rights holders should be able to make enquiries with alleged secondary infringers as to the identity of primary infringers without that action triggering a right by the alleged secondary infringers to pursue a groundless threats case against them.

In addition, the Law Commission has said that legal advisers should not be able to be pursued in a groundless threats action.

"In Australia, advisers acting in a professional capacity are not liable for acts done on behalf of the rights holder," the Law Commission said. "This appears to be working satisfactorily. We propose similar protection should be available for lawyers, registered patent attorneys and registered trade mark attorneys acting in a professional capacity on behalf of a client."

The Law Commission said that it would also consult more widely on plans to create a new "statutory tort" that would "provide protection against unfair competition" in relation to actions by rights holders when claiming their patent, trade mark or design rights have been infringed.

"We welcome views on the advantages and disadvantages of creating a new statutory tort of making false or misleading allegations in relation to patent, trade mark or registered and unregistered design right infringement in the course of trade, which cause or are likely to cause loss to a competitor," it said.

The Law Commission said that it was important for those accused of infringement to be able to challenge rights holders that make groundless threats against them in light of the "proliferation" of IP rights in existence today. The "huge increase" in the volume of these rights has "increased the fear factor of threats", it said.

The Law Commission also said that current "loopholes" enable "a well-advised rights holder" to circumvent threat provisions when issuing notices relating to infringement to firms they suspect of infringing their rights.

"There are four loopholes which a well-advised rights holder could exploit," the Law Commission said. "A well resourced rights holder can simply issue proceedings and then open negotiations; through careful drafting, a letter can be worded so as to fall short of an actionable threat...; a threat can be made to bring proceedings for something other than infringement, which has the same effect but is not covered by the threats provisions; For Community trade marks and Community design rights it is possible to 'forum shop' and make threats of proceedings to be brought outside the UK."

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