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Reforms to be made to UK rules on 'groundless threats' of IP infringement

Out-Law News | 02 Mar 2015 | 4:41 pm | 2 min. read

The UK government has promised to change the law to make rules that allow businesses to bring legal action against intellectual property (IP) rights holders that make "groundless threats" of IP infringement against them "much clearer".

The Intellectual Property Office (IPO) and Department for Business, Innovation and Skills (BIS) broadly accepted recommendations made by the Law Commission on reforms to the "threat provisions" under UK law.

Currently, some 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 government said there is a case for sweeping away the existing rules in the longer term and replacing it "with a UK-wide or EU-wide new tort in relation to making unfair allegations". However, it has, for now, backed shorter term "evolutionary" changes to the existing rules instead.

UK minister for IP Baroness Neville-Rolfe said: "Our reforms will make sure the law properly protects businesses from being threatened unfairly, but also allow innovative businesses to resolve disputes legitimately and enforce their rights."

Among the changes backed by the government are measures to align how the 'threat provisions' apply to patents, trade marks and design rights.

David Woods, an IP disputes expert at Pinsent Masons, the law firm behind Out-Law.com, said: "The 'groundless threats' provisions seek to strike a balance between the right of IP owners to put companies on notice that they are suspected of infringing their IP rights with the right of businesses to be able to operate without being the subject of unjustified threats of court action if demands for payment in relation to spurious claims of infringement go unmet."

"Any attempt to clarify this area and add consistency across how the threat provisions apply to different IP rights has to be a good thing. There may not be a complete 'one size fits all' approach because of the inherent differences in the nature of each IP right, but the important thing is that more clarity is delivered on what rights holders can say in their communications without opening themselves up to a potential groundless threat action," he said.

"This is a complicated area of law that is easy to fall foul of so rights holders should take advice when seeking to communicate with businesses they suspect of infringing their IP rights," Woods said.

In its paper, the government said that rights holders that send certain types of communications to businesses should be not be able to be pursued by those businesses for making groundless threats. It said it would list "some specific and non-limiting examples of such communications" in its proposed new legislation. However, it said it was not convinced by some of the wording suggested by the Law Commission.

The Law Commission had recommended that "communications should be excluded from the groundless threats provisions if they are made for a legitimate commercial purpose, and if the information given is necessary for that purpose".

"The government agrees that the law should not be too inflexible; nor should it exhaustively list the types of specific excluded communications," the government's response to the Law Commission's recommendations on 'groundless threats' reforms (5-page / 360KB PDF) said. "However, the government wishes to reflect further on whether defining excluded communications as ones that are made for a 'legitimate commercial purpose' is the right statutory definition, or whether it carries the risk of being interpreted too widely."

"The government notes that an overly-wide interpretation could potentially remove any effective protection for secondary actors, despite any specific examples that may be present in the legislation," it said.

Patent law reforms introduced in 2004 already exempt 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's recommendation that legal advisers should not be able to be pursued in a groundless threats action when communicating with businesses on behalf of rights holders was also accepted by the government. However, the new rules will only protect legal advisers where their communications to businesses "clearly identifies" who they are acting for.