UK Threats Provisions: Don’t Let Them Trip You Up

(IPRinfo 4/2012)

Asserting intellectual property rights may trigger claims of unjustified threats of legal proceedings.

Anyone looking to assert their intellectual property rights in the UK should be aware that asserting certain IP rights, and accusing a person/entity of infringing those rights, could trigger claims under statutory provisions designed to protect against unjustified threats of legal proceedings.

Threats provisions apply to patents, registered trade marks, and registered and unregistered designs. The remedies include damages; a declaration that the threats were unjustified; and an injunction to prevent further threats being made.

Currently, proposals are afoot to change these threats provisions. Why are these proposals made? How will they change the IP landscape in the UK? In the meantime, what practical points should practitioners take on board?

The motivation for introducing the threats provisions into UK legislation was originally to protect traders from being threatened with weak proceedings which would not stand up in Court, but which nevertheless would unfairly oppress vulnerable businesses.

Outline of the provisions
There are statutory threats provisions which relate specifically to UK patents, trade marks, registered designs and unregistered designs. In addition, both community trade marks and community designs fall within these provisions, so care needs to be taken even if the rights asserted are not UK-only rights. Broadly, the threats provisions prevent a threat being made of legal proceedings for infringement of an IP right, unless the threat relates to a specified exemption (as discussed below).

There are no equivalent provisions for copyright, passing off (an English law concept that protects unregistered trade marks that have acquired goodwill in the UK) or confidential information.

Has a threat been made?
Whether a threat has been made is tested objectively, based on whether an ordinary recipient of a letter or other communication (whether made orally or in writing) containing the threat would understand a threat of infringement proceedings to have been made.

Where IP owners need to be especially careful is in relation to implied threats. The communication in question is always read in context, so previous correspondence can be relevant to establishing whether a threat has been made. A reservation of rights may imply a threat, as may a threat of future contingent action.

Avoiding falling foul of the threats provisions
The threats provisions contain exceptions, so communications can be worded so as to avoid the provisions by ensuring that any allegations of infringement relate to the excluded activities. These exceptions reflect the motivation behind the provisions to protect retailers, who are less likely to be aware of their possible infringement, and perhaps more vulnerable to unjustified threats.

Defending a threat
If a threats claim is made, it is a defence to prove that the infringement that was threatened can be justified (i.e. that there was in fact an infringement of a valid right). However, even if this is available, a party may bring a threats claim for tactical reasons, thus making them the claimant in an action, and arguably putting the IP rights owner on the back foot.

A person bringing a claim for an unjustified threat can obtain the following relief:
• A declaration that the threats lacked justification;
• Damages; and
• An injunction to prevent further threats by the IP owner.

Why might change be required?
Commentators recognise that the threats provisions do not necessarily solve the problems which they were introduced to address. In most cases, a well-crafted letter can get around the threats provisions, by using the exceptions. This means that, in practice, the provisions do not necessarily deter a claimant from sending a letter to any party who could be found to be infringing their IP rights, whether they are large or small, or infringers by accident or design.

This may have the undesired result of specially worded letters creating confusion on the part of alleged infringers. While UK practitioners will recognise why a letter is worded in a particular way, without perhaps referring to the main activities causing the concern (eg the sale of infringing goods), those receiving a letter may not recognise the reasoning.

The current position is also at odds with the general approach encouraged by the English Courts under the Civil Procedure Rules. This approach encourages the provision of full details of any claim in a letter before action. The indirect result of the threats provisions is that often letters before action relating to IP claims do not clearly describe all the issues for fear of falling foul of a threats claim, thereby misleading potential defendants as to the claims against them.

What changes are being proposed?
The Law Commission has this year launched a project to consider whether to repeal, reform or extend the UK threats provisions.

The project will consider the balance between the rights of IP owners who want to be able to protect their rights; and traders who value the protection from overly threatening legal letters.

The Law Commission intends to publish a consultation paper in February 2013, which will lead into a three month consultation period running until May 2013. The culmination of the consultation will be a Law Commission final report on recommendations to the Government, which will be made in late March 2014.

If threats provisions are weakened or repealed, the balance of power will swing to the side of IP owners, who will be free to robustly assert their rights without fear of repercussions in the guise of a threats claim. Arguably this will result in more clarity for potential defendants, and will have limited practical consequences in terms of volume of letters sent or rights enforced. Potential defendants will still, of course, be able to counter-claim for invalidity of a weak IP right, or seek a declaration of non-infringement if a presumptuous claim is brought.

In the meantime, despite the strong indication that it may be time for a change in stance on the threats provisions, if reform is to take place, it is still some way off. It is therefore still important to take heed of the threats provisions, when preparing letters before action.

Some practical tips to avoid falling foul of threats provisions
To be sure of your position, advice should always be sought from English lawyers before looking to assert IP rights in relation to the UK, as great care will need to be taken when deciding on the content and recipient of any communication.

There are a number of key points to remember in relation to the threats provisions, which can be useful both when advising clients on letters before action, and in assessing whether a client may have been a victim of a threat under UK law.

• Threats provisions apply to patents, registered trade marks, and registered and unregistered designs.
• There are limited statutory exemptions to the threats provisions, but a communication (including any attached undertaking) must be carefully composed to take advantage of them.
• It is generally acceptable to put someone on notice of your rights. However, even if a communication does not explicitly threaten infringement proceedings in the UK, a court may find that a threat is implied when considered in context.
• You can write a broader letter of claim relating to passing off, misuse of confidential information or copyright infringement. However, be careful not to imply a threat in relation to the restricted rights.
• Claims under the threats provisions can be brought not only against the IP owner, but also against the person writing the letter containing the threat. This can include the law firm instructed to send the letter on behalf of a client.
• Any ”person aggrieved” can bring a threats claim. This includes any person whose commercial interests are, or are likely to be, adversely affected in any real way, by the threat of infringement proceedings. This means that not only the recipient of a letter can bring a claim, but also anyone else affected within the chain of production/supply for the allegedly infringing product.

Iso-Britanniassa ei ole säännöksiä sopimattomasta menettelystä elinkeinotoiminnassa. Suomessa laki sopimattomasta menettelystä elinkeinotoiminnassa (1061/1978) voi tarjota keinon puuttua kilpailijan toimintaan. Korkeimman oikeuden ratkaisu KKO:2005:105 antaa lisävalaistusta varoituskirjeiden oikeudelliseen arviointiin.