The Intellectual Property (Unjustified Threats) Bill 2017

Posted: May 10, 2017

On 27 April 2017, shortly before the dissolution of Parliament, the Intellectual Property (Unjustified Threats) Bill received Royal Assent. The new Act is expected to come into force in October 2017.

Background

Unjustified threats legislation is designed to provide redress to people who receive unjustified threats of Court proceedings for registered trade mark, design or patent infringement. Its main underlying purpose is to protect innocent consumers and retailers (“secondary actors”) of goods that might infringe IP rights.

The groundless threats regime has, however, been tarnished by controversy, not least because it has been exploited by alleged primary infringers (“primary actors”) seeking to gain a tactical advantage over IP rights holders, by threatening, and in some notorious cases, bringing, Court action in response to either an unwary letter before action or an unguarded statement made during the course of negotiations.

Many commentators view the existing regime as draconian and unfairly weighted in favour of alleged infringers, who are gifted a right of action merely because a claimant used the wrong form of words in a written communication. This has in turn caused uncertainty among rights owners and practitioners, who have been known to exercise farcical levels of caution in enforcing rights, or indeed not to enforce them at all, for fear of a threats action.

The position on threats for patent infringement was ameliorated somewhat by the Patents Act 2004, however trade marks and designs have up to now remained regulated by the sparse wording of section 21 of the Trade Marks Act 1994 (“TMA”), section 26 of the Registered Designs Act 1949 and section 253 of the Copyright, Designs & Patents Act 1988.

The new Act brings the law regarding threats for infringement of registered trade marks and designs into line with that relating to patents, and makes further reforms to all three rights. In particular, the 2017 Act extends to trade marks and designs the existing exception in patent cases for threats made to a “primary actor” (see below).

The main changes to the law

Meaning of a “threat”: The new Act clarifies the meaning of a threat, confirming that a threat will be actionable if it relates to proceedings for infringement caused by an act done (or threatened to be done) in the UK. Previously, the threat had to be understood as being to bring proceedings in a UK court. This change also ensures that the threats provisions can apply to the new EU unitary patent.

Primary actors: The new Act will allow threats to be made to “primary actors” (e.g. manufacturers or importers of infringing goods) in relation to specified acts and will also allow rights owners to require primary actors to cease secondary acts, such as selling. Previously, a threat made in connection with selling by a primary actor would have fallen foul of eg. the provisions of section 21 TMA.

Intended acts: The new Act extends the exemption for specified primary acts (eg manufacturing or importing) to intended primary acts.

Causing another person to infringe: The primary act of applying a sign to goods or their packaging will also extend to the act of “causing another person to apply” that sign.

Permitted communications: Under this new so-called “safe harbour” provision, a rights owner may now communicate directly with a secondary actor provided the communication is made for a “permitted purpose” and the threat is not express. Permitted purposes include:-

(a)   Giving notice that a registered trade mark exists;

(b)   Discovering whether, or by whom, a registered trade mark has been infringed by a specified act; and

(c)    Giving notice that a person has a right under a registered trade mark.

The Court is also given a wide discretion to treat any other purpose as a permitted purpose if it “considers it in the interests of justice to do so”. We expect this provision to be debated in case law in the coming years.

Note, however, that requiring a person to cease using a mark, to deliver up or destroy goods, or give an undertaking, may not be treated as a permitted purpose.

Mass communications: The new Act clarifies that threats can be made in mass communications and do not have to be made to a specified individual.

Professional advisers: The new Act introduces a provision preventing threats actions from being brought against professional advisers who act on instructions and who identify their client in the communication. Cue a huge sigh of relief from the legal profession, since hitherto any “person” (including professional advisers) making a threat has been caught by the legislation, and law firms have been sued as a result merely for acting on instructions.

Comment

The new Act, when it comes into force, will go some way towards redressing the balance between IP rights owners and alleged infringers. Owing to the sparse wording of the existing legislation, IP rights owners have for too long walked a tightrope between asserting their legitimate hard-won rights and being caught by the threats provisions. IP rights owners should now, if properly advised, be in a position to enforce their rights more freely and sensibly.

Jim Dennis is an IP Partner in Simkins’ Dispute Resolution team.