UNJUSTIFIED THREATS IN INTELLECTUAL PROPERTY LITIGATION

April 11, 2014

Before issuing proceedings, a claimant will engage in pre action correspondence with the proposed Defendant(s). The process commences through a letter of claim. This is sent by the claimant’s solicitor.

In the vast majority of cases a threat to sue is not actionable. There is however an exception in relation to threats to sue for infringement of intellectual property rights.

Threats provisions were included in intellectual property legislation to address the concern that when threats to sue for infringement of intellectual property rights are made against suppliers and traders, their fear of being involved in litigation may result in them capitulating and the business suffering damage, even if the right is invalid.

Threats provisions apply to all registered rights. They also apply to unregistered EU and UK design right.

A recipient of a threat can issue court proceedings. The recipient would seek a declaration from the Court that the threat is unjustified and injunctive relief to prevent any further unjustified threats. The recipient may also seek costs and damages. To date there is no reported case on damages which may be extremely difficult to quantify in practice.

A threat can be made orally or in writing i.e. a letter of claim. A threat is made if what is communicated is understood by the ordinary recipient as being a threat of infringement proceedings.

Whilst Plaintiffs have attempted to avoid unjustified threats by simply issuing a “notification of rights”, they cannot “draft out” a threat. No matter how the correspondence is drafted, if it is understood by an ordinary recipient as a threat, it is treated as such.

Liability for Threats

Any “person” making a threat can be sued. This would usually include the owner of intellectual property rights (both individual and company), licensees and users. It is not however necessary to have a specific interest in intellectual property.

Professional advisers can be added as defendants to unjustified threats proceedings. This includes solicitors and patent attorneys. It may also include barristers if they have advised on pre action correspondence.

There are several ways of avoiding unjustified threats litigation:

1. Legislation provides exceptions which are designed to protect retailers/traders further down the distribution chain. For example it is not an unjustified threat to alleged patent infringement if the alleged activity is making or importing a product for disposal;

2. Issue a “notification of rights” letter rather than a letter of claim. This reminds the recipient of the owner’s intellectual property rights. However, all will depend on how the notification is understood by the ordinary recipient as to whether it is considered a threat.

3. In intellectual property litigation, there may be several rights pleaded in parallel. In addition to registered intellectual property, a plaintiff may have a right to claim for passing off and breach of copyright. A plaintiff may wish to rely solely on these alternative causes of action.

It is not an unjustified threat if the owner if intellectual property has a valid claim for breach of intellectual property rights. Avoiding the pitfalls of an unjustified threats action can be expensive and protracted. The owner of intellectual property should seek legal advice before communicating any concerns of infringement to third parties.