5 July 2017

Why you could be sued for making threats to sue

Patents, trade marks and designs are valuable intellectual property assets, and the temptation is to act first and think later if the value of those assets is put at risk.

However, while firing off a cease and desist letter to distributors and retailers of infringing products may seem like an obvious first line of defence, this strategy is not without its pitfalls.

IP litigation, particularly patent litigation, is perceived as a complex, expensive minefield that is best left well alone. As far back as Victorian times, Lord Esher was led to remark:
"Why, that a man had better have his patent infringed, or have anything happen to him in this world, short of losing all his family by influenza, than have a dispute about a patent. His patent is swallowed up, and he is ruined."
And that perception has changed little today.

What this means in practice is that anyone threatened with a civil claim for IP infringement might be inclined to agree to whatever is demanded of them rather than fight the claim in Court - whether or not the claim itself is one that would stand up to legal scrutiny.

For example, unscrupulous businesses have in the past used such threats to stop customers buying competing products, even though such products were not actually infringing any IP rights.

Legislation has existed for some time to protect the recipients of such groundless threats, and that legislation has recently been updated in the form of the Intellectual Property (Unjustified Threats) Act 2017This week, the UK Intellectual Property Office has also published guidance for businesses on the new legislation. 

Of particular note are the available remedies (unchanged by the new law) against those bringing groundless threats:
  • An injunction stopping more threats being made;
  • Damages for loss caused by the threat; and
  • A declaration that the threats were unjustified.
It is has to be stressed that it is only groundless threats that are actionable, and even then only if such threats are made exclusively in respect of so-called secondary acts (e.g. selling and using products protected by patents). A threat in respect of so-called primary acts (e.g. manufacturing a product protected by patents) can be made with relative impunity.

Moreover, certain communications which might otherwise be perceived as implied threats are permitted, provided that:
  • they do not contain express threats;
  • the sender reasonably believes the truth of the contents, and 
  • the purpose of the communication is to put the recipient on notice of IP rights, to request information relating to the identity of a primary infringer, or to find out whether acts of primary infringement have taken place.
So stop and think before you send that cease and desist letter. It could be you on the wrong end of a legal action.

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