A reformed approach to threats

United Kingdom

This article was produced by Nabarro LLP, which joined CMS on 1 May 2017.

Summary and implications 

UK legislation contains special provisions relating to groundless threats of infringement proceedings. It has long been thought the rules are too favourable to (alleged) infringers. The UK Law Commission has now published its final report and recommendations on reforming the threats regime.

Background

Threats provisions apply to patents, UK and Community trade marks, UK registered designs, UK design right, registered Community designs and unregistered Community designs.

The claimant in a threats action (i.e. the recipient of threats) can seek a declaration that the threats were unjustified, an injunction to prevent further threats, and damages. The threats provisions are intended to strike a balance between allowing rights owners legitimately to enforce their rights, and preventing rights owners from making dubious infringement allegations – particularly against a competitor’s distributors and customers.

Key recommendations

  • Consistency across IP rights – to reflect the changes already made in relation to patents in 2004, the report recommends that there should be no cause of action in relation to the other IP rights where the threats are made against a primary actor, even if the threat is made in relation to acts of secondary infringement as well as primary infringement.
  • Legitimate communication with secondary infringers – the UK Civil Procedure Rules require parties to communicate with each other prior to issuing proceedings, with a view to avoiding the need for litigation. The threats provisions, however, can discourage such communication. The Law Commission has recommended that a rights owner should be permitted to communicate with a secondary infringer without fear of a threats action where the rights owner has a legitimate commercial purpose behind the communication (e.g. identifying a primary infringer) and reasonable grounds for believing the information it communicates is true.
  • Eliminating professional adviser liability – under the current regime, an aggrieved person may bring an action against anyone who has made a threat. This arguably includes professional advisers. The Law Commission report recognises that the possibility to sue lawyers for threats made on behalf of their clients can be manipulated by the alleged infringer. The report therefore recommends that a lawyer, registered patent attorney or registered trade mark attorney should not be liable for making threats where they have acted in their professional capacity and on instructions from their client.
  • Reform, not starting afresh – a more radical proposal was considered by the Law Commission. This was to do away with the threats regime entirely and introduce a new tort based on the Paris Convention of making “false allegations which discredit a competitor”. The Law Commission ultimately preferred the more incremental shift reflected by the proposed reforms, but emphasised that proper consideration should be given to this alternative at a later date.