Insights: Ground shifts under groundless threats

While it is important that intellectual property (IP) rights are protected, the right to enforce those IP rights can be misused, which can be anti-competitive and can have a stifling effect on innovation and creativity. Responding to concerns that the existing law did not strike the right balance between protecting IP rights holders and allowing for innovation, the Department for Business, Innovation and Skills and the UK Intellectual Property Office jointly asked the Law Commission to review this area of the law.

Following a consultation which was carried out last year, the Law Commission has concluded that protection from groundless threats of infringement proceedings should remain a part of UK law for patents, trade marks and design rights. However, the Law Commission has recognised that there is a need for reform and has highlighted specific areas where this is required.

Some of the key reforms which are proposed are as follows:

• Threats actions may no longer be brought for any threat made to a “primary” actor, regardless of whether the threats being made relate to primary or secondary acts of infringement. Primary acts are those infringing acts deemed to be most commercially damaging, such as manufacturing or importing of an infringing product, whereas secondary acts are lesser acts of infringement such as the sale or stocking for sale of an infringing product. This is already part of patent law where the benefits have been felt, and the Law Commission recommends that this is extended to trade marks and designs.

• Threats actions may no longer be brought for any threat made to a potential primary actor, namely threats made where there is evidence that a party has an intention to commit a primary act. This will allow infringement to be tackled at an earlier stage.

• Communication will be permitted between an IP rights holder and a secondary actor without it being considered a threat where there is a legitimate commercial purpose behind it, such as the purpose of tracking down a primary actor. Clear guidance as to what may be said will be given by the legislation. This will alleviate the current problems of communicating with secondary actors, which is fraught with difficulty and can result in disputes being driven to court sooner than might otherwise be the case.

• Professional advisors will no longer be liable for threats made on a client’s behalf. This will remove the problem of joint liability being used as a tactical manoeuvre to cause a rift between client and advisor.

These changes, if adopted, would be beneficial for all concerned. There will be consistency in the approach to threats for all different types of IP rights. The new law will be clearer and easier to follow and apply. Constructive dialogue with a view to settlement of disputes will be facilitated. This in turn should reduce costs and the need for litigation, which, due to the proliferation of rights in recent times, is an ever increasing risk. It is also hoped that the reforms will reduce the time spent on specialist advice, the cost of which can particularly disadvantage SMEs.

The consultation project is now complete. The Law Commission is very keen that its recommendations are adopted by way of new piece of primary legislation which will enact a new provision on groundless threats covering patents, trade marks and design rights. However it remains to be seen whether the Government will implement the recommendations put forward by the Law Commission.

Look out for our full report on the potential implications of these changes to follow in the next edition of our trade mark newsletter: boultbites.TM. In the meantime the Law Commission’s final report is available here.