Intellectual Property (Unjustified Threats) Act 2017

Owners of IP rights, be they trade marks, design rights or patents, are often faced with having to protect those rights from third parties. Often the first inclination of an IP owner who believes that his rights are being infringed is to contact the purported infringer. However, doing so brings with it the risk that the rights holder might find themselves on the receiving end of an IP threats action.

In this briefing note, we outline the scope of the Intellectual Property (Unjustified Threats) Act 2017 which came into force on 1 October 2017. We highlight the pitfalls to IP rights owners and suggest ways in which those pitfalls might, if appropriate advice is taken, be avoided.

The UK has, for a long time, had legislation in place to prevent IP owners making so-called “unjustified threats”. This legislation is intended to address the legitimate concern that IP owners seeking to enforce invalid rights might intimidate traders into stopping trading non-infringing goods. Once an IP right holder is accused of making a threat, they have the burden of proving to the Court that the threat either fell into one of the legislative “safe harbours”, that it was justified as the right was infringed and, in the case of trade marks and registered designs, that the IP right was valid. In practice, the Courts have adopted a very restrictive approach to these safe harbours, which arguably discouraged attempts to settle disputes by negotiation before commencing litigation.
In recent years we have seen sophisticated multinational corporations misstep themselves in this complex area and make actionable threats against third parties, resulting in damages awards being made against them by the Courts.

The new legislation represents an attempt to soften the threats legislation by permitting certain communications between rights holders and their professional advisers, and possible infringing parties.
As under the old legislation, threats may be oral or written, express or implied. However, they may not be actionable if they satisfy the following criteria:

1. The subject matter of the threat is not actionable. This will be the case if the threat relates to the so-called “primary” acts of infringement, as detailed in the legislation. Broadly speaking, primary acts include importing or making patented products or designs and applying trade marks to goods, importing goods containing that mark and supplying services under a mark. However, it is important to examine the circumstances of each case to see if the very specific criteria in the legislation is satisfied;
2. The threat is made to a “primary actor”, that is a person who is performing the acts described above, not a party involved further down the supply line;
3. The threat is in a “permitted communication”, within the meaning of the legislation. This definition is intended to encompass information that can be exchanged to resolve disputes. The communication must be for a “permitted purpose”, it must contain only information that is necessary for that purpose and the person making the communication must reasonably believe that the information is true.

Although the new legislation is welcome, this remains a treacherous area for IP owners. In particular, although the exceptions are now somewhat broader, the permitted acts are very specific and care must be taken to ensure that communications do not stray into unpermitted territory. A wrong step at this stage might jeopardise the whole litigation, affect which party has the burden of proving the validity of the rights and open up a damages claims from the alleged infringers.