The IP (Unjustified Threats) Bill

Minister for Intellectual Property

Crown Copyright
Open Government Licence

On 19 May 2016 Lady Neville-Rolfe, the Minister for Intellectual Property, introduced the Intellectual Property (Unjustified Threats) Bill into the House of Lords. The purpose of the Bill is to reform the law relating to unjustified threats of IP infringement. The need for reform is illustrated by two comparatively recent cases:

• Prince Plc v Prince Sports Group Inc. [1998] FSR 21 where the American lawyers of a well-known multinational sports goods supplier landed their client in High Court proceedings by demanding the transfer of a domain name by reference to their client's worldwide trade mark registrations in a letter before action that would have been quite unobjectionable in the United States; and 
• Brain v Ingledew Brown Bennison and Garrett (No. 3)  [1997] FSR 51 where a firm of solicitors was sued for pre-action correspondence that would have been quite acceptable in almost any other cause of action.

The reason why proceedings arose in both cases is that the Patents Act 1977, Registered Designs Act 1949, Copyright Designs and Patents Act 1988 and the Trade Marks Act 1994 create rights of action for those who are aggrieved by threats of infringement proceedings that turn out not to be justified. I discussed that legislation and the criticisms that have been made of it at some length in my case note on Global Flood Defence Systems Ltd and another v Van Den Noort Innovations BV and others [2015] EWHC 153 (IPEC) (29 Jan 2015) on 31 Jan 2015.

As I mentioned in that case note, the Law Commission has considered whether such rights of action should be retained and has concluded in Patents, Trade Marks and Design Rights: Groundless Threats that they should although the law should be reformed. In a further report on whether to extend the right of action to threats to sue in the Unified Patent Court the Law Commission produced a draft bill.  Following further consultation the Minister has introduced this Bill. In their press release the Minister and Intellectual Property Office said that its key elements include:

• "providing a clearer framework within which disputing parties and their professional advisers can operate to resolve disputes with a view to avoiding litigation

• protecting retailers, suppliers and customers against unjustified threats

• bringing the law for trade marks and designs into line with that for patents by allowing a rights holder to challenge someone who is a primary actor without fear of facing a groundless threats action

• protecting professional advisers from facing personal legal action for making threats when they act for their clients

• making the necessary changes to threats law so that the protection against unjustified threats can apply to European patents that will come within the jurisdiction of the Unified Patent Court."

This Bill will follow a special procedure for Law Commission Bills.

The Bill as introduced into the House of Lords consists of 9 clauses the first 6 of which relate to patents, trade marks and EU trade marks and registered, unregistered and Community designs. Clause 7 deals with geographic extent, clause 8 with commencement and clause 9 with short title and citation. The Bill amends the provisions creating threats actions in each of the above-mentioned statutes and the statutory instruments that extend the rights of action in respect of trade marks and registered designs to EU trade marks and registered Community designs.

In the case of each statute the Bill would substitute several new sections for the single section  that creates a threats action at present.  Thus, a new s.70 and ss. 70A to 70F would replace the existing s.70 in the Patents Act 1977.  The new s.70 would create a new two stage test which is set out in the explanatory notes:

"The first part, taken from the common law, is whether the communication would be understood by a reasonable person in the position of a recipient to mean that a right exists. The second part is whether the communication would be understood by such a person to mean that someone intends to bring infringement proceedings in respect of that right for an act done in the UK. This is also based on the current common law but has been modified so that the test can apply to European patents with unitary effect."

If an action lies the remedies are set out in a new s. 70C (a).  The new s.70A (2) to (5) would create exceptions to the definition of "actionable threat" in s.70A (1). S.70B would permit certain communications between the patentee and third parties some of which would at present be actionable.  A new s.70D would exclude lawyers and patent and trade mark agents from liability provided that they act upon instructions and identify their clients.

Clauses 2, 4 and 5 make similar changes to s.21 of the Trade Marks Act 1994, s.26 of the Registered Designs Act 1949 and s.253 of the Copyright, Designs and Patents Act 1988 respectively. Clause 3 makes consequential changes to The Community Trade Mark Regulations 2006. Clause 6 substitutes a new reg. 2  and regs. 2A to 2F for the existing reg. 2 of the Community Design Regulations 2005.

Anyone wishing to discuss this Bill or threats actions in general should call me on 020 7404 5252 during normal office hours or send me a message through my contact form.