Patents: threats before patent issued

Background

An applicant for a patent may bring proceedings in respect of any act only if the act would, if the patent had been granted on the date of the publication of the application, have infringed not only the patent, but also the claims in the form in which they were contained in the application immediately before publication (section 69(2)(b), Patents Act 1977) (1977 Act).

Threats of infringement proceedings may be justified if the acts in respect of which the proceedings were threatened constitute, or, if done, would constitute patent infringement (section 70(2A), 1977 Act) (section 70(2A).

The Court of Appeal has held that a threat made before grant would be understood as a threat to bring proceedings after grant. No difficulty arose in deciding whether the threats could be justified provided that appropriate steps were taken to ensure that the patent was granted before trial. (Brain v Ingledew Brown Bennison and Garrett [1996] FSR 314).

Facts

N and G entered into a licence agreement, under which G was exclusively licensed under N's patent application to make and distribute a flood barrier. After the licence was terminated G stopped selling the barrier and started selling an alternative product. N made threats of patent infringement proceedings against G. G then started proceedings against N for groundless threats. N counterclaimed for royalties due from G under the licence.

G applied for summary judgment on the ground that the threats could not be justified because they were threats of proceedings for infringement of a granted patent, and the application had not been granted. The Intellectual Property Enterprise Court (IPEC) refused this application. 

Shortly before trial, the European Patent Office (EPO) granted the patent. N asked for the trial of the threats claim to be adjourned. The IPEC ordered an adjournment. G appealed the refusal of summary judgment and the adjournment.

Decision

The court dismissed the summary judgment appeal and upheld the adjournment. 

Threats were capable of justification under section 70(2A). By creating a tort of strict liability which did not require proof of actual damage, section 70 acted as a restraint on commercial freedom of speech and an obstacle to the negotiation and settlement of patent disputes without resorting to infringement proceedings. So, the court should be slow, absent clear wording, to conclude that section 70 of the 1977 Act (section 70) made a class of threats incapable of justification.

Section 70 was aimed at the damage that could be caused to a manufacturer or importer of goods by threats of patent infringement proceedings directed at its customers. However, it was clear from section 70(2A) that it was lawful to make these threats where they were justified. In considering whether a threat was justified, what mattered was whether the person making the threat was ultimately able to obtain relief in respect of the acts in question.

Section 70(2A) required the court to consider whether the acts for which proceedings were threatened constituted an infringement, not whether the…