Intellectual Property (Unjustified Threats) Act 2017

The Intellectual Property (Unjustified Threats) Act  2017 (the Act ) has received Royal Assent.

Background

UK legislation provides for protection against groundless threats of infringement proceedings by the holder of a patent, trade mark, unregistered design right or registered design. The claimant in a threats action can seek a declaration that the threats lacked justification, damages and an injunction to prevent further threats. 

In  April 2013, the Law Commission consulted on possible reforms to the UK legislative provisions relating to unjustified threats of intellectual property (IP) infringement proceedings and published its report in April 2014 (see Briefing "Groundless threats of IP proceedings: a potential solution?", www.practicallaw.com/7-569-1729). In October 2015, the Law Commission published a draft version of the Bill (see News brief "Unjustified threats regime: greater certainty but risks remain", www.practicallaw.com/0-620-4699). 

Facts

The Act  sets out several changes to the law. 

The threat test is modified so that it relates to whether the communication would reasonably be understood by a recipient to mean that someone intends to bring infringement proceedings in respect of a relevant IP right for an act done in the UK or which, if done, would be done in the UK (section 70(1), Patents Act 1977) (1977 Act). The threat need no longer be understood as being to bring UK proceedings. This change also ensures that the threats provisions can apply to the unitary patent.

Threats can be made in mass communications such as press releases and do not have to be made to an identified individual. This replicates the current case law (section 70(2), 1977 Act).

The existing exception for threats relating to specified primary acts of infringement of the particular IP right in question (such as making or importing a product) is extended to threats that refer to intended primary acts (section 70A(3), 1977 Act). For trade marks only, the primary act of applying a sign to goods or their packaging also extends to the act of causing another person to apply that sign (section 21A(2)(a), Trade Marks Act 1994) (TMA). 

The primary actor exclusion for patents introduced by the Patents Act 2004, which allows a threat covered by the exception to a person relating to specified primary acts also to refer to secondary acts, is extended to trade marks and designs (section 21A(4), TMA; section 26A(4), Registered Designs Act 1949; section 253A(4), Copyright, Designs and Patents Act 1998 CDPA; regulation 2A(4), Community Designs Regulation (6/2002/EC)).

There is a new "safe harbour" to allow a rights-holder, or someone acting on its behalf, to communicate with a person who might otherwise be able to sue for unjustified threats, where they make a threat which is not an express threat (sections 70A(5) and 70B, 1977 Act), provided that:

• The communication must be made for a permitted purpose. Three permitted purposes are set out (section 70B(2), 1977 Act), but the court may treat another purpose as a permitted purpose if it considers it in the interests of justice to do so (section 70B(3), 1977 Act). Various purposes not deemed to be permitted purposes are also listed (section 70B(4), 1977 Act).
• All of the information relating to the threat must be necessary for that purpose. Three examples of necessary information are given (there are equivalents for the other relevant IP rights), namely a statement that a patent exists and is in force or that a patent application has been made; details of the patent, or of a right in or under the patent, which are accurate in all material respects, and not misleading; and information enabling the identification of the products or processes in respect of which it is alleged that acts infringing the patent have been carried out (section 70B(5), 1977 Act).
• The person making the communication must reasonably believe that the information is true.

A threat is justified if it is shown that the act to which the threat relates was or would be infringing. The express provision that a person aggrieved may still obtain a remedy if the relevant IP right is shown to be invalid is removed as unnecessary (section 70C(3), 1977 Act). Since an invalid right cannot be infringed, a threat made regarding it cannot be justified. 

The defence for threats made to a secondary actor where no primary actor can be found, is extended to trade marks and designs. The defence is also revised to require that the threatener took "reasonable steps" to identify a primary actor, instead of "best endeavours".

There is new protection for professional advisers, providing legal services or trade mark or patent attorney services, provided that they are making the communication on the instructions of another person; and that when the communication is made, they identify that person (section 70D(3), 1977 Act).

Where a threat to sue is made before a registered trade mark or registered design is granted (and in respect of a pre-grant infringement), the threat is understood to mean that proceedings will be brought after grant, with the issue of whether the acts complained of are infringing being determined on the basis of the right as granted (section 70E, 1977 Act). This point was clear from case law in relation to patents, but less clear for registered trade marks and designs.

Infringement proceedings is extended to include threats to bring proceedings seeking an order for delivery up and disposal, including amendments to ensure that it covers the new unitary patent (section 70F, 1977 Act).

Only provisions concerning commencement and the territory came into force on 27 April 2017. The remaining substantive provisions will be brought into force by statutory instrument. The commencement date has not been confirmed but the Intellectual Property Office hopes that it will be in force from 1 October 2017.

Comment

The Act is intended to encourage the resolution of disputes and implements long overdue reforms bringing the law regarding threats in relation to trade marks and designs in line with that relating to patents. The law regarding unjustified threats in relation to IP rights remains a potential minefield. The tort remains one of strict liability with no requirement of intention, only what is reasonably understood about the intention. 

Even when the changes in the Act come fully into force certain key concepts will require interpretation: for example, the extent to which the courts will exercise their discretion to extend the scope of a permitted purpose in relation to permitted communications beyond those specified, and the question of when a communication is necessary for a permitted purpose. Also unclear is what amounts to reasonable steps that need to be taken before a person making a threat can rely on the defence of last resort allowing one to contact secondary actors where no primary actor can be found, although there may be guidance from patent law where this defence has been previously available.

Copyright and unregistered trade mark rights (passing off) anomalously continue to be unaffected by the Act.

Source: UK Parliament: Intellectual Property (Unjustified Threats) Bill: Commons stages, 28 April 2017 and Intellectual Property (Unjustified Threats) Act 2017.

First published in the June issue of PLC Magazine and reproduced with the kind permission of the publishers. Subscription enquiries 020 7202 1200.