DON’T YOU THREATEN ME!: Incurring Liability For Making Groundless IP Infringement Threats In The Light Of The Current Law Reform Consultation

For well over a century IP law has featured a special set of rules whereby liability can be incurred as a result of the issue of groundless threats of infringement. Their object is to dissuade rights-holders from scaring off traders by the use of sabre-rattling; and their effect can often be to turn the tables on IP bullies who, to their surprise, find that they are receiving a writ rather than issuing one. But are the rules working properly? The Law Commission, which is currently consulting on the subject, thinks not, and has therefore proposed a series of reforms. In this handout we briefly review the current rules, and then discuss elements of the consultation.

1. The current law...

   Rationale

   Intellectual property law is relatively complex, and litigation can be costly, so it is all too easy for people to capitulate when threatened with IP litigation - especially alleged "secondary infringers", namely downstream traders such as distributors, stockists, retailers, resellers and business customers who often find it difficult if not impossible to distinguish between a bluff and a genuine threat. It is principally this category of people whom the laws on liability for groundless threats are designed to protect.

   The cause of action for groundless threats

   Under a series of comparable (though not identical) statutory provisions1a person aggrieved by a threat of proceedings for infringement of certain categories of IPRs (whether or not he is the actual recipient of them) may sue for relief in the form of an injunction, a declaration that the threat lacks justification, and damages2. The categories of IPRs covered by this cause of action extend to UK and European patents; UK, European Community and International Trade Mark Registrations; registered and unregistered European Community Designs, and UK registered and unregistered designs - a long list, but not a comprehensive one, for various other categories of IP infringement3 fall outside the scope of the provisions.

   Parties who are potentially liable

   Since anyone issuing such a threat may potentially be liable, those at risk include not only IP rights holders themselves, but also their licensees and indeed their professional advisors, such as patent and trade mark attorneys, and solicitors. It is also worth remembering that employers may incur liability under the threats provisions by virtue of vicarious liability for their employees, even if the latter have been expressly prohibited from...