On 26 February 2015, the UK Government published its response to the Law Commission’s proposed reforms to the groundless threats of intellectual property right infringement provisions by largely accepting the Law Commission’s proposed reforms, subject to certain qualifications. See UK Gov’t Response.
The law of groundless threats is aimed at providing redress to recipients of groundless threats of trade mark, patent or design right infringement proceedings where there has been no infringement or where the intellectual property right claimed is invalid. The law has been heavily criticised as different approaches apply to the different intellectual property rights, the provisions are regarded as ambiguous and they are inconsistently applied.
From a practical perspective, the existing groundless threats provisions are inconsistent with the strict obligation on parties under the English pre-action conduct rules to exchange information with one another in order to attempt to avoid the need to go to court. Hence sending a pre-action cease-and-desist letter that complies with the pre-action conduct rules may nevertheless fall foul of the groundless threats provisions. This makes routine enforcement of intellectual property rights difficult.
In light of these problems, the Law Commission published a report in April 2014 recommending significant reform to the law on groundless threats. The UK Government responded to these recommendations on 26 February 2015, largely agreeing with the Law Commission’s proposals, subject to certain qualifications. A summary of the UK Government’s position is set forth below.
Summary of response
Outlined below, the UK Government’s response was that:
- Shape of reform: Protection against groundless threats should be retained, but reformed. In the longer term, serious consideration should be given to a new UK or EU wide tort in relation to making unfair allegations; but for now, the evolutionary approach to reform proposed by the Law Commission should be adopted.
- Consistency: To align with the existing position on patents, groundless threats actions may not be made in respect of threats of infringement made to a primary actor. Under the existing threats provisions for trade marks and designs, a proprietor can threaten a manufacturer or importer without risk of a groundless threats action, but cannot threaten infringement against those manufacturers or importers in respect of any subsequent sale of those manufactured or imported goods. The proposed reforms will remove this distinction so that a proprietor can threaten a primary actor with impunity in respect of both primary and secondary acts.
- Exempt communications: Communications with secondary actors which are made for a “legitimate commercial purpose” and where the information given is necessary for that purpose should not fall foul of the threats provisions. However the UK Government will reflect on whether defining exempt communications as ones made for a “legitimate commercial purpose” is the correct statutory definition, noting that an overly broad definition would undermine the protection that the groundless threats provisions afford to secondary actors.
- Reasonable endeavours to find primary actor: Where threats of infringement proceedings are made to a secondary actor in trade mark and design cases, it will be defence to show that the proprietor has used “reasonable endeavours” to locate the primary actor. Whilst expressing that a proprietor should not have to go to extraordinary lengths to invoke the defence, the UK Government had reservations as to whether the “reasonable endeavours” test was objectively clearer, fairer and better to understand than the existing “best endeavours” test in patent law. This will be considered further prior to the legislative reform.
- Knowledge of patent validity: The existing defence to an action for groundless threats in patent law where a patent holder did not know, and had no reason to suspect, that the patent was invalid should be abolished. The UK Government also made clear that no equivalent defence should be introduced for trade marks or designs.
- Liability for professional advisers: Lawyers, registered patent attorneys and registered trade mark attorneys should not be jointly liable where they are acting in their professional capacity on instruction from their clients. However the exemption will only apply when the communication clearly identifies the professional adviser’s client and the burden of proof will fall on the professional adviser to show that they were acting on their client’s instructions.
The UK Government’s response is positive and promises to bring some much needed clarity, consistency and rationality to the law of groundless threats.
The proposed reforms are not without questions however (for example: how to define “legitimate commercial purpose”; whether “reasonable endeavours” is any clearer than “best endeavours”; and whether lawyers will be required to waive privilege in order to prove that they are acting on their client’s instructions), and so it remains to be seen how these reforms will be implemented in practice.
The Law Commision (LAW COM No 346) “Patents, Trade Marks and Design Rights: Groundless Threats” (April 2014)
The Government’s Response to the Law Commission’s Report (Law Com No 346) “Patents, Trade Marks and Design Rights: Groundless Threats” (26 February 2015)