Update on the Unjustified Threats Act

Update on the Unjustified Threats Act

The new Intellectual Property (Unjustified Threats) Act has now taken effect (as of 1 October 2017). As discussed in our previous post, the act is designed to create an environment that favours negotiation and settlement, rather than litigation, between parties involved in an IP infringement dispute.

This change follows a review of the law of unjustified threats carried out by the Law Commission* with a goal of creating a system whereby parties can negotiate fairly over IP disputes, whilst protecting parties likely to be harmed by unjustified threats over alleged infringement. This includes any party whose commercial interest might be affected by the threat and need not necessarily be the direct recipient of the threat. In particular it is designed to discourage threats made to parties supplying or retailing anything protected by an IP right when the correct party to contact would be the producer or importer.

It is always important to take care when making allegations of infringement because any unjustified threats may be actionable. Where threats are unjustified the party who made the threat may find themselves being sued for damages.

A two-part test for determining whether or not a communication constitutes a threat has been provided:

  1. Whether a reasonable person would understand that a communication contains a declaration that a right exists and that a party intends to undertake infringement proceedings in respect of this right
  2. Whether a reasonable person would understand that the threat relates to an act done (or an act that would be done) in the UK

However, those concerned that their rights may be infringed can still communicate with potential infringers. This allows disputing parties to exchange information and gives them an opportunity to privately settle any disputes without having to resort to court proceedings. Any communication of this type must be believed to be true by the person making the communication and must be made for a permitted purpose, including:

  • Providing information that an IP right exists
  • Ascertaining whether a right has been infringed and/or who has infringed it
  • Providing information that a person has a right, where another person’s knowledge of that right is relevant to any proceedings brought in respect of that right.

The courts may, in some circumstances, treat another purpose as permitted if it is considered to be in the interests of justice to do so. However, if a party requests that someone stop doing something, promise not to do something, to destroy something or to hand something over, in respect of an IP right, this will not be considered a “permitted communication.”

The ability to provide information that an IP right exists is particularly important as if an infringer can reasonably claim to be unaware of the IP right the right-holder will not be awarded damages (although they can get an injunction against further infringement). However, once an infringer is made aware of such a right damages start to accrue unless they immediate cease to infringe.

According to the new Act, unjustified threats related to alleged infringement of patents, trade marks and design rights are all treated in essentially the same way. The new Act makes it clear that made publically and in mass communications, such as press releases, could constitute threats and such communications do not need to be made directly to an individual to be considered an unjustified threat, provided that they are more than a general warning.

As always, legal advice should be sought before any communication is sent regarding infringement of an intellectual property right. If you have any queries, please contact a member of our team who will be delighted to help.

*Although this was not a joint project, the threats provisions do apply in Scotland and the Law Commission consulted with the Scottish Law Commission during their review.

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