Patents, Trade Marks and Design Rights: Groundless Threats

Status: This project is complete.  In a written response issued on  26 February 2015, the Government accepted the majority of our recommendations outright. Three were accepted in principle and we are currently addressing the Government's comments in respect of those recommendations.

Patents, trade marks and design rights are valuable intellectual property (IP) rights and a vital foundation of economic growth.  These rights ensure that innovation is rewarded and encouraged.  The law provides a means by which they can be effectively enforced; however, this can be misused with the result that new ideas and innovations are stifled.  The mere threat of infringement proceedings is capable of causing significant commercial damage to a business by driving customers away.  This is because of the real and perceived effects of IP litigation.  It is widely thought to be expensive, complex and disruptive and therefore avoided at all costs.

The law provides a remedy in the shape of the threats provisions.  Where there has been no infringement or where the right is invalid, the threat is said to be groundless.  Any person aggrieved by a groundless threat may apply to court for an injunction, declaration and/or damages.

Although this is not a joint project, the groundless threats provisions apply to Scotland and during the course of this project we have consulted with the Scottish Law Commission.

The project

In our final report published in April 2014, we recommend that:

  • the protection against groundless threats of infringement proceedings should be retained, for patents, trade marks, registered and unregistered design right but it should be reformed;
  • a threats action may not be brought for all threats made to a primary actor; this is already part of patent law but should also apply for the other rights. Primary actors are those who have carried out primary acts, such as the importation of goods or the application of a mark to packaging. Primary acts can cause the greatest commercial damage to a rights holder;
  • it should be possible to communicate with secondary actors, that is those who have not carried out primary acts.  This will be where there is a legitimate commercial purpose behind the communication and where there are reasonable grounds for believing that the information provided is true. Guidance as to what may be said should be provided by the legislation;
  • for patents, it should no longer be possible to avoid liability for making threats by showing that at the time the threat was made the threatener did not know, or had no reason to suspect, that the patent was invalid; and
  • a lawyer, registered patent attorney or registered trade mark attorney should no longer be jointly liable for making threats where they have acted in their professional capacity and on instructions from their client.

In the written response, the Government indicated that it was keen to see our work move forward and intended to bring primary legislation to enact the reforms in due course.  We are currently instructing Parliamentary Counsel on a draft Bill.