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Friday, 14 August 2015

Tinkering with IP threats: Commission consults, Parliament proposes and Robin roars

The making of groundless and unwarranted threats to sue other people for infringing intellectual property rights is a topic which in the United Kingdom has been weighed, measured, broken down into fragments and then put together again so many times that one might almost think it was not a topic of law reform but an offline version of a MMORPG. But now, it seems, a somewhat unlovely, inconclusive, muddled and befuddled attempt at a happy ending is in sight.  Katfriend and CIPA Litigation Committee stalwart Vicki Salmon reports:
In the past few years the Law Commission for England and Wales has been consulting on new legislation to deter IP rights-holders from issuing unjustified threats to sue people for infringing their IP rights.  For those not familiar with this area, the issue of a threat to a competitor’s customers that a product (or process) infringes an IP right can have a serious effect on that competitor’s business, without the IP right-holder actually bringing proceedings and getting a court to decide if the IP right if it has been infringed – or even if it’s actually valid in the first place.  
The ‘threats’ provisions in UK statute law give the competitor in such a situation the right to seek an injunction and redress for damage caused to its business when the threat was not justified. 
Over the years, the UK has developed detailed rules for patents, registered trade marks and designs (whether registered or unregistered) — but the rules for patents are different from the rules for other rights.  With the coming of the Unified Patents Court (UPC), it becomes even more complicated to answer the question whether an unjustified threat to sue for patent infringement is subject to redress in the United Kingdom Courts.  
If cats can keep in step, why can't legislators?
The Law Commission consulted.  Some respondents considered the UK to be out of step with most of Europe, arguing that the threats provisions should be abolished and replaced with a law of unfair competition.  The Law Commission however preferred recommend sticking to an incremental modification of the existing laws.  The previous Government agreed and it now appears that a Bill to achieve that objective will be brought forward in early September 2015. 
The Law Commission’s Working Party and a number of representative bodies (including CIPA, IPFed, ITMA and FICPI) were asked to comment on the draft.  Professor Sir Robin Jacob said:
“I consider it extraordinarily elaborate and complicated.  It is not the right solution and in its present form should be dropped.  I remain of the opinion that something much simpler, along the nature of “abusive communication” would be enough.  Tinkering with this will serve no useful purpose.  There is no hurry – threats of IP infringement proceedings are far from top of the problems in the IP world.  I am saying this now so no one ever thinks I thought it was a good idea.  I hope this submission will be published.”
Something far simpler would be better. However, if this is what we are going to get, then we might as well make it as useful as possible.  As for urgency, there are issues with the application of the threats provisions to the UPC which will need resolving sooner rather than later.  Also, there is often pressure on the Parliamentary timetable, so when offered a slot for a Bill, it is not surprising if the Law Commission and Intellectual Property Office (IPO) jump at the offer [says Merpel, this is a bit like catching a bus to the wrong destination because there isn’t a bus to the right one]. 
The elaborate nature of the Bill comes, in part, from the intention to harmonise the law of threats for the different IP rights.  Whilst this is to be applauded, it does make the Bill long and repetitive [neither of which seems to trouble the Westminster Parliament, which created the behemoth of the Copyright, Designs and Patents Act 1988 – the longest and most repetitious piece of copyright legislation on the planet] and it is easy to get lost in the various provisions.  In particular, the provisions as to what type of threat (for “primary infringement”) is not actionable is set out (as Parliamentary draftsmen love to do) in elaborate and step-wise language, where the intention is soon lost in the language of the text.  This could be put far more succinctly and we hope that it will be.  Greater clarity is also required around what can be communicated to a “secondary infringer”. 
The draft has removed the requirement for the right to be “valid”, based on the assumption that an invalid right cannot be infringed.  Given the international reach of European trade marks and designs and of unitary patents, it may then be up to other courts to decide if this an assumption which can be sustained.  Also, with this goes one defence for a patentee – currently, even though the patent is invalid, that the threat may still be acceptable if the patentee did not know about that particular ground for invalidity. 
The professional adviser's worst nightmare ...
Professional advisers are also to get a “safe harbour” when acting on instructions and when the client is identified.  This should ameliorate the position in which the professional adviser is seeking to start a discussion and put an end to the tactic of seeking to separate an IP right owner from the legal adviser by means of a threats action against the adviser.  However, the definition as to who comes under the definition of “professional adviser” may need some rethinking as it currently very wide and does not seem to tie to any particular form of qualification or regulation [Merpel would like to see greater clarification of this “safe harbour”: for example, does it only apply where the client specifically instructs the professional adviser to make an unwarranted threat? Are the instructions themselves and correspondence surrounding them going to be regarded as privileged communications between representative and client?]
Various comments will by now have been sent into the IPO and the Law Commission.  We are waiting to see what transpires.  For those interested to follow the published parts of the debate, the comments submitted by CIPA (from a quickly assembled view of the relevant committees) are available here, but we have not had permission to publish the draft Bill.  Sorry – you will only get part of the story.
This Kat is fuming.  Here is a draft Bill that is drafted by civil servants – his servants – and that is supposed to protect the interests of businesses that are unfairly threatened.  It’s clear that organisations representing the IP professions have had a chance to see the draft and comment on it, but what about those whom the Bill is intended to protect?  It’s not as if the Bill represents some top-secret government activity that affects the security of the nation and defence of the realm: we are only talking about mildly tweaking a Bill to provide a legal remedy that has been part of British statute law for nearly four decades and that deals with a right that is rarely invoked.  Why then is this draft Bill not available?

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STOP PRESS! This Kat has just (at around half-past lunch today) received the following e-missive from Sahira Khwaja (Partner, Hogan Lovells, IPMT). Sahira writes:
Just read your post in the IPKat on the Unjustified Threats Bill.  I was a bit perplexed that you hadn’t seen the Bill itself as the IPO circulated a draft for comments on 13 July (including to an organisation of which Hogan Lovells is a member) so we provided some comments on it.  I was told that there were no restrictions on it being circulated to people outside that organisation, so I am sending it to you [and here it is, together with an incomplete and draft set of very official-looking explanatory notes].
The comments that I have seen have identified a number of issues with the Bill, which I'm told have been passed on to the IPO and Law Commission.  I'll be interested to see whether your comments accord with them!
Thanks so much, Sahira! Now it's time for the Kats to take a look ...

5 comments:

Anonymous said...

We have to be impressed by the knowledgeability of CIPA on this- In the latest journal they also comment on reform of appeal routes in IPEC - a plan of which ordinary mortals are not privy. If CIPA know these things they should publish at least to their members.
Vexed

Anonymous said...

You state the intention is to deter IP rights-holders from issuing unjustified threats to sue people for infringing their IP rights.

Lets not forget the small. A fledgling company, holder of a legitimate well promoted and well regarded trademark, may be faced by an aggressive competitor who disregards repeated warnings of a likelihood of confusion and sets about using threats of high legal cost to hijack a trademark. The cost of law alone can be used to deprive an IP rights holder of their IP rights. T.C.

Anonymous said...

In addition to my previous comment, I was surprised that the UK mediation service appear to acknowledge the part legal costs serve in trademark disputes. When legal costs are limited to just £2000 one might reasonably conclude that a smaller party holding a trademark was acting irrationally if they defended their trademark against a much larger party, a party who repeatedly referred to the substantial legal burden the smaller party would have to carry if they defended the trademark. In my instance, the UK mediation service pursued a pragmatic outcome which consequently protected me from the legal expense but deprived me of a functional trademark! T.C.

Meldrew said...

Vexed,

When the choice is between getting some consultation on the understanding that the document being consulted on is to be kept confidential, or no consultation, I hope that CIPA will always take the former route. What is perplexing is that CIPA seem to have been told a document is confidential whereas other organisations appear to have received, or have taken, a different message.

As for CIPA knowledgeability, perhaps they are knowledgeable because they know how to keep secret that which is imparted in confidence: rather like a patent attorney.

Perhaps working on a CIPA committee might be a way to assuage your curiosity?

Law Commission England and Wales said...

Dear Kats

Just a couple of points we would like to pick up on regarding this post.

This project has been running for three years and you have very kindly carried pieces for us and links to all our previous publications. The consultation paper piece (http://ipkitten.blogspot.co.uk/2013/04/monday-miscellany.html) described the two possible approaches to reform on which we sought views.

The one on the report (http://ipkitten.blogspot.co.uk/2014/04/threateners-dont-fret-your-concerns-may.html) explained that there was not enough consultee support to introduce the wider reform we had proposed and set out instead what had been supported. As with all our law reform projects, consultees' responses helped to shape our policy.

Sir Robin has always been very clear and consistent about his preference for wider reform to replace the current law. We quoted him in the report (http://www.lawcom.gov.uk/project/patents-trade-marks-and-design-rights-groundless-threats/#patents-trade-marks-and-design-rights-groundless-threats) and put his full consultation response on our website, along with all the others (http://www.lawcom.gov.uk/project/patents-trade-marks-and-design-rights-groundless-threats/#patents-trade-marks-and-design-rights-groundless-threats-3). We have already assured him that we will publish his most recent comments, in full, in the final report.

The draft of the bill your correspondent saw, and that you now have, is an early version of a work that is still in progress. “Test driving” early versions of a bill in confidence for comment like this is something we often do. We find it very helpful to have the major issues pointed out to us early on so we can redraft.

The bill has gone through at least five significant redrafts as we have responded to feedback from stakeholders, who were not limited to the professions but covered a wide range of interests. When we were asked if the early draft could be published we explained that we had already started making changes and that releasing it would just confuse things. The same goes for the explanatory notes.

We had intended to ask if IPKat would carry a piece and a link to the final report and the bill, which we will be publishing in a few weeks. We very much hope that is still possible as we greatly value the assistance we have been given with this project so far.

Julia Jarzabkowski
Law Commission

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