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Wednesday, 14 October 2015

Unjustified threats to sue for IP infringement: a bit of British patching up, but more remains to be done

Not all prospective defendants
are proof against chilling effects
Yesterday the Law Commission for England and Wales published the second and final report of the project to reform the law of unjustified (ie groundless) threats to sue for infringement of a patent, trade mark or design right [careful readers will spot that this list is incomplete, in as much as there appear to be quite a few IP rights to which it does not apply: copyright, plant varieties rights, geographical indications, passing off, trade secrets and database right spring swiftly to mind. This should give some scope for continuing to make unjustified threats to sue, notes Merpel]. The making of groundless threats to sue is a topic to which this weblog has frequently returned (see blogposts here), since the chilling effect of a threat to sue, particularly where the defendant is a retailer, distributor or other business that does not make the (non)-infringing goods, can destroy the trade of perfectly innocent traders who are not even party to the threats and who may have no idea that they have been made.

In short, the Law Commission was asked by the Department of Business, Innovation and Skills and the UK Intellectual Property Office to look at this area of law.  Following a consultation in 2013, the Law Commission published a report in 2014 in which it made 18 recommendations for reform.  15 of these reforms were accepted outright, while the other three were deemed acceptable in principle but in need of further work.

The Law Commission has now drafted the Intellectual Property (Unjustified Threats) Bill [you can access the full text as Appendix C to the report here]. The final report both seeks to explain the Bill and to make two further recommendations. As the Law Commission explain:
When the project began, the introduction of the Unitary Patent and the machinery to regulate it seemed a long way off. Consultees flagged up issues about whether and how the threats provisions should apply to the new rights. The general consensus was that they should, and we agree. We continued working on the issue which involved speaking to stakeholders representing the interests of those in England, Wales and Scotland and to our working group. We have also worked closely with the Intellectual Property Office and drawn on their work focusing on the specific legislative changes that may be necessary in order to implement the Unified Patent Court Agreement and related regulations.
There are two new recommendations. One is that the protection of the threats provisions should extend to European patents that fall within the exclusive jurisdiction of the Unified Patent Court. The other would introduce a change considered necessary to the current test for whether a communication contains a threat.

The Law Commission also seeks to justify its approach to the Bill in light of criticisms past and present:
We have sought comments from stakeholders on early prototypes of the Bill and have been greatly assisted by the feedback. Where possible we have tried to respond to the many different and competing demands of stakeholders and, as a consequence, the Bill has gone through many drafts. 
Some have commented that the Bill seemed repetitive. That is mainly because of what it will do if enacted. Rather than being a stand-alone Bill, it instead inserts the new threats provisions into the existing Acts for the various rights. Once it has done its job, there should be no need to refer to it again. The Bill also addresses stakeholder complaints about the current provisions being inconsistent by using the same language for each of the rights wherever that is possible.
There has been some negative comment about the shape of the reform. We consulted on two ways of doing this. The first was to build on the current law; the second was to replace it entirely with a new tort of false allegations made in the course of trade. There was not enough consultee support for the new tort but some saw that the first approach could be a step towards the wider reform. We said in our 2014 report, and still maintain, that wider reform should be seriously considered for the longer term. It was comforting to see that this was not ruled out by the Government in their response to our recommendations. 
Says this Kat, the current law is a dreadful mess and anything that can be done to make it more consistent, and indeed intelligible, is to be welcomed. It is however sad that businesses, IP owners and their professional advisers must work in an environment in which so much European substantive IP law has been harmonised -- especially with regard to registered rights -- but the extent to which threats to sue may or may not be made within Europe remains inconsistent and the opportunity to consider the impact of unwarranted threats to sue upon the operation of the single European market was not seized.

2 comments:

Hector MacQueen said...

One wonders if there isn't room for at least a mini-codification of what might be called the common parts of IP, such as groundless threats, remedies etc; and perhaps also on the bits where IP inter-faces with other parts of the law such as charges and securities. In the work I did for the Law Commission on groundless threats, I couldn't help thinking that the present differences in the various Acts was down to the draftsman and his/her instructors thinking only about patents, trade marks, or designs, or whichever was the current subject, rather than in any sort of holistic systematic way. If you had common legislation for this sort of thing, it could be easily referred to, simply up-dated as and when the occasion arose, and any variations between different IPRs clearly justified by appropriate policy considerations.

Mark Anderson said...

@Hector MacQueen: Great idea. Other common areas that might be covered include employer/employee ownership, initial vesting, assignment of future IP, assignments generally, licensing, whether licences binding on future owner, joint ownership.

Might also be used as an opportunity to address unexplored issues such as implied warranties of title etc in assignments and licences, assignment of a determinable interest, and whether royalty obligations can "attach" to ownership (like negative covenants on land in English law). See further my chapter on patent licensing in Research Handbook on Intellectual Property Licensing (editor, de Werra, Edward Elgar Publishing) which proposes a codification of licence agreements.

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