Groundless threats to sue for IP infringement: the end of an era?

According to a UK government media release yesterday,
How cats respond to threats
(per Charles Darwin, here)
The UK Government will improve protection to make sure businesses are not exposed to unnecessary and baseless accusations ... in response to the Law Commission’s Report. Protection against groundless threats of infringement proceedings will be retained for patents, trade marks, registered and unregistered design right. A number of new reforms will also be introduced. These are:
  • making sure that the threats provisions are much clearer [indeed, the fact that they are drafted in such convoluted terms, which differ as between IP rights, is a real headache.  This Kat has also never received a convincing answer to the question whether a statement posted on a website that indicates that the manufacture or sale of a particular product will be treated as an infringement might constitute a groundless threat. Suggestions?] 
  • making it easier for parties to make good faith attempts to settle an IP infringement dispute before litigation [but surely, if the parties are making good faith attempts to settle infringement disputes, there already exist ways of doing this without making groundless threats to sue?]
  • stopping legal advisers from being subject to threats and accusations, when the dispute is between the parties that they represent. [This is a pity, says Merpel, who never tires of reading L'Oréal (UK) Ltd & Another v Johnson & Johnson & Another [2000] EWHC Ch 129 in which Mr Justice "Lightning" Lightman held a relatively amicable solicitor's letter to be a threat. Lightman J's characterisation of the letter can be found below]
Threats of legal action for IP infringement can cause significant commercial damage to small businesses. They are costly and disruptive, drive customers away and stop business from selling goods and services. ...”
Says Hogan Lovells' Alastair Shaw,
"At present in trade mark and design cases there is often a certain amount of shadow-boxing before the full extent of the alleged wrongdoing becomes clear to the likely defendant, by which time positions on both sides can become entrenched. There may be some doubts about whether the position will be improved in practice for legal representatives if the Government follows through on its proposal that they must show that they were acting on instructions to exempt them from liability for threats [Hmm. This Kat quite likes the idea of lawyers being able to show that they are acting under instruction, particularly if they bill him for the work they've done ...]. But, overall, the Government's responses should be seen as a very positive move".
Merpel has an idea. why not have a system of graduated threats?


The Government response to the Law Commission’s Report (Law Com No.346) “Patents, Trade Marks and Design Rights: Groundless Threats" (26 February 2015) is here

The Law Commission's Groundless Threats web page is here

Mr Justice Lightman's summary of the letter in question reads like this, at para 16:
"The Letter is the work of a master of Delphic utterances who uses all his skills to say everything and nothing and to convey an enigmatic message which has the same effect on the recipient as a threat or adverse claim whilst disclaiming to be either. He goes beyond merely reserving his clients' rights: he makes clear that no decision has yet been made to sue, but likewise makes clear that others who used the Words on their packaging after pressure from the Defendants succumbed to that pressure and desisted; that the Defendants thought that the Claimants had unfairly sought to benefit from the Defendants' goodwill; that the Defendants had six years to commence legal proceedings; and that the Defendants would afford no comfort in respect of the possibility of such proceedings".
Groundless threats to sue for IP infringement: the end of an era? Groundless threats to sue for IP infringement: the end of an era? Reviewed by Jeremy on Friday, February 27, 2015 Rating: 5

1 comment:

  1. Jeremy,

    The focus seems to be frivolous law suits and not non-practicing entities, which is correct. Businesses file suite against competitors to try to increase their market share. If the case is legitimate, the plaintiff can accept royalties, effectively outsourcing the manufacturing and marketing. Companies are motivated by business considerations, the grounds of the complaint are the means, not the end.

    Law firms take on suites for business reasons as well, but are morally, ethically and generally legally bound to act in accordance with their client's interest. The trouble is that sometimes law firms have attorneys on percentages of billing and are prepared to file frivolous law suits. It is important to have legal sanctions against law firms to prevent this.

    There was such a case in the US a while ago, where the presiding judge fined the plaintiff's lawyers. The CAFC upheld the ruling on appeal. See for more details.

    Whilst there are law firms willing to file frivolous cases, there should be legal sanctions against such firms.


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