Groundless threats of breach of IP

Groundless Threats – the Reforms

Following an investigation by the Law Commission the UK government recently published a press release on the issue of “groundless threats” in relation to patents, registered / unregistered design right and trade marks (copyright doesn’t have any threats provisions).

The Problem

Intellectual property rights are important to businesses. If they are infringed, then there has to be a mechanism to remedy the situation. So far, so good. The mechanism in question is a legal one and things normally kick off with an unfriendly letter from a firm of lawyers (aka a “cease and desist letter” or a “letter before action”).

This letter normally contains a number of threats along the following lines: if you don’t stop doing what you’re doing we’re going to take you to Court. The mere receipt of such a letter can cause a great deal of damage to a business; particularly if it changes its activities as a result. It follows therefore that if parties are allowed to send letters like this without constraint, innovation and new ideas are likely to suffer. So, in an effort to curtail the overzealous rights holders (and potentially their legal representatives) there are laws in place to deal with groundless threats.

Great, case closed then… well no, unfortunately the law which deals with groundless threats is not terribly clear and, where it can be understood, it is particularly onerous.

The Solution

The government has announced that it will do three things to address the problem:

1. Ensure that the threats provisions are made clearer – currently there are different provisions for different rights and none of them are terribly straightforward.

2. Make it easier for parties to make good faith attempts to settle an IP infringement disputes before litigation; and, this is a bit vague but may well involve a stronger nudge towards Alternative Dispute Resolution.

3. Stop legal advisers from being subject to threats and accusations when the dispute is between the parties that they represent.

Currently advisors, simply by acting on the instructions of their clients, can be held liable in a threats action.

To accompany these reforms Baroness Neville-Rolfe, the Intellectual Property Minister, said:

“We are improving protection against the groundless threats of intellectual property infringement that small businesses can face. Our reforms will make sure the law properly protects businesses from being threatened unfairly, but also allow innovative businesses to resolve disputes legitimately and enforce their rights.”

Briffa Comment

This certainly sounds like a step in the right direction. Nobody benefits from uncertain law and anything which allows legal advisers to acts for their clients, without risking their own liability, must be a good idea (although you would probably expect us to say that).