Patents

Threats Actions

John Lambert

Last updated 26 Jan 2006

Ever since the Patents, Designs and Trade Marks Act 1882, it has been actionable to threaten patent infringement proceedings in certain circumstances. Such an action may be brought not just against the prospective claimant but also against that person's agent. Thus, threats actions have been brought against solicitors for letters before action. No similar cause of action exists in other types of litigation, though the common law provides a remedy for malicious threats. No country outside the Commonwealth common law legal tradition has ever seen the need for such a remedy. Threats actions had until recently been confined to patents and registered designs but they have now been extended to unregistered design right and trade marks. Australia has gone even further by providing an action under s.202 of its Copyright Act 1968 for threats of copyright proceedings.

The Statutory Provisions
The following sections of the following statutes provide for threats actions:

	s.26 of the Registered Designs Act 1949 as amended;
	s.70 of the Patents Act 1977as amended;
	s.253 of the Copyright Designs and Patents Act 1988; and
	s.21 of the Trade Marks Act 1994.

Further reg. 4 of The Community Trade Mark Regulations 1996 extends s.21 of the Trade Marks Act 1994 to threats of Community trade mark proceedings. Reg. 2 of The Community  Design Regulations 2005 makes similar provision for Community designs.

The Cause of Action

All of the above sections are in substantially the same form although there has recently been substantial modification of the Patents Act 1977 by s.12 of the Patents Act 1977 . S.70 (1) of the Patents Act 1977 provides:

"Where a person (whether or not the proprietor of, or entitled to any right in, a patent) by circulars, advertisements or otherwise threatens another person with proceedings for any infringement of a patent, a person aggrieved by the threats (whether or not he is the person to whom the threats are made) may, subject to subsection (4) below, bring proceedings in the court against the person making the threats, claiming any relief mentioned in subsection (3) below."

The relief mentioned in sub-section (3) is:

(a) a declaration to the effect that the threats are unjustifiable;

(b) an injunction against the continuance of the threats; and

(c) damages in respect of any loss which the claimant has sustained by the threats.

Recent Changes

Before the 1977 Act was amended a threat had to be in respect of a direct infringement. No action lay for threats to bring proceedings for making or importing a product for disposal or for using the process but an action could lie for threatening to bring proceedings for consequential acts such as sale by a manufacturer or importer of the product that he had made or imported (see Cavity Trays Ltd v RMC Panel Products Ltd [1996] RPC 361).  S.70 (4) has been changed as follows:

"Proceedings may not be brought under this section for -
(a) a threat to bring proceedings for an infringement alleged to consist of making or importing a product for disposal or of using a process, or
(b) a threat, made to a person who has made or imported a product for disposal or used a process, to bring proceedings for an infringement alleged to consist of doing anything else in relation to that product or process."

An action no longer lies merely for merely providing factual information about a patent,
making enquiries of the other person for the sole purpose of discovering whether, or
by whom, the patent has been infringed, or making an assertion about a patent for
the purpose of any enquiries so made.

A new defence provided by a new s.70 (6) is that In proceedings for threats made
by A to B in respect of an alleged infringement of a patent. In the case of a product, it is now a a defence for A to prove that he used his best endeavours, without success, to discover the identity of the person who made or imported the product and that he notified B accordingly, before or at the time of making the threats, identifying the endeavours used. Similarly, where the invention is a process and the alleged infringement consists of offering it for use, it is a defence  for A to prove that he used his best endeavours, without success, to discover the identity of the person who used the process. If the alleged infringement is disposing of, offering to dispose of, using or importing a product obtained directly from a process or keeping the product whether for disposal or otherwise, it is a defence  for A to prove that he used his best endeavours, without success, to discover the identity the identity of the person who used the process to produce the product in question and that he notified B accordingly, before or at the time of making the threats, identifying the endeavours used.

Policy
Such legislation is intended to prevent intimidation of a competing trader's customers. That is why threats in respect of making or importing products or using processes which would be made directly to the source of allegedly infringing items are disregarded. The object is to prevent abuse of a monopoly not to emasculate the means of defending it.

Risk Areas

An example of the difficulties to which this cause of action can give rise is Prince Plc v Prince Sports Group Ltd. [1998] FSR 21 where the US lawyers of a trade mark proprietor prompted a threats action by a strongly worded demand to transfer a domain name (see "Consider the Implications of Foreign Laws Before Sending a Cease and Desist Letter" Intellections June 2005). The Court of Appeal has recently held in Unilever Plc v The Procter & Gamble Co. [2000] FSR 344 that a threat made in "without prejudice" negotiations is not admissible in evidence but this limited privilege requires a genuine attempt at compromise. Merely heading a letter "without prejudice" will not suffice (Kooltrade Ltd. v XTS Ltd. [2001] FSR 344).

 

Important