IP Unjustified Threats Act 2017: update

The Intellectual Property (Unjustified Threats) Act 2017 is set to become law shortly, introducing significant changes to this complex area of IP law in the UK. We summarise below the main changes, and some handy reminders.

Many managers and non-UK lawyers are unaware that liability can arise when a threat is made concerning infringement of trade marks, design rights or patents. This could be in the form of a claim letter, or a statement to third parties, which might for example include general publicity about a dispute, insinuations to prospective investors or purchasers, or, at least in theory, an online takedown notice.

Unless the threat falls into one of the statutory exceptions, any person aggrieved, not necessarily the addressee of the threat, can bring a claim for an injunction and damages. The party making the threat must then justify it by proving that their valid rights have been infringed. This can have the effect of dragging a rights holder into court when that was not their actual intention, and putting them on the defensive and at a strategic disadvantage.

Introducing greater consistency
Until now, the law on what is and is not permitted was further complicated because the rules were different for patents, on the one hand, and trade marks and designs on the other. These differences affected which kinds of commercial actors could be threatened without risk. That is now changing, with all relevant rights having essentially the same rules.

The essence of the new law is that threats can be made in relation to ‘primary acts of infringement,’ such as manufacture or importation, and a threat in respect of primary acts can also extend to secondary acts, such as sales, without risk. There are additional, limited circumstances in which threats to a secondary actor fall outside the threats regime.

What is a threat?
Principles developed in case law are now enshrined in a new statutory test: would a reasonable person understand that an IP right exists and that someone intends to bring proceedings against someone else for infringing it, for an act done in the UK? The requirement for an act done in the UK also serves to align the threats regime with the new EU Unified Patent Court system, whose statute contains no specific provision for unjustified threats – a concept unknown in most EU states.

Additionally, the new law enshrines the principle that a threat under a pending application can be justified if and when the right is granted.

There is also a new roadmap of ‘permitted purposes’ aimed at allowing a rights holder to bring a party’s attention to an IP right without making a threat. This will need to be navigated carefully.

Who is liable?
Until now, lawyers making written or verbal infringement threats on behalf of a client could be held directly liable, albeit that this has been viewed as a misuse of the former law. That can no longer happen, as long as the client is identified in the communication. To benefit from this safe harbour, the professional adviser must be “regulated in the provision of legal services, or the services of a trade mark attorney or a patent attorney, by one or more regulatory bodies.”

Explanatory notes indicate that this protection for professional advisers is not restricted to UK or EU advisers; however, we would reiterate the danger of making potentially actionable threats, for those not familiar with this complex area of law.

What isn’t covered?
First, there is no general exemption for threats made in ‘without prejudice’ communications. However, within genuine settlement discussions there may be less cause for concern.

It is also worth remembering that there is no statutory threats regime in respect of other IP rights, such as copyright, passing-off and breach of confidence, nor in respect of domain name complaints per se. It is possible, however, that in some countries any kind of unjustified threat could be actionable as a form of unfair competition.

These rules also have no application to IP rights outside the UK. Nevertheless, it is the recipient’s impression of the communication that counts, so a threat intended to be confined to non-UK rights must be very carefully worded.

If you would like more information, or training, on this topic, please contact our IP team.