Home > Reading Room > Law Commission proposes reform to groundless threats in IP

Law Commission proposes reform to groundless threats in IP

Written by Aasim Durrani on 24 April 2013

« Return to Reading Room

The Law Commission has released a consultation paper setting out the case for reform of groundless threats provisions in intellectual property law. At present, a threat of legal action relating to an allegation of infringement by a trade mark, design rights or patent owner may result in them facing legal action for groundless threats.

Groundless threats

Groundless threats provisions were introduced in respect of patents under the Patents, Trade marks and Designs Act 1883, but have since been expanded to other forms of intellectual property as follows:

The rationale behind the existence of groundless threats provisions is that a threat to issue proceedings may cause a business to cease using certain intellectual property rights, even where those rights have not actually been infringed or are invalid. A threat to litigate can have a massive impact on a business, particularly SMEs, and so groundless threats provisions were introduced as a counterbalance to discourage bullying by way of baseless allegations of infringement.

Practical considerations

The Law Commission states in its consultation paper that groundless threats actions are "impeding genuine pre-litigation negotiations over legitimate disputes." At present, a practical gap exists between the Civil Procedure Rules and best practice in IP disputes. The Civil Procedure Rules require a claimant to assert all of its claims from an early stage, whereas fear of an accusation of groundless threats are usually enough to discourage a rights owner from doing anything more than simply notifying a suspected infringer of their rights.

Proposed reforms

The Law Commission is in favour of groundless threats provisions for trade mark and design rights being broadened along the lines of patent reforms which took place in 2004. These reforms allowed for communications to suspected secondary infringers to address statements of fact and assertions about the patent without being considered groundless threats to litigate. The Law Commission also said that professional advisers should not be subject to claims for groundless threats, pointing out that such a system is currently working well in Australia.

It also pointed out four loopholes which rights holders are able to take advantage of to mitigate the risk of an action for groundless threats against them:

  1. Issuing proceedings before opening negotiations;
  2. Carful drafting so that a letter falls short of groundless threats provisions;
  3. Threatening proceedings for something other than infringement and not subject to threats provisions; and
  4. For EU trade marks and designs, issuing proceedings outside of the UK.

 

Finally, the Law Commission stated it will be consulting on a new statutory tort of making false or misleading allegations in relation to IP infringement in the course of trade, which causes or is likely to cause loss to a competitor. The proposals in the consultation paper have been largely welcomed, although legislation is unlikely to be introduced  in the near future.

By Aasim Durrani. Aasim is a Trainee Solicitor and can be contacted on aasim.durrani@lawdit.co.uk

If you'd like to know more about this article please send an email to Unknown quoting the article title and any questions you might have, alternatively call the office number on 02380 235 979 or send an enquiry through our contact form.

Want to speak
to someone?

Complete the form below and we’ll call you back free of charge.

Visual Captcha