New protection for businesses against groundless threats

Under intellectual property law, individuals and businesses are protected from threats of legal action for infringing a third party’s intellectual property rights (IPRs) when those threats are groundless and unjustified.

A threat may be unjustified if, for example, the third party’s IPR is invalid, or if it does not actually own it.

It is not hard to imagine that this type of abusive behaviour could be used in the marketplace in order to gain a commercial advantage, and the law recognises that parties should not be subjected to it. The unjustified threats provisions apply to registered trademark, patent or design right infringements. A business that receives an unjustified threat can sue the third party for an injunction preventing further threats, a declaration that there is no infringement and/or for damages to compensate them for any loss.

For a long time the law in this area has been inconsistent and in some respects unsatisfactory. Earlier this year the Intellectual Property (Unjustified Threats) Act 2017 (the Act) was passed, with certain provisions already in force, and further provisions to come into force later on.

The Act has made various changes in an area which was often misunderstood. It adds greater consistency across IPRs, providing a new statutory test as to what constitutes a threat, and making it clear when professional advisors will not be liable for such threats. The Act also clarifies for solicitors on what basis they can write to alleged infringing parties without fear of an unjustified threats claim being made against them.

It should be noted, however, that there are no statutory unjustified threats provisions in respect of copyright, passing-off or breach of confidence.

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Paul Gordon is a partner in our litigation and dispute resolution department. He joined Willans from a City law firm in 2005, and has experience in handling a broad range of commercial matters, including intellectual property, director and shareholder disputes, and engineering and construction cases.