By way of reminder, English law contains protection for recipients of threats of infringement of certain intellectual property rights including, patents, trade marks and registered and unregistered designs. The threats regime is a controversial one, and the Law Commission has recently recommended significant reform. However, the government's response to the recommendations is awaited and as yet the provisions remain unamended. The precise wording varies for different rights, but the principle is the same. A recipient of a groundless threat of infringement is entitled, subject to some exclusions, to a declaration that the threats are unjustifiable, an injunction and damages. A "mere notification" that a right is registered does not constitute a threat.
The facts of this case were simple. Both parties sold cake stands on eBay. The Defendants sent a Notice of Claimed Infringement to eBay under its VeRO programme, complaining that the Claimant's cake stands infringed certain registered designs. As a consequence, eBay removed the listings. The Claimant, apparently concerned that if it received more than two eBay notices against it then it might be barred from eBay altogether, entered into correspondence with the Defendants and with eBay in an attempt to resolve the matter. The Claimant's listings were finally reinstated in around July 2013.
The key question for Mr Richard Spearman QC (sitting as a deputy judge) to decide was whether the VeRO Notice was a "threat". Both parties applied for summary judgment on this issue.
The VeRO notice itself read: "I have a good faith belief that the listings identified below (by item number) offer items or contain materials that are not authorised by the IP Owner, its agent, or the law, and therefore infringe the IP Owner’s rights according to English law".
The authorities make it clear that the concept of a "threat" is a wide one, covering any intimation conveying that a party has rights and intends to enforce them against another. The Defendants relied on an email from an eBay employee which suggested that eBay did not consider a VeRO Notice to be a threat of proceedings against eBay. However, Mr Spearman QC was not persuaded by this. He referred to a previous decision of Pumfrey J which considered the same issue.
Pumfrey J's reasoning was as follows: eBay may become liable for infringements on its platform once put on notice, and the VeRO programme is part of a system designed to avoid that. eBay is therefore more likely than not to remove a listing that is the subject of a VeRO Notice to avoid liability for itself. He said: "…I believe with considerable force, that what can be described as an institutionalised avoidance of litigation is a response in fact to a threat". However, Pumfrey J was only required to determine that the issue was arguable. Although in the present case the deputy judge made it clear that he considered the Claimant's submissions "much more persuasive" than those of the Defendants, in the end he concluded that the question should be remitted to trial. Among other things, he wanted more information on how the VeRO system operated.
It is also worth noting that the individual who submitted the VeRO notice was found to be jointly liable. Mr Blackmore was a director and 40% shareholder of the Defendant company and was the owner of the rights in question. However, the deputy judge focussed on the sending of the Notice, saying "it is quite obvious that he was involved in the sending of the notice to such an extent as to make the act of sending it his own".
Although no final decision was made here, it is clear that there is a real possibility that an eBay VeRO Notice will be considered a "threat" for the purposes of groundless threats legislation. Rights owners should therefore think very carefully before submitting notices under the VeRO scheme, or under one of the many similar schemes run by other intermediaries. Individuals submitting notices on behalf of rights owners should also take care – they may also be liable if the threats are unjustified. One sure fire way to avoid liability would be to rely, if possible, on rights that are not covered by threats legislation, such as copyright.