What are groundless threats?
The groundless threats regime is designed to provide redress to recipients of unjustified threats of trade mark, patent or design right infringement. The rules cover a very wide range of communications potentially including, as we commented on in this blog last year, an eBay VeRO notice. The regime is controversial, partly because of the manner in which it has been applied and partly because of the different approaches to threats relating to different IP rights.
In its 2014 report the Law Commission recommended significant reform, devoting an entire chapter of its report to some of the problems with the regime which were highlighted by the Best Buy threats case, in which Fieldfisher advised the successful claimant.
What are the proposed changes?
The government's recommendations in full can be found here. In a nutshell, the government want to clarify the threats provisions and make them consistent across all IP rights, while also making it easier for rights owners to make good faith attempts to settle without falling foul of the groundless threats rules. Happily for legal advisors, solicitors and registered trade mark/patent attorneys would no longer be liable for threats made on instructions, provided their clients are clearly identified.
The original rules were intended to encourage rights owners to address their claims at the "primary actors" i.e. the manufacturers or importers of allegedly infringing items, rather than distributors or retailers. However, one of the problems with the existing regime in respect of trade marks and designs is that, because of the way the exclusions are worded, a rights owner can threaten with impunity in respect of manufacture or import, but cannot ask the same person to cease selling those manufactured/imported goods without risk. The government's proposals would do away with this arbitrary distinction by adopting an approach similar to that which already applies to threats of patent infringement and focusses the exclusions on the type of person being threatened, rather than the act. Broadly speaking, under the proposals, threats against primary actors would be excluded. Thus a threat could be made against the manufacturer/importer of goods bearing a trade mark without risk of facing a groundless threats claim, and that threat could refer to acts not just of manufacture or import, but also of advertising and sale. This will undoubtedly make cease and desist letters against primary actors more sensible and free from the semantic gymnastics sometimes engaged in at present to try to bring them within the exclusions.
The proposals also recommend that certain types of communications with "secondary actors" may be allowed including, for example, where the threatener has used reasonable endeavours to locate the primary actor.
Other recommendations include the repeal of s. 70(2A)(b) of the Patents Act (which provides a defence even if the patent relied upon is subsequently shown to be invalid, provided that the threatener had a good faith belief in the patent's validity at the time of the threat).
Reaction and next steps
The proposals should be welcomed by rights holders (and legal advisors, who would escape personal liability!) as they would provide clarity, and return some much needed rationality to an often misunderstood area. The Government has stated that it intends to bring primary legislation to enact the reforms in due course. The Government will want to look carefully at whether it might be possible to do this via the special Parliamentary procedure available for Bills that implement uncontroversial Law Commission recommendations.