The changing threat of threats regarding trade marks – the Intellectual Property (Unjustified Threats) Act 2017

Practitioners in the trade mark field, and owners of brand rights portfolios, have long been aware of the risk in threatening third parties with action in relation to the infringement of registered trade mark rights.

Groundless threats, in certain circumstances, are actionable, both against the proprietor of the rights and the adviser making the threat. However, this area of the law is about to be reformed, with the Intellectual Property (Unjustified Threats) Act 2017 shortly coming into force.

Trade Mark Unjustified Threat Lawyer Scotland Brand Court

Key changes in the new Act

  • The exclusions have been updated, so that threats in relation to infringing manufacture or importation (which have always been excluded) now include threats relating to intended actions.
  • The concept of a permitted communication is introduced. In essence a groundless threats action cannot be brought where information was given for a permitted purpose, it was necessary for that purpose, and the communicator believed it to be true. Permitted purposes include giving notice a registered trade mark exists, for the purposes of discovering the identity of an infringer, or for the purposes of notice that a person has a right under a registered trade mark, where that is relevant to subsequent proceedings.
  • In relation to the latter one must not forget the provisions of the Intellectual Property (Enforcement, etc.) Regulations 2006, section 3(1), which states "Where in an action for infringement of an intellectual property right the defendant knew, or had reasonable grounds to know, that he engaged in infringing activity, the damages awarded to the claimant shall be appropriate to the actual prejudice he suffered as a result of the infringement". However, the legislation limits the effect of the foregoing, stating that requesting cessation of use of a sign in the course of trade in relation to goods or services, requesting delivery up or destruction of goods, or requesting an undertaking, each may not be treated as permitted purposes.
  • The defences are also amended, to allow a justification defence to apply where the rights relied on are subsequently shown to be invalid, and to allow a further defence to cover where threats were only made after reasonable steps to identify the infringer (without success) were taken.
  • Lastly, the Act removes liability for professional advisors.

As such, it is paramount for those who have active brand enforcement projects to review and consider the terms of the pre-action correspondence employed, so that it takes advantage of the provisions of the new act. Properly drafted correspondence could be hugely beneficial in mitigating risk.

Seeking recompense for threats - pitfalls

However, seeking recompense for threats has never been without its pitfalls. See the case of Prince plc v Prince Sports Group Inc, where although an injunction and declaration was granted, no enquiry into damages was directed until the claimant could put in evidence a prima facie case for establishing that it had suffered some damage as a result of the threatening letters.

See also Carflow Products (UK) Ltd v Linwood Securities (Birmingham) Ltd & Others, albeit a design right case, but one which held that the making of the unjustified threats complained of did not cause the losses, rather it was the decision to withdraw products once a writ was served, as such pointing to the only recoverable loss being the expense suffered in relation to responding to the letters. This is reiterated in SDL Hair Ltd v Next Row Ltd, where only the direct consequences of the threats were relevant to the damages calculation.

Further, one should not forget Frayling Furniture v. Premier Upholstery Ltd, again a design right case but relevant all the same, where no relief was granted, as the threats action was brought only after the writ in the infringement action had been served, the threats had not caused any damage and were unlikely to be repeated, and it appeared that the real reason that the action had been continued and fought before the judge was that both sides wanted to recover their costs.

Get in touch

To discuss brand management matters, contact Jamie Watt at jamie.watt@harpermacleod.co.uk.