For manufacturers, Intellectual Property (IP) rights are often the lifeblood of their operations.
They encompass patents, trademarks, copyrights, and trade secrets, which protect designs, processes, and branding.
Manufacturers will usually invest significant time and resources into developing their IP, including branded products for disposal.
However, in so doing, they face a persistent threat, namely, baseless threats of IP infringement.
That involves unwarranted accusations of IP infringement, for example, infringement of someone else's registered trademark.
While genuine IP challenges are necessary to protect rights holders, unjustified threats pose a risk to manufacturers.
The implications of unjustified threats are significant. They can stifle competition, sow seeds of doubt among investors, stockists, and retailers and hinder the launch of new products/brands, causing a loss of market share.
In the following sections, we will take a closer look at the Intellectual Property (Unjustified Threats) Act 2017 (the Act) and how it operates to protect manufacturers and the supply chain from groundless threats of IP infringement.
The Act
The Act was implemented to discourage persons from making baseless threats of legal action in the context of registered trademarks, design rights and patents.
That is important since it is typically very easy to allege infringement of IP, threaten legal action and follow through with the threat.
However, if left unchallenged, such threats can cause untold damage to a business's reputation and stifle legitimate commercial activity.
In terms of looking at the operative provisions of the Act, we will focus on groundless threats of infringement of registered trademarks/brand names (etc.).
Threats
Pursuant to the Act, a threat of infringement proceedings is actionable if a reasonable person would understand from the communication that:
- A right (i.e., a registered trademark) exists.
- A person intends to bring proceedings against another person for infringement of the right.
Accordingly, a threat may be expressed in forms such as a letter before action or implicit to the extent it communicates the intention to bring an action against a recipient.
Importantly, mere notification that a mark is registered or that an application for registration has been made is not, without more, an actionable threat.
A groundless threat action can be brought in respect of actions such as selling or offering to sell goods under a trademark and using the trademark in the context of marketing or advertising goods for the purpose of selling them.
Relief
Suppose an action for groundless threats is brought pursuant to the Act.
In that case, the remedies awarded can include:
- A declaration the threats are unjustifiable.
- An injunction against the continuance of that threat.
- Damages.
The Act provides that any person aggrieved by a groundless threat may bring an action.
Exceptions
A threat of infringement will be actionable unless:
- The threat is limited to 'primary' acts of infringement, i.e. applying, or causing another person to apply, a sign to goods or their packaging and importing, for disposal, goods to which, or to the packaging of which, a sign has been applied;
- The threat is made to someone who has done or intends to do a primary act or
- The communication containing the threat qualifies as a 'permitted communication'.
A 'permitted communication' must reasonably be believed to be true and is necessary to communicate information for a 'permitted purpose' such as:
- Giving notice that a registered trademark exists;
- Discovering whether or by whom a registered trademark has been infringed by 'primary' acts of infringement as mentioned above;
- Giving notice that a person has a right in or under a registered trademark, where another person's awareness of the right is relevant to any proceedings that may be brought regarding the registered trademark.
The Act makes clear that requests for a person to cease doing anything concerning a product or process, for delivery up or destruction or for the giving of an undertaking are not communications for a 'permitted purpose'.
Implications for Manufacturers
Suppose a manufacturer receives a threat regarding goods for which it has made or applied a trademark.
In that case, such a threat may not be actionable as a groundless threat since it relates to a 'primary act' of infringement and thus falls within the exceptions under the Act.
However, a manufacturer may still be an 'aggrieved party' for the purposes of the Act; for example, if one of its retailers stops buying its goods because that retailer has received a threat of infringement from someone else.
In that event, if the threat is not a 'permitted communication', a manufacturer may be able to bring an action against the person who made the threat.
Conclusion
In summary, the Act provides useful protection to those receiving threats of IP infringement.
In the context of trademark infringement, actionable threats may relate to the sale or offering for sale of goods which use the trademark.
Threats are actionable save where they relate to 'primary acts' of infringement, and certain 'permitted communications' for 'permitted purposes' are exempted by the Act.
The remedies for an action in groundless threats of infringement include claims for an injunction, declaratory relief and damages.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
