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Patents, trade marks and design rights: are groundless threats of infringement causing problems?

In a consultation opening today, the Law Commission seeks views on reform of the law relating to groundless threats of litigation over patents, trade marks and design rights.

Infringement litigation can be disruptive and expensive. The mere threat may cause significant commercial damage to a business by driving customers away. The law therefore provides protection to businesses that discover that customers and others involved with a product are receiving groundless threats that the product infringes patent, trade mark or design rights.

The Commission concludes that this protection is still needed. David Hertzell, the Law Commissioner leading the project, comments:

“Disputes relating to patent, trade mark and design rights are widely viewed as expensive, complicated and best avoided. This makes threats of litigation a potent weapon. When retailers receive letters saying that a product infringes a patent, many just drop the product. If the product does infringe, that is fair enough. But where the allegation is groundless, it is important to provide the supplier with a remedy. Otherwise it is too easy for a rival to gain an unfair advantage through bully boy tactics.

“Patents, trade marks and design rights are vital to the UK economy. But they must not be misused to stifle competition.”

Proposals for reform

Groundless threat provisions were introduced in the nineteenth century to resolve disputes about steam engines. The Commission argues that they need to be adapted to the new global battles over information technology.

The statutory provisions do not distinguish well between the trade source of the allegedly infringing product and those with less commitment to it, such as retailers and customers. Groundless threats action can also be used in a tactical way. They may drive cases to court, rather than encourage settlement talks, and might deter smaller, poorer firms from enforcing their rights.

The Commission is consulting on two approaches to reform. The first is to:

  • adapt the 2004 patent law reforms and extend them to trade marks and design rights to bring consistency across all intellectual property rights
  • clarify at what stage, and under what circumstances, a rights holder can approach a competitor, their distributor or customers, about a potential infringement, and
  • protect legal advisers from liability for groundless threats.

The Commission’s second provisional proposal is to treat groundless threats as a form of unfair competition and introducing a new and broader cause of action based on the Paris Convention.

David Hertzell explains:

“The first approach is evolutionary. It builds on the reforms to patent law in 2004 and meets most of the problems. But we are also interested to hear whether people think that more radical reform may be needed.

“Our provisional proposals seek to bring consistency and clarity, and reduce the need for litigation. Whichever approach is taken, we believe that the provisions should be reformed so that they once again protect the balance between rewarding innovation and encouraging economic growth through new ideas and inventions.”

The consultation paper, Patents, Trade Marks and Design Rights: Groundless Threats, is available on
www.lawcom.gov.uk. The consultation is open until 17 July 2013.

Notes for editors

1. The Law Commission is a non-political independent body, set up by Parliament in 1965 to keep all the law of England and Wales under review, and to recommend reform where it is needed.
2. For more details on this project, visit
www.lawcom.gov.uk
3. For all press queries please contact:
Phil Hodgson, Head of External Relations:  020 3334 0230
Jackie Samuel:  020 3334 0216
Email: 
communications@lawcommission.gsi.gov.uk

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