"Stop infringing my IP" - The danger of making unjustified threats
Introduction
Many businesses fail to appreciate that, just because they own an intellectual property right, such as a registered trade mark or a patent, that does not give them free reign to complain to their competitors, and their competitor's customers, that products and services that they are selling infringe their IP rights.
Many businesses fail to appreciate that, just because they own an intellectual property right, such as a registered trade mark or a patent, that does not give them free reign to complain to their competitors, and their competitor's customers, that products and services that they are selling infringe their IP rights.
In summary, the various UK acts of parliament that govern registered IP rights are worded in such a way that complaints of this nature can be held to be 'unjustified threats'. By way of example, many businesses think that if they own a patent they are quite within their rights to tell a competitor and/or its customers that if they sell a particular product it will infringe their patent and they will be able to sue them for patent infringement. Unfortunately, Section 70 of the Patents Act 1977 provides that such an allegation constitutes a threat which is unjustifiable, unless the person making the threat can prove at trial that their patent is indeed being infringed. If, in fact, the Court concludes that the patent is not being infringed, and/or that the patent is invalid (i.e. it should not have been granted in the first place), then the person aggrieved by the threat may bring Court proceedings claiming damages in respect of any loss which that aggrieved person has suffered as a consequence of the threat being made.
By way of illustration, LB Europe Limited recently sued Smurfit Bag In A Box SA for unjustified threats, pursuant to Section 70 of the Patents Act 1977. A representative of Smurfit had orally, and in writing, made various threats against a customer of LB Europe Limited to the effect that, were the customer to sell LB Europe's dispensing tap (for use in containers for wine), Smurfit would sue LB Europe's customer for patent infringement. Upon learning of the threat, LB Europe commenced proceedings against Smurfit, claiming that Smurfit had made 'unjustified threats', contrary to Section 70 of the Patents Act 1977. At the trial the Court concluded that unjustified threats had indeed been made (because whilst the patent was valid, it had not been infringed by LB Europe's product). As a consequence, LB Europe was entitled to recover damages from Smurfit for the losses it had suffered as a consequence of the threat being made to its customer, namely, the lost sales caused by the decision of LB Europe's customer not to buy LB Europe's dispensing tap from it until after the Court had decided that LB Europe's product did not infringe Smurfit's patent.
The moral of the story is clear. Do not go making threats of this nature unless you have taken legal advice and you are fully aware of the risks involved. There is nothing worse than being sued by a competitor, in circumstances where you could have avoided those proceedings simply by not making the threat in the first place.
Ashfords is regulated by the Solicitors Regulatory Authority. The information in this article is intended to be general information about English law only and not comprehensive. It is not to be relied upon as legal advice nor as an alternative to taking professional advice relating to specific circumstances.
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