By making sweeping allegations of registered trade mark infringement against third parties, brand owners run the risk of being sued for making groundless threats.
The groundless threats provisions are a wide ranging and tricky area of law to navigate. For such reasons, we advise clients to tread carefully when making claims of registered trade mark infringement.
However, the law of groundless threats may be about to change. In April, the Law Commission issued a report (available here) recommending reform of the groundless threats provisions.
What are groundless threats?
If you own a registered trade mark and you make certain allegations against someone else that they are infringing your registered trade mark (or if you do so via your solicitor) and:
then you would be making a groundless threat.
The recipient of the threat may make a claim against you and/or your solicitor, seeking an injunction to stop you/your solicitor making such threats and/or an award of damages and/or a declaration that the threats are unjustified.
The purpose of the groundless threats provisions is to strike a balance between a trade mark owner's right to protection from infringement of its registered trade mark and misuse of that right.
Primary and secondary infringement - the "Cavity Trays" problem
Infringing acts that are likely to cause the most commercial damage are known as "primary acts of infringement" (e.g. importing or manufacturing of infringing goods). Lesser acts of infringement, such as the sale of an infringing product, are known as "secondary acts of infringement".
Threats relating to primary acts of infringement may be made without fear of incurring liability. However, threats relating to secondary acts of infringement will trigger the groundless threats provisions.
Often, an infringer will manufacture goods and then subsequently sell them (i.e. they will carry out primary and secondary acts of infringement). This is problematic as, if you make a claim of registered trade mark infringement that refers to both primary and secondary acts of infringement, the threats provisions could be triggered and the recipient of the threats could make a claim against you. This is known as the "Cavity Trays" problem.
If you are unfamiliar with the law, it is therefore easy to fall into the trap of going beyond making threats that are permissible (i.e. threats only relating to primary acts).
Why do the groundless threats provisions need to be reformed?
According to the Law Commission's report, there are three key reasons why the groundless threats provisions should be changed:
1. The provisions can be easily avoided. For example, as the provisions only apply to threats to sue for registered trade mark infringement, other kinds of proceedings can be threatened without incurring liability (e.g. threats to sue for passing off). Therefore, by making carefully crafted allegations, the threats provisions can be avoided altogether.
2. The effect of the provisions is too wide. The Civil Procedure Rules, which govern civil litigation, require disputing parties to talk through the issues and avoid litigation wherever possible. The groundless threats provisions often prevent disputing parties from adhering to this requirement. In addition, professional advisors (such as solicitors writing letters to infringers on behalf of their clients) can also be on the hook for making groundless threats, even if they are made on their client's instructions.
3. The groundless threats provisions governing registered trade marks are complex and inconsistent with equivalent provisions for other types of intellectual property right (i.e. patents and registered designs).
What action has the Law Commission recommended?
The most significant recommendations in the Law Commission's report are:
1. Registered trade mark owners should be safe to make allegations of trade mark infringement, without fear of triggering the groundless threats provisions, where the threat relates to allegations of both primary and secondary acts of infringement (i.e. where a "Cavity Trays" situation arises).
2. Registered trade mark owners should be safe to make allegations of trade mark infringement against those who it reasonably believes intend to carry out primary acts of infringement, but only if the rights owner presents evidence to support its suspicions, when making its allegations.
3. Registered trade mark owners should be safe to communicate with those committing secondary acts of infringement without fear of triggering the groundless threats provisions, but only if there is a legitimate commercial purpose for communicating with the secondary infringer. According to the Law Commission's report, an example of an acceptable communication with a secondary infringer would be writing to the secondary infringer in order to track down the primary infringer.
4. Legal advisors should not be liable for groundless threats made in their professional capacity, where they are acting on behalf of their client and in accordance with their client's instructions.
Comment
The Law Commission's recommendations stop short of a complete overhaul of the law governing groundless threats. However, if adopted, the proposed reforms are likely clarify an area of law that is fraught with risk.
Until any reforms are implemented, the existing groundless threats provisions remain in force.
If you are a registered trade mark owner thinking of contacting someone who you believe is infringing your trade mark, in order to avoid being caught out by the groundless threats provisions we strongly recommend that you discuss your concerns with a member of Ashfords' Intellectual Property Team, before any communication is made with the other side.
