Unjustified threats of patent infringement – changes to UK law

The Intellectual Property (Unjustified Threats) Act 2017 (the Act) received Royal Assent on 27 April 2017 and will apply from 1 October 2017, making a number of amendments to the Patents Act 1977.

The Act

The Act has three key aims:

• to protect businesses and individuals against the misuse of threats to intimidate or gain an unfair commercial advantage where there has been no infringement
• to make it easier for those involved in an IP infringement dispute to negotiate a settlement, and avoid litigation, and
• bring consistency across the law of unjustified threats as it applied to patents, trademarks and designs.

There are a number of changes to the law surrounding unjustified threats as a result of the Act, in particular it:

• creates a new statutory test for what is a "threat of infringement proceedings"
• allows for threats to be made by "mass communication" methods
• creates a new safe-harbour for "permitted communications"
• updates the permissible defences, to include situations in which no primary actor in an infringement can be found, despite "reasonable steps" being taken
• creates an exception for professional advisers, under certain circumstances, and
• creates provisions for unjustified threats in relation to a unitary patent.

Threat Test

The Act modifies the "threat test", introducing an objective, two-step test to determine whether a communication amounts to a "threat of infringement proceedings". This requires that a reasonable person in the position of a recipient of the threat would understand from the communication that:

• a patent exists, and
• a person intends to enforce the patent against another person (in the UK or elsewhere) for an actual or potential infringement in the UK.

Threats need no longer be understood to relate only to bringing infringement proceedings in the UK. As a result, the provisions will apply to the unitary patent and the Act also inserts a new Schedule into the Patents Act 1977 in respect of unitary patents, for when the UPC Agreement comes into force.

Furthermore, the new threat test ensures that threats to bring proceedings before the UPC in respect of patents falling within its jurisdiction will, where appropriate, fall within the scope of the threat provisions.

Who may bring an action?

It remains the law that:

• any person "aggrieved" by a threat may bring an action, and
• such a threat is not actionable if it is made in respect of making or importing a product for disposal, or for using a process.

In these cases, it is also not actionable to threaten proceedings for any other alleged infringement in respect of the product or process.

The Act also provides protection against threats made through mass communication, such as press releases. Such threats do not have to be directed at a particular individual.

Safe-Harbour

he Act provides a "safe harbour" to allow a patent holder to communicate with someone who might otherwise be entitled to bring an unjustified threats action if threatened. The "permitted communication" must be done for a "permitted purpose".

A communication containing a threat of infringement proceedings is a "permitted communication" if:

• the communication is made solely for a "permitted purpose"
• all the information provided is necessary for that purpose, and
• the person making the communication reasonably believes it is true.

Permitted purposes include:

• notifying the recipient that the patent right exists
• attempting to discover whether and by whom the patent is infringed (by making or importing a product, or using a process), and
• giving notice that a person has a right under a patent where that person's awareness of the patent is relevant to the action that may be taken.

The Act also grants the court the power to treat any other purpose as a "permitted purposes" if it is in the "interests of justice". The aim of this is to provide certainty over what will be considered a permitted purpose, whilst allowing the court the flexibility to take the surrounding circumstances of a case into account.

The Act also lists purposes which cannot be considered "permitted purposes".

Defences and Exemptions

The old defence for making threats to secondary actors is retained, but reformed to the extent that the threatener must first use reasonable steps to discover the primary actor who is making or importing the product, or using the process.

The person making the threat must also inform the person threatened either before or at the time of making the threat of the reasonable steps used.

It is also a defence to show that the act for which the threat was made is an actual or potential infringement.

Lawyers and registered patent attorneys are not liable for making threats where they have acted in their professional capacity on instructions from their client and have made that client known.

Conclusion

The Act aims to strike an appropriate balance between enabling rights holders to enforce their IP assets, while preventing attempts to misuse threats to distort competition or stifle innovation. Among its other provisions, the Act is bringing in necessary changes to ensure protection against unjustified threats that will fall within the jurisdiction of the UPC.