Threats to sue for patent infringement - the risks (April 2016 update)

April 2016

A person who makes a groundless threat to bring patent infringement proceedings in respect of certain acts may be sued in the UK by any person "aggrieved" by the threat. A threat will be considered to be groundless if it is shown that there is in fact no infringement or the patent is invalid. In such cases the court may grant an injunction to prevent the person from making further threats, a declaration that the threats are unjustified, or damages to compensate the aggrieved person for any losses he has suffered as a result of the threats. This rule is intended to prevent aggressive patent holders from making unjustified threats to retailers and purchasers.

What is a "threat" in this context?

In determining whether a communication amounts to a threat of patent infringement proceedings, the court will consider how the communication would be understood by an ordinary recipient. For this reason a threat to bring proceedings does not need to be explicit and may be implied. For example, a series of letters might amount to a threat when read together even if each individual communication was not on its own a threat.

A company may be liable for threats made by its employees and external advisors so it is important that your staff are aware of the consequences of making threats. Under the current law, solicitors and patent attorneys can also be themselves held liable for threats made on behalf of their clients (but see below).

Who can bring an action for groundless threats?

Any person aggrieved by a groundless threat may take action against the person who made the threat. This could be the person who was threatened or a third party who was affected by the threat. For example, if a patent holder threatens infringement proceedings against pharmacists for selling a drug, the manufacturer of that drug could bring an action against the patent holder even though the manufacturer was not threatened itself.

What can I say if I think somebody is infringing my patent?

This depends on what infringing acts the person is doing.

Threats of infringement proceedings against a person for the acts of making or importing a patented product for disposal or using a patented process will not give rise to an action for groundless threats. In addition, if a person has made or imported a product for disposal or used a process, you may threaten them with proceedings for the other statutory infringing acts (e.g. selling, offering for sale and using a product) without incurring liability for an action for groundless threats. The reasoning behind this exclusion is that a patent holder should be free to put possible "primary" infringers on notice of proceedings but those further down the supply chain should be protected from groundless threats.

If you suspect a person is carrying out one of the other acts of infringement alone, without making or importing for disposal, or using a patented process (e.g. a retailer selling a product), you may still only provide them with factual information about the patent and make enquiries about who made or imported the product in question.

Are there any defences for a patent holder?

If a patent is found to be invalid, a patent holder's threat to bring infringement proceedings could be held to be unjustified. However, a patent holder will not be liable if he can show that his patent was infringed and, at the time he made his threat, he had no reason to suspect that his patent was invalid. It is also a defence if the patent holder can demonstrate that he used his best endeavours to identify the maker or importer of a product or user of process before he made his threats.

Review of the IP threats provisions

The Law Commission in the UK has reviewed the IP threats provisions and in April 2014 published a report recommending amendments to the law. This made 18 recommendations for reform. In October 2015 the Law Commission published a further (and final) report along with a draft Intellectual Property (Unjustified Threats) Bill. The Bill incorporates recommendations from the two reports. As regards patent matters, the Bill makes the following proposed changes:

  • A new two-step test has been introduced to determine whether a communication amounts to a "threat of infringement proceedings":
    • The first step relates to whether a communication would be understood by a reasonable person in the position of a recipient to mean that a right exists and that someone intends to enforce it in the UK or elsewhere against someone else;
    • The second step requires that the threat be made in relation to a person. Although this does not mean that the threat needs to be made against an individual. It may be more general, for example in a mass communication, in which case the reasonable person who is the recipient is a member of the public to whom the communication was directed (this part of the test is consistent with the existing law).
  • The Bill provides a "safe harbour" to allow a rights holder to communicate with someone who might otherwise be entitled to bring a threats action if threatened. Whether a communication is a threat or not depends how it is perceived by a hypothetical recipient. The communicator's intention is irrelevant. This exception applies in the following circumstances:
    • The communication is made solely for a "permitted purpose" (see below for explanation);
    • 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; 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 Bill also grants the court the power to add to the list of permitted purposes. The Bill offers some guidance on what cannot be treated as a permitted purpose along with information that may be regarded as necessary to communicate a permitted purpose. Examples of the former include requesting a person to cease doing anything in relation to a product or process, and examples of the latter include a statement that a patent exists.
  • The current defence for making threats to secondary actors should be retained but reformed to the extent that the threatener must use reasonable endeavours to discover the primary actor and the person making the threat shall inform the person threatened either before or at the time of making the threat of the reasonable endeavours used.
  • Lawyers and registered patent attorneys should not be liable for making threats where they have acted in their professional capacity and on instructions from their client.
  • The defence that at the time of making the threats the person making the threat did not know, and had no reason to suspect, that the patent was invalid in respect of the matter threatened, should be revoked.
  • The Bill contains wording to extend the protection of the threats provision to European patents that will come within the jurisdiction of the Unified Patent Court.

The government has accepted the Law Commission’s recommendations for reform and intends to introduce primary legislation to implement these reforms. The timetable for making the Bill law is currently unknown.

If you have any questions on this article or would like to propose a subject to be addressed by Synapse please contact us.

Threats to sue for patent infringement - the risks

Michael Washbrook

Michael is an associate in the Patents group based in London.

Polly West

Polly is a trainee in the in the Patents group based in London.

"This rule is intended to prevent aggressive patent holders from making unjustified threats to retailers and purchasers."

"Any person aggrieved by a groundless threat may take action against the person who made the threat. This could be the person who was threatened or a third party who was affected by the threat."