What changes to the law covering IP infringement claims mean for your tech startup

IP law

Peter Finnie, managing partner at GJE, talks through what changes to the law covering IP infringement claims mean for technology startups and scaleups in the UK.

On 1 October, a new UK law – the Intellectual Property (Unjustified Threats) Act 2017 – came into force that made significant changes to what you can and cannot say to anyone you suspect of infringing your UK intellectual property.

Stripping away the legalese, at their core, the changes do three things:

  1. They add consistency to the restrictions governing how the suspicion of infringement can be communicated for different IP rights;
  2. They safeguard against the unfair exploitation of the monopoly granted by owning an IP right;
  3. They provide additional protections to enable professional advisers to communicate freely with their clients when advising on the issue of threats.

To understand the impact of the Act, let’s first unpack exactly what an “unjustified threat” is when it comes to intellectual property infringement claims.

What is a “threat”, and what makes a threat “unjustified”?

The law considers a threat to be any communication that would cause a reasonable person to understand that the claimant:

  • holds an IP right;
  • and intends to initiate legal action against a party that it believes to be infringing that right.

That communication can be private and direct to the party concerned, or a mass public message (such as an advert or statement in a media interview) – anything, including a spoken comment, that can be interpreted as described above can constitute a threat.

A threat is unjustified if the IP right in question does not in fact exist, if it has expired, or if no infringement of the right has actually occurred.

The recent changes mean that the rules governing what can or cannot be said about potential infringements of registered trademarks and registered and unregistered designs have been brought into line with those covering patents. This means that the most commonly-used IP rights are now handled consistently under the Act.

Why is the law bothered about unjustified threats?

The law exists to prevent IP rights holders using unjustified threats to unfairly exploit the monopoly that their IP rights grant them over specific technologies or brand elements and intimidate other parties. It stops one company waving a patent at another (often smaller) in an attempt to scare them into stopping trading when the threat of legal action is not substantiated.

In particular, the law aims to protect businesses further down the supply chain, such as retailers and resellers, from claims brought against them that would more properly be addressed at the companies manufacturing or importing the products in question.

Claimants often use unjustified threats to pressure retailers into removing products from sale, harming their business, as a proxy for bringing proceedings against the originating company, when they have no intention of actually starting action against the retailer. The Act, therefore, protects these targeted companies, empowering them to challenge threats as unjustified.

What does this mean for you and your startup?

It’s natural that you’ll want to defend your intellectual property and deal with competitors or imitators that are using patented technologies or processes, or trademarked assets, without the relevant permissions. But you need to be careful how you go about it, getting the right professional advice and taking note of what you are allowed to say to someone you suspect of infringing an IP right you hold.

There are easy ways of getting your point across without risking being seen to be issuing a threat.

Things you can safely do include:

  • informing somebody of the IP right that you hold, noting the specific patent name and number, for example;
  • asking a retailer or reseller of a product you believe infringes your IP right for information about the manufacturer or importer who might ultimately be responsible for the infringement.

Any requests to cease selling a product or using a product, any reference to legal proceedings, or any indulgence in cliche cries of “See you in court!”, however, are likely to constitute an unjustified threat if not grounded in expert professional legal advice, and could kick off a lengthy and expensive legal battle.

The recent changes to the law have also introduced new protections for professional advisers acting on behalf of companies protecting their IP rights.

Previously, it has been a common tactic for defendants in IP infringement cases to use the unjustified threat laws to drive a wedge between a claimant and their legal advisers, as lawyers’ communications could be construed as an illegal threat and action taken against the lawyer too. This is no longer possible.

In short…

Regardless of these recent changes to the law, it is always advisable to seek professional legal counsel on matters concerning potential IP infringements to ensure that you aren’t making threats that could be considered unjustified and open you up to potentially damaging repercussions.

For more information on IP law, download UKTN’s free guide.