unjustified threats

Recipients of unjustified threats of infringement of registered intellectual property rights and other aggrieved by the threat are entitled take action to recover their loss arising from such communications. Injunctive relief is also available to prevent further instances of threats. The threat need not be in writing.

Each of the statutory forms of intellectual property rights (registered designs, registered trade marks and patents) makes available actions for unjustified threats of infringement. Thus, those who make express or implied unjustified threats of infringement of registered designs, trade marks and patents are susceptible to a claim by any person who is affected by the threat of litigation. Accordingly, the action is available not just to recipients of the threat – those up or down the distribution chain, subject to limited exceptions, are entitled to bring a claim for damages, an injunction.

Patent related Threats

Not all recipients of a threat of patent infringement proceedings are entitled to take action for an unjustified threat of infringement. A threats action will be able to be successfully defended in the following circumstances:

1. the recipient of the threat was:
• a manufacturer;
• an importer; or
• user a patented process;
2. The patent owner shows:
• the patent was valid;
• the acts complained of in the threat would have infringed the patent or the proprietor of the patent did not know or have reason to suspect that the was invalid in respect to the acts complained of; and
• the recipient is not a manufacturer, importer or user of a patented process;
3. The alleged threat:
• provides factual information about the patent;
• the communication makes inquiries for the sole purpose of discovering the identity of the manufacturer, importer or user of a patented process; or
• limits assertions to these matters;
4. As a special case, where the defendant made its best endeavours to ascertain the identity of the manufacturer, importer or user of a process, and subsequently makes a threat against a person who is not a manufacturer, importer or user of a process after notifying the alleged infringer of the endeavours used.

The exception to the availability of threats actions made against manufacturers, importers and users of processes extends to further dealings with the product. That is to say, threats to sue for acts amounting to, say, distribution of patented products by an importer of goods will to the extent that those acts extend beyond importation amount are immune from suit.

The Threat

Unjustified threats may take the form of advertisements, brochures, letters or any other means. An actionable threat may be made orally. A mere notification of patent rights does not amount to an unjustified threat. Informing a person of the rights possessed by a patent owner would not amount to a threat and be limited to factual information about the patent; enquiries as to whether the patent has been infringed by the addressee of the communication; and assertions about the patented invention for the purposes of the enquiries.

A threat to sue for patent infringement need not be made expressly. For instance, a statement that the patent owner intends to enforce their rights may amount to an implied threat and be sufficient from the perspective of a reasonable and normal recipient. If it is the case that a particular addressee or act of infringement cannot be identified from the face of an advertisement or circular threatening proceedings, it is less likely that a threat has been made.

Aggrieved Persons

Any person that has been affected by the threat may take action to prevent further instances of the threat and/or recover losses suffered by the making of the threat. For instance, an importer may cease distributing patented products or process as a result of receiving the threat. One or many of its customers suffer loss as a result of the importer ceasing distribution, as the threat was taken seriously. Should this be the case, each of the customers is entitled to take action to prevent the threat being made in the future and recover the loss that they suffered respectively as a result of refusal on the part of the importer to distribute the product or process. Ideally, a person should be in a position to point to specific loss suffered to assist proving that it has in fact been aggrieved by the threat to sue the importer.

Conversely, if threats are made to customers which prevent the customer from purchasing the allegedly infringing goods in the future, a claim will lie in the hands of the distributor for the loss of sales caused by the threat.

Moreover, the threat of infringement of a patent does not need to be made directly to the each person that is aggrieved by the threat provided its business is aversely affected in more than a trivial way.

Conclusion

Ownership of patent rights gives the proprietor monopoly rights in respect to the claims made the patent. A patent owner comes from a position of strength, as patents are assumed to be valid until such time as they have been revoked. Having said this, patent owners may unnecessarily create potential liability for themselves by making assertions of infringement that are unable to be proved at law. Prior to writing to potential infringers, a patent owner should think carefully about the trading activities of the alleged infringer and draft their correspondence deliberately to avoid potential counterclaims for unjustified threats.

Usage: The retailer of the allegedly patented product applied for relief from further threats to mitigate the diminution of sales to customers caused by the threat.

Related Words: patent; registered design rights; registered trade mark; damages; intellectual property rights; assessment of damages.