For well over a century IP law has featured a special set of rules whereby liability can be incurred as a result of the issue of groundless threats of infringement proceedings. Their object is to dissuade rights-holders from scaring off traders by the use of sabre-rattling; and their effect can often be to turn the tables on IP bullies who, to their surprise, find that they are receiving a writ rather than issuing one.
But are the rules working properly? The Law Commission, which is currently consulting on the subject, thinks not. In its opinion, they are too complex and inconsistent, and may also have the effect of encouraging a "sue first, ask questions later" approach that is clearly contrary to public policy.
So a range of alternative reforms has been tabled by the Commission. Some of them would involve creating a more level playing field amongst various categories of IP rights, for currently it is safer to threaten a patent suit than to threaten trade mark or design litigation. A broader-brush suggestion is to treat groundless threats as a form of unfair competition and to introduce a novel cause of action – namely, a new-fangled tort of making false or misleading allegations in respect of patent, trade mark or design right infringement. Yet another possible reform – definitely the favourite of this author – is to tear up the rule whereby lawyers may themselves incur liability for issuing infringement threats on behalf of their clients. It is after all hard enough to be an IP lawyer, without also incurring legal liability for practising one's profession!
We therefore intend to contribute to the consultation, which closes on 17 July.
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