Defending Manufacturers and Their Supply Chain

For manufacturers, Intellectual Property (IP) rights are often the lifeblood of their operations.

They encompass patents, trademarks, copyrights, and trade secrets, which protect designs, processes, and branding. 

Manufacturers will usually invest significant time and resources into developing their IP, including branded products for disposal.

However, in so doing, they face a persistent threat, namely, baseless threats of IP infringement.

That involves unwarranted accusations of IP infringement, for example, infringement of someone else’s registered trademark.

While genuine IP challenges are necessary to protect rights holders, unjustified threats pose a risk to manufacturers. 

The implications of unjustified threats are significant. They can stifle competition, sow seeds of doubt among investors, stockists, and retailers and hinder the launch of new products/brands, causing a loss of market share. 

In the following sections, we will take a closer look at the Intellectual Property (Unjustified Threats) Act 2017 (the Act) and how it operates to protect manufacturers and the supply chain from groundless threats of IP infringement. 

Pursuant to the Act, a threat of infringement proceedings is actionable if a reasonable person would understand from the communication that: 

1. A right (i.e., a registered trademark) exists. 
2. A person intends to bring proceedings against another person for infringement of the right. 

Accordingly, a threat may be expressed in forms such as a letter before action or implicit to the extent it communicates the intention to bring an action against a recipient.

Importantly, mere notification that a mark is registered or that an application for registration has been made is not, without more, an actionable threat. 

A groundless threat action can be brought in respect of actions such as selling or offering to sell goods under a trademark and using the trademark in the context of marketing or advertising goods for the purpose of selling them. 

A threat of infringement will be actionable unless: 

• The threat is limited to ‘primary’ acts of infringement, i.e. applying, or causing another person to apply, a sign to goods or their packaging and importing, for disposal, goods to which, or to the packaging of which, a sign has been applied;
• The threat is made to someone who has done or intends to do a primary act or
• The communication containing the threat qualifies as a ‘permitted communication’.

A ‘permitted communication’ must reasonably be believed to be true and is necessary to communicate information for a ‘permitted purpose’ such as: 

• Giving notice that a registered trademark exists;
• Discovering whether or by whom a registered trademark has been infringed by ‘primary’ acts of infringement as mentioned above;
• Giving notice that a person has a right in or under a registered trademark, where another person’s awareness of the right is relevant to any proceedings that may be brought regarding the registered trademark.

The Act makes clear that requests for a person to cease doing anything concerning a product or process, for delivery up or destruction or for the giving of an undertaking are not communications for a ‘permitted purpose’.

In summary, the Act provides useful protection to those receiving threats of IP infringement.

In the context of trademark infringement, actionable threats may relate to the sale or offering for sale of goods which use the trademark.

Threats are actionable save where they relate to ‘primary acts’ of infringement, and certain ‘permitted communications’ for ‘permitted purposes’ are exempted by the Act.

The remedies for an action in groundless threats of infringement include claims for an injunction, declaratory relief and damages.