Don’t sue the messenger

From 1 October, the Intellectual Property (Unjustified Threats) Act 2017 offers new protection for professional advisers (including lawyers) involved in certain intellectual property disputes.

If the owner of a trade mark, patent or design thinks someone else is using their intellectual property without permission, they may be tempted to threaten legal action with a letter, social media post, or other communication. While these are not formal legal actions as such, making such threats can be very a effective deterrent strategy.

Because IP litigation can be both very expensive and commercially disruptive, most people will seek to avoid the cost and energy required to fight a court battle – even if they are confident that they are innocent. To address concerns that threats could be made without proper care, “threats provisions” were introduced into legislation in 1883. If someone finds themselves unjustifiably threatened with legal proceedings for alleged intellectual property infringement, they may be able to launch a counter-attack known as a “threats action.”

This protection is unique to only certain types of intellectual property, and serves to shield innocent businesses from intimidating behaviour. If successful, the threats action may result in an injunction against more threats, a public apology, and damages for injury to reputation.

But until recently, professional advisers – including lawyers – have been at risk of incurring personal liability, because any person could be sued for making an unjustified threat, even if it was simply made on behalf of a client. This is because any person making the threats could be sued – but “person” was not actually defined in statute (section 70A(1), Patents Act 1977). It could therefore be widely interpreted to the owner of the IPR in question, but their lawyers, too – as seen in Brain v Ingledew (a Firm) (No 3). 

It is easy to see how this could be awkward for a variety of reasons. To avoid being sued for an “unjustified threat,” lawyers may suggest skipping past the threatening letter and going straight to formal litigation. This may be confusing or unsatisfactory for a client, who might prefer to send a threat first in the hopes that it could resolve the issue out of court. Lawyers might also require an indemnity from their client, which could have a chilling effect on the relationship. The risk of having one’s lawyer being sued may also discourage an IP owner from asserting their rights in the first instance.

For the last several years, the Law Commission and the Information Commissioners Office have been reviewing these threats provisions, and considering amendments. They have determined that threats actions could be used tactically to drive a wedge between legal advisers and their clients, or to drive cases to court rather than encourage negotiations over settlement.

Accordingly, under the new Intellectual Property (Unjustified Threats) Act 2017  a new protection has been introduced for regulated professional advisers where they act on client instructions, and identify their client in the communication (s. 70D(3), PA 1977). The protection extends to non-UK and non-EU advisers, as well as in-house counsel.

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