Threatened changes result in justified concern


The government has accepted the Law Commission’s recommendations for reforming the unjustified threats provisions relating to intellectual property rights, but Claire Phipps-Jones explains that issues still remain with how such actions can be pursued in relation to Unitary patents and European patents that have not been opted out of the UPC and that unwary patent advisors should take heed.

In a recent response, the government has accepted the Law Commission’s recommendations for reforming the unjustified threats provisions relating to intellectual property rights1 and noted its intention to continue to investigate introducing the reforms via the special procedure for bills implementing uncontroversial Law Commission recommendations.  The proposed amendments include, among other things, extending the existing unjustified threats legislation such that it would apply to Unitary patents (UPs) and those European patents that have not been opted out (referred to as “opted-in EPs”) and so will fall within the jurisdiction of the Unified Patent Court (UPC).  Despite the recommendations being a step towards unification of the threats provisions for national, European and Unitary patents, the exclusive jurisdictions of the UPC mean that it remains a little unclear exactly how an unjustified threats action brought in accordance with the new provisions will be dealt with.

The background to the Bill and the proposed changes

The current UK provisions suggest that a party may bring an unjustified threats action in relation to a threat to bring infringement proceedings in the UK on the basis of a GB or EP(UK) patent, where that threat has been made anywhere in the world.  In its defence to a threats action, it is possible for a party to argue that the threat was justified by proving that the acts complained of were infringements of a valid patent, or, if the patent is subsequently held to be invalid, that at the time of making the threat, that party did not know and had no reason to suspect that the patent was invalid in a relevant respect2.  As a result, in hearing such an action, it is often necessary to determine questions of validity and infringement.

The Law Commission is of the view that statutory threats legislation should also apply to UPs and opted in EPs.  However two key issues arose when considering how to amend the current legislation.  The first was that it is not possible simply to expand the wording of the current legislation to include UPs and opted-in EPs, as to do so would effectively expand the scope of the national UK threats provisions to all UPC states.  The second was that jurisdictional issues arise as to the hearing of defences to a threats action, which principally rely on an assessment of validity or infringement of the patent in question.

Threats actions are not currently provided for in European law or in the UPC Agreement.  As a result, despite some UPC Courts being geographically located in the UK with jurisdiction to hear infringement issues, they would not have jurisdiction to hear a threats action, as such provisions are a matter of national law whereby jurisdiction is reserved for UK Courts.  If the current UK national law was amended to apply to threats to commence proceedings in the UPC, it would expand the scope of the UK threats provisions to all UPC states.  The Law Commission is clear that its intention is not to expand the effective scope of the current national threats actions in such a way, as to do so would not be in line with European law.

The current test requires that a threat can be made anywhere, but must be a threat to sue in the UK.  Given that the scope of UPs and opted-in EPs is pan-European, a threat to commence infringement proceedings may not be specific to a particular jurisdiction.  In any event, in relation to a UP or opted-in EP, a patentee may commence proceedings relating to the actual or threatened infringement of patents3. in any Local or Regional Division of the UPC where the defendants are domiciled or where the alleged infringing acts take place.  According to the Law Commission’s report, it is of the view that any threat based on a UP or opted-in EP will not be a threat to bring proceedings in a UK Court, as required by the Best Buy case, but rather will be a threat to bring proceedings in the UPC, as the UPC will have exclusive jurisdiction for infringement proceedings and should not be considered to be a UK Court.  In their eyes, this would effectively mean that even if the current threats provision was amended to include UPs and opted-in EPs in the definition of patent, it still would not apply to UPs or opted-in EPs as there is no threat of proceedings in a UK Court.  It is for this reason, among others, that change has been proposed.

Is this premise correct?  The UPC will certainly have jurisdiction to determine the validity and infringement of an opted in EP(UK), which is a UK right, and a number of the courts will be physically located in the UK.  Indeed, the Patents Act currently defines “court” as the High Court in England and Wales.  However, the proposed amendment seeks to amend the definition such that “court” will include “the Unified Patent Court, as respects the jurisdiction which it has by virtue of Schedule A4”, suggesting that it could be considered to be a UK court. Of course, this is not decisive, given that the current requirement of an actionable threat being a threat to bring proceedings in a UK Court has its basis in case law and, as such, there is no clear definition of what is meant by “UK Court”.

In any event, in order to preserve the right to bring a threats action in UK national law, the Law Commission have proposed an alternative provision which allows for action to be brought in a UK Court in relation to threats of proceedings based on alleged acts of infringement which take place in the UK, rather than a threat to bring proceedings in the UK.

The Law Commission explain the test as follows:

“We recommend a new test for a threat of infringement proceedings which is that a reasonable person in the position of a recipient would understand from the communication that a person –
(a) Has a right in a Unitary Patent, European Patent (UK) or national patent, Community trade mark or national trade mark, Community registered or unregistered design or national registered or unregistered design; and
(b) Intends to bring proceedings against another person for infringement of one or more of those rights by:
(i) An act done in the United Kingdom, or
(ii) An act which, if done, would be done in the United Kingdom”

This test has been captured in the draft Bill.  It seeks to have a similar scope to the existing provisions, where any actionable threat in the UK relates to a threat to commence proceedings for infringement in the UK (and hence, must conduct allegedly infringing acts within the UK).  However, it is interesting to note that it may not apply to all acts for which infringement proceedings can be brought before the UK Local Division, as in the UPC it is possible to bring an action in the local division of the defendant’s residence or principal place of business in relation to acts done elsewhere.  Threats relating to such acts may not be actionable in accordance with the currently proposed wording, despite such action being brought against a UK national/company.

In addition, while it is the intention of the Law Commission to capture threats sufficiently linked to the UK, it seems that the draft wording is broad enough to capture threats of infringement proceedings made anywhere in the world in relation to a UP or opted-in EP, where the party to whom the threat is made has some at least some sales (or conducts at least some other infringing acts) in the UK.  This is because UPC proceedings for infringement will most likely be brought in relation to all infringing acts across Europe.  Therefore a generic threat to bring proceedings based on a UP or opted-in EP could be considered to be a threat to bring proceedings in relation to any and all infringing acts in any jurisdiction in which such acts occur.  Any other interpretation would appear somewhat strained. As a result the scope of the threats provisions may well have expanded as a result of the proposed changes.

Unjustified threats in the UPC era

While the current wording could be considered to overcome the issue identified above by allowing actions to be brought based on threatened proceedings for infringement of UP and opted-in EPs, it does not address the issue of how such claims will proceed, given that the UK courts will not have jurisdiction to hear issues of validity or infringement of such patents.  A threats action will be brought in the UK Courts.  As discussed above, a defence may rely on questions of infringement and invalidity.  Following commencement of the UPC, it will have exclusive jurisdiction for infringement and revocation actions based on UPs and opted-in EPs, with the Local/Regional Divisions being largely responsible for hearing infringement actions and also determining some counterclaims for revocation, and the Central Division principally responsible for revocation actions (with claims relating to human necessities, chemistry and metallurgy being heard in the London section of the Central Division).

The currently proposed provisions do not explain what should happen when such a defence is raised.  However, the Law Commission have suggested two possible options, based on the current position in trade mark law, where actions are brought in a UK Court authorised to determine pan-European issues.

  1. The threats action could be stayed pending determination of the issue(s) of infringement and/or validity in the UPC.


  1. The UK Court could take a robust approach and form an interim view on infringement or validity in order to dispose of the matter in its entirety or in order to determine whether interim relief should be granted.

There are serious difficulties with both of these options.  In relation to the first, it is quite unclear in what circumstances the UK court might order a stay.  To do so when proceedings in the UPC were already afoot may not be unreasonable.  Of course, depending on the time taken for a UPC action to be determined, it is possible that the UK Court may not consider it in the interests of justice to wait, perhaps employing a test similar to that applied to the assessment of whether to stay a national revocation action until the outcome of co-pending EPO actions.  Whatever the position for pending proceedings, to await the outcome of proceedings when they have not yet been commenced seems too open-ended, and potentially means that a resolution to a threats action could be a long time coming.  The Law Commission has suggested that one option may be to order that if proceedings are not commenced in the UPC to determine infringement within a given time period, the defence of justification is considered to be withdrawn.  Such an order could be considered at least contrary to public policy, as it may effectively force the patentee to allege infringement seeking pan-European relief at a stage where it may not be confident to do so, in order to resolve a national question of whether a threat was justified.  This is particularly the case given the front-loaded nature of UPC proceedings and the size and value of the market at stake, meaning that many patentees will wait until they have collected significant evidence and taken time to prepare the best case possible prior to commencing proceedings.  It is simply not reasonable for a national court to require a party to commence potentially pan-European proceedings in short order or alternatively be unable to rely on a statutory defence when the same principle is not part of the legislation.  If this approach is adopted, the proposed changes may inadvertently give threats legislation more bite.

In relation to the second of the Law Commission’s options, it is quite unclear whether the UK Court would accept jurisdiction to form even an interim view on infringement or validity.  Article 32(1)(a) of the UPC Agreement explains that the UPC has competence for “actions for actual or threatened infringements of patents and SPCs and related defences, including counterclaims concerning licences”.  It is unclear whether this could include a defence in national proceedings that a threat of infringement of a UP or opted-in EP is justified based on infringement of a valid patent.

On the other hand, should the court be willing to provide an interim opinion on the validity or infringement of a patent for the purposes of deciding whether the defence should apply, might this have an effect on the relevant division of the UPC determining the issue?  In any event, should the decision of the UK Court differ from the UPC, it is clear that the UPC’s decision would “trump” the UK Court’s opinion, suggesting that any damages arising from the same should be recoverable.  The position, however, becomes complicated in circumstances where the UK action has been finally determined and damages have been paid.  Would those damages then be recoverable and what happens to any injunction?  Similar positions have arisen in relation to cases where patents have subsequently been revoked at the EPO.  In such cases, it has been suggested that a stay of proceedings should be granted where refusing the same will result in irrevocably depriving a party, for example where the final payment of damages is made as a result of the proceedings and no undertaking to repay is provided.  Applying a similar principle may mean that the Court in a threats action may form an interim opinion on validity or infringement to determine the defence of justification, and will either refuse or grant an injunction and damages on that basis.  However, the assessment of the quantum of damages and potentially also the injunction may be stayed pending UPC proceedings (which may, or may not, follow) unless the threatened party is willing to undertake to repay damages arising from the stay if a subsequent decision of the UPC means that the defence should have prevailed.

It is also possible to envisage circumstances where the UPC determines that the patent is invalid without determining infringement (for example, if Local Division infringement proceedings are stayed pending Central Division revocation proceedings, which are determined first, rendering the infringement proceedings unnecessary).  In such circumstances, the facts required for a defence of justification to succeed would not have been fully determined by the UPC, as it is possible for the UK Court to find that the patentee did not know and had no reason to suspect that the patent was invalid when the threat was made.  Interestingly, it appears on the face of the Bill that this defence to justification has been removed (i.e. the relevance of the knowledge of the patentee as to the validity of the patent at the time of making the threat).  However, the Law Commission appear to suggest that while there is a change in the wording between the current provisions and the Bill, there is no change in substance4.  If that is true, the UK Court would therefore be left to consider the question of infringement, which it may consider to be within the exclusive jurisdiction of the UPC.

Finally, it is worth considering whether these provisions may add to the ability of a party to identify an advantageous litigation strategy in the UPC, exploiting unjustified threats as a way to have proceedings heard in a preferred forum.  For example, is it conceivable that a UK based company may bring a threats action based on alleged infringement in the UK of a patent owned by an Estonian company, in circumstances where the alleged infringer intends (unbeknown to the patentee) to launch its product Europe-wide but wishes its action to be heard in the UK?  In such circumstances, applying the Law Commission’s suggestion that a stay be granted pending UPC proceedings commenced within a given period, were the Estonian company to rely on a defence of justification it would need to bring infringement proceedings in the UPC in the UK based on its current knowledge of infringing activities and the domicile of the defendant.

The future

It remains to be seen whether these changes result in the national unjustified threats legislation in the UK having a broader scope and more bite in a post-UPC era.  Should the Bill successfully pass through Parliament, it is clear that these provisions may unwittingly catch out clients with non-UK advisors that are not familiar with the UK national threats provisions.  For example, it is conceivable that a German company could write to a French company threatening proceedings for infringement of its UP.  Assuming that the French company conducts any infringing acts in the UK (even, perhaps, a small percentage of its total sales), it may be possible for it to bring an unjustified threats action in the UK Courts.  It is therefore crucial for non-UK clients and advisors alike to be aware that pre-action correspondence and discussions taking place anywhere in the world relating to acts of infringement of UP and opted-in EPs where there are any potentially infringing acts in the UK may result in a national threats action.  As the Courts have not yet considered how to deal with such actions, it is clear that clients and advisors need not only be aware of the cost and time burden of an unexpected UK litigation, but also of the potential effect this may have on their UPC litigation strategy.

While the Law Commission is hopeful that the Bill will be introduced in the next Parliamentary Session starting in April 2016 and will be passed quickly via the special procedure for bills implementing uncontroversial Law Commission recommendations, perhaps the concerns discussed above go some way to explain the Law Commission’s view that the best long-term approach would be to replace the threats provisions with a new tort of false allegations made by one trader to discredit a competitor based on the Paris Convention for the Protection of Industrial Property.


1 Following the publication of the Law Commission’s final report entitled “Patents, Trade Marks and Designs: Unjusitified Threats” (see Bristows’ comment here), the IPO launched a discussion document on 22 October 2015.  The government received 12 responses to that paper and on 28 January 2016 published its response which can be found here.
2 Section 70(2A) of the Patents Act 1977 provides that: “If the defendant … proves that the acts in respect of which proceedings were threatened constitute or, if done, would constitute an infringement of a patent – (a) the claimant … shall be entitled to the relief claimed only if he shows that the patent alleged to be infringed is invalid in a relevant respect;  (b) even if the claimant … does show that the patent is invalid in a relevant respect, he shall not be entitled to the relief claimed if the defendant … proves that at the time of making the threats he did not know, and had no reason to suspect, that the patent was invalid in that respect.”
3 Articles 32 and 33 of the Agreement on a Unified Patent Court
4 Paragraph 4.45 of the Law Commission’s final report entitled “Patents, Trade Marks and Designs: Unjusitified Threats”

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