Imagine this: You are browsing through the internet and come across a product or logo which you are ‘absolutely certain’ infringes your intellectual property rights – e.g. a patent application. In a fit of rage, you immediately contact the seller/supplier and allege they infringe your intellectual property rights, and you are going to sue them for everything they have. Turns out their product does not infringe your intellectual property rights and now tables have turned, and they sue you for unjustified threats. While not always quite so dramatised, incorrectly asserting your intellectual property rights can result in a declaration of unjustified threats in which you may be required to compensate the person which you alleged to be infringing.
Reviewing relevant Commonwealth legislation relating to intellectual property, each of the Patents Act, the Trade Marks Act and the Designs Act have a section specifically relating to relief from unjustified threats.[1] While there are slight differences in the wording of these aforementioned acts, we will look to the Patents Act for illustrative purposes. Section 128(1) of the Patents Act 1990 states:
(1) Where a person, by means of circulars, advertisements or otherwise, threatens a person with infringement proceedings, or other similar proceedings, a person aggrieved may apply to a prescribed court, or to another court having jurisdiction to hear and determine the application, for:
(a) a declaration that the threats are unjustifiable; and
(b) an injunction against the continuance of the threats; and
(c) the recovery of any damages sustained by the applicant as a result of the threats.
The obvious next question may be what damages may be recovered. The damages must be a result of the threats.[2] For example, if as a result of the threats, a potential client ceases negotiations with the alleged infringer, the threats may be held to be unjustifiable.[3]
As an example, party A (a potential infringer) is negotiating with party B for the sale of a product which you believe falls within the scope or your intellectual property rights. You inform party B that party A is infringing your intellectual property rights and that by purchasing party A’s products they too would be infringing your intellectual property rights. In order to avoid any potential for litigation, party B seeks another vendor. Subsequently, a court finds that party A’s product does not infringe your intellectual property rights. It would be reasonable for party A to seek relief for the damage caused by the threats made by you. While damages may be difficult to quantify and/or demonstrate, avoiding the potential for damages from unjustifiable threats is an easier and entirely avoidable option.
If unable to walk away and seek professional advice from your patent and/or trade mark attorney, merely notifying a potentially infringing party of the existence of a granted patent and/or a patent application is not considered an unjustifiable threat.[4] The better course of action is to collect as much information regarding the allegedly infringing product or mark and seek advice from your patent and/or trade mark attorney prior to engaging with the alleged infringer.
As a general rule – seek advice prior to alleging infringement of any intellectual property rights. Contact our intellectual property professionals to set up a free consultation to discuss your IP needs.
[1] Patents Act 1990 (Cth) s 128; Trade Marks Act 1995 (Cth) s 129; Designs Act 2003 (Cth) s 77.
[2] Ungar v Sugg (1892) 9 RPC 114, 118.
[3] Solanite Signs Ltd v Wood (1933) 50 RPC 315, 319; Horne v Johnston Brothers (1921) 38 RPC 366, 372.
[4] Patents Act 1990 (Cth) s 131.