Groundless Threats

Groundless Threats

Unjustified threats to sue can be a dangerous strategy to employ if a client or indeed its legal
representatives embark on this route. A successful claim for groundless threats can include a
declaration from the court that the threats are unjustified an injunction against future threats
and damages for any losses caused by those threats.

However it should be noted that this ‘Groundless Threats’ protection is not available for the
following matters:

– Copyright (note section 253 Copyright, Designs and Patents Act 1988 (the ‘CDPA’))

– The tort of passing off and

– Breach of confidence.

In addition exceptions also exist to the statutory provisions and these too must be considered
when assessing the risk and or action of a threats letter:

Exceptions

1. Section 253 of the CDPA in respect of making or importing anything.

2. Section 21 of the Trade Marks Act 1994 (the ‘Act’) in respect of:

  Applying a trade mark to goods / packaging

  Importation of goods that have the mark applied to it or its packaging and

  The supply of services under the mark.

3. Section 70 of the Patents Act 1977 in respect of making or importing a product for sale

or using a process.

4. Section 26 Registered Designs Act 1949 in respect of making or importing anything.

Therefore it can be seen that allegations of Primary Infringement are thus preserved.

In the case of Prince v. Prince Sports Group [1998] FSR 21it was confirmed that because of the
potential damage and concern that may be caused by a threats letter an effort is required to
ensure that such threats are not made ‘casually’ or ‘recklessly’.

Elements for claimant to prove

There are three elements that an ‘innocent’ claimant who receives groundless threats must
establish before it is entitled to the remedies that are available to it:-

1. Are the threats groundless?

The burden of proof will be for the maker /author of a threats letter to establish that the
threats are in fact justified. However it is necessary for any potential claimant to be sure of
its position otherwise its application for a groundless threats action will be overcome. To assist
in such determination the claimant ought to assess:

a) What intellectual property right is being claimed?

b) Is the right that is claimed valid?

Is it a right that is claiming infringement a registered right and /or

Is the registration valid / is it a right that may likely be revoked?

c) Does the right claimed fall within the statutory exceptions?

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2. Are the threats actionable?

a) The threats may be express or even implied.

b) A single letter or multiple letters /communication as a whole may amount to such threats.

c) Later communication will not be sufficient where it attempts to nullify the earlier threat.

d) Mere notification of the right-holder’s registered rights does not constitute a threat.
However the wording of such a letter may indeed give rise to a veiled threat, which is potentially actionable.

e) The threat must identify to whom it is addressed. General threats are insufficient.

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3. Is the claimant aggrieved?

a) An aggrieved party may be one that has not been directly threatened. This would apply in
circumstances where a rights-holder may bring a claim where a retailer selling protected products has been threatened by a competitor.

b) A party must be able to establish to the court that it has been aggrieved. Frivolous or
unconnected /uninterested third parties may not bring such a claim.

c) Actual damage need not be proved. However it is necessary for the claimant to show that
at least a minimal commercial interest has been affected.

d) An adverse effect is more likely where the threat(s) are made against the claimant
directly.

e) Indirectly threatened claimants are required to show that actual or potential loss is
more than minimal.

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