Commercial & Intellectual Property Law Specialist; Public Access Barristers

Threats to Sue in Intellectual Property Law


Case 1
The Plaintiff was the manager of a company. The company was set up for the commercial exploitation of a process for waste treatment using wet oxidation technology. The second defendant was a national research laboratory funded largely by the Danish government. The first defendant was a firm of solicitors instructed by the second defendant.

Technical input for the Plaintiff's company was supplied by an employee of the second defendant. When the second defendant discovered that some of its internal documents had found their way to one of the Plaintiff's potential customers the second defendant commenced civil proceedings in Denmark. The second defendant then instructed solicitors (the first defendant) to raise the matter with the Plaintiff's company. Correspondence then passed between the first defendant and the Plaintiff, the Plaintiff's company and the Plaintiff's solicitors. In the correspondence reference was made to a pending application for a European patent. The Plaintiff claimed that this correspondence contained a threat that was actionable and commenced legal action for a threat to sue. The action was founded on threats to sue for infringement of a patent. As there was no patent since it was only a pending application for a European patent the threat to sue could not be justified. The Plaintiff sought an order for an inquiry into damages. The court found in favour of the Plaintiff and ordered an inquiry into damages even though it was sceptical of the likelihood of the Plaintiff recovering a substantial award. Whilst the financial risk to the Plaintiff of an inquiry into damages was negligible as he was on legal aid, nevertheless, this outcome did risk incurring greater expenditure in litigation with the liklelihood of little financial gain. This would be the case no matter which party would ultimately succeed in the substantive action.

Case 2
The Plaintiff was the owner of a registered design for a car steering wheel lock. The second defendant was a customer of the first defendant. The Plaintiff made a claim to the second defendant that the registered design rights had been infringed. In the action that was pursued the first defendant counterclaimed for invalidity and damages for unjustified threats to sue. As the registered design was held not to be infringed the threats could not be justified and an inquiry was ordered into damages for unlawful threats.

Following correspondence between the Plaintiff and the second defendant and the commencement of proceedings the second defendant decided to withdraw the steering wheel lock from its forthcoming brochure. A settlement was reached between the Plaintiff and the second defendant and two days after the Plaintiff released the second defendant from its undertakings. Damages claimed as a result of the unjustified threats being made was the loss of opportunity to sell the car steering wheel lock through the second defendant's brochure.

As the product had only been withdrawn from the brochure after the writ was issued and not after the unlawful threats were made it was held that the losses incurred did not flow from the unjustified threats to sue but flowed from the issue of the writ itself.

Case 3
The Claimant and Defendant were companies who were rival importers of three wheel buggies for children. The Defendant claimed it had patent rights, design rights and rights under an exclusive distribution agreement in respect of three wheel buggies that were being infringed by the activities of the Claimant. A course of correspondence followed between the parties which was inconclusive. The Defendant then wrote to one of the Claimant's customers, a well known chain of stores, who bought and sold the Claimant's buggies. In the letter sent to the Claimant's customer the Defendant reasserted its claim and asked the customer to cease marketing the three wheel buggy. In fact the Defendant held no patent rights and no design rights and the threat of litigation could not, therefore, be justified. The Defendant maintained that the correspondence attracted privilege as it had been headed 'without prejudice'. It was held that the correspondence could not, in fact, attract privilege as there were no negotiations taking place between the Defendant and the Claimant's customer. The judge ordered an inquiry into damages, gave a declaration that the threat contained in the correspondence was unjustified and granted an injunction against the continuation of the threats.

(Note that subsequently the Defendant went into voluntary liquidation and the Claimant sought to join the Defendant's solicitors and a Director of the defendant company in order to enforce judgment. It was held that an original claim could not be amended in order to continue a claim against a new defendant after judgment had already been given.)

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