IP ANALYSIS
Hidden dangers in threatening to sue for infringement
Two recent cases have reiterated the care that must be taken when addressing potential infringement of intellectual property rights. UK law contains provisions that protect the public from intimidation by certain threats issued by a patent proprietor, if those threats are ultimately groundless. Similar provisions also apply for trade marks and designs.
The first of the cases involved Riemser’s patent covering a device for insect bite treatment. Riemser believed that Zeno’s device for treating acne might infringe its patent and wrote to a large number of Boots stores stocking Zeno’s product, drawing attention to its European patent and suggesting that Zeno had adopted the same technical solution. The letter did not allege that Boots was infringing the patent, or mention that patent infringement proceedings might be brought, and it was asserted by Riemser that the sole purpose of the letter was to discover whether the patent had been infringed. However, the UK High Court found that, in the circumstances, a reasonable person would have understood the letter to amount to a veiled threat of infringement proceedings.
Zeno’s device was found to not infringe Riemser’s patent, and thus the perceived threat
was a groundless one. Therefore Zeno was able to obtain relief from Riemser for the
damage caused by the groundless threats.
In the second case, Grimme started an action against Scott for manufacturing and selling
a potato separator. Grimme had patent and unregistered design rights in respect of the
product. Grimme’s solicitors wrote to a number of Scott’s clients advising them that
action was being taken against Scott. Although the letter explicitly stated that Grimme
did not intend to take action against the recipient, the letter also “reserved all its rights
in the matter” and indicated that contact would be made again. The UK High Court
decided that the letter was a veiled threat of infringement proceedings. It considered
that the ordinary recipient would read the letter to suggest that although Grimme did
not currently intend to commence proceedings, it would be likely to do so in the future
if it succeeded in its action against Scott.
Although it was found that some of the roller designs were infringed, the veiled threat
of infringement was viewed as having been made with regard to all the roller designs.
Therefore the threat had not been justified in its scope, and so a groundless threat had
been made in respect of some of the designs.
These two cases act as a reminder that a proprietor should be cautious in selecting the
wording and intended recipient of any letters or statements issued in connection with
actual or possible infringement proceedings. Extreme care should be taken and advice
should be sought as early as possible if there is any suspicion of potential infringement
of rights.
Protection of luxury brands versus free trade
The online auction retailer eBay has once again locked horns with manufacturers of
luxury goods, specifically in the form of Louis Vuitton. Louis Vuitton has for several years
waged law suits against eBay, in various EU countries, arguing that the sale of its luxury
goods on the eBay site has a detrimental impact on the exclusive nature of the goods and
as such should be prohibited. In reply, eBay has forcefully argued that such a control on
the distribution of the goods is contrary to the principles of free competition and is
anticompetitive.
In the latest decision handed down by the French courts, the ruling has gone in favour of Louis Vuitton. It has enabled Louis Vuitton to prevent the sale of its genuine goods on the eBay site and has also extended to enabling the company to stop the sale of counterfeit items. However, this cannot be taken as the final position for the sale of luxury items, because, in contrast to the French decision, the UK courts dismissed a corresponding claim made by L’Oreal. The UK decision did, however, hold eBay liable for the sale of fake fragrances and cosmetics.
eBay has indicated that it will file an appeal against the French decision on the basis that it constitutes an unfair restriction of trade to allow such a limitation on the sale of genuine goods and counterfeit goods. It can be expected that eBay will continue to defend its ability to sell as broad a range of goods as possible.
This is clearly a difficult path for the courts to tread, as an attempt is made to preserve
the integrity of brand owners on the one hand but also to enable free trade and fair
competition on the other.
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