Australia: The perils of communicating with customers about IP litigation - could you be making 'unjustified threats'?

Last Updated: 30 November 2016
Article by Lucy Hartland
Services: Dispute Resolution & Litigation, Intellectual Property & Technology

What you need to know

  • Business updates to customers about actual or pending litigation relating to intellectual property rights can sometimes include 'unjustified' or 'groundless' threats of infringement proceedings.
  • If a customer update is provided, it should be drafted with care to avoid any direct or indirect threat of infringement proceedings, and in particular, should avoid reference, whether direct or indirect, to the position or potential infringement position of customers.
  • "Reassuring statements" may suggest that an update can be more readily interpreted as a threat of infringement, since such reassurance would otherwise not be necessary.

When a business becomes involved in legal proceedings, there can sometimes be a temptation to communicate with customers and keep them informed about the progress of the litigation. The desire to reach out to customers can be particularly strong where the litigation is likely to attract the attention of mainstream media or become the subject of public commentary and criticism.

Care should always be exercised before issuing communications about any type of litigation, but this is especially critical when the litigation relates to intellectual property (IP) rights. This is because there are provisions in Australia's IP rights legislation which prohibit the making of 'unjustified' or 'groundless' threats of infringement. These terms have been interpreted quite broadly in the past, which means that it can be surprisingly easy to fall foul of the provisions. A simple email that a business might consider to be no more than an informative (and perhaps even helpful) update to customers may be enough to constitute an unjustified threat, exposing the business to liability it would not have expected.

Snapshot of 'unjustified threats' provisions

There are provisions in the Patents Act 1990, Copyright Act 1968, Trade Marks Act 1995 and Designs Act 2003 which expressly prohibit making 'unjustified' (sometimes called 'groundless') threats of infringement.1

The precise terms of the prohibitions vary from Act to Act, but they all relate to a threat to commence legal proceedings for the infringement of a relevant IP right (that is, a patent, a work protected by copyright, a registered trade mark or a registered design).

A person aggrieved by an unjustified threat can apply to a court for relief, including an injunction to prevent any further unjustified threats and an award of damages for loss suffered as a result of the threat. Persons may be aggrieved by a threat made to them. They may also be aggrieved by threats made to third parties, for example, where there is a communication made by an IP rights holder to a customer of an alleged infringer, because this may harm the alleged infringer's commercial interests.

Although it is not a threat to merely notify someone of the existence of an IP right, the context in which that notification is given is important, as this may suggest the communication was, in the circumstances, a threat.

When communicating with customers can amount to 'unjustified threats' - a recent example

Earlier this year, the Federal Court of Australia considered a case which demonstrates the problems that can arise when a business communicates with customers about alleged patent infringement.

In CQMS Pty Ltd v Bradken Resources Pty Limited [2016] FCA 847 the applicants (CQMS) had commenced proceedings against the respondents (Bradken) for infringement of patents relating to the mounting of wear members to earth excavating devices. CQMS was unsuccessful in its claims, with Justice Dowsett finding that the patents had not been infringed.

Bradken alleged that CQMS had made unjustified threats of patent infringement in a number of communications, two of which involved emails to customers.

The first email was sent on 6 November 2013, the day that CQMS commenced infringement proceedings against Bradken. This email included the statement that:

By selling certain components of the Penetrator Max products to its customers to be used as GET,2 [Bradken] has infringed, and authorised the infringement of, the patents. However, CQMS' dispute is with [Bradken] not with the customers who use the GET.

Although CQMS said this email was sent to its own customers, Justice Dowsett noted that, given "the limited number of suppliers, the customers of one supplier would be potential customers of the others".4 Justice Dowsett observed that by referring to infringements 'authorised' by Bradken, the email would inevitably raise in customers' minds the issue of their own potential liability. In Justice Dowsett's view, the fact that the email offered reassurance (through the statement that CQMS' dispute was with Bradken and not with customers) tended to support the view that the email could be regarded as a threat and would cause customers to wonder why the email had been sent. Dowsett J considered that "[at] the very least, that customer would conclude that any future acquisition of one of the respondents' products would be risky".4 On that basis, Justice Dowsett held that the 6 November 2013 email was a threat to customers.

The second email to customers was dated 8 September 2014 and headed 'Notice of Federal Court Proceedings'. In providing a status update on the proceedings, the email included the following passages:

CQMS Razer's patent infringement case against Bradken is progressing to Trial. Potential infringement by Bradken's customers of the CQMS RAZER Wedgelock Patents
[CQMS]'s claim of patent infringement against [Bradken] is in part, based on [Bradken] supplying product to their customers whereby those customers' use of that product results in [Bradken]'s customers infringing [CQMS]'s patent rights. You may have been unaware of this if you have purchased the [particular] GET assemblies from [Bradken]
[CQMS]' ... has not made a claim against any other party other than [Bradken]. However, if a Court agrees with [CQMS]'s position and find that the Wedgelock Patents have been infringed, then [CQMS]' will consider further action.

Justice Dowsett noted that although the communication was ostensibly addressed to CQMS' customers, it was clear that it was also addressed to Bradken's customers, which was made plain by the reference to products "you have purchased". There was a clear threat of future action against customers in the event that CQMS was successful in its patent infringement proceedings.

As result of these findings and the failure of the patent infringement proceedings, Bradken's claim for unjustified threats was successful.

Key takeaways

A finding that a business has made unjustified or groundless threats of infringement against customers is undesirable. In addition to liability for damages as a result of the threats, the business may also suffer reputational damage.

Care must be exercised when drafting communications and updates to customers about anticipated or current proceedings relating to IP rights. In particular, it is critical to:

  • carefully consider the necessity and motivation for such communications, in light of the risks involved
  • avoid any references, whether direct or indirect, to the position of customers in the context of the litigation.

Ultimately, the safest approach for any business involved in IP rights litigation is to seek advice before issuing any form of consumer communications about the litigation.


1 See Patents Act 1990, s 128; Copyright Act 1968, s 202 (among others); Trade Marks Act 1995, s 129; Designs Act 2003, s 177. These are the key provisions but where other IP legislation is concerned, the position should be confirmed

2 'GET' is a reference to 'Ground Excavating Tools', being parts used for excavators, and the use of the Penetrator Max was alleged to infringe the patents in suit.

3 At [169].

4 At [170].

This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this article. Authors listed may not be admitted in all states and territories

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Lucy Hartland
Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions