UK: "No Sitting On The Fence For IPEC": IPEC Holds That Groundless Threats Of Patent Infringement Proceedings Were Made

Last Updated: 16 April 2014
Article by Claire Morris and Gary Small

The IPEC has found in favour of a claimant who was groundlessly threatened with patent infringement proceedings. Despite obtaining a non-infringement opinion from the IPO, the defendant represented himself before the IPEC and seemingly suffered from his lack of legal advice.

The Intellectual Property Enterprise Court (IPEC) (formerly the Patents County Court) hears less complex cases related to all intellectual property matters in the UK. The main route for cases in the IPEC has a limit on damages of up to £500,000, and on costs orders of no more than £50,000.

In FH Brundle v Perry His Honour Judge Hacon, recently appointed judge of the IPEC, gave a ruling under section 70 of the Patents Act 1977 for groundless threats of patent infringement proceedings.

Facts

Mr Perry was the proprietor of UK Patent No. 2390104 B which relates to a fence bracket. Brundle is a wholesaler of metal products, including fences and component items for fences. In its range is a bracket used to attach fence panels to a post called the "Nylofor 3D Bracket", which is sold in two forms.

In October 2012 Mr Perry sent a "Notice Before Proceedings" to Brundle's "Chief Executive/Chairman" stating that the Nylofor 3D Bracket infringes his patent, demanding that Brundle provide an Account of Profits, stating that he is legally entitled to a share of those profits, and that he intends to take proceedings against Brundle in the High Court if no amicable solution can be reached regarding payment to him of his share of the profits. He went on to request a response within 14 days or he would commence proceedings against Brundle.

Brundle's solicitors replied, denying infringement, alleging that Mr Perry had made unjustified threats, and inviting Mr Perry to undertake that he would make no more such threats. During the course of future correspondence Perry sent two more letters to Brundle's solicitors in which he stated "you will be providing the information I have asked you for and in the meantime I will put a hold on taking any legal proceedings against your client" and " you are claiming 'unjustified threats of legal action for alleged patent infringement' and I pointed out that your client may still have a liability to me between 2004 – 2011 whilst the Patent GB2390104 was in force".

In February 2013, Brundle sued Mr Perry under section 70 of the Patents Act 1977 alleging that all three letters made groundless threats of patent infringement proceedings, that Brundle was a person aggrieved by those threats, and that the threats could not be justified because there was no infringement. Mr Perry counterclaimed for patent infringement.

In April 2013, upon Mr Perry's request, the Intellectual Property Office (IPO) prepared an opinion as to whether one form of the Nylofor 3D Bracket had infringed the Patent. In the written opinion the IPO concluded the particular Nylofor 3D Bracket did not fall within the claims of the Patent and therefore there was no infringement.

In November 2013 Mr Perry applied to transfer the proceedings to the Patents Court alleging, in particular, that he would be prejudiced by the £500,000 ceiling on damages in the IPEC. In response, Brundle agreed that the IPEC should have jurisdiction to award damages or profits in excess of that sum in the event that Mr Perry were to succeed in his counterclaim and establish an entitlement to an award above £500,000.

The case was heard before the IPEC where Mr Perry represented himself.

Decision

HHJ Hacon upheld Brundle's claim and dismissed Mr Perry's counterclaim. HHJ Hacon held that each of the letters constituted a threat of proceedings, that Brundle was a "person aggrieved", that the Nylofor 3D Bracket did not infringe the patent and that, therefore, Mr Perry's threats were unjustified and had no defence.

A threat of proceedings

HHJ Hacon stated that a communication contains a threat of proceedings if a reasonable person, in the position of the recipient of the letter, with his knowledge of all the relevant circumstances as at the date on which the letter was written and taking the letter as a whole, would have understood that the writer intended to convey an intention to enforce his rights by bringing legal proceedings. It is sufficient if the defendant has asserted that he has legal rights in respect of intellectual property and that he intends, as against the claimant, to enforce those rights; the threat to do so may be veiled or covert, conditional or future.

Mr Perry argued that the first letter was addressed to the Chief Executive/Chairman and that worldly wise CEOs and Chairmen do not take such letters seriously. HHJ Hacon noted that the extent to which the recipient goes on to treat the threat seriously is irrelevant; the threat has still been made.

In this case, HHJ Hacon held that the first letter contained an explicit threat and that the second and third letters were less confrontational but should be read in light of the first letter as maintaining the earlier threat to bring proceedings.

A person aggrieved

It is well established that, if the threats complained of are directed at the claimant, the claimant will be a 'person aggrieved'. In this case, the threats in all three letters were directed at Brundle who was, therefore, a person aggrieved.

Potential infringement of the patent claims

The Patent contained a single independent product claim: claim 1. HHJ Hacon considered whether claim 1 was broad enough to cover the form of the Nylofor 3D Bracket in question. In making this consideration, he took account of the IPO's written opinion. Although he came to the same overall conclusion as the IPO Examiner, HHJ Hacon disagreed with some of the Examiner's reasoning and outlined his own reasons for construing the claim as he did.

In determining his construction, HHJ Hacon considered judgments on the meaning of the terms "for" and "suitable for" in a claim, including whether they introduced a subjective element into the claim. He construed "for" as "suitable for" and held that, in this case, it was to be assessed objectively through

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