Correspondents in Australia, Canada, Germany, the UK and the US review the law and recent developments on threats of proceedings for IP infringement that are groundless or may interfere with business activity.

EIGHT QUESTIONS

1. Is there any specific legislative provision to deal with threats of proceedings for infringement of IP rights that are groundless or have the potential to interfere with legitimate business activities?
2. If legislative provisions are not available are there any other sources of law that can be employed against threats?
3. Are there separate provisions/approaches for different IP rights? If so, which are covered and how?
4. Are there actors that may be threatened without the risk of a retaliatory threats action?
5. Can secondary actors be threatened or asked for further information about primary actors?
6. Are there any [other] specific exceptions or defences?
7. If threats provisions exist, how much are they used?
8. Are there any recent cases of note that illustrate the approach in your jurisdiction?

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1. There are no specific legislative provisions that address groundless “threats of proceedings” for IP infringement that are groundless, unless and until the threat matures into a legal action to enforce the intellectual property. The primary statute that addresses groundless patent cases is 35 USC 285, which provides that a court may award attorneys’ fees to the prevailing party in “exceptional cases.” The Supreme Court loosened the standard for what constitutes an “exceptional case” in 2014 in the Octane Fitness LLC v ICON Health & Fitness, Inc case. Under Octane Fitness, a court may find a case “exceptional” if it stands out from the others with respect to the substantive strength of a party’s litigating position or the unreasonable manner in which the case was litigated. There is legislation pending that includes a provision that would permit courts to consider a patent owner’s practice of sending purposefully evasive demand letters to end users alleging patent infringement in connection with determining if the case was “exceptional” under 35 USC 285.

2. One approach that can be taken against a groundless “threat” of litigation is for the party being threatened to file a case in federal court for a “declaratory judgment” that the threatened patent(s) is invalid and/not infringed. While this approach does not mitigate the expense associated with defending against a charge of patent infringement, it does permit the threatened party to choose their preferred jurisdiction in which to litigate. Alternatively, a party who is threatened with enforcement of patent that is believed to be invalid can file a petition for inter partes review, covered business method review, or ex parte reexamination, requesting that the USPTO review the validity of the threatened patent. These approaches are generally more economical ways of challenging the validity of a threatened patent than federal court litigation.

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