Dealing with intellectual property enforcement letters?
Avoiding falling into traps when hostile IP claimants send the initial cease and desist letter is crucial in dealing with bullying claims.
Knowing how to deal with a cease and desist letter alleging trademark, patent or design rights infringement is just as important as writing a balanced letter alleging unlawful use of IP assets.
Claimants have every right to safeguard valuable assets. However, increasingly bullying claims both legitimate and groundless are used to distort competition.
As IP enforcement practitioners, our perspective is from both claimant and defendant. Knowing how to deal with a cease and desist letter alleging trademark, patent or design rights infringement is just as important as writing a balanced letter alleging unlawful use of IP assets.
IP bullying and social media
There are two aspects to the interrelationship between social media and IP assets like trademarks and copyright.
First are the marketing and other customer relationship and community opportunities of brand building on social media. On the other hand, there is the viral nature of social media which includes exponential negative discourse about targets of trademark enforcement efforts being unjustified that can severely damage a brand.
The public relations backlash potential is significant if trademark owners are not engaged in legitimate brand protection.
When does aggressively enforcing an IP asset cross the line and go too far?
In January 2019 the EUIPO upheld the application for revocation of McDonald’s EU trademark for the Big Mac in its entirety (classes 29, 30 and 42) by cancellation order No 14 788.
Lack of genuine use of the mark was the reason the EUIPO revoked the Macdonalds trademark.
However, Supermac only sought cancellation of McDonald’s mark in retaliation for McDonald’s aggressive enforcement actions.
Although the issue of unjustified threats did not arise in the above case, it is an example a well-known company aggressively enforce its trademark rights, and it backfires.
What are the existing tools to defend against IP bullying?
IP disputes are expensive and can cause severe disruption to a business over a long period. The characteristics of IP disputes in the previous sentence often make smaller companies easy targets because the business owner would rather have the matter go away than engage in conflict even if the enforcement challenge is not on solid ground.
Awareness is the first level of defence against IP bullying. You need to know what the law is to understand what it isn’t.
Some IP bullying scenarios have apparent red flags. In other cases, the situation is more nuanced as the enforcer may have justified rights but a fragile claim. The wrong approach by you could make their feeble claim stronger.
Take the assertions made by the desist notice with a pinch of salt. Check the facts and evidence is correct. For instance: does the complainant own the intellectual property? Is the trademark still in force? Is the amount sought for the infringement reasonably assessed?
So, if the trademark in question has expired, or there is no mark of the kind alleged to have been infringed in existence, or the mark alleged to have been infringed is not registered for the use in question (and there are no grounds for a claim of passing off), there is no actionable claim.
Under the Intellectual Property (Unjustified Threats) Act 2017 (the Act), s21 of the trademark act 1994 was amended, setting out the remedy for unjustified threats for a patent, trademark, and design rights.
If you receive an intellectual property infringement letter that you believe is entirely baseless, you can counter-sue asking for a declaration that the threats lacked justification, damages and an injunction to prevent further threats.
However, does the Act deal with the problem of IP bullying? This article by Bird & Bird is a good summary of the provisons of the Act.
The Act does address the problem of IP bullying.
IP bullying falls disproportionately on SMEs since more substantial rights holders can easily afford litigation costs.
However, under the Act, whether you make threats that are unlikely to be true when tested knowing that they are unfounded deliberately or you legitimately believe your allegations to be valid you are still liable for baseless, false threats.
The point is that a threat means legal and commercial costs incurred by the party threatened, which ends up damaging the falsely accused.
It is irrelevant that the threat is legitimate in intention because there is no requirement of a tortious intent. The applicant only needs to prove that there was an unjustified threat. There is compensation for the falsely accused. The IP bully needs to consider that it might pay for intimidating smaller players falsely.
Brand reputation and IP security continue to remain a top priority for business owners. Any cease and desist letters must, however, be tempered so that there is a balance between protecting assets and bullying.
Claimants need to be concerned both about the legalities, namely, that the threat is justified, and even if it is the IP owner will not be deemed a bully for enforcing its assets.
Defendants need to avoid pressure for quick capitulation.
At the elementary level, the absurd amounts of damages sought should serve as a red flag for recipients of letters of claim.
Resist unreasonable response times. Replying to a complicated letter of claim requires careful consideration.
Our firm can guide IP owners on the steps an IP asset owner can take to secure its IP legitimately. We also advise receivers of enforcement threats on the existing tools for defending against an IP bully.
Please contact our firm for advice on the best practices for developing and maintaining legitimate trademark enforcement.
By Peter Adediran
03. 01. 2020
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