Pause before threatening to sue.

Pause before threatening to sue.

Stop and Pause: being too quick to assert your Intellectual Property rights could land you in hot water.

Do you think that someone is using your work in an illegal way? Stop and pause before you threaten them with legal action, as accusing someone of infringing your intellectual Property may leave you in the firing line.

Law exists in Australia to protect people from making dubious claims in relation to patents, designs, copyright and trademarks. This extends to sending cease-and-desist letters, sending circulars and advertisements.

The idea behind this legislation is to stop rights holders from misusing their position. For example, it is easy to scare competitors off by having lawyers draft cease-and-desist that they cannot afford to investigate, even when they may not have technically infringed someone’s intellectual property.

A recent 2016 case of CQMS Pty Limited v Bradken Resources Pty Limited shows that if you allege infringement but you turn out to be wrong, the person you complained about may bring a claim against you.

In this case, CQMS alleged that Bradken had infringed a number of their patents. Their lawyers sent out a letter of demand, setting out the basis for their claim. The letter of demand was “fairly standard” and of the kind often sent by patent attorneys. When Bradken did not comply with their request, CQMS then pursued the claim in court.

CQMS lost the case and was then countersued by Bradken, who asserted that they had been the victim of an “unjustified threat”. The fact that CQMS had lost the case was evidence of such “unjustified threat”. It did not matter that CQMS firmly believed that they case a good case against Bradken and were prepared to follow it through in court.

Likewise, the 2016 case of Stone & Wood Group Pty Ltd v Intellectual Property Development Corporation Pty Ltd should serve as a warning to be careful that what you may think infringes intellectual property may not, in fact, do so.

In this case, craft beer brewers Stone and Wood had a beer called “Handcrafted Stone and Wood Pacific Ale” and they alleged that competitor craft brewers Thunder Road had infringed their intellectual property by calling their beer “Thunder Road Pacific” and ‘Pacific Ale”.

The court found that the trademark used by thunder Road was not deceptive and Stone and Wood lost the case. Thunder Road counter claimed using the unjustified threats provisions and won their case against Stone and Wood.

These examples should deter you from firing off “cease and desist” letters without a careful strategy. The UK Parliament is currently examining the issue of unjustified threats with the intention of clarifying what should be considered a threat. At this stage, reform is not purported in Australia, despite opposition to the “unjustified threat” laws that currently exist.

What if someone is infringing your IP?

In light of the pitfalls noted in this article, what should you do if you think that someone is infringing your intellectual property?

1. Stop and pause

Take a deep breath before firing off any emails or letters to the other party.

Do not presume that just because your competitor is using similar words, colours or phrases that they are automatically infringing your intellectual property.

Do not send any kind of “cease and desist” communication unless you are genuinely intending to proceed with, and substantiate, the claim in court. Be aware that in some cases, if you fail in court, this is enough to establish an “unjustified threat”.

2. Check it out

Check what intellectual property rights you do have. Do you have all your designs, patents and trademarks registered? Are your claims valid in the country that you are asserting them? Just because you have rights in one country, does not mean you have rights in another.

Engage a patent attorney if you are unsure about what rights you have.

3. Play if safe

If you believe that someone is close to infringing your intellectual property, there are some things you can do. You are allowed to notify another party that intellectual property in a particular design, patent or trademark exists.

We recommend getting a lawyer to look over any correspondence you intend to send, as there are scales of what is considered a threat.

What if you receive a cease and desist letter?

1. Don’t panic

Being on the other end of a cease and desist letter can be frightening, especially if the other party is speaking about pursing a claim in court. Remember, these letters are not a summons to court. Take a deep breath and take time to properly assess what is being asked of you. Don’t rush to pull down all your advertising material or respond with a knee-jerk reaction. Such letters should be taken seriously, but there are a variety of options available.

2. Read the letter

Read their communication care to find out exactly what the other party asking you to do. Are they talking about trademarks? Copyright? Or other contractual matters? Are they asking you to remove certain material? Or are they just asking for information? Do they want a response by a certain date? Do they want you to remove the whole part of something, or just make minor changes?

3. Speak to a lawyer about whether a valid claim exists

Intellectual law can be complicated, with varying spectrums of permitted use. Using similar colours and phrases will not automatically infringe someone’s intellectual property rights.

4. Do nothing

Unfortunately, operating in the public arena opens you up to allowing anyone to contact you. Some people like to act litigiously, just to intimidate you or disrupt your business practices. In these cases, you may elect not to do anything about the letter.

Be careful with this approach, as it carries its own risk if there is a chance you are infringing someone’s copyright.

If there is a chance the claim is valid – address it immediately and do not hide it at the bottom of you to-do-list in the hope that it will go away. In most cases, it usually does not!

5. Comply

After reading the letter and seeking advice, it may be that you decide to comply. This will be the easiest and most cost effective solution. However, you should consider the consequences of doing so. Will you have to change your whole business strategy? Will it cost a lot to make the required changes?