The rapid growth in e-commerce over the past decade has offered consumers enormous choice and unparalleled access to online goods. Consumers are enthusiastically turning to Amazon, eBay and Depop to buy everything from dog food to trainers.
Most commerce is legitimate, but these marketplaces can also be abused by those seeking to sell goods that infringe intellectual property rights (IPRs). Thankfully, many of these stores have developed specific tools to allow IPR holders to report and remove infringing listings. Amazon's well-established IP policy, for example, provides IPR holders a detailed guide for reporting infringements of trademarks, copyright, designs, and patents.
With this in mind, note that there are legal provisions in the UK designed to prevent IPR holders from unfairly intimidating third parties into ceasing their commercial activities. Unjustified threats of IPR litigation have the potential to harm businesses and to harm customers. The UK's Patents Act 1977, as amended by the Intellectual Property (Unjustified Threats) Act 2017, provide remedies for this harm in the context of patents, protecting against misuse of threats to intimidate and encouraging rightsholders to focus enforcement on primary infringers rather than those down the distribution chain. See HLK's guide to Actionable Threats for more information.
Until now, the question of whether or not use of e-commerce IPR tools to allege infringement constitutes a threat has not really been looked at in much detail in the courts. Complaints via eBay's IPR VeRO programme were described as "arguably a threat" way back in 2004 (Quads 4 Kids v Campbell [2006] EWHC 2482 (CD)). And now for the first time, the UK's Court of Appeal have looked directly at unjustified threats in the context of Amazon's IP policy.
What is an unjustified threat?
If you have infringed an IP right (IPR), or intend to do something that will infringe an IPR, then the right holder can threaten to sue for infringement. But a threat to sue for IP infringement is unjustified and possibly actionable if:
no relevant IPR exists,- the IPR has expired or is invalid, or
- no infringement has taken place because what you are doing is sufficiently different from what is protected by the IPR.
See HLK's guide to actionable threats for more information.
When is a complaint a threat?
The issue at hand related to communications between American consumer electronics manufacturer The NOCO Company (NOCO) and e-commerce giant Amazon. NOCO raised complaints via Amazon's "Infringement Form" concerning a handful of products from Carku - a Chinese company who supply batteries to distributors, who then sell via Amazon. Did NOCO's communications amount to actionable threats?
NOCO's completed Infringement Form included an assertion of patent infringement by Carku and a request for removal of Carku's products from sale.
In the first instance, as summarised by Mr Justice Meade, "NOCO's central point was that its communications with Amazon did not amount to the threat of legal proceedings". Notably, NOCO's submissions were focused on whether the reasonable person in the position of Amazon would have perceived the notifications as a threat of infringement proceedings against Amazon.
The Court concluded that a reasonable person would have understood a request for removal of the listing combined with the explicit allegation of patent infringement to be at least an implicit threat that - if the request were not complied with - NOCO would bring proceedings for patent infringement.
In the second instance, at the Court of Appeal, NOCO sought to overturn the decision that the complaint amounted to a threat of infringement proceedings. Lord Justice Lewison emphasised that the statutory test for an actionable threat is satisfied if a reasonable person in the position of the recipient would understand that the patentee intends to bring infringement proceedings against "another person" - not necessarily the recipient of the communication.
NOCO's appeal was thrown out.
Does that make any complaint a threat?
NOCO argued before the Court of Appeal that the first instance decision means that "every one of the communications that Amazon receives under its IPR complaints procedure would be understood by Amazon to be a threat of IPR litigation against Amazon itself". Notwithstanding that an actionable threat could be in respect of any other person, not only Amazon itself in this instance, Lewison LJ emphasised that the complaint may or may not be understood as a threat "depending on what the complaint actually says".
Amazon's Infringement Form invites neutral information. NOCO's completed Infringement Form went further and included additional information, positively requesting removal of specific products before any investigation had been carried out. Without this specific additional information, it's possible to use the Infringement Form as a "permitted communication", allowing parties to exchange information without triggering a threats action.
It is now clear that a complaint via Amazon's Infringement Form can - in particular circumstances - be considered a threat. When the Infringement Form goes as far as to explicitly allege patent infringement and to include requests to remove a product from offer, the complaint risks becoming an actionable threat.
IPR holders need to exercise caution when considering a complaint via e-commerce IPR tools. HLK are happy to advise on available options and next steps in order to help protect you and your business' IPRs.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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