No sitting on the fence: IPEC finds groundless threats of patent infringement

The Intellectual Property Enterprise Court (IPEC) (formerly the Patents County Court) hears less complex cases related to all IP matters in the United Kingdom. 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 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 owner of UK Patent 2 390 104 B, which related to a fence bracket. Brundle was a wholesaler of metal products, including fences and component items for fences. In its range was a bracket used to attach fence panels to a post called the Nylofor 3D bracket, which was sold in two forms.

In October 2012 Perry sent a notice before proceedings to Brundle’s “Chief Executive/Chairman” stating that the Nylofor 3D bracket infringed his patent, demanding that Brundle provide an account of profits, and stating that he was legally entitled to a share of those profits and intended to take proceedings against Brundle in the High Court if no amicable solution could be reached regarding paying him 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 Perry had made unjustified threats and inviting 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 Perry under Section 70 of the Patents Act, alleging that:

• all three letters made groundless threats of patent infringement proceedings;
• Brundle was a person aggrieved by those threats; and
• the threats could not be justified because there was no infringement.

Perry counterclaimed for patent infringement.

In April 2013, on 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 that the particular Nylofor 3D bracket did not fall within the claims of the patent, and therefore there was no infringement.

In November 2013 Perry applied to transfer the proceedings to the Patents Court alleging, in particular, that he would be prejudiced by the £500,000 damages ceiling at 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 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 Perry represented himself.

Decision
Hacon upheld Brundle’s claim and dismissed Perry’s counterclaim. Hacon held that:

• each of the letters constituted a threat of proceedings;
• Brundle was a “person aggrieved”;
• the Nylofor 3D bracket did not infringe the patent; and
• therefore, Perry’s threats were unjustified and had no defence.

Threat of proceedings
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 or her 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 or her rights by bringing legal proceedings. It is sufficient if the defendant has asserted that he or she has legal rights in respect of intellectual property and intends, as against the claimant, to enforce those rights; the threat to do so may be veiled or covert, conditional or future.

Perry argued that the first letter was addressed to the "Chief Executive/Chairman" and that worldly wise CEOs and chairpeople do not take such letters seriously. 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, 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.

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, which was therefore a person aggrieved.

Potential infringement of patent claims
The patent contained a single independent product claim: claim 1. 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, 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, 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 the eyes of the person skilled in the art. He held that 'adapted to' and 'adapted in use to' mean the same as 'suitable for', and that these terms always bring with them a qualification, saying:

“It may be that the feature in the product alleged to infringe could fulfil the purpose stated in the claim, but only if certain further steps are taken. A point will be reached where the further steps required are such that the need for them renders the feature unsuitable for (or ill adapted to) that purpose in the mind of the skilled person. This will always be a question of fact and degree.”

On the evidence, Hacon held that the Nylofor 3D bracket did not fall within the scope of claim 1 as it did not include at least four of the nine features recited in claim 1. Consequently, Brundle did not infringe the patent and Perry had no defence for Brundle’s action for threats of patent infringement proceedings.

Comment
Judgments relating to groundless threats of patent infringement proceedings are few and far between. However, Section 70 provides a trap for the unwary. In this case, the defendant represented himself and this, in conjunction with the content of his letters, suggests that he sought no independent legal advice; this appears to be a major cause of his downfall.