Groundless threats provisions apply to trade marks, patents, registered and unregistered designs.

The purpose of the groundless threats provisions is to ensure that one party cannot effectively bully another to cease trading where the threats made are unjustified.

A party making a threat should be aware of the groundless threat provisions.  Liability for making a groundless threat extends to solicitors and in-house advisors, companies and individuals. 

A party aggrieved may bring a groundless threats action, but that party’s commercial interests must have been affected, e.g. financial loss from ceasing to trade because of the threat made.  The party aggrieved may be the manufacturer of the goods complained of, or the importer, distributor, buyer or end user.

It will be a defence to a threats action if the maker of the threat can show that the threat was justified: that the acts complained of are in fact infringements, or that if they were performed, they would have amounted to an infringement. For trade marks and designs, this defence will not be available if it can be shown that the IP right is invalid. For patents this defence will still be available even where a patent is found to be invalid, provided that at the time of making the threats, it was not known, nor there was no reason to suspect that that the patent was invalid.

The groundless threats provisions do not apply to passing off, copyright or misuse of confidential information.