Tuesday, 26 October 2010

The PCC Page, no.3: The biter bitten? – Watching your pre-action steps

In this, the third in the series of PCC Pages, the Chartered Institute of Patent Attorneys (CIPA) takes us through the next stage when contemplating using the Patents County Court for England and Wales for what are promised to be cheaper, easier infringement proceedings.  Here CIPA President Alasdair Poore warns of problems even at the pre-action stage, suggesting how best to avoid them.
Cautious Co. (which we introduced last week, being a company that is anxious to get even with a competitor in the PCC) now wants to throw caution to the wind. “I really want to get a move on. Now write and clobber them! No need to worry about a costly case.” You understand that these are instructions.

A word of caution?

There are of course ethical considerations about just writing a letter “clobbering them”. There is also all that guidance in the CPR about pre-action behaviour (paragraph 7.1(1) and Annex A (paragraph 2) of the Practice Direction (Pre-Action Conduct)), which means that normally you are expected to approach the other party and tell them that you are about to clobber them (with appropriate details). If you can certify that you have taken that step then the time limit allowed for a defence is reduced from 70 days to 42 days (CPR 63.22(2) and (3)). Incidentally that gives rise to an interesting question: since the client will not usually know whether you have complied with these provisions, it seems you will also have to add your name to the statement of case to confirm this – the statement of truth must be signed by someone “with knowledge of the facts alleged” (CPR 63.21).

You may even be able to get come further guidance on the sort of things which might be said in your pre-action letter from the draft Code which was prepared some time ago, but shelved when the Ministry of Justice concluded that pre-action protocols were proliferating.

So is that what you should do?

Less haste, more speed

As an IP practitioner you will already be aware of the problem with groundless threats under Patents Act 1977, s 70, and Trade Marks Act 1994, s 21, but being 100% confident of your client’s case you feel this is one case where writing a fierce demanding letter would be perfectly justified.

This is where things might go wrong. The new PCC rules make forum-shopping a reality. If you do send a letter which is threatening, or indeed a letter which might arguably be construed as threatening, that might easily form a basis on which the competitor could bring proceedings against your client (or you) IN THE HIGH COURT. You can try to step within the bounds of the section 70(4) and (5) of the Patents Act, or 21(1)(a) to (c) of the Trade Marks Act, but that is always a potentially risky exercise (as in Prince Plc v Prince Sports Group [1998] FSR 21 (“the person making such communication wishes to take advantage of one or more of the excepting paragraphs of section 21(1), it is incumbent upon him to indicate this in terms”) and for example very recently Grimme Landmaschinenfabrik Gmbh & Co. KG v Derek Scott (T/A Scotts Potato Machinery, here: see para 170 etc.). And it is not enough to have a defence, because the threatened party can still bring the action.

The manufacturer or importer exclusion (s 70(4)(b)) for patent threats is now much clearer; or possibly you can rely on genuine without prejudice correspondence (Best Buy Co Inc v Worldwide Sales Corp [2010] EWHC 1666), but that path is littered with problems and probably will not satisfy CPR 63.22(2).

Or you can always apply to have the claim transferred out of the High Court after the event, and even argue that the infringer should have complied with the preaction procedure before bringing the threats action!   But will your client be pleased with that?

A bite repellant?

Why not just issue proceedings? After all you may not be saving time by writing first, as you have to provide a reasonable time for reply. And there is a reasonable excuse for not complying with the requirements of the pre-action procedure: Annex A, 2.2(3) and 3.6), noted in the draft Code above (para 2.2). You probably don’t have to do so if there is a risk of a threats action. But where does that leave you if you think that the competitor is really a manufacturer or importer? Comments please.

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