Reservation of rights can constitute an unjustified threat of unregistered design right infringement rules High Court – Grimme Landmashinenfabrik v Scott (t/a Scotts Potato Machinery), High Court…

The High Court has ruled that a reservation of rights to commence proceedings can constitute an unjustified threat of infringement even where the letter expressly stated that there was no intention of proceedings. Grimme sued Scott for unregistered design right infringement in relation to rollers in ‘Evolution’ potato separators sold by Scott. Scott counter-claimed that Grimme had made unjustified threats of design right infringement proceedings arising from letters sent to Scott’s resellers. Where threats of proceedings for infringement of design right are made, a person affected by those threats may seek a declaration that the threats are unjustifiable, an injunction against further threats and damages in respect of any loss suffered as a result of those threats. It is then up to the party accused of making the threats to show that there was in fact an infringement of the design right constituted by the acts in respect of which the proceedings were threatened.

The High Court found that one of Scott’s roller designs infringed Grimme’s design right but that a second version of the roller did not infringe that right. However, the High Court went on to find that unjustifiable threats of design right infringement proceedings had been made notwithstanding that the letter expressly stated that Grimme did not intend to commence proceedings. The High Court ruled that a threat could be implied and that the test to be considered was the effect that the letter would have on an ordinary recipient. In applying that test, the High Court found that an ordinary recipient would read the following sentences as indicating that Grimme did not intend to commence proceedings at that time but would likely to do so if it was successful in its action against Scott: ‘…Please note that our client does not intend to commence proceedings against you as its action is against Mr Scott, but of course our client reserves all its rights in this matter. We will contact you again after judgement [sic] has been handed down.’ As such, the High Court found that the letters constituted a veiled threat of infringement proceedings.

The allegations contained in the letter were not specific about which particular roller designs were alleged to have been infringed. In order for Grimme to show that the threats were justified it needed to show that all of Scott’s roller designs infringed at least one aspect of its unregistered design right as an ordinary recipient would assume that the allegation was made against all of Scott’s rollers. However, Grimme had shown that only one of Scott’s roller designs infringed its design right. The High Court concluded, therefore, that the threats were unjustified.

Samantha Lloyd, assistant editor of www.Upload-IT.com and a solicitor at Matthew Arnold & Baldwin LLP, comments: ‘Letters which include allegations of intellectual property infringement must be drafted very carefully. As this case shows, even an express statement that no proceedings are intended may not be enough to ensure correspondence does not amount to a veiled threat of proceedings.’