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A claim for “groundless threats" – Not a claim for a declaration of non-infringement in disguise

23 September 2015

Where threats are made in the UK to bring IP infringement proceedings the UK courts can, and will, deal with them. This includes any underlying issues of validity and infringement, even where EU rules on jurisdiction would otherwise require issues of non-infringement or validity to be dealt with elsewhere.

The High Court in London gave a novel decision on 15 September 2015, relating to its jurisdiction to hear a claim for groundless threats of infringement of unregistered Community designs[1]. It held that although it did not have jurisdiction to hear a claim by Tech21 (advised by Charles Russell Speechlys) for a declaration of non-infringement of unregistered Community designs that Logitech (a Swiss company) claimed to own, it did have jurisdiction to deal with Tech21’s claim against Logitech for “threats” of infringement of those very same rights.

Logitech Europe S.A. argued that the provisions of the EC Designs Regulation[2] concerning jurisdiction for claims for declarations of non-infringement prevented the UK courts hearing the claim made against it by Tech21 for groundless threats of infringement of unregistered Community designs made by Logitech. However, the judge held that the UK’s statutory provisions for groundless threats create civil liability for anticompetitive behaviour. While claims concerning groundless threats may require the consideration of infringement, such claims are nonetheless distinct from claims for a declaration of non-infringement and, in accordance with the EC Designs Regulation and the Lugano Convention on jurisdiction and enforcement[3], the High Court has jurisdiction to hear claims for groundless threats of infringement that are made in the UK.

Background

Tech 21 UK Ltd, one of the UK’s fastest growing tech companies and a leading designer and producer of impact-protection cases for smartphones and tablets, entered an agreement with Logitech in relation to the development of a new range of cases for Apple’s iPad Air and iPad Mini. The relationship foundered and in 2014 the companies both released cases onto the market in the EU. This resulted in a dispute concerning the ownership of the designs of the cases. Logitech claimed that, to the extent the designs were the work of Tech21, it owned any design rights in them by virtue of the agreement between the parties. This was denied by Tech21.

On 10 September 2014, Tech21 received a letter from a German law firm acting on behalf of Logitech, claiming that Logitech was the exclusive owner of all IP rights, including unregistered Community designs, in its cases. The letter threatened proceedings for infringement of the unregistered Community designs, referring to sales of Tech21’s cases in Germany. The letter requested that Tech21 make a cease and desist declaration, including that it would refrain from acts of (alleged) infringement in the European Union.

Tech21 quickly issued a claim in the High Court in London, seeking a declaration of non-infringement of any design rights owned by Logitech, including:

  • unregistered Community designs; and
  • any UK unregistered design right vested in Logitech; and
  • relief for groundless threats of infringement.

Logitech challenged the High Court’s jurisdiction. It claimed that as it had branches in the Netherlands and Croatia, under the EC Designs Regulation, only the courts of those countries had jurisdiction to hear the claim for a declaration of non-infringement of unregistered Community designs. It also argued that the letter was not a threat of proceedings in the UK and, if it was, the claim for relief from groundless threats was, in this instance, in essence a claim for a declaration of non-infringement and therefore the rules on jurisdiction concerning such claims in the EC Designs Regulation should be applied to this claim as well. Finally, Logitech argued that the court did not have jurisdiction to hear the claim for non-infringement of UK unregistered design rights on the basis that the letter did not give rise to a real and present dispute concerning such rights.

Judgment

The court held that it did not have jurisdiction to hear Tech21’s claims for a declaration of non-infringement in relation to the unregistered Community designs (due to the branch offices in the Netherlands and Croatia). In addition, that it did not have jurisdiction to hear the claim concerning UK unregistered design rights as it considered that there was no real and present dispute concerning such rights between the parties. However, the court held that it did have jurisdiction to hear Tech21’s claim against Logitech for groundless threats of infringement of unregistered Community designs.

The Judge extensively reviewed the law in relation to groundless threats and the Law Commission’s report on the possible reform of the law[4]. He concluded that the purpose of the UK’s statutory tort for groundless threats is to create civil liability for undesirable anti-competitive behaviour, not to provide a procedure for obtaining a declaration of non-infringement. As a result, and in accordance with the EC Designs Regulation, jurisdiction is a matter of national law. The UK and Switzerland are both signatories to the Lugano convention on jurisdiction and enforcement and, in relation to statutory torts such as groundless threats, the courts of the country where the harm occurred have jurisdiction.

The Judge considered that a reasonable reader of the letter would have understood it to indicate that legal proceedings in the UK were likely or at least a realistic possibility, as although the specific acts of infringement referred to in the letter occurred in Germany, Logitech had requested a declaration from Tech21 that it would refrain from acts of (alleged) infringement throughout the EU. Under the EC Designs Regulation, Logitech would only be able to obtain a pan-EU injunction (and damages for acts of infringement across the EU) if it brought infringement proceedings in the UK, where Tech21 is domiciled.

As a result, the letter was a threat of proceedings in the UK, harm would occur in the UK, and the High Court has jurisdiction.

Logitech has been given permission to appeal the judgment in relation to groundless threats and Tech21 has been given permission to appeal the decision in relation to non-infringement of UK unregistered design right.

Summary and overview

Although the position is complicated, there is a simple message – and it extends to all “threats” claims, including not only those based on Community designs (both registered and unregistered) but also on patents and trade marks as well. That message is that if threats of proceedings are made in the UK, the UK courts will have jurisdiction in relation to those claims – and, where appropriate, will consider any underlying issues of validity and infringement.

This was of particular benefit in the present case where, if Logitech had prevailed, Tech21 was faced with having to bring proceedings for declarations of non-infringement not in the UK (its home state) but in either the Netherlands or Croatia (the only two countries in the EU where the Swiss company, Logitech, had a place of business, but which were countries which had no real connection with the dispute).

Charles Russell Speechlys advise Tech21.

1. Tech 21 UK Ltd v Logitech Europe SA [2015] EWHC 2614 (Ch) (15 September 2015)

2. Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs

3. Convention on jurisdiction and the enforcement of judgments in civil and commercial matters, done at Lugano on 16 September 1988

4. LAW COM No 346, “Patents, Trade Marks and Design Rights: Groundless Threats”, April 2014

This article was written by David Fyfield & Ian Wood.

For more information please contact David on +44 (0)20 7203 5200 at david.fyfield@crsblaw.com or Ian on +44 (0)20 7203 5124 or at ian.wood@crsblaw.com