This dissertation explores the topic of groundless threats of patent infringement. On the one hand, warning letters are of considerable significance, as patentees and potential infringers are encouraged to enter into a negotiating dialog to solve the infringement dispute. A constructive conversation can produce a similar outcome to a judicial trial, without imposing the costs of time-consuming and inefficient ligation on society. Nevertheless, the enforcement of a patent beyond its protectable scope may have an adverse impact on undistorted competition. Particularly, the accused infringer can become a victim of commercial interference and reputational damage. Considerable competitive harm arises when letters are aimed at secondary actors or at the public. In light of this, this dissertation seeks to answer the question of how to assess this type of market behavior and which criteria can be feasibly and universally applied.
The dissertation adopts doctrinal legal methodology. Functional comparative law is applied in Chapters 2 to 5. Chapter 6 puts forth proposals for systematic legislation on the issue for the international level. The dissertation first offers a clear picture of how different legal systems solve this common problem, including from the perspective of statutes and judicial practice. In the UK, the specific provisions restraining unjustified threats of patent infringement are contained in the Intellectual Property (Unjustified Threats) Act 2017. In contrast, Germany and China rely on the application of the general tort clause and unfair competition law. Both these models are followed in the U.S. legislation and case law.
The study analyzes the similarities and differences of the legal solutions offered by these four jurisdictions. The comparative research demonstrates that all four legal systems exemplify the intellectual property approach and the unfair competition approach. Under the intellectual property approach, patentees’ liability derives from the general balance of interests inherent in this system. As long as the factual and legal situations are correct, proprietors are entitled to send out infringement warning letters, an instrument that forms an important part of the enforcement of their intellectual property rights. If the accusation is found to be factually incorrect, threat-makers must bear liability regardless of whether the threat was sent with recklessness or with negligence. This corresponds to a standard of liability for intellectual property infringement because infringers have to be subject to injunctive relief and damages when they negligently or intentionally trespass on protectable rights. The ex post analysis of the issue of infringement and validity is the determinant. Conversely, liability in the unfair competition approach originates from the inappropriate ways of making warning letters, and herein lie the ex ante considerations. The emphasis in this approach is placed on the type of threats, the parties to be targeted and the means of threatening. The question of whether the threat-maker has met the due-care requirements plays a crucial role in appraising the unjustified nature of the threat. The heart of the matter here is the behavior adopted against unfair competition. In short, the “what” and “how” are different points of focus in the intellectual property approach and the unfair competition approach, respectively.
All four jurisdictions well exemplify a combination of the intellectual property approach and the unfair competition approach, but in various ways. In the UK, China and Germany, patent holders tend to have more freedom to threaten primary actors compared to sending communications to secondary actors or to the public, while the U.S. legal system does not distinguish between these two situations. It developed a completely cumulative method combining the intellectual property approach and the unfair competition approach to restrain all bad-faith warning letters. This double bad-faith standard in the U.S. embodies the rule of intellectual property in its accuracy requirement and the rule of unfair competition in its subjective bad-faith prerequisite.
In Germany and China, the combination of the intellectual property approach and the unfair competition approach also prevails. The judges there consider all circumstances in each individual case, including the content or the form of warning letters, how these letters have been issued, and whether the due-care obligations have been complied with. Considering all these factors allows courts to apply a sliding scale so that the strength of one criterion can compensate for the weakness of another. The core of this can be seen as a hybrid cumulative combination of the intellectual property approach and the unfair competition approach. In the UK threats regime, either the safe-harbor statute, which concerns the intent and manner of sending out warning letters, or the accuracy of the content contained in the communication, could be a justification for threat-makers’ behavior. This criterion is rooted in an alternative combination of the intellectual property approach and the unfair competition approach.
Chapter 5 undertakes a critical evaluation of these diverse approaches based on the principle of proportionality, with the goal of discerning which of the possible solutions is most suitable and just.
Chapter 6 presents a further elaboration of the suggested solution put forward in Chapter 5. Patentees are essentially allowed to threaten their competitors when they discover a potential patent infringement conducted by a competitor, except when the infringement allegation is objectively baseless and the threat is conducted in bad faith. What the patent holders are allowed is more restricted if the recipients are actual or potential retailers or customers of the competitors. Either the allegation of infringement has to be proven to be true from an ex post perspective, or threat-makers must ensure an equitably high degree of accuracy of the accusation and fulfillment of the due-care requirements. It is proposed that these requirements be added to item (iii) of Article 5(2) of the WIPO Model Provisions, serving as a model for implementing the obligations of Article 10bis(3)(b) of the Paris Convention and for modernizing the domestic legal framework dealing with unjustified threats of patent infringement.
Publication
Zheng, Minyu, Legal Responses to Unjustified Threats of Patent Infringement – Intellectual Property Approach or Unfair Competition Approach? (Elgar Intellectual Property and Global Development series), Edward Elgar Publishing, Northampton, MA, USA; Cheltenham, UK 2024, forthcoming, 192 pages.
