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Patent and other IP infringement in South Africa: When can you threaten legal action?

June 5, 2017

So let’s say you’ve spent hundreds of thousands on Research and Development for a new invention – not to mention design, branding, or re-branding exercises to create a trade mark/Ss. Or let’s say you have copyright in certain works you’ve created, jumping through all of the relevant hoops required to protect and register them.

One day, searching the internet for similar products, you find that someone is potentially copying your product. What do you do? First, stop and breathe – before you threaten the manufacturer, wholesaler, retailer, etc., with patent infringement.

You should know that Section 70 of the South African Patents Act 57 of 1978 states the following:

‘70 Remedy for groundless threats of infringement proceedings

  1. Where any person, by circular, advertisement or otherwise, threatens any other person with proceedings for infringement of a patent, a person aggrieved thereby may, whether the person making the threats is or is not entitled to or interested in a patent, or an application for a patent, institute proceedings against him and obtain a declaration to the effect that such threats are unjustifiable and an interdict against the continuance of such threats, and may recover such damages, if any, as he has sustained thereby, unless the person making the threats proves that the acts in respect of which the proceedings are threatened, constitute or, if done, would constitute an infringement of a patent in respect of a claim in the specification which is not shown by the plaintiff to be invalid: Provided that a circular, advertisement or communication addressed to any person, which comprises only a notification of the existence of a particular patent upon which the proprietor relies for protecting his interests shall not, by itself, be deemed to be a threat of proceedings for infringement.

 

  1. The defendant in any such proceedings may apply by way of counterclaim in the proceedings for any relief to which he would be entitled in separate proceedings in respect of any infringement by the plaintiff of the patent to which the threats relate.’

This provision serves to prevent patent owners from abusing a) their position in the market and b) the legislation that establishes their rights (Patents Act), even though they may not technically have a case.

What’s the bottom line? It’s this: If you don’t have sufficient proof of patent infringement and the validity of your patent claims, don’t launch proceedings against an alleged infringer of your patent – or even threaten such proceedings. The best thing to do (if you’re unsure) is to send a letter informing the alleged infringer that your patent exists.

Two 2016 cases handed down by the Federal Court of Australia serve as examples of a court considering as unlawful and worthy of an interdict the threats of an IP rights holder against an alleged infringer. These were CQMS Pty Ltd v Bradken Resources Pty Ltd (patent) and Stone & Wood Group Pty Ltd v Intellectual Property Development Corporation (trade mark).

Put another way: If you allege patent rights infringement, and it turns out that your claim/s are invalid, or there was no infringement, the person you threatened may bring a claim against you. So what should you do if you think someone is infringing your IP rights?

  1. Stop and think clearly.

 

  1. Don’t, in the heat of the moment, send emails or letters to an alleged infringer.
  2. Don’t presume that because the alleged infringer is using similar elements of your patent (for example), they’re automatically infringing your patent rights.
  3. Don’t send any form of “cease and desist” letter or letter of demand, unless you genuinely intend to provide evidence of the claim/s in court.
  4. Be aware that, if you lose the court case referred to in c), this may be enough to justify a claim from the alleged infringer for “unjustified or groundless threats”.

 

  1. Do your homework.

 

  1. Find out what IP rights you own and whether they’re valid and registered.
  2. Find out whether your IP rights are owned, valid and registered in the territory where the alleged infringement has taken place.
  3. Remember the impact of the internet (there are certain rules applicable to disputes that occur in cyberspace).
  4. Engage an IP attorney if you’re uncertain of your rights.

 

  1. Be conservative at first.

 

  1. If you think someone is infringing your patent, consider the provisions of Section 70 of the Patents Act, where it states that a letter asserting the fact that you own certain patent rights would not constitute an “unjustified or groundless threat”.
  2. Seek the counsel of an IP attorney, who understands the nuances and practical application of the laws. He or she will also be able to determine whether the letter referred to a) above would be considered an “unjustified threat”.

Other IP legislation

Whilst section 70 of the Patents Act is a welcome provision for patent litigation, the drafters of other IP legislation in South Africa (e.g. Trade Marks Act, Copyright Act) have not followed this principle, and have not followed other countries (see above re Australia) when it comes to threats in relation to other IP rights. It appears that practitioners and commentators on the IP legislation, at the time, did not think the legislation should have a corresponding provision to section 70. This means that other IP rights owners can threaten potential infringers, without the same consequences as seen in section 70 of the Patents Act.

This is perhaps the reason why we see fewer patent matters and far more trade mark and copyright cases being heard by the courts. The omission of a “section 70-type provision” in the other IP legislation lends itself to a more aggressive stance from representatives/attorneys of non-patent IP owners. This often leads a recipient of such a letter to panic, and without the necessary financial resources to mount a counter-attack, they are more likely to lie down and agree to the terms and conditions of the letter of demand/”cease and desist letter”.

My advice in this scenario is, notwithstanding your lack of financial resources, you should still consult an IP specialist; there are organisations/companies cropping up (much like in the USA and Europe) in South Africa, who will fund your litigation, if you have a good case. So, you should have no excuse to turn to your IP attorney and seek his advice and assessment of your matter, before simply agreeing to the demands in the letter asserting IP rights infringement.

This article is of a general nature, and should not be relied upon as a substitute for complete legal advice from an attorney, which will take into account all the circumstances of your case.  

 

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