Unjustified Threats

January 28, 2008

One challenging aspect of advising small businesses is the vagueness of the law. It is difficult to give the clear, black and white answers business people need. One client recently asked me what letters we would be able to send out to enforce her design or trade mark rights if she registered them. She even wanted to know how much we would charge for such letters. She was unimpressed to hear about the threats legislation and that the price would largely depend on the facts. For a recent example of the threats provisions at work see here and for more details of the legislative provisions about designs see here, for trade marks, see s21 here and for Patents see here.

So, is it not worth registering rights given the uncertainties that exist and the potential costs of enforcement? I can only express my own opinion by explaining why Azrights has applied for a trade mark even though I know we would not be able to outspend a big corporation if it were minded to steal our brand. But that is to look at a worst case scenario. As the costs of infringement actions are so high for business – both in financial and resource terms – in practice, people are wary of infringing on other’s rights and try to get round them wherever possible. So, IP law does not generally involve squabbling in court over the existence or scope of rights. Rather than going to court to get a judge to tell them what they can and can’t do, the focus is on getting into the best position for reaching agreement on who should be allowed to do what.

In practice, if we did not register our rights it would be even more difficult to enforce them. Passing off actions are notoriously expensive to bring, and sustain. On the other hand a registered trade mark deters most people from infringing the rights. So, a registered right strengthens your position in achieving a negotiated solution. Disputes generally do not reach the courts and are settled, if both sides get the same advice about their respective prospects. It is only if both sides think they are going to win, or that anything can happen that settlement is less likely. As this is an important issue to many of our clients we will be coming back to these questions in future postings.