Is your claim of trade mark infringement justified? If not, you could now be liable for additional damages
27 Mar '19

Trade Mark owners must take care before making allegations of infringement or otherwise threatening legal proceedings against a competitor’s use of a trade mark. The Trade Marks Act 1995 (Cth) (the Act) has always included a prohibition against the making of unjustified threats of infringement proceedings.

However, the issue has now become a little more significant.

A recent amendment to the Act now allows the Court to award additional damages against a person who makes unjustified threats of proceedings for infringement.

Under new clause 129(2A) of the Act, a Court may award additional damages if it considers it appropriate to do so, having regard to such factors as:

(a) the flagrancy of the threat;

(b) the need to deter similar threats;

(c) the conduct of the defendant that occurred after the defendant made the threat; and

(d) any benefit shown to have accrued to the defendant because of the threat.

When might damages be an appropriate remedy?

An award for damages might, for example, be a realistic outcome if the recipient of an unjustified threat of infringement materially impacted a business such as causing a rebranding or impeding the launch of a campaign or new product based on the allegedly infringing brand.

When does this change come into effect?

These amendments apply to threats made on or after 24 February 2019.

Other relevant changes

It is important to note that for trade mark infringement proceedings commenced after 24 February 2019:

(1) simply notifying someone of the existence of a registered trade mark does not constitute a threat to bring an action for trade mark infringement (new section 130A of the Act); and

(2) rights holders can no longer rely on a defence that they have commenced trade mark infringement proceedings or are pursuing such proceedings. That old section of the Act (section 129(5)) still applies however in relation to an action for infringement of a trade mark commenced before 24 February 2019.

Lessons

Trade Mark owners must exercise real care before making a threat to commence court proceedings for infringement of their intellectual property. The merits of the case, including the potential availability of any relevant defences under the Act should be carefully assessed.   Firing off a letter of demand, based on a dubious claim, in the hope it will cause the recipient to change their behaviour, could prove very costly.

 

This article is provided by way of general information only and is not legal advice. Always obtain your own independent legal advice tailored to your business’ particular circumstances before making decisions relating to the legal issues referred to above. In this regard, we’re here to help.