Failed Patent Infringement Threats Cost Accuser

When a threat is made to bring a patent infringement action against another company, the result of the mere threat may be to cause damage to the threatened company. It may, for example, cease selling or making the item(s) that allegedly infringe the patent and suffer commercial loss through inability to fulfil contracts or make sales.



Where an action is brought and fails, the costs payable by the person bringing the action can therefore include the damages suffered by the defendant for commercial loss as well as legal costs.



In a recent case, an action was brought for infringement of a patent relating to a yellow pigment. A letter was sent to the manufacturer of the pigment, threatening to sue it and any of its customers that used the pigment.



The company claiming its patent had been infringed sent a letter to the other company which said that ‘…you will not be interested in continuously effecting a patent infringement, which may involve the most serious penalties to the infringer and his customers’.



The court rejected the claim that the patent had been infringed and concluded that the threat contained in the letter was not justified. There was therefore an actionable right against the company that made the threat.



Before threatening to take action against someone, it is essential to be aware of the consequences the threat may have as, if it proves to be unjustified, unexpected costs may result.