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Jumping The Gun: How Copyright and Trade Mark Threats Can Backfire

When you believe someone has infringed your copyright or trade mark, it’s a natural first response to be angry. “Who do they think they are?” or “How dare they?”.

It’s a small step from there to confronting the person you believe is responsible. Some business owners are quick to pull the trigger and threaten legal action or send cease and desist letters. A common example of this kind of threat is demanding material be taken down from a website, or else.

But acting impulsively can be a big mistake. If you make a threat without proper grounds, it can turn around and bite you. In the end, you may be the one facing legal action.

What’s the risk?

There are laws in place to protect the rights associated with the creation of original works (copyright), as well as brand names, logos, taglines, etc. (trade marks). These laws balance established rights with the creation of new work, ideas and brands. One such law prohibits the making of ‘groundless threats of infringement’. There are provisions under both the Copyright Act and the Trade Marks Act, which deal with groundless threats of legal action.

The Copyright Act

Under section 202(1) of the Copyright Act, a person can access a number of remedies for the making of a groundless threat:

  • A declaration stating that the threats are unjustifiable;
  • An injunction against the continuance of the threats; and
  • Award of damages for any loss sustained because of the threat.

The Trade Marks Act

Under section 129 of the Trade Marks Act, the court may also award additional damages for the threat itself, the need to deter others from making such baseless threats, and other relevant matter the court wishes to consider. This increases the scope for compensation significantly and should cause enough concern to rights holders, for them to pause before acting recklessly.

The only defence for a rights holder is to show the court ‘that the acts in respect of which the action or proceeding was threatened constituted, or, if done, would constitute, an infringement of copyright.’ In other words, they have to back themselves up and show that there actually is an infringement.

The risks are significant. In one case for example, celebrated Queensland artist Richard Bell won $147,000 in damages following a groundless threat made by his assistant Steele.

Bell had made a film in New York with the help of Steele. Afterwards, Steele claimed she owned copyright in the work and had the trailer for the film taken down from the Internet. Bell brought a legal action against Steele, and since the threats were not backed up, he won damages for likely lost sales. This highlights the very real risk of making threats, without justification.

What constitutes a threat?

Simply notifying someone about the existence of copyright, isn’t a threat – but anything more than that could be interpreted by a court as being one. A court will objectively consider whether a statement is a threat, based on the language used.

The court will look to whether a person has asserted their copyright or trade mark rights, and whether they have indicated that they will commence legal proceedings, if their rights are not respected. A threat can also be made in the form of a letter from a legal representative.

What makes a threat justifiable?

Proving that a threat is justified requires more than just a belief in good faith that it was. The court requires the parties to have assessed the objective strength of their claim of infringement. This stops parties from acting out at everybody, who in their opinion, uses a remotely similar mark or original, work, to their own. There must be an actual legal basis for the threat.

Example

One case that delved deeper into this requirement involved the Telstra Corporation. In a 2002 case, the Federal Court found that copyright existed in Telstra’s Yellow and White Pages. On the basis of this legal ruling, Telstra threatened the Phone Directories Company to cease using their copyrighted work. However, three years later the High Court overturned the initial ruling. The Phone Directories Company therefore attempted to sue Telstra for making a groundless threat. The Federal Court refused this reasoning. However, given the original ruling was good law at the time, Telstra made the threats, so they had a strong legal basis.

It’s clear that the court requires rights holders to act on logic grounded in law, not unreasoned emotion. This may be difficult if you honestly believe your rights have been infringed upon, but it could just pay off to reflect for a moment before you act.

But wait, there’s more

It’s important to realise that it’s not just the copyright holder, or the registered owner or user of a trade mark, who can take legal action.

Anyone who is aggrieved by a groundless threat can bring a lawsuit too. For example, suppliers, advertisers or other associated businesses could be affected by the threat as well.

On top of all that, there is your reputation to think about. The risk of a lawsuit aside, making threats to protect your copyright or trade mark, without a proper legal basis, can be a genuine risk to your brand as well. Unlike the payment of damages (money can be replaced), brand damage can be permanent.

What should you do?

Given the consequences, whether or not you make a threat of infringement should be approached carefully. In many cases, you may have a valid complaint – and of course, you want to act to protect your interests.

If you feel that your rights have been infringed upon, it could pay off to do two things:

1. Take a step back and consider the consequences, before firing off a cease and desist letter; and

2. Seek legal advice.

Getting good advice early about a possible infringement could save a lot of time and money, in the long run.

Are you prepared to take the risk of being a little trigger happy?