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VeRO and groundless threats

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21/09/2016

The decision of the Intellectual Property Enterprise Court in T&A Textiles and Hosiery Ltd v Hala Textile UK Ltd and Others [1] is a wake-up call for those who complain of an infringement of intellectual property rights under eBay’s Verified Rights Owner (VeRO) system without first giving proper consideration as to whether the complaint is well founded.

Both parties designed and manufactured bed linen. The claimant maintained that bed linen sold by the defendant infringed its copyright (in respect of the design on the products) and its registered design (in respect of a packaging label).  The defendant disputed the claims and also counterclaimed that the sending of letters to third parties and to eBay under the VeRO system constituted “groundless threats”.  Under UK law, the recipient of a groundless threat has the right to claim against the person making the threat.  (The law on groundless threats is in the process of being overhauled with draft legislation contained in the Intellectual Property (Unjustified Threats) Bill, which is currently working its way through Parliament.

The claims for infringement were dismissed. The Court found that the alleged infringing designs had been imported prior to the creation of the claimant’s drawings (which defeated the copyright claim) and also that the claimant’s registered design was invalid as the defendant’s allegedly infringing packaging had been made available to the public prior to registration of the claimant’s design.

The Court found that the letters sent by the claimant to third parties constituted groundless threats. On the question of whether the letters sent to eBay under its VeRO system were groundless threats, the Court was a little more guarded. Its provisional view was that the initial notice to eBay was a groundless threat and that a subsequent letter to eBay was a clear threat, even though written in the context of a complaint under the VeRO system.

The case emphasises the need for right owners to consider the law on groundless threats when using the VeRO programme.

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[1] [2015] EWHC 2888 (IPEC).

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