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High Court rules that requests made to Amazon to delist competitors' products amounted to unjustified threats

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United Kingdom

In a recent High Court decision, Shenzhen Carku Technology Co. Ltd v The NOCO Company, Mr Justice Meade decided that the defendant's communications to Amazon via the latter's UK IPR complaints procedure amounted to an unjustified threat within the meaning of the Patents Act 1977. He considered the issue after having decided that the relevant patent was invalid and therefore not infringed.

This is an interesting case as it required an assessment of the meaning of a notice to Amazon - a third party conglomerate with its own policies and procedures for dealing with complaints and which necessarily informs its decisions. That, as we explain below, was key to the court's conclusion.  
 
Previous similar cases
 
There have been similar issues at interim stages in relation to eBay's VeRO (Verified Rights Owner) programme but not Amazon's programme. In the eBay dispute, the court found that there was arguably a threat when submitting a notice to eBay but the judge found it a "remarkably difficult question".  Meade J noted in this case however, that there was no determinative view on the issue and considered it "impractical and wrong" to assess the case before him by comparison with the previous cases.  
 
The law: groundless threats
 
The court set out a reminder of the fundamental tenets of the threats provisions: whether a communication is a threat must be considered objectively; the meaning of a statement / passage is to be answered by reference to the reasonable person in the position of the recipient with its knowledge of all the relevant circumstances. What would that person have understood the writer to have intended, in the context of the letter as a whole? A communication may amount to a threat even if it is "veiled, covert, conditional or future". The person "threatened" must have been "aggrieved". In order to be "aggrieved" by that threat, they must show that their commercial interests have been, or are likely to be, adversely affected in a real way – not fanciful or minimal.  
 
Key facts
 
The defendant accepted it had used Amazon's IPR complaints procedure but denied that it amounted to an unjustified threat. The discussions between Amazon and the parties went beyond just notices and take-downs. Amazon's lawyers responded to the claimant when the claimant had challenged decisions made by Amazon to remove listings. Apparently the defendant had given an indemnity to Amazon to get its products back on the website when the claimant notified Amazon that some of the defendant's products were infringing. There was communication between Amazon and the defendant about the latter suing third parties. All this was submitted as evidence and the judge clearly considered it all in formulating its conclusions.
 
Decision
 
The key question for the court was how the notifications would have been perceived by a reasonable person in Amazon's position. The court rejected the notion that Amazon's particular set-up and its IP policies would be irrelevant to the assessment. It said that the subjective thoughts of the recipient are to be ignored but their commercial arrangements and procedures are objective matters and relevant if they would condition how the communication would be understood.
 
In deciding that the defendant's communications to Amazon were perceived as a threat to sue, the court made some key (mainly factual) observations:
 
  • Had Amazon's IPR policy been such that Amazon delisted automatically in response to any patent infringement assertion without regard to its own legal position, then there was a good argument that Amazon did not feel threatened – in that scenario, its response would be pre-ordained by its own policy.
  • The fact that Amazon does allow some products to remain on its market following complaints strongly suggests that Amazon does not take an all-or-nothing approach. Amazon makes a judgment in its own self-interest (as one would expect) and that is why there is no policy to de-list blindly.
  • Even if it is true that the defendant would never sue Amazon, Amazon does not know that. Especially if it has sold enough of an allegedly infringing product, who knows whether the defendant "might not give in to greed or commercial necessity and sue?" Meade J also noted that the evidence before him showed that from an early stage, the whole situation was "freighted with legal positions being taken". The defendant went as far as sending Amazon claim charts.
Take-away
 
This decision appears to be the first case of its kind in relation to Amazon's IPR procedure, while Amazon is not itself a party to the proceedings. The unjustified or (otherwise known as) groundless threats provision in the Patents Act is equivalent in material respects to that applying to trade marks and designs. So this decision may not only be confined to the patent space. However, whether this decision can be relied on definitively when dealing with other take down procedures is not so clear. As the court recognised, there may be real differences between Amazon's policies and the approach to other ISPs. The communications between Amazon and the parties respectively were also critical to the judge's conclusions. The defendant took what appeared to be a very legal and heavy approach with Amazon.
 
This decision could leave prospective IP holders in a tricky position: for a good chance of success, the notice to an ISP needs to follow the latter's rules, be robust and supported by legal representatives. However, if businesses are troubled by a delisting (and if they know about this decision!) that might spur them on to challenge the notification and, possibly, rely on the notice itself to claim an unjustified threat. It is a difficult balance and clients should take advice as to the content of their notice and approach going forward in similar cases.
 

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Areas of Expertise

Intellectual Property