Intellectual property – guidance

Intellectual property crime and infringement

Understands how intellectual property crime and infringement occurs and impacts business.

1. Criminal offences (counterfeiting and piracy)

Infringement of trade marks and copyrights can be criminal offences, as well as being actionable in civil law. A range of criminal provisions are set out in the relevant Acts, and other offences such as those under the Fraud Act 2006 may also be applied. These criminal offences are most often associated with organised crime groups who are dealing for profit in fake branded goods or pirated products. However, these offences can also occur in legitimate business, for example if an employee uses the workplace to produce and/or sell quantities of fake DVDs or branded goods to colleagues or outside the office.

1.1. What is criminal intellectual property (IP) rights infringement?

Criminal IP offences are also known as “IP crime” or “counterfeiting” and “piracy”. Counterfeiting can be defined as the manufacture, importation, distribution and sale of products which falsely carry the trade mark of a genuine brand without permission and for gain or loss to another. Piracy, which includes copying, distribution, importation etc of infringing works, does not always require direct profits from sales - wider and indirect benefits may be enough along with inflicting financial loss onto the rights holder. For example possession of an infringing copy of a work protected by copyright in the course of your business may be a criminal offence under section 107 (1)(c) of the Copyright, Designs and Patents Act 1988.

Not all cases that fall within the criminal law provisions will be dealt with as criminal offences and in many cases business to business type disputes are tackled by the civil law. Further information is available on what is the law and the guide to offences.

1.2. What does infringement mean

“Infringement” is a legal term for an act that means breaking a law. IP rights are infringed when a product, creation or invention protected by IP laws are exploited, copied or otherwise used without having the proper authorisation, permission or allowance from the person who owns those rights or their representative.

It can range from using technology protected by a patent to selling counterfeit medicines/software or copying a film and making it available online.

All of these acts will constitute a civil infringement but some copyright and trade mark infringements may also be a criminal offence such as the sale of counterfeits including clothing.

1.3. How will action be taken against you

Trading standards are primarily responsible for enforcing the criminal IP laws, with support from the police, and with investigative assistance from the IP rights owners. Private criminal investigations and prosecutions may also be launched by the right owners in some cases.

Criminal IP offences may be taking place in your workplace in a variety of ways. These include:

  • employees selling copies of protected works or supplying fake goods within the working environment

  • company servers and equipment being used to make available (i.e. uploading) infringing content to the internet with the knowledge of management

  • using the work intranet to offer for sale infringing products to colleagues

  • external visitors entering your premises, to sell counterfeit and pirated items

  • using unlicensed software on business computer systems with the knowledge of management

Not only can IP crime make you and your business liable to a potential fine of up to £50,000, and a custodial sentence of up to 10 years, counterfeiting and piracy can affect your business security and reputation, threaten your IT infrastructure and risk the health and safety of your staff and consumers.

2 Risks for business

IP rights infringement and in particular IP crime threaten legitimate businesses, their staff, and undermines consumer confidence. Your business may face a number of risks if you do not take appropriate steps to tackle IP crime within your working environment.

Failure to address the problem could leave you and your business liable and at risk to criminal and/or civil action. Under civil law you may be subject to court action and have to pay damages. Criminal action may lead to unlimited fines, or a custodial sentence (which could be up to a maximum of 10 years). You may also be vulnerable to threats from computer viruses and malware.

You need to think about not only the way your business is conducted, but also be aware that the behaviour of your staff – and their actions at work may also incur liability for the organisation as a whole.

Activities which results in IP rights being infringed can raise both civil and criminal law liabilities. In some cases these activities may relate to something done directly by the business. In other instances it may relate to an independent action of a member of staff at work.

2.2. Security risks

There are many security risks to a business from IP crime. These include the infiltration of viruses and malware which can aid identity theft, threaten system security and slow down IT networks.

2.3. Reputational risks

Good businesses attract respect and the trust of future partners. Adverse publicity relating to any civil or criminal court action could affect how other businesses view you and how they choose to deal with you.

2.4. Resource implications

IP crime can impact on the productivity of your business. Resource implications, such as staff neglecting work tasks to carry out illegal activities, and IT system failure due to malware problems, can have a detrimental affect.

3. Potential problem areas

IP rights are unfamiliar to many and can be complicated. One item can be protected by a number of different IP rights, which can be infringed in different ways. A music CD will have copyright in the music, so-called “mechanical” rights in the recording, design rights in the cover, and well-known brands often register their names as trade marks.

In order to protect your business, and avoid serious legal and security risks, it is important:

  • to understand how IP rights infringements can occur

  • to have a strategy for avoiding them, and

  • to know how to address such a problem if it arises

To assist in identifying instances where IP rights infringement can occur, a range of activities and examples have been identified. Advice is available on steps to help you deal with an IP rights infringement in your business.

3.1. Business activities

A business can infringe the IP rights of others by not having the correct licence to support the activities that take place within the business.

3.2. Staff activities

Staff infringing IP rights at work can impact productivity, put your systems at risk from malware and put you and your business at risk of legal liability for their actions.

3.3. People visiting your workplace

Letting traders onto your premises to sell items to your staff could leave your business facing legal liability. It can also compromise your site security plans.

There are many more potential problem areas, therefore it is vital that you and your business understand how these problems might arise, so you can take steps to avoid them.

4. Dealing with infringement

The needs of businesses will vary. What is right for a factory unit or a small office may not suit larger more complex organisations. The common thread is that doing nothing is not a sensible option given the risks it can pose for you and your business. Whether your business is small or large there is a range of actions you can take to make sure that IP rights infringement is not occurring within your business environment.

Preventative steps will help to safeguard you and your business, but once infringing activities have been identified, a fast and effective response is essential. You therefore need to be prepared, even if you are not currently aware of any such problems in your business.

Clear processes and procedures will help you to embed respect for IP with managers and staff, creating the right company ethos and ensuring that you identify potential problem areas and manage them properly.

Staff and managers need to understand what IP is, how IP rights can be infringed and the risks this can pose - both for them and for the business. Staff in corporate functions, such as Human Resources (HR), Information Technology (IT), finance and procurement have a particularly important role to play in spreading information and good practice.

4.1. Preventative procedures and policies

Guidance is available on the procedures and processes you and your business can adopt to prevent infringement occurring. Information includes: HR policies, license management and processes for site visits. Advice on what to do if you identify any criminal IP offences relating to IP rights infringement taking place in your business is also covered.

4.2. Raising awareness within your business

Practical tools have been developed to help you educate staff and management about the importance of IP and how to comply with the relevant law. These include sample slide packs to help raise awareness and improve understanding.

5 Civil Infringement

The infringement of an IP right is a civil matter in the case of patents, trade marks, designs and copyright. In the case of trade marks and copyright the act may also constitute a criminal IP offence.

There are many potential problem areas, therefore it is vital that you and your business take action to avoid these problems. Advice and guidance on dealing with IP rights infringement is available.

5.1. How to avoid infringement

It is important that you and your business take preventative steps to avoid infringing the IP rights of others by seeking permission - which usually means obtaining a licence for the activity.

5.2. How will an IP rights owner take action against you

If you are believed to be infringing IP rights, the owner may wish to take action through the civil courts; other methods can also be used, such as mediation, the use of “cease and desist” letters or by seeking to use other services in resolving disputes.

You may be liable for damages relating to any infringement.

Copyright owners generally have the right to authorise or prohibit any of the following things in relation to their works:

  • copying the work in any way. For example, photocopying, reproducing a printed page by handwriting, typing or scanning into a computer, or making a copy of recorded music

  • issuing copies of the work to the public

  • renting or lending copies of the work to the public. However, some lending of copyright works falls within the Public Lending Right Scheme and this lending does not infringe copyright

  • performing, showing or playing the work in public. Obvious examples are performing plays and music, playing sound recordings and showing films or videos in public. Letting a broadcast be seen or heard in public also involves performance of music and other copyright material contained in the broadcast

  • broadcasting the work or other communication to the public by electronic transmission. This includes putting copyright material on the internet or using it in an on demand service where members of the public choose the time that the work is sent to them

  • making an adaptation of the work, such as by translating a literary or dramatic work, transcribing a musical work and converting a computer program into a different computer language or code

Copyright is infringed when any of the above acts are done without permission, whether directly or indirectly and whether the whole or a substantial part of a work is used, unless what is done falls within the scope of exceptions to copyright permitting certain minor uses.

Copyright is essentially a private right so decisions about how to enforce your right, that is what to do when your copyright work is used without your permission, are generally for you to take.

Deliberate infringement of copyright on a commercial scale may be a criminal offence.

7. Patent infringement

Infringing a patent means manufacturing, using, selling or importing a patented product or process without the patent owner’s permission.

The owner of a patent can take legal action against you and claim damages if you infringe their patent.

7.1. How to avoid infringing

Patent applicants have to provide a full description of the invention. You can ask us for an opinion to check if what you want to do would infringe a particular patent. If it would infringe, you may be able to agree terms with the owner, or even buy the patent from them.

You can check our database of patents that are currently Not in Force

If you are infringing get professional advice quickly from a patent attorney or solicitor, because the owner can sue you.

7.2 . What if someone sues you for infringing

There are two basic types of defence if someone claims you are infringing their patent:

You are not infringing - what you are doing does not infringe their patent claims, or the patent is invalid - you can take legal action to challenge the validity of the patent. If you win, their patent may be cancelled (revoked). The loser usually has to pay both sides’ costs, so think hard before starting legal action. If someone intends to sue you for infringement, you can try to reach agreement with them on using their patent. Get professional advice from a patent attorney or solicitor, but do not do or say anything yourself.

8. Design infringement

By registering a design the proprietor obtains the exclusive right for 25 years (provided renewal fees are paid every 5 years) to make, offer, put on the market, import or export the design, or stock the product for the above purposes.

These rights are infringed by a third party who does any of the above with the design, for commercial gain.

8.1. How to avoid infringing

The Intellectual Property Office (IPO) can not advise you on whether your design would infringe an existing design. If you are concerned that you may be infringing, you may wish to obtain professional advice from a patent attorney, trade mark attorney or a solicitor.

If you are infringing you should be aware that the owner may be able to sue you. The legal practitioner may also be able to advise you on agreeing, if it is possible, some form of terms between you and the owner of the registered design (such as licensing the right to use the design or buying it from them).

8.2. What if someone sues you for infringing

There are two basic types of defence if someone claims you are infringing their design:

  • you are not infringing - what you are doing does not infringe their design, or
  • the design is invalid - you can take legal action to challenge the validity of the design. If you win, their design may be cancelled (invalidated). The loser usually has to pay the legal costs of both sides, so think hard before starting legal action. If someone intends to sue you for infringement, you can try to reach agreement with them on using their design.

8.3. I think someone else maybe infringing, what should I do

Get professional advice. You may be able to get a court order to force the infringer to cease trading. You should then consider whether to negotiate or to take legal action for compensation. However, infringement actions must be taken to the High Court of England and Wales, the High Court of Northern Ireland or the Court of Session in Scotland. The IPO does not handle such actions.

8.4. How to avoid infringement

It is important that you and your business take preventative steps to avoid infringing the IP rights of others by seeking permission - which usually means obtaining a licence for the activity.

8.5. How will an IP rights owner take action against you

If you are believed to be infringing IP rights, the owner may wish to take action through the civil courts; other methods can also be used, such as mediation, the use of “cease and desist” letters or by seeking to use other services in resolving disputes.

You may be liable for damages relating to any infringement.

9. Trade mark infringement

If you use an identical or similar trade mark for identical or similar goods and services to a registered trade mark - you may be infringing the registered mark if your use creates a likelihood of confusion on the part of the public. This includes the case where because of the similarities between the marks the public are led to the mistaken belief that the trade marks, although different, identify the goods or services of one and the same trader.

Where the registered mark has a significant reputation, infringement may also arise from the use of the same or a similar mark which, although not causing confusion, damages or takes unfair advantage of the reputation of the registered mark. This can occasionally arise from the use of the same or similar mark for goods or services which are dissimilar to those covered by the registration of the registered mark.

9.1. What about unregistered trade marks

There is no available remedy for trade mark infringement if the earlier trade mark is unregistered. Some unregistered trade marks may be protected under Common Law and this is known as Passing off. However, whether or not they are protected will depend on the particular circumstances, in particular:

Whether, and to what extent, the owner of the unregistered trade mark was trading under the name at the date of commencement of the use of the later mark; Whether the two marks are sufficiently similar, having regard to their fields of trade, so as to be likely to confuse and deceive (whether or not intentionally) a substantial number of persons into thinking that the junior user’s goods and services are those of the senior user; The extent of the damage that such confusion would cause to the goodwill in the senior user’s business.

9.2. I think that I may be infringing, what should I do

Get legal advice. There may be a number of potential courses of action or defences open to you, but this will very much depend on the particular circumstances of your case.

Some traders who think they may be infringing an earlier trade mark choose to cease trading under the offending sign, others choose to approach the earlier trade mark owner and attempt to negotiate a way forward that suits both parties, which may include a co-existence agreement.

If you decide that you are not infringing, or you have a good defence, you may decide to stand your ground or even to sue the trade mark holder for making unjustified threats. In the worst case scenario, you may have to change your trade mark and re-brand your products or services.

9.3. I think that someone else may be infringing, what should I do

Get legal advice as the most suitable course of action will depend on the particular circumstances of your case.

One potential option open to you is to write to the infringer. However you must be satisfied that the earlier trade mark that you own and the activities of the infringer justify this. This is because the law also protects traders from unjustifiable threats of trade mark infringement.

You may be able to negotiate a settlement which suits both parties, which may involve a co-existence agreement. Another option is that you may be able to get a court order to force the infringer to cease trading and pay compensation for damages. However, infringement actions must be taken to the High Court or in Scotland, the Court of Session. We do not handle such actions.

10. What is a coexistence agreement

A coexistence agreement is a legal agreement whereby two parties agree to trade in the same or similar market using an identical or similar trade mark.

The agreement is drawn up between parties and sets the parameters for each to use their trade mark without the fear of infringement or legal action from the other(s).

The coexistence agreement set the terms and conditions the parties have agreed, to allow each other to undertake their respective business activities.

Whilst coexistence agreements may take many forms, and may also include designs, copyright and patents, entering into a formal binding coexistence agreement will ensure that the parties avoid the likelihood of becoming involved in any future costly and lengthy legal dispute.

The specific details of a coexistence agreement is a matter only for the parties involved to negotiate and the IPO cannot become a party to the negotiations.

Many groups of copyright owners are represented by a collecting society. A collecting society will be able to agree licences with users on behalf of owners and will collect any royalties the owners are owed. In many cases a collecting society will offer a blanket licence for all the works by owners it represents, for example for music to be played in a shop or restaurant.

There are many collecting societies who operate for various types of copyright material:

  • printed material

  • artistic works and characters

  • broadcast material

  • TV listings

  • film

The Copyright Tribunal is an independent tribunal established by the Copyright, Designs and Patents Act 1988. Its main role is to adjudicate in commercial licensing disputes between collecting societies and users of copyright material in their business. It does not deal with copyright infringement cases or with criminal “piracy” of copyright works. Copyright infringement can be dealt with in the civil courts such as the High Court (Chancery Division), the Intellectual Property Enterprise Court and certain county courts where there is also a Chancery District Registry. Criminal matters are dealt with in the criminal courts. Where parties are unable to reach agreement in commercial licensing disputes they might also wish to consider, as an alternative to the Copyright Tribunal, mediation services.

13. Professional advice

Legal professionals who specialise in IP are useful in helping you to understand, obtain and defend your IP rights. Details of professionals in your area can be obtained from any of the following organisations:

13.1. Other sources of advice include:

There are a number of other organisations geared specifically to helping inventors, especially lone inventors, to bring their ideas to market, and to provide advice on finding financial assistance. For example, The Institute of Patentees and Inventors (IPI) is a non-profit making organisation that specifically helps lone inventors.

14. Annual ip crime report

The latest IP Crime Report 2012/13 was published on 29 July 2013. The report highlights current and emerging threats surrounding counterfeiting and piracy, including those conducted via the internet. The report also contains statistical data and enforcement activities from UK law enforcement agencies such as trading standards, police and HM Revenue and Customs along with industry bodies

15. Reporting intellectual property crime

If you have concerns or are aware of any person that may be involved in IP crime, then you may report this through your local trading standards service - who are the leading authority enforcing IP legislation - via Citizens Advice Bureau and/or the anonymous reporting system of the charity CrimeStoppers and Action Fraud

People involved with IP crime are generally involved with other types of crime such as benefit fraud, drugs and people trafficking. Therefore, it is imperative that you report any instance of IP crime that you are aware of, to the enforcement authorities.