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Intellectual Property Matters – March 2015

Intellectual Property Matters – March 2015

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11/03/2015

Designs and “complex products”

Under Article 4(2)(a) of the Community Designs Regulation [1], a design applied to or incorporated […]

Under Article 4(2)(a) of the Community Designs Regulation [1], a design applied to or incorporated in a component part of a complex product is considered to be new and to have individual character – and therefore to be capable of registration – only if the component part remains visible during normal use.

This principle was in issue in a recent case to be heard by the General Court, Argo Development and Manufacturing Ltd v OHIM [2]. The case concerned the design for a folding advertising sign. (The design is depicted in the judgment, available here.) The proprietor of several earlier designs sought a declaration of invalidity on the grounds that the handles were not visible during the use of the product and also on the grounds of lack of novelty and individual character.

The General Court rejected the argument on visibility on the basis that the design in question was not a complex product so that the question of the visibility or otherwise of the handles was not a relevant consideration. The Court went on to find that the differences in the handles between the competing designs was such as to render the design in suit distinctive. On the issue of individual character, the Court considered that the shape of the cardboard and its division into foldable pleats constituted features in relation to which the designer had a limited degree of freedom and that the handles played an essential role in creating a different overall impression on the informed user.

As well as highlighting the importance of establishing whether a product is a “complex product” in cases where visibility of the design in suit, the case also shows the importance of determining the extent of design freedom enjoyed by the designer, a relevant consideration in establishing the existence of individual character [3]. In this case the General Court found that the scope of design freedom enjoyed was very restricted and that, taking that limited freedom into consideration, the design did create an overall different impression on the informed user.

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[1] Regulation 6/2000/EC
[2] Case T-41/14
[3] Article 6(2) of Regulation 6/2000/EC

Groundless threats before the grant of the patent

Section 70(1) of the Patents Act 1977 states “where a person (whether or not the […]

Section 70(1) of the Patents Act 1977 states “where a person (whether or not the proprietor of, or entitled to any right in, a patent) by circulars, advertisements or otherwise threatens another person with proceedings for any infringement of a patent, a person aggrieved by the threats (whether or not he is the person to whom the threats are made) may … bring proceedings in the court against the person making the threats …”.

A claim cannot be brought if the threat is not “groundless”. Therefore if the maker of the threat can prove that there has been or will be an infringement of his patent rights, the party threatened will have no cause of action.

In Global Flood Defence Systems Ltd & Another v Van Den Noort Innovations BV & Others [1] the patent the subject of the threats had not yet been granted. It was still at the application stage. Nonetheless the defendants put notices on their website alleging patent infringement and wrote a letter to a third party complaining that their patent was being infringed. The claimant argued that this constituted a groundless threat; the defendant raised a defence of justification under section 70(2A) of the 1977 Act. The claimant sought summary judgment.

The defendants relied on section 69 of the 1977 Act, which provides that the rights granted by a patent are backdated to the date of grant and that, whilst they did not currently have a patent, they might have one by the time of the trial.

Hacon J in the IPEC held that it was indeed plausible that the defendants would have a patent by the time of trial and that they would be able to rely on the defence of justification if they succeeded in getting the patent by the time of the trial. Accordingly, the summary judgment application was refused. At trial, to invoke the defence of justification successfully, the defendants would need to show, first, that the patent was granted and, secondly, that the claimant’s acts would have infringed the patent had it been granted on the date the patent application was granted.

The fact that some of the threats included reference to patent rights that did not yet exist did not mean the defence of justification could not succeed.

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[1] [2015] EWHC 153 (IPEC)

Infringement of design right in jeans

A recent High Court decision [1] has clarified the different tests for infringement of copyright […]

A recent High Court decision [1] has clarified the different tests for infringement of copyright and UK unregistered design right and considered the test for the “knowledge” of the defendant in claims for secondary infringement of UK unregistered design right.

The case concerned the design in a pair of jeans, depicted in the judgment, which can be accessed here. The claimant’s design shows an emphasised, stretched, “anti-fit” effect around the knee. When the claimant instituted proceedings for infringement of UK unregistered design right in the jeans, the defendant denied having copied the design, saying instead that it had been following “general fashion trends in the denim market”.

The judge considered that the similarities between the claimant’s design and the defendant’s design were striking. Where a claimant can, as here, demonstrate sufficient similarity in the features claimed to have been copied and that the defendant had prior access to the copyright work, the burden of proof is reversed. It is for the defendant to satisfy the judge that, despite the similarities, these did not result from copying.

The judge then noted the different tests for copyright infringement and that of UK unregistered design right: in the case of the former, there would be infringement if a substantial part of the work was copied; by contrast, in the case of UK unregistered design right, it was not the case that reproducing a substantial part of a design, without more, would constitute infringement. In the case of UK unregistered design right, there will only be infringement if the design is copied so as to produce articles exactly or substantially to the design.

The products in question were manufactured overseas, so the case was about “secondary infringement”. Secondary infringement involves commercial importation of or dealing in articles which the infringer knows or has reason to believe are infringing articles. Dealers who can establish that they did not know and had no reason to believe that design right subsisted in the relevant design may be ordered to pay damages not exceeding a reasonable royalty but will face no further liability. The Court held that the persons whose knowledge mattered for these purposes were those persons within the defendant organisation who were responsible for arranging and ordering the manufacture of the products. In the words of the Court it would be “unfortunate” if such person were able to escape liability “by giving general instructions to foreign manufacturers to produce articles similar to popular designs and then say that if those manufacturers choose to fulfil those instructions by copying other people’s designs that is not something that can be laid at his door if he has not looked to see whether copying has occurred”.

Overall, the judge found that there was substantial reproduction of the shape and configuration of the claimant’s design. Such alterations as there were were insubstantial, i.e. they would not be taken to be significant by the person assessing the design. Accordingly, judgment was given for the claimant.

The judge’s remarks on what is meant by knowledge of alleged secondary infringers is particularly relevant in the fashion/textiles industry where production is invariably carried out overseas and the products then imported in the UK for sale to consumers.

Also noteworthy is the judge’s emphasis on the importance of designers taking care to ensure a comprehensive paper trail to demonstrate an independent design process – the defendant in this case fell a long way short of the judge’s expectations in this regard.

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[1] G-Star v Rhodi Ltd [2015] EWHC 216 (Ch)

Online exhaustion of copyright and the second-hand market

Article 4(2) of the Information Society Directive [1] provides that the exclusive distribution right of […]

Article 4(2) of the Information Society Directive [1] provides that the exclusive distribution right of a copyright owner shall not be exhausted within the EU, in respect of the original or copies of the work, except where the first sale or other transfer of ownership in the EU is made by the rights holder or with its consent. The rights holder’s exclusive right to distribute the copyright-protected work becomes exhausted upon that first authorised sale or transfer of ownership.

In Art & Allposters International BV v Stichting Pictoright [2], the defendant sold posters on canvas. The claimant brought proceedings for copyright infringement on the basis that the canvas transfers reproduced its copyright-protected works without its consent. After having worked its way through the Dutch courts, the case was referred to the Court of Justice of the European Union (CJEU) for a preliminary ruling.

The issue before the Court was whether the exhaustion of the distribution right set out in Article 4(2) applied to the situation where a reproduction of the copyright-protected work, after it has been marketed in the EU with the rights holder’s consent, underwent an alteration in form – in this case from a paper poster to a canvas – and was placed on the market again in that new form.

In this case, it was undisputed that the posters had been placed on the market as posters with the rights holder’s consent. The issue was whether the alteration of the medium impacted on the exhaustion of the exclusive distribution right.

The Court ruled that the exhaustion of the distribution right applies to the tangible object into which a protected work or its copy is incorporated if it has been placed onto the market with the rights holder’s consent. It added that the replacement of the medium resulted in the creation of a new object incorporating the image of the protected work. This was sufficient to constitute a new reproduction of the work which was covered by the exclusive right of the author and therefore required his authorisation. In other words, the consent of the rights holder did not extend to the distribution of the work in the altered form. The owner’s right accordingly had not become exhausted.

The ruling has obvious implications for those involved in the exploitation of copyright works, particularly artistic works, produced on physical, tangible objects.

It is worth contrasting this with the position in respect of copyright in software.

How the doctrine of exhaustion of rights applies in the context of copyright in software was considered by the CJEU in UsedSoft v Oracle [3]. In that case, the Court held that an author of software cannot oppose the resale of his ‘used’ licenses allowing the use of his programs downloaded from the internet.

The Court stated that it made no difference whether the customer obtains a material medium with the software on it – such as a CD-ROM or DVD – or if the software is downloaded directly from a website. The principle of exhaustion under the Legal Protection of Computer Programs Directive [4] applies equally to tangible and intangible copies of software programs, as the wording of the Directive does not differentiate between the two. Therefore, software distribution by download triggered the principle and equated to a ‘sale’ of the software.

The Court’s ruling in UsedSoft left unclear how the doctrine of exhaustion of rights may be applied in respect of other forms of digital content, such as e-books or videogames, which may be subject to different legislation, such as the Information Society Directive.

It is not obvious that the ruling in Art & Allposters can be transferred to the digital environment, as the Court of Justice made clear in its UsedSoft ruling that the Information Society Directive did not apply in that case and instead it is the Software Directive alone which falls to be considered in such cases. This makes it very important in deciding whether the copyright material in question falls within the Software Directive or the Information Society Directive. In the latter case, the exhaustion of rights principle is dependent upon the physical medium in which the work is expressed and it may be that exhaustion does not apply to downloads; in the former case, it clearly can apply to downloads.

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[1] Directive 2001/29/EC
[2] Case C 419/13
[3] Case C 128/11
[4] Directive 2009/24/EC

Ownership of copyright in the Innocent logo

When logos are created, the artwork is automatically protected by copyright and under English law […]

When logos are created, the artwork is automatically protected by copyright and under English law the designer is the copyright owner even if the work is commissioned. It is therefore standard practice for copyright ownership to be assigned to the commissioner who is then free to use the logo and register it as a trade mark. Copyright assignments are relatively straightforward agreements but must be in writing.

Unfortunately for Fresh Trading, the designers of its so-called “dude” logo (depicted in the judgement), claimed copyright ownership and challenged Fresh Trading’s Community Trade Mark on the basis that it conflicted with its copyright. The evidence showed that the individuals who set up the Fresh Trading business engaged a design agency (Deepend) to design a logo for the new business. Deepend were to be paid for their work by way of the allotment of shares in the new business and the agreement provided that Fresh Trading would “receive full intellectual copyright of any work”.

The agreement was never signed and Fresh Trading never allotted shares to Deepend. Deepend went into liquidation and assigned its interest in the copyright works it had created for Fresh Trading to the defendant in these proceedings.

Fresh Trading brought a claim for declaratory relief regarding the ownership of the copyright in the logo.

The High Court began by noting that an assignment of existing or future copyright must be signed by the assignor in order to be legally effective (section 90(3) of the Copyright, Designs and Patents Act 1988. Given the absence of a signature, Fresh Trading could not be the legal owner of the copyright. However, while the absence of a signature meant there was no formal legal assignment, it did not necessarily mean that there was no agreement to assign the copyright, which could give rise to an equitable assignment. From the evidence, the Court concluded that there had indeed been an equitable assignment as the parties’ conduct demonstrated an intention to act in accordance with the terms of the unsigned agreement. The parties had intended the agreement to be legally binding notwithstanding they had described it as a “heads of agreement” and “subject to contract”, the Court noting that the use of those terms did not necessarily preclude the coming into force of a binding legal agreement.

Regarding the argument that as no shares had been allotted, there could be no equitable assignment, the Court considered that these two actions were intended to be concurrent not conditional on one another so that the fact that no shares had been allotted did not mean that there could not be an equitable assignment of the copyright.

The case is a useful reminder of importance of ensuring that copyright in a logo is formally transferred to the end user in order to avoid future legal disputes arising.

The case is also interesting for what the Court said about assignments of future copyright where the Court made clear that an assignment of future copyright will not be effective if it is subject to further conditions.

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[1] Fresh Trading Ltd v Deepend Fresh Recovery Ltd and another [2015] EWHC 52 (Ch)

The importance of careful selection of prior art

Mr Justice Birss has refused [1] an application by the defendant in patent proceedings to […]

Mr Justice Birss has refused [1] an application by the defendant in patent proceedings to re-open the trial and to permit it to amend its pleadings to plead new prior art. Birss J had himself given judgment in the case in November in which he found that the claimant’s telecommunications patent to be valid and infringed by the defendant. The prior art that the defendant now wished to adduce comprised three documents found by employees of the defendant two weeks after Birss J handed down his judgment.

Birss J accepted that he had power to re-open the trial but declined to do so. In doing so he considered the following well-established principles:

Could the evidence have been found with reasonable diligence before the trial?
Would the evidence, if given, probably have an important influence on the results of the case?
Was the evidence on the face of it entirely credible?

The application had to be considered in the interests of efficient litigation, justice to others and use of court resources. The prior art had been available before the trial and could have been found with reasonable diligence. Although neither party had acted to their detriment in reliance on the judgment and there would be no major prejudice to the claimant if the matter were to be re-opened, that did not justify re-opening the trial, where there was no excuse for the defendant not having adduced the prior art at trial. Further, it was not clear that even with the prior art, the patent in suit would be invalid.

The lesson to take home from this case is to ensure the right prior art is selected and adduced before trial. Afterwards it will be too late. In the judge’s own words, the application “could and should have been made before trial and then it would not have had the serious consequences for the resources and finality which it now has and it would not have the serious impact on other court users which it now would have”.

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[1] Vringo Infrastructure Inc v ZTE (UK) Ltd [2015] EWHC 214 (Pat)

The risks of claiming infringement of a descriptive mark

The claimant owned five UK and Community trade marks, all featuring the word “supreme” in […]

The claimant owned five UK and Community trade marks, all featuring the word “supreme” in respect of animal foodstuffs. Its products included a muesli rabbit food featuring a cartoon character, “Russel Rabbit”; other muesli products featured other cartoon characters. The word “supreme” featured in a banner in its packaging. Since 1994, the defendant had also marketed rabbit food using the word “supreme”; its product was called “MR JOHNSON’S Supreme Rabbit Mix”. The evidence showed that the claimant did not object to the defendant’s use of the word “supreme” so long as it did not use it in a banner.

In 2012, the defendant redesigned its packaging, with the word “supreme” more to the fore. This prompted the claimant to institute infringement proceedings. In turn, the defendant counterclaimed for invalidity.

Arnold J found [1] that the claimant’s word marks were invalid save in respect of small animal food. This was because the word “supreme” was descriptive. The fact that a stylised font was used did nothing to overcome this and make the word marks distinctive. By contrast, the claimant’s ribbon marks did have some distinctive character as a result of their presentation.

Arnold J then considered whether the marks had acquired a distinctive character through use. In this regard, he found that the cartoon characters – notably Russel Rabbit and Gerty Guinea Pig – were much better known than the mark SUPREME. However, in respect of small animal food, the UK word mark had acquired a “slender” degree of distinctive character.

Arnold J went on to dismiss the infringement action. He held that the defendant’s use of the word “supreme” did not adversely affect the origin function of UK trade marks. He also found there was no likelihood of confusion between the two competing signs. In any event, even if infringement had been prima facie established, the defendant would have had defences available to it – first, that it was using the term “supreme” in a purely descriptive manner and, secondly, of honest concurrent use as the defendant had been using the mark for over 20 years without causing confusion.

The judgment was clearly a bad one for the claimant and, to compound matters, Arnold J noted that considerable costs were likely to have been incurred. The case demonstrates the risks of instituting infringement proceedings in respect of an adjectival mark and where there may be difficulties in demonstrating acquired distinctiveness. Instituting infringement proceedings (for any registered mark, be it a trade mark, patent or design) often result in a counterclaim for invalidity and the coming under scrutiny of the claimant’s own (in this case, very weak) registration.

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[1] Supreme Petfoods Ltd v Henry Bell & Co (Grantham) Ltd [2015] EWHC 256 (Ch)

Trade marks: registry review – March 2015

Husky [1] The EU General Court has upheld the Board of Appeal’s decision rejecting the […]

Husky [1]

The EU General Court has upheld the Board of Appeal’s decision rejecting the applicant for revocation’s argument that various requests for an extension of time for filing evidence had been granted in error as they had been granted without the applicant’s consent. The General Court confirmed that OHIM could – but was not obliged – to seek consent to such an extension. Where it did not do so, it was obliged to take into consideration all the circumstances surrounding the request for an extension.

Red bull [2]

The EU General Court has upheld an earlier opposition decision for registration of the mark BULLDOG based on the earlier work mark BULL for identical goods.

The Court considered that most non-English speakers would not be familiar with the term “Bull”, and that in England there was a certain association between the two animals, as bulldogs had been bred originally in order to participate bull-baiting.

As the marks were similar and the goods were identical, the Court found there was a likelihood of confusion and annulled the Board of Appeal’s decision to dismiss the opposition.

Wolf’s head (fig.) [3]

On a re-hearing of a case referred to it by the European Court of Justice, the EU General Court has dismissed an opposition based on dilution and free-riding. The opponent owned a number of figurative marks depicting a wolf’s head which were registered in respect of gardening products. The applicant was seeking to register a similar image of a wolf’s head in respect of professional wood and green waste processing machines.

Despite the strong visual similarity the opposition was rejected in its entirety as the opponent had failed to show that the contested mark would take unfair advantage of or be detrimental to the earlier mark.

Wine-book (fig.) [4]

Facebook, Inc has successfully opposed the registration of the figurative mark WINE-BOOK in Classes 9 and 42.

The Opposition Division concluded that there was sufficient similarity between the marks for relevant consumers to establish a mental connection between them and that there was a high probability that the applicant’s mark would take unfair of the distinctive character or repute of the FACEBOOK mark.

It remains to be seen whether this decision, which has attracted some criticism, will be appealed.

Top tips

With the rapid growth in popularity of 3D printing, designers who have not yet done so should consider registering their designs to protect against unauthorised copying.

The Registered Designs Act 1949 provides a regime for the protection of designs against copying by third parties. More specifically, it states that registration of a product protects the “appearance of the whole or a part of a product resulting from the features of, in particular, the lines, contours, colours, shape, texture or materials of the product or its ornamentation”.

The component parts of a complex product can only be protected as a registered design if they are visible and are of a novel and industrial design. Designs that are dictated by their technical function cannot be protected as registered designs, nor where the features of appearance of a product must be reproduced in the form they are in order to fit with a product to which they are connected or in which they are incorporated.

It is not always easy to tell whether a design will be capable of protection as a registered design. Please contact us for advice on whether your design may be capable of protection as a registered design.

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[1] Case T-287/13 Husky CZ sro v OHIM
[2] Case T-78/13 Red Bull GmbH v OHIM
[3] Case T-570/10 Environmental Marketing Ltd v OHIM
[4] Facebook Inc v Collector Consulting, Opposition No B 2 035 510

Contacts

Alan Harper, Senior Associate, Intellectual Property & Trade Marks at Walker Morris LLP

Alan Harper
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