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The Intellectual Property Bill: what’s new for designs?

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17/12/2013

The Intellectual Property Bill (the draft Bill) has been working its way through Parliament throughout the summer and autumn and is likely to be enacted in 2014. Arguably, the most eye-catching of the draft Bill’s provisions concern patents, in particular the new powers to enable the UK to implement the Unified Patent Court Agreement, but there are a number of important provisions relating to UK unregistered design rights and to registered designs of which the owners of intellectual property rights in designs need to be aware. First, however, a quick reminder of the current registered design regime:

Registered designs: the current regime

The Registered Designs Act 1949, as amended, 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”. A product for these purposes is any industrial or handicraft item.

In addition, a design may be registered as a Community registered design pursuant to EC Regulation No 6/2002. Designs can be registered and protected by a single right which applies to all member states of the EU, conferring upon the holder an exclusive right to use the design and prevent third parties from doing so for 25 years, with no requirement to prove that the design has actually been copied. A ‘design’ is defined in the Regulation to mean the appearance of the whole or a part of a product resulting from the features of, in particular: the lines, contours, colours, shape, texture and/or materials of the product itself and/or its ornamentation. The Regulation goes on to define a ‘product’ as meaning any industrial or handicraft item, including parts of a more complex product, packaging, get-up, graphic symbols and typographic typefaces.

Changes to registered designs regime

The draft Bill will make the deliberate copying of a UK or Community registered design a criminal offence. The offence will only apply to designs that have been registered prior to the copying and, for the criminal offence to be constituted, there must have been deliberate copying in the course of business. It will not be an offence for the design to have been reproduced unintentionally and it will be a defence if the defendant can show reasonable grounds for believing the design in question was invalid or that their design did not copy it. The maximum sentence will be 10 years’ imprisonment and/or a fine. Although there are a number of defences (e.g. that the defendant was not acting in the course of business) the criminal sanction is bound to have a deterrent effect on would-be infringers. The new legislation will bring registered designs into line with the legislation on trade marks and copyright. It is important to note, however, that this will only apply to registered designs – it will not apply to unregistered design right. In practice, many designers rely on design right when in fact they could apply for registration of their design. The possibility of criminal proceedings ought to make registration even more of an attractive proposition than it is already.

Again in line with the existing position for trade marks and copyright, Trading Standards will be given powers of forfeiture, including providing for a court to authorise the removal of copies of registered designs, or items that have been used to make them, from the premises of persons under investigation.

The draft Bill provides for the UK to join the Hague system. This is an international designs registration system which allows applicants to designate the countries in which they wish their design to be registered. The savings could be considerable. At present, according to the Government’s own figures, registration for six countries, allowing for translation and notarial costs and fees, could total £7,500. Under the Hague system this would be just £500.

The draft Bill aligns UK registered designs and Community registered designs in a number of ways: currently the use of a UK registered design in good faith and with permission is not subject to infringement of the associated copyright; this is to be extended to registered Community designs. The draft Bill clarifies that the designer, not the commissioner, remains the first owner for both registered designs and Community registered designs and that, again for both, the applicant does not need to be the proprietor of the design. The draft Bill also aligns the legislation regarding the innocent infringement of a UK registered design with that for Community designs. The proprietor of a UK registered design will be able to seek from an innocent infringer some or all of the profits made because of the infringing activity, but not any wider form of financial damages.

The draft Bill will introduce a limited right of prior use where a third party acts in good faith in the use of a design that is subsequently registered by another.

One of the most striking features of the draft Bill is the proposed introduction of a non-binding opinions service for registered designs, similar to that which already exists for patents, to be provided by the UK Intellectual Property Office. The opinions will be given on a no-liability basis. The proposed opinions service is a response to the perception that SMEs and designers are deterred from enforcing their rights in the courts because of the costs, time and uncertainty involved. The Government believes that the opinions service will help to redress this.

Finally, the draft Bill will provide a new route of appeal against decisions of the Registrar relating to designs. Those affected will have the choice of using either an Appointed Person (appointed by the Secretary of State) or the court. This reflects the system currently in place where the Registrar’s decisions concerning trade marks are challenged.

Changes to the unregistered design right regime

Designs may also be protected by unregistered design right. Like copyright, this right arises automatically and without the need for registration. The draft Bill proposes some modest changes to when a design will be eligible for protection and who may be eligible for protection, including allowing companies from China and the United States to benefit from UK design right, a proposal not without controversy given that there is no reciprocal arrangement with those countries.

The draft Bill also restricts protection for trivial features of designs by removing ‘any aspect’ from the definition of a design. The Government expects that this will reduce uncertainty over the breadth of the unregistered design right, especially in actions before the court.

The owner of a UK design right has “the exclusive right to reproduce the design for commercial purposes” (“commercial purposes” meaning selling or hiring in the course of a business). The draft Bill provides for exceptions to design right infringement for an act that is done privately and for purposes which are not commercial; for an act that is done for experimental purposes; and for an act of reproduction for teaching purposes (provided that the act of reproduction is compatible with fair trade practice and does not unduly prejudice the normal exploitation of the design and provided mention is made of the source).

As with registered designs, the draft Bill clarifies that the designer, not the commissioner, will be the first owner of unregistered design right. The benefits are described succinctly in the draft Bill’s explanatory notes: “[this] removes the situation in which a UK right is automatically owned by whoever commissioned the design, and an EU right (which includes the UK in its scope) is instead automatically owned by the designer. It brings UK design law into line with UK copyright law, and means that the initial ownership of closely related rights will no longer end up with different parties”. The changes are not retrospective and also will not apply where there is a contract already in place before the coming into force of the applicable legislation between the employer and the commissioner.

Employees

The position regarding employees will remain unchanged and the ownership of any designs created in the course of their employment will vest with their employers. As an additional point, a recent case has sought to clarify the position in relation to the ownership of unregistered design rights in designs created by company directors. In UWUG Ltd v Ball (t/a Red) [1], the Patents County Court held that, where there is insufficient evidence that a director is in fact an’ employee’ of a company, the director will only hold any unregistered design rights on trust for the company, unless the rights are formally assigned or there is an agreement in place to the contrary.

Points to consider

The protection of designs features very prominently in the draft Bill, a reflection of the importance – and growing importance – that designs play in the UK economy. Whilst UK design rights offer some protection to qualifying designs, design owners should consider whether their designs may be eligible for protection as a registered design or as a Community registered design, which offers greater levels of protection at an affordable cost. The other striking aspect of the draft Bill’s provisions concerning designs is the increasing harmonisation of the UK regime with its EU counterpart.

The Walker Morris Trade Marks and Designs team has a wealth of experience in handling applications for registration of designs and advising upon infringement claims and defences to claims.

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[1] [2013] EWPCC