IPEC refers question on design novelty to CJEU

For many years, there has been significant uncertainty and academic disagreement regarding the circumstance under which a design will qualify for unregistered Community design (“UCD”) protection.

Article 11 of the Council Regulation (EC) No. 6/2002 on Community Designs (the “Design Regulation”) states that a design will benefit from UCD protection from the date on which the design is first made available to the public within the Community. Such event occurs where the design is “disclosed in such a way that, in the normal course of business, these events could reasonably have become known to the circles specialised in the sector concerned, operating within the Community”.

There is no question that a qualifying design which is first disclosed within the EU in such a manner would be entitled to protection. But what of designs that are first disclosed outside of the EU? The law in this circumstance is unclear.

Germany is the only EU member state where a ruling has been made on whether designs first marketed outside the EU can qualify for UCD protection. The Bundesgerichtshof (the German Federal Supreme Court) held that protection would only arise where the disclosure takes place within the EU (Case I ZR 126/06 Gebäckpresse II). This view was, in part, based on the wording of Article 110(a) of the Design Regulation, added in 2003 with the entry of the A10 countries to the Union which states that “Pursuant to Article 11, a design which has not been made public within…the Community shall not enjoy protection as an unregistered Community design.”

However, this presents a significant problem for designers who first disclose their design outside of the EU. Under Article 5 of the Design Regulation, a design will only qualify for protection if no identical design has been made available to the public. For the purposes of Article 5, Article 7(1) of the Design Regulation states “a design shall be deemed to have been made available to the public if it has been…disclosed… except where these events could not reasonably have become known in the normal course of business to the circles specialised in the sector concerned, operating within the Community”.

This has been interpreted to mean that a disclosure outside of the EU can be novelty destroying. In effect, the designer destroys the novelty of his own design by first displaying it outside of the EU.

As can be seen above, the wording of Articles 11(2) and 7(1) is very similar. Nonetheless, adopting the German Federal Supreme Court's interpretation one is left with the position that a disclosure outside of the EU can "become known in the normal course of business to the circles specialised in the sector concerned within the Community” such that its novelty is destroyed but is not “disclosed in such a way that, in the normal course of business, these events could reasonably have become known to the circles specialised in the sector concerned, operating within the Community” in order to given rise to UCD protection.

This is a position that some academics have struggled to reconcile. Indeed, St Ville and Chantrielle (Russell-Clarke and Howe on Designs) consider that, in the same way that disclosure outside the EU could make the designs known in the EU for the purposes of Article 7(1), then the substantially similar wording of Article 11(2) should also be triggered by any exhibition outside the EU. In their eyes, provided that the design could have reasonably come to the attention of the relevant parties in the EU (not a hard barrier to pass in the age of social media and the internet), then such disclosure should also trigger UCD protection.

St Ville and Chantrielle have also questioned how much stock should be put in the wording of Article 110(a) – a transitional provision inserted to ease the accession of new member states. They query whether the intention of this new Article was to entirely amend the general EU position on UCD protection. Indeed, if EU legislators had intended to impose such territorial restrictions, it would not have been complicated for this to be expressed directly.

Referral from IPEC

This issue is now due to receive some clarity thanks to questions referred to the CJEU by His Honour Judge Hacon in the case of Beverly Hills Teddy Bear Company v PMS International Group plc [2019] EWHC 2419 (IPEC).

In this case, Beverly Hills Teddy Bear Company (the “Claimant”) was seeking summary judgement against PMS International Group plc (the “Defendant”) for the infringement of its UCD rights in relation to six soft toys called “Squeezamals”.

The parties agreed that the toys had been exhibited in October 2017 at the “Mega Show” trade fair in Hong Kong, before later being shown at the Nuremberg Toy Fair in January 2018 - the first time the toys were exhibited in the European Union. The parties also agreed that this exhibition in Hong Kong would be sufficient to make the designs known in the normal course of business to circles specialising in the toys sector, operating within the Community, thus meeting the criteria for Article 7(1) of the Design Regulation.

In the eyes of the Defendant, this disclosure therefore meant that the novelty of the design of toys had been destroyed and as this disclosure had occurred before the toys were disclosed inside the Community, the designs could not benefit from the three years’ UCD protection provided by Article 11(2).

However, the claimant queried how disclosure outside the EU could become known to circles specialised in the sector in question for the purposes of one Article, but not the other. In short, should the disclosure in Hong Kong destroy the novelty of the designs, or provide them with protection in the EU?

Although his own view was that first disclosure must occur within the EU in order for an unregistered design to receive protection, Hacon HHJ did not consider the case settled under EU law and referred questions to the CJEU.

The questions

In particular, two questions were referred as follows:

1. For the protection of an unregistered Community design to come into being under art.11 of Council Regulation (EC) No. 6/2002 of 12 December 2001 ('the Regulation'), by the design being made available to the public within the meaning of art.11(1), must an event of disclosure, within the meaning of art.11(2), take place within the geographical confines of the Community, or is it sufficient that the event, wherever it took place, was such that, in the normal course of business, the event could reasonably have become known to the circles specialised in the sector concerned, operating within the Community (assuming the design was not disclosed in confidence within the terms of the final sentence of art.11(2))?
2. Is the date for assessing the novelty of a design for which unregistered Community design protection is claimed, within the meaning of art.5(1)(a) of the Regulation, the date on which the unregistered Community design protection for the design came into being according to art.11 of the Regulation, or alternatively the date on which the relevant event of disclosure of the design, within the meaning of art.7(1) of the Regulation, could reasonably have become known in the normal course of business to the circles specialised in the sector concerned, operating within the Community (assuming that the design was not disclosed in confidence within the terms of the final sentence of art.7(1)), or alternatively some other, and if so, which date?

[Note: It is possible, because the reference has arisen from a UK court, that, following the UK’s exit from the EU, the CJEU will decline to take this reference forward. Nonetheless, this issue is of fundamental importance to the scope of UCD protection and there are likely to be a significant number of Member States and parties that would welcome the clarity, so it is possible it may continue regardless.]

The impact

The CJEU’s response to these questions (assuming it is given) should provide some much-needed clarity. Furthermore, the answers to these questions may be particularly important of UK businesses post-Brexit.

Should the CJEU agree with the interpretation from Gebäckpresse II, then designs will need to be disclosed in the EU first in order to avoid their novelty being destroyed before they can acquire protection under Article 11(2). Any design which is first disclosed in the UK would no longer qualify for UCD protection. This would be particularly concerning for designers in the fashion industry where there is a heavy reliance on unregistered rights.

While it may be possible for designers to launch simultaneously in both the UK and EU post-Brexit, or register their designs in the Community, both of these solutions have serious cost and administrative implications for brands and are unlikely to provide long-term solutions.

European designers may therefore be disinclined to bring their designs to UK events like the London Fashion Week or any similar event, if doing so would jeopardise the EU protection of their designs. Instead product launches or trade shows in the EU may become more desirable places for any major launch. This leads to the potentially worrying long term effects: rather than risk losing their protections or launch products overseas first, could fashion brands, particularly those with high turnover of designs only on the market for brief periods, simply relocate permanently to the continent?

If the Gebäckpresse II interpretation is adopted by the CJEU, then one option to protect UK designers would be for the Government to seek to negotiate a position whereby the EU would accept UK-based disclosures as disclosures “within the EU”. Any such mutual recognition between the UK and the EU member states of respective design rights may help to maintain protection for UK businesses but the incentives for the EU to offer such an arrangement is less clear.

The full judgment can be found here.