As acknowledged by the UKIPO in its Call for Views, the UK has one of the most robust and effective intellectual property regimes in the world. However, the UKIPO appreciates that the cost of enforcing rights could be a barrier to enforcement, especially for individuals and SMEs. The Office has therefore sought views from the IP community on the effectiveness of the United Kingdom’s enforcement regime.
In our view, the current system is still broadly effective. However, that is not to say that the system is perfect. Based on recent experience, it is clear that start-ups and SMEs are disproportionately disadvantaged when making use of the designs enforcement framework, particularly on the issue of costs. Indeed, it is well-established that a party with a clear financial advantage can often leverage its position to secure settlement on favourable terms that do not reflect legal reality. Even with the application of discounts and innovative fee structures, the cost of retaining counsel, drafting particulars and prosecuting the case can ultimately dissuade an aggrieved party from pursuing a case, or at least influence it to take a less bullish approach.
In our experience, in cases where there is a clear mismatch in financial resource, the party with the fiscal advantage can often fail to approach the proceedings constructively with the overriding objective in mind, i.e. by hedging its position on the assumption that the counterparty will be unable to sustain the proceedings from a financial perspective. While the cost caps applying to actions in the Intellectual Property Enterprise Court were broadly welcomed on the grounds that they force parties to secure better and more realistic merits assessments at the outset of a matter, the counter-position is that such costs caps may force less well-off claimants to settle claims more quickly to avoid inevitable irrecoverable costs.
Notwithstanding the above, the case of Oh Polly (in which significant additional damages were awarded, reported by Law-Now here) has certainly helped to focus the attention of parties, who may now have far more to lose financially in the event of a finding of infringement.
Additional steps that the UKIPO may wish to consider as part of its Call for Views are:
- The broadening of the definition of ‘commercial purposes’ at section 226(1) CDPA to mirror the provisions of the Trade Marks Act 1994, namely to correspond to ‘in the course of trade’. The current definition of “commercial purposes” is restrictive: it says that the acts must be done “with a view to the article in question being sold or hired in the course of a business” (section 263(3) CDPA). For fashion designers in particular, this restriction is extremely problematic. Take for example the hypothetical scenario whereby unregistered design rights subsisting in articles of clothing are copied and subsequently paraded on fashion runways and social media. Provided the party that has copied the designs is able to demonstrate that the copies in question have been produced purely for marketing purposes, and have not been (nor will be) sold or hired, the claim can be evaded.
- The IPEC small claims track could be expanded to include infringement proceedings premised on registered designs. It is already possible to initiate a claim in the small claims track based on unregistered design rights and registered trade mark rights. For the purposes of determining the validity of an unregistered design right, an assessment of prior art must be undertaken to determine whether the design in question is commonplace. This search is not dissimilar to a search for novelty/individual character, which are relevant to the validity of registered designs. Accordingly, the small claims track should already be equipped to handle the technical challenges posed by registered design claims. In cases where its appears that evidence/disclosure will be critical, the claim could in any event be transferred to IPEC or the High Court;
- The continued existence of licences of right (section 237 CDPA), particularly within the context of unregistered designs, many of which arise in respect of designs that are not sold to the public, but remain iconic of a specific designer. In the fashion industry, for example, many designs are created specifically for runway shows, as a means to enhance the reputation/exposure of the designer, although the clothing items themselves may never actually be sold. The Licence of right provision entitles an unaffiliated third party to appropriate a famous design together with the goodwill/reputation attached thereto, without having contributed to the creative process that led to the creation of the design in the first place. While the licence is subject to the agreement of satisfactory financial terms, the reputational transfer (in the sense that consumers will associate the item(s) in question as originating from the licensee rather than the original designer) may end up being far more valuable, thereby giving the licensee a significant commercial advantage.
Reviewing the UK designs framework – UKIPO’s Call for Views
The legal protection of design rights in the UK is no picnic. As IP practitioners and design businesses will be all too well aware, UK design law comprises a myriad of IP rights, both registered and unregistered, protecting different types of designs and with a varying scope and term of protection. This framework has been further complicated by the introduction of new UK “spin off” design rights post-Brexit, and other changes to the legal landscape. It is no surprise, therefore, that the sheer complexity of design law is often cited by design businesses (particularly those without legal representation) as a key reason for not taking full advantage of the protection that is available to them. The UKIPO is alive to the need for simplification of the system, and the opportunities presented by Brexit to re-shape domestic design law for the future.
Between January and March 2022, the UKIPO ran a ‘Call for Views’ consultation on the reform of the UK designs framework. It invited submissions from design industry stakeholders and IP professionals on possible improvements to the current system. The consultation has now closed, and we will monitor and report on further developments as they arise.
Over the next few weeks, CMS will be exploring some of the topics covered by the consultation, and will be considering the key themes that are likely to emerge as the focus of further discussion. Please get in touch if any of these issues directly affect your business and you’d like to discuss them in confidence with our Designs team.
To view the articles in this series, click here.