IPEC refers unregistered design questions to CJEU

His Honour Judge Hacon has referred to the CJEU two important questions of unregistered Community design (UCD) law.

In Beverly Hills Teddy Bear Company v PMS International Group plc [2019] EWHC 2419 (IPEC), the Claimant (BHTB) seeks to enforce its registered Community designs, UCDs and copyright in design drawings in six soft toys called “Squeezamals” [which are seemingly very popular; readers with small children may be better placed to comment]. The Defendant [yes, the same PMS as made famous by the Trunki case] applied for summary judgment in respect of the alleged invalidity of the UCDs for five of the products.

A Squeezamal. It’s so fluffy. 

The parties agreed that the relevant toys were first shown to the public at the “Mega Show” trade fair in Hong Kong in October 2017. They were later exhibited at the Nuremberg Toy Fair in January 2018, the first time that they were shown to the public in the EU. The parties also agreed that exhibition at the Mega Show was sufficient for the design to have become known in the normal course of business to circles specialising in the sector concerned, operating within the EU (therefore falling within Article 7(1) of the Design Regulation). This, argued PMS, destroyed the novelty of the UCDs, because the UCDs only would have qualified for protection when they were first made available to the public within the EU i.e. in Nuremberg in January 2018.

In light of Gautzsch, we know that it is possible for Article 7(1) to be engaged to destroy novelty even if the relevant act of publication after registration, exhibition, use in trade or disclosure occurs outside of the EU. The debate therefore focused on whether the event of disclosure that would trigger protection as a UCD should also be treated in the same way as a potentially novelty-destroying disclosure (given the substantially identical wording of Article 7(1) and Article 11(2) regarding commencement of protection). Or, in other words, can a design first be disclosed (in a manner specified under the Design Regulation) geographically outside of the EU and yet qualify for protection as a UCD by virtue of the same disclosure that was outside of the EU?

There is no direct CJEU authority on this question. Article 110(a), which was added in connection with the 2003 accession to the EU by several states, seems to suggest a narrow, EU-centric approach to first disclosure:

“Pursuant to Article 11, a design which has not been made public within the territory of the Community shall not enjoy protection as an unregistered Community design.”

The ambiguous drafting of Article 11 together with the above was enough for the German Federal Supreme Court (Bundesgerichtshof) to decide in Case I ZR 126/06 Gebäckpresse II that the event of disclosure relied on as qualifying for a UCD must take place within the territory of the EU. Hacon HHJ noted that this judgment has significant persuasive effect on the English courts.

However, UK academic opinion is divided on this topic. Stone (European Design Law) and Bently, Sherman, Gangjee and Johnson (Intellectual Property Law) accept the view of the Bundesgerichtshof, in spite of potentially severe effects on designers if the legislative scheme is indeed as protectionist as it appears. In contrast, Howe, St Ville and Chantrielle (Russell-Clarke and Howe on Designs) consider that a disclosure outside of the EU could trigger UCD protection, as long as the design could reasonably have become known in the EU as a result in accordance with Article 7(1).

Counsel for BHTB also proposed an inventive alternative interpretation: a “split date” i.e. a UCD first comes into existence when first disclosed in the EU, but novelty must be assessed at the time of first disclosure anywhere in the world.

The court did not consider that EU law is settled regarding the issues raised, so referred the following questions to the CJEU:

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?

Comment

The judge noted that were he to determine the application and therefore leave it to an appeal court to make a reference to the CJEU, given the continuing uncertainty regarding Brexit it is eminently possible that the Court of Appeal would no longer be entitled to make a reference. This reference may have more important Brexit-related implications, however. If a design must first be disclosed within the EU in order to attract UCD protection, designers are likely to be more careful about where they first display their designs. For example, if Brexit happens, London Fashion Week, the 2019 edition of which just concluded, might lose shows to Paris or Milan.

Counsel for BHTB raised an interesting point: is the “Fortress Europe” policy that an ‘EU disclosure only’ approach to qualification for UCD protection consistent with the requirement under Article 3 of TRIPS that signatory states do not treat their own nationals any more favourably than nationals of another signatory state? Although not directly an issue of nationality, it is reasonable to assume that EU nationals are more likely first to disclose their designs in the EU, and therefore to benefit from UCD protection under a narrow interpretation of Article 11. It seems unlikely that the CJEU will support BHTB on this point, but (in the author’s view) there is a difference between whether a non-EU resident could first disclose a design in the EU, and whether as a practical matter they would do so. This does seem unduly harsh when a UCD might otherwise be the only form of EU intellectual property protection that a small and/or legally unsophisticated designer might otherwise enjoy.

The CJEU is unlikely to clarify in this reference whether an online first disclosure could be treated as an EU disclosure (even when not originating from or targeted at the EU); the EUIPO consulted on this point recently.