The visual appeal of a product plays a key role for its potential commercial success. Brands such as Apple and Alfa Romeo are a clear example how the design of a product can be used to elicit an emotional response from the consumer that could ultimately result in a purchasing decision. All this goes to demonstrate the importance of industrial designs as fundamental IP assets for every successful enterprise. Despite being intangible assets, it is easy to see that design rights can have a sound financial impact on the development of a business. That is why their legal protection is an important cornerstone of every sensible IP management strategy.
Within the EU, the substantive design laws of the Member States are quite similar as a result of an approximation effort driven by a Directive from 1998 – Directive 98/71/EC of the European Parliament and of the Council. However, a far more important step was undertaken in the early 2000s with the adoption of Council Regulation 6/2002 on Community designs (the Regulation, Design Regulation) which established the legal framework for the EU Community design system. The Design Regulation set up a unified system of protection for industrial designs with uniform effect throughout the entire territory of the EU.
The Regulation defines the concept of “design” as the appearance of the whole or a part of a product that results from the features of the lines, contours, colors, shape, texture and/or materials of the product itself and/or its ornamentation. In turn, a “product” could be any industrial or handicraft item, including parts that are intended to be assembled into a complex product, packaging, get-up, graphic symbols and typographic typefaces. Design rights can be granted for products with a two-dimensional form such as surface ornamentation or wall tapestry or a three-dimensional form such as an armchair or a vacuum cleaner. Design rights can also be granted for graphical user interfaces (GUIs) used in computer programs and computer games as well as their components such as graphic icons and menus. In order to obtain protection for a design, there is no requirement that the designs produce any aesthetic or artistic impression.
Based on the above, it is easy to see that designs produce an impact on consumers entirely through visual perception. And this impact can be powerful enough to directly affect sales. It is not uncommon that through a creative design an otherwise ordinary product could become a large commercial success. The car industry and the smartphone industry are two typical examples of areas where design is a driver of sales and the manufacturers are investing heavily in their dedicated design departments. Therefore, targeted investments in a creative and innovative design can be very profitable for an enterprise. First, the enterprise would be entitled to take the full benefit of the design in its own business by commercializing the respective products but moreover it would be able to assign (sell) or license for a fee the design rights and thus generate also additional streams of profit. For many companies, their intangible IP assets, such as design rights, can be far more valuable and profitable than their tangible assets.
The design right is a type of an intellectual property right. It can be brought to life in two different ways:
- by way of registration before an industrial property office (registered design) and
- by way of disclosure to the public (unregistered design)
Accordingly, there are differences between the registered Community design right and the unregistered Community design right in both the duration and the scope of protection.
The registered Community design confers on its holder the exclusive right to use it and to prevent any third party not having his consent from using it. The term “use” covers the making, offering, putting on the market, importing, exporting or using of a product in which the design is incorporated or to which it is applied, or stocking such a product for those purposes. Thus, registering a design is the optimal way to protect the investment in that design by obtaining a monopoly on the manufacturing, the offering for sale and the marketing of the product which embodies the registered design. An unregistered Community design confers on its holder the right to prevent any third parties from doing the above acts only if the contested use results from intentional copying of the protected design (i.e. act done in bad faith). If the contested use results from an independent creation by a designer who may be reasonably thought not to be familiar with the design made available to the public by the holder, then the unregistered design right could not be enforced against such a third party. Therefore, if the rightholder relies on an unregistered design right she will have to prove that her design was disclosed to the public at a certain date and further, that the third party has acted in bad faith – knowingly copied the disclosed design. It is easy to see here that unregistered designs are far more difficult to enforce against an alleged infringer.
The duration of legal protection conferred by a registered Community design is for a period of 5 years starting from the date of filing the application for registration. This term of protection can be renewed for a fee several times up to a total term of 25 years from the date of filing. As for the unregistered Community design, the term of protection is 3 years starting from the date on which the design was first made available to the public within the EU and it cannot be extended further. The text of the Regulation clarifies that a design is deemed to have been made available to the public if it has been published, exhibited, used in trade or otherwise disclosed in such a way that, in the normal course of business, these events could reasonably have become known to the circles that are specialized in the relevant sector. At the same time, a design shall not be deemed to have been made available to the public for the sole reason that it has been disclosed to a third party under conditions of confidentiality.
There are two positive requirements for obtaining a design right – i) the design must be new (novelty), and ii) the design must have individual character.
A design will satisfy the novelty requirement if there is no identical design that has already been made available to the public. The text of the Regulation clarifies that designs are deemed to be identical if their features differ only in immaterial details. The relevant point in time when novelty should be present differs between the registered and the unregistered Community designs. In the scenario of an unregistered Community design, no identical design should have been made available to the public before the date on which the design for which protection is claimed has first been disclosed to the public. In the scenario of a registered Community design, no identical design should have been made available to the public before the date of filing of the application for registration of the design for which protection is claimed, or, if priority is claimed, the date of priority. Here it must be noted that as per Article 41 of the Regulation, if a person has duly filed an application for a design right in or for any state that is party to the Paris Convention for the Protection of Industrial Property, or to the Agreement establishing the World Trade Organisation, he or she will enjoy, for the purpose of filing an application for a registered Community design in respect of the same design, a right of priority of 6 months from the date of filing of the first application. Thus, for example, an applicant can file for national registration before his or her national industrial property office and still enjoy a 6-month period where an application can be filed before the EUIPO for a registered Community design and when the novelty requirement is assessed, it will be the earlier date of filing before the national industrial property office that will be relevant.
A design will satisfy the requirement for individual character if it produces a different overall impression on an informed user as opposed to any previously available design. The relevant point in time when the requirement should be satisfied differs between the registered and the unregistered Community designs. In the scenario of an unregistered Community design, the relevant point in time is the date on which the design for which protection is claimed has first been disclosed to the public. In the scenario of a registered Community design, the relevant point in time is the date of filing of the application for registration of the design for which protection is claimed, or, if priority is claimed, the date of priority. The notion of “informed user” has been defined by case law – Judgement of the General Court of 22 June 2010 in Case T-153/08, Shenzhen Taiden Industrial Co. Ltd v OHIM, paragraphs 46-47. According to the General Court, “with regard to the interpretation of the concept of informed user, the status of ‘user’ implies that the person concerned uses the product in which the design is incorporated, in accordance with the purpose for which that product is intended. The qualifier ‘informed’ suggests in addition that, without being a designer or a technical expert, the user knows the various designs which exist in the sector concerned, possesses a certain degree of knowledge with regard to the features which those designs normally include, and, as a result of his interest in the products concerned, shows a relatively high degree of attention when he uses them”. Therefore, it could be argued that in view of the degree of knowledge and expertise possessed, the notion of “informed user” in design law could be placed above the notion of “average user” in trademark law but below the concept of a “person skilled in the art” employed by patent law. When individual character is assessed, the degree of freedom of the designer when developing the design is always taken into account. The freedom of the designer can usually be limited by certain regulatory requirements, such as for example mandatory toy safety standards that require edges and corners to be smoothly finished or the avoidance of the use of small separable parts. In such cases where the freedom of the designer is limited, the practical impact would be that the bar for establishing “individual character” would be lowered and even small differences between two designs might be sufficient to arrive at a conclusion that a different overall impression is created upon the informed user.
In addition to the 2 positive requirements for protection, there are 2 negative requirements established by the Regulation. In this sense, no design rights can subsist in a design which is contrary to public policy or to the accepted principles of morality. Secondly, no design rights can subsist in features of the appearance of a product which are solely dictated by its technical function.
Finally, it must be noted that there are certain specifics about the requirements for novelty and individual character when it comes to complex products. In this sense, the Regulation postulates that a design applied to or incorporated in a product which constitutes a component part of a complex product shall only be considered to be new and to have individual character: if the component part, once it has been incorporated into the complex product, remains visible during normal use of the latter, and to the extent that those visible features of the component part fulfil in themselves the requirements of novelty and individual character.
The Community design system coexists with the national design systems of the EU Member States and an applicant is free to choose between the two. There are some clear advantages of the Community system before the EUIPO from an efficiency perspective – there is just one application that needs to be filed, in one language and with one set of registration fees. At the same time, if registration is granted it will be valid for the whole territory of the EU. The decision whether to register at a national level or at the Community level is a question of IP strategy and it also depends on the needs of the particular business – whether its focus will be a single EU Member State or alternatively a broader market presence would be pursued.
An application for a registered Community design can be filed before the EUIPO or at the national industrial property office of a Member State in which case it will be forwarded to the EUIPO within 2 weeks from filing. A key characteristic of the registration procedure before the EUIPO is that it only checks for formal requirements such as that the subject matter filed can be considered a design, that there is no conflict with public policy and morality and that the formalities of the application and the payment of fees are complied with. Therefore, the EUIPO does not perform a substantive check for novelty and individual character of the filed design. In view of this, it is highly recommended than an applicant performs a prior search for any possible designs that may conflict with the design that is to be filed for registration as the rightholders may easily initiate invalidity proceedings after the registration. This could save an applicant not only time but also money. Such search should not be limited only to registered designs but if possible should encompass also unregistered designs and designs that are registered but lapsed. Databases such as EUIPO’s eSearch Plus and DesignView are helpful tools for searching registered designs. When it comes to unregistered designs, it makes sense to perform a search on the internet, to consult any existing relevant literature or magazines or examine within the circles that are specializing in the relevant sector.
As a result of the lack of substantive check for novelty and individual character, the registration procedure is very fast – more than 70% of the Community designs are registered by EUIPO within less than 10 days and there is also a Fast Track service where under certain conditions designs could be registered within 2 working days. Applicants can take the benefit of an electronic filing form at the EUIPO website and attach the graphical representations of the designs by uploading a number of JPEG files. An important formality is that applicants need to provide an indication of the products to which their design refers by using the Locarno Classification system. EUIPO has developed a helpful tool – Design Class, which can automatically classify the product into the respective classes and subclasses as per the Locarno system. If the formal requirements that an application for a registered Community design must satisfy are fulfilled, EUIPO registers the application in the Community Design Register and publishes the registered Community design in the Community Designs Bulletin. It is important to note that the applicant is entitled, when filing the application, to request that the publication of the registered Community design is deferred for a period of up to 30 months from the date of filing. This could make sense for the applicant in case he wants to keep the registered design secret from the competition for a certain period of time that is needed to bring the product to the market.
Despite the speed of the registration procedure, as noted it comes with one significant drawback – it provides limited legal certainty as it only checks for compliance with certain formal requirements and a registered design can be relatively easy invalidated by a third party provided that the grounds for invalidity are in place. Under the regulation, the grounds for invalidating a registered design right include: lack of novelty, lack of individual character, design that is contrary to public policy and morality, design that is dictated solely by a technical function and a situation where the claimed subject matter does not comply with the definition of a design. Additionally, a design could be invalidated if there is a conflict with a prior IP right – i) a prior design which has been made available to the public after the date of filing of the application for the Community design but which is protected from a date which is prior to the said date, ii) a distinctive sign (i.e. trademark) which is used in a subsequent design and where either Community law or national law empowers the rightholder to prohibit such use, iii) if the design constitutes an unauthorized use of a work protected under copyright, iv) if the design constitutes an improper use of any of the items listed in Article 6ter of the Paris Convention for the Protection of Industrial Property, i.e. armorial bearings, flags and other State emblems. In reality, the predominant cause for invalidation of designs in the proceedings before the EUIPO is lack of individual character.
Any natural or legal person, empowered to do so by the Regulation, may submit to EUIPO an application for a declaration of invalidity of a registered Community design. If EUIPO finds that the application for a declaration of invalidity is admissible, then it will examine whether the grounds for invalidity prejudice the maintenance of the registered Community design. In the examination of the application, EUIPO can invite the parties to file observations. Once a community design has been declared invalid, the legal consequence is that it is deemed not to have had, as from the outset, the effects specified in the Regulation, i.e. invalidation has a retroactive effect. The decisions of the EUIPO examiners, such as in the case of refused applications for the registration of a Community design or invalidity decisions, can be appealed before the Third Board of Appeals of EUIPO which deals exclusively with design matters. Each decision of the Board of Appeals is usually made by 3 members and in turn it can also be appealed before the General Court in Luxembourg.