Nearly 20 years since EU-wide design law was introduced, the review of design law in the EU is reaching its final stages. Last month, the European Commission released its detailed evaluation of existing EU legislation on design protection. In an exclusive guest post, Andrea Leonelli from Allen & Overy looks at the European Commission report and what could happen next.
The foundations of European design law as we know it are Directive 98/71/EC (the Designs Directive) and Regulation (EC) 6/2002 on Community Designs (the Designs Regulation), together with implementing Regulation (EC) 2245/2002 and the fees Regulation (EC) 2246/2002. Together, these legislative instruments served both to create the unitary design protection system and to harmonise important aspects of national design law across the European Union.
Since 2014, the EU has published a number of papers as part of its review process. Examples include ‘The Economic Review of Industrial Designs in Europe’ (January 2015), ‘Legal review on industrial design protection in Europe’ (April 2016) and ‘The Intellectual Property implications of the development of industrial 3D printing’ (April 2020).
Now, the European Commission has brought these reports together in its evaluation, providing a well-rounded summary of the issues that have been at the heart of the debate on EU design law and taking into account feedback from stakeholders. While this article focuses on the more challenging aspects of EU design legislation, the evaluation clearly shows that it remains broadly fit for purpose and has been successful in supporting design-intensive industries, in providing predictable, fast and cost-effective rights that are valid across the EU and, in bringing member states’ legislation closer together, reducing the fragmentation of the internal market.
Awareness and underuse of the system
The first issue is not one that may be fixed easily via legislation: the evaluation remarks that there remains a lack of awareness of design rights and their potential benefit at many companies, and particularly SMEs. This was echoed in the response to the public consultation, leading to a suggestion that these rights remain underused. The evaluation points to the need for a two-pronged approach: certainly better clarity as to the benefits of protecting designs, but also a more concerted effort to outline the differences between design rights and other forms of IP.
A topic that, from the way in which it is addressed in the evaluation, could well be at the front of the queue for reform when the time comes is that of the maximum number of views of a design that can be filed as part of a registered Community design (RCD) application (which is currently seven) and the need to allow for the filing of dynamic views.
Respondents to the public consultation stated that this low number is often not sufficient to show the design fully. In addition, this limitation highlights how the current static views of the design – currently the only means of representing it – are no longer effective. Broadening the means of representation to include dynamic views is deemed to be necessary, and could result in a clearer and better scope of protection afforded to the designs themselves. The evaluation also considers that this is an area of law that may be ripe for harmonisation, since at national level approaches vary as to both the number of views and the acceptance of dynamic views of designs. Harmonisation with the Hague Agreement (which has no maximum number of views) may also be appropriate.
The evaluation makes several remarks on 3D printing at various points of the report. While 3D printing (as assessed by the 3D Printing Study) undoubtedly presents opportunities and could allow for the development of new business models, it also brings some challenges. The first relates to the digital transmission of CAD files, which are not in themselves protectable as designs, but which contain “instructions” for producing a protectable design. The evaluation states that more clarity is needed as to what constitutes a design right infringement when those CAD files are made available online and shared. The second area examined in the evaluation is the exception relating to private and non-commercial use of a registered design. This is viewed with concern by some stakeholders, as it is perceived as a risk that as 3D printers become more widespread, it could amount to a de facto immunity for personal use and a much broader exception than is available in relation to other IP rights.
Unregistered Community designs
UCDs are viewed in the evaluation as a helpful tool against unauthorised copying, primarily for short-lifecycle or seasonal products. Over the past few years, UCDs have been at the centre of a heated debate amongst practitioners and academics: does the first disclosure of a design need to be in the EU in order for that design to enjoy protection as a UCD, or should designs that were first disclosed elsewhere also qualify?
The evaluation, while acknowledging that the issue is yet to be definitively resolved by the CJEU, throws some weight behind the more restrictive reading of the regulation. It states that allowing the creation of a UCD on the basis of a disclosure occurring anywhere in the world would imply giving automatic rights to the rest of the world without any possibility of monitoring and without any reciprocity. This provides a clear steer as to where the CJEU (in the event of a reference) or legislative reform may eventually land on this topic.
As to the UCDs’ current 3-year term of protection, the evaluation makes it clear that there is little appetite for prolonging this.
Interaction with other IP rights
The most problematic interaction between IP rights identified in the evaluation is well known: that between design law and copyright law. The lack of clarity as to the overlap between the two and the uncertainty it creates is viewed as a possible factor in the perceived underuse of design rights. While the Design Regulation and the Design Directive already provide that a design could benefit from both design and copyright protection in the right circumstances (known as “cumulation of rights”), when that legislation was drafted, copyright law was largely unharmonised, leaving it to Member States to determine the scope of that overlap based on national law.
The CJEU now has, through case law, proceeded to harmonise certain aspects of copyright law, such as the notion of ‘work’, and to clarify the interplay between copyright and design – see in particular the decisions in Flos (C-168/09), Cofemel (C-683/17) and Brompton (C-833/18) – however as the latter two of these cases were decided in the last 18 months, it is too early to tell how national courts will apply them and whether a more targeted approach through EU legislation may be required.
The evaluation also highlights inconsistencies between design law and trade mark law, such as the lack of harmonisation of invalidity proceedings for designs at the national level, the potential for trademarks to provide an avenue to protect animated designs as movement marks given the current inability to file dynamic designs and the lack of clarity around the protection of interior designs.
The speed and ease of registration of RCDs has always come with its share of challenges: a lack of ex ante novelty examination, coupled with the fact that the product indication and classification do not affect the scope of protection of a Community design, means that it can be difficult to search for prior designs. However, the majority of respondents to the consultation stated that they were satisfied with the system as is, only indicating that better image search tools would be helpful to identify prior designs ahead of filing/launch. The evaluation also mentions that it may be helpful to harmonise national rules on the scope of substantive examination, particularly as only five national offices examine designs for novelty and individual character.
Enforcement rightly occupies an important part of the evaluation, with an awareness of the need for better implementation of the existing measures as outlined in the Enforcement Directive (Directive 2004/48/EC), as well as the need to harmonise further procedural aspects of enforcement at a national level. There currently remain broad gaps between the enforcement regimes of different Member States in terms of the costs and speed of proceedings but also the requirements for evidence and sanctions available. In particular, the level of difficulty in obtaining ex ante injunctions varies broadly as does the availability of declarations of non-infringement. It is not surprising that the Legal Review called for further harmonisation in this area.
A specific agenda item that appears more than once across the evaluation and on which there is a reasonable amount of consensus is the need for legislative reform in the area of enforcement of design rights for goods in transit. The Trade Mark Directive (Directive (EU) 2015/2436) and the EU Trademark Regulation (Regulation (EU) 2015/2424) now provide that trademark holders may prevent third parties from transiting goods that infringe EU trade marks through the EU’s territory, clarifying the 2011 CJEU judgment in the Philips and Nokia joined cases (C-446/09 and C-495/09), which had placed the burden on the rights holder to prove the goods are intended to be put on sale in the EU. The same clarification has not yet been made in relation to design rights, creating a lack of alignment with trade mark law that can hamper enforcement.
The harmonisation of spare parts protection across the EU was high on stakeholders’ agenda. Member States apply widely different rules in relation to spare parts, resulting in a fragmented European market, making it hard for SMEs to operate and hampering the free movement of goods. This originates from the inability of Member States to agree on an approach when the Designs Directive was drafted, leading to the so-called ‘freeze plus clause’, originally meant to be a temporary measure, whereby Member States cannot increase restrictions on the spare parts market, but can further liberalise it.
Following the withdrawal of the Commission’s proposal on this topic in 2014 this puzzle remains hard to solve and the current situation is unsatisfactory for those companies that need to operate around it. Positions on this issue are entrenched, with car manufacturers on one side and spare parts producers on the other, and in spite of a real need to harmonise this area of law, doing so could slow down the process of legislative reform.
Now for a topic that is legally simpler but certainly key to ensuring the continued growth in the use of RCD filings – that of fees. While the overall level of fees was deemed to be appropriate in the evaluation, three main problems were highlighted.
The first relates to the requirement for all designs combined under a single application to fall in the same Locarno class, viewed by stakeholders as an unnecessary requirement. The second relates to renewal fees, as multiple designs in the same Locarno class can benefit from a bulk discount at the application/publication stages, whereas this is not available at the point of renewal, which can put cost-conscious SMEs on the back foot compared to larger companies. The current fee structure also provides for higher fees each time a design is renewed, whereas the process and therefore the cost to the EUIPO does not differ.
Finally, the third relates to the possibility of further harmonisation of national applications on the matter of fees. However, given the glaring discrepancies in the cost of filing designs at national IPOs across the EU, it is unsurprising that the evaluation on this point simply states that it could be a good idea to explore this further.
There are several areas of EU design law that could benefit from reform, with many more listed in the evaluation than could be summarised above. To date, several important clarifications have come from CJEU decisions, and the cooperation projects have helped aligning, for example, the standard of representations and visual disclaimers. Legislative reform will still be needed.
Following the conclusion of this process of evaluation, the European Commission has published an Inception Impact Assessment, which summarises the shortcomings identified in the Commission’s studies. The first step involves feedback on the roadmap itself (with a deadline of 22 December 2020 to respond), to be followed by a substantive public consultation in the first quarter of 2021. A comprehensive Impact Assessment is planned for the third quarter of 2021, based on which the Commission will consider the need for the preparation of an implementation plan.