Policing global markets for designs infringement

Design basics

A design is the appearance of the whole or a part of a product resulting from its features, in particular the shape, patterns, configuration and colours of the product itself and/or its ornamentation. A design right protects the overall appearance and the ornamental shape of the design presented, whether for an entire product or a portion thereof.

Designs can be relevant to any industrial or handicraft item but also to graphic symbols, graphical user interfaces and logos.

Design protection can apply to a wide range of products belonging to industry, fashion and crafts. Because appearance and exterior shape play a fundamental role in a product’s success, design protection has taken on an increasingly important role in the global economy in recent years.

The design value index – a market capitalisation-weighted index comprised of design-driven companies – shows that design-oriented companies outperformed their competitors by 211% over a 10-year period. Therefore, it is unsurprising that the most recent statistics published by WIPO confirm that the number of international applications for the protection of designs grew by 3.3% in 2018, reaching 5,429 applications.

As a result, designs represent a competitive tool in today’s global market and potential infringements affecting designs have increased significantly.

Key considerations and available tools

Creating a design protection strategy is becoming increasingly important for design-intensive industries. Design is an essential business asset for innovative companies and requires proper protection.

In principle, design protection grants to the relevant owner the right to prevent third parties from manufacturing, marketing, selling or importing items incorporating a design which is a copy, or substantially a copy, of a protected design right.

Depending on the applicable laws, products created independently must meet one or both of the following conditions in order to obtain design protection:

• novelty; and
• originality or individual character.

The assessment of novelty and originality varies from country to country.

In general, a design is considered to be ‘new’ if no identical design has previously been disclosed to the public and it can be considered ‘original’ if it significantly differs from known designs – if, in other words, the overall impression that it produces on the informed user differs from the overall impression produced on such a user by any other design which has been made available to the public.

In most countries, a design needs to be formally registered in order to be protected under the applicable law (so-called ‘registered designs’), while in some countries and regions design laws grant – without any form of registration – time and scope limited protection to unregistered designs.

In addition, depending on the particular national law and the kind of product, designs may also be protected as works of art under copyright law or may be protected under patent law as design patents.

Moreover, where the national law permits and when the protected object allows it, the design protection can be associated with patent protection and this combination can be used appropriately to obtain the best possible legal result.

All these issues must be considered when a company starts shaping its own strategic design IP portfolio with a global perspective.

How to prioritise a design strategy: where and when?

Where?

Design rights are territorial and are limited to the country (or region) where application is filed and protection is granted. Deciding where to apply for design protection is a balance between cost and cover.

In general, in order to obtain protection in different countries, an application for the registration of a design or for the grant of a patent design must be filed with the IP office of each country (or region) where protection is sought, in accordance with the applicable local regulation.

To avoid having to submit applications in each country where protection is sought, some organisations have developed a single procedure that grants design protection in a large number of territories (or in an entire region), providing a practical business solution for a global design protection strategy.

This is the case for WIPO’s Hague System, which provides a specific procedure for registering up to 100 designs in 70 contracting parties, all through a single international application.

Moreover, in certain regions, it is possible to obtain protection for designs in the region concerned by filing an application with a regional IP office. For example, this is the case for:

• the African Intellectual Property Organisation, which registers designs in states party to the Bangui Agreement;
• the African Regional Intellectual Property Organisation, which registers designs in states party to the Lusaka Agreement; and
• the EUIPO, which registers designs in the member states of the European Union.

In general terms, a design protection strategy could be developed seeking design protection in those countries or regions where a company has commercial interests and/or where design piracy is more likely to occur and/or where products are manufactured.

In this context, the evaluation of where to extend the design protection can be balanced with other different protections (ie, three-dimensional (3D) trademarks or patents).

In some cases, local legislation offers faster protection through the registration of a design instead of a 3D trademark. Sometimes it is cheaper to extend the design protection in some countries instead of the patent protection.

When?

In design protection, time as well as place is crucial.

According to the criteria that must be met to obtain design protection, in general it is important to file an application for design registration or for the grant of a design patent before publicly disclosing it, in order to avoid destroying its novelty or originality. Thus, ideally, a design application should be filed with the IP office of the country or region where protection is sought, before the public disclosure of the design at issue.

In fact, if the design has already been made available to the public, it may no longer fulfil one of the above-mentioned design protection’s conditions becoming part of the public domain.

Some countries and regions, however, grant a grace period to file an application after disclosure of the design. In other words, such a grace period provides a safeguard for applicants who have disclosed their design before filing the relevant application. This grace period varies from country to country but, in general, is six or 12 months from the disclosure date.

In some design protection systems, it is also possible to ask for deferral of publication of a design for a fixed period after the filing of the relevant application. This may be useful in an IP portfolio strategy when a product requires a longer period to be launched on the market.

Considerations regarding differences in regimes and what is actionable

Remedies and penalties differ from country to country (and/or from region to region) and can even be of a different nature, essentially, at court (civil or criminal) and administrative level.

In addition to such remedies, one effective procedure that allows the owners of design rights to stop counterfeit products is a seizure operation by the customs authority of a specific nation or region. With such an operation, it is possible to prevent counterfeit copies of protected designs from entering the market, intercepting them at Customs before they create commercial damage to the owner of the infringed design. In this respect, it is necessary, in general, to activate a customs supervision service regarding specific design rights, by filing the relevant application with the competent local custom office. Even though this instrument has not been used extensively, when it has been used continuously and in an organised manner, it has given interesting results, particularly for small and medium-sized enterprises.

This approach is typical of the European Union, but similar procedures exist in other countries (eg, the United States and China).

European Union

At EU level, the legal framework of designs consists both of an EU-wide protection system, governed by the EU Regulation on Community Design, and parallel national laws based on an EU directive on the same subject.

The EU regulation, which applies directly to all member states, provides EU-wide protection for all kinds of design, both registered and unregistered. Therefore, when an EU company, or an extra-EU company with a relevant EU market and EU exposure, creates a product which could likely be subject to design protection, it has two choices:

• to protect its design through registration; or
• to commercialise it without registration.

The option chosen will essentially depend on the design portfolio strategy of the company itself and each option presents advantages and disadvantages.

That said, a Community design could be challenged at two different levels:

• before the EUIPO; or
• before the national courts.

An invalidity action can be brought before the EUIPO, aimed at obtaining a declaration of invalidity of a contested Community design. The EU regulation provides different invalidity grounds that can be invoked: the most frequently used are that the design is not new or does not possess individual character.

In the case of potential infringement of a Community design, the national courts of the member states have exclusive competence. In such cases, an action must be brought before the national court, which has been designated by the single member states according to the regulation for such purpose. Consequently, the specific procedural law and the cost of such proceedings depend on the respective place of jurisdiction.

Actions may be brought in the courts of the member state in which the defendant is domiciled or has operations or, if neither applies, in which the plaintiff is domiciled or has operations.

Infringement proceedings may also be brought in the courts of the member state in which the act of infringement was committed or threatened.

United States

The US system recognises a product’s appearance protection under different IP rights (ie, design patents, copyrights and trade dress). Each form of IP protection has its own conditions and applicable laws ruling on remedies and penalties. Sometimes a product can be protected by more than one measure of protection (or even by all measures).

This chapter focuses on design patents, which most closely resemble IP rights afforded in other countries under different names, such as ‘registered design’ or ‘industrial design’. In this respect, protection is not granted for unregistered design patents.

According to the applicable patent law, a design patent infringement can be raised if the overall appearance of the patented design is substantially the same as that of the accused design in view of the prior art. This is the so-called ‘ordinary observer test’, which is the test to be used in order to assess whether there is design patent infringement. In other words, design infringement occurs when the designs under comparison (the contested one and the patented one) are substantially the same as perceived by an ordinary observer. In design patent infringement cases, the burden of proof falls on the design patentee.

The US design patent system also allows post-grant procedures to challenge the validity of design patents.

In the United States, the appearance of a product can be further protected under trade dress law – when the distinctive appearance of a product serves as a source identifier – and under copyright law – when the object presents an artistic character to be protected.

Knowing the regimes and remedies of the different measures of protection (ie, design patents, copyrights and trade dress) is crucial when shaping an IP strategy in the United States.

China

In China, the appearance of a product can be protected under a design patent application, while protection is not granted for unregistered designs. Therefore, China, like the United States, has placed its design protection within its patent law.

In addition, as in the US system, a product design can also be protected in China as a trademark, trade dress and copyright, according to applicable laws. Each form of IP protection has its own conditions and remedies.

An important aspect of Chinese patent design law that must be considered is that design rights protection can be obtained easily in China because design patents are granted immediately on preliminary examination, provided that the application contains no formal errors. In other words, design applications are not substantively examined.

That said, Chinese patent law provides for an invalidation process for designs: if a party believes that a design grant does not fulfil the applicable law requirements, it can request the Patent Re-examination Board to declare the said patent right invalid and the board decision can be appealed to the court if either party is dissatisfied with the decision.

In case of design patent infringement, a dispute can be solved through a consultation process, which is a non-legal, optional pathway. If consultation fails or the parties do not want to utilise this pathway to resolve the matter (eg, when major and more complex issues are contested), the disputants can choose between a court and an administrative solution. The rights holder can take legal action before a people’s court or request the administration department for patent-related work to handle the dispute.

Like in the United States, the Chinese design system applies the ordinary observer test to assess whether there is design patent infringement.

In addition, according to the ‘prior-art defence’ principle, the defendant in an infringement case can file a counterclaim of invalidity of the title acted on.

How to assess when action is desirable – and in what form

Companies should identify the territories of interest in the present and near future to shape, develop and enforce an effective strategy of design protection, which should be done from the very beginning of a new project. In doing so, the knowledge and understanding of the different design protection regimes applicable to each country and/or region is crucial and a tailor-made approach is required.

In general terms, a territory of interest should be the one of commercial interest to the company – the one where the design product at issue will be reasonably placed on the market and/or the one where design piracy is more likely to occur and/or the one where such design product is manufactured.

In this respect, a proper design portfolio strategy should additionally consider filing a design application not only in order to protect product design, but also for defensive purposes. To give a practical example, a defensive design patent application could be filed in China not so much to protect the design owner, but rather to prevent local companies from securing and using local designs in order to block Western companies from entering into the Chinese market.

The evaluations regarding design protection must be developed taking into consideration the other IP rights which can be applied to the specific case, not only based on the protection given by the IP right but also considering the real possibility to enforce it in a specific country or the opportunity to enforce one IP right instead of another.

That said, both before and after registration, effective tools exist that can help companies to develop and enforce their own design portfolio. Indeed, search availability tools exist that help companies to save time and money by searching for designs that may conflict with theirs before filing a design application in a specific country or region. Moreover, watch service tools also exist which are aimed at watching over companies’ designs worldwide, reporting newly published similar designs in the classes of interest and allowing a company to respond quickly to protect its own design.

These tools, together with the considerations above, can effectively help companies to decide whether to file a design application in a specific country or region and to keep their own design IP portfolio under control globally.