ACID head calls for CSR statements

With the UK General Election getting closer, it was no surprise to learn that Dids Macdonald, CEO of Anti Copying in Design (ACID), took the opportunity of World Intellectual Property Day last Monday to write an open letter to the Chancellor, which reads in part:

"... WIPO Day 2010 will also see the start of a new and ongoing campaign launched by ACID (Anti Copying in Design) to encourage UK PLCs to include the respect for intellectual property (IP) in their Corporate Social Responsibility commitments. As a result of the pioneers and campaigners, many PLCs now focus on ethical issues - human rights, sustainability, the environment, employee welfare, etc., but all too often the communication of high ethical standards and respect for IP do not get a mention. A simple statement such as, "(name of company) respects the intellectual property rights of other companies and individuals" would go a long way to ensure that UK innovators and creators could rely on the knowledge that they could trade with ethical companies who demonstrate a commitment to encourage respect for IP. According to the British Library and IP Centre 79% of users prefer to work with companies who have ethical standards.

The economy will play a central role in the election campaign and future Chancellors must show how they will stimulate recovery from the longest recession in modern times. Tax, financial regulation and public spending policy will be at the top of the agenda. However, another effective way to foster the green shoots of recovery is by innovation, creativity and a knowledge economy encouraging collaborative use of IP, safe from the threats of infringement. Key UK PLCs who take the important step of declaring their positive policy on intellectual property within their CSR will compel other market leaders to follow suit and, hopefully, it will become a "must have" for ethical trading inclusion. After all, in tough economic times it will be the knowledge economy and the encouragement of innovation and creativity which will be a significant stamp in the passport to economic recovery. Currently the UK Creative Industries contribute 8.2% to the UK's GDP. ...

I do hope that amongst the many challenges a new chancellor will have to juggle to re-ignite the economy will be a simple Government endorsement to encourage key UK PLCs to include respect for intellectual property within Corporate Social Responsibility. Others will follow suit".

The good thing about CSR commitments is that they don't cost governments anything, they cost implementing companies very little and they cause a lot of embarrassment when, having been breached or forgotten, they are drawn to the attention of the media. The bad thing about them is that they are of little use in a court of law and that they're not incompatible with fairly regular infringement by, for example, importers and retailers who have no easy means of respecting unregistered design rights which they don't know exist. It will be interesting to see if any other pro-IP bodies and organisations take up the call, and what sort of difference it might make to the current commercial environment.

Triumph over Beyoncé

The Munich District Court wants Beyoncé to take off her underwear - only to avoid further copyright infringement, of course!

Sony, the producer of a music video with Beyoncé, received an injunction order issued by the court on behalf of the Munich lingerie company Triumph due to copyright infringement in December 2009. In this video, the famous US singer wears an unusual and stylish combination of underwear with bracelets and a pair of sunglasses.

Sony’s appeal has recently been refused by the court. The design of Beyoncé’s underwear, says the court, is similar to what a design student from Bulgaria drafted for a lingerie competition organised by Triumph in 2009. The student had become one of the finalists of this competition, and his design was even published in Italian Vogue. In an interview he said that he had been inspired by Picasso.

In the judge’s opinion, the design has a high level of individuality and, therefore, it assumes a high level of protection. The decision is only based on copyright, but protection as an unregistered Community design also comes into consideration. So far so good, but in addition to the legal matters, Triumph showed its probably deeper interest in publicity: it offered Sony and Beyoncé to withdraw the order if she would become an honorary member of the Jury for the next lingerie competition. She declined.

It is rather certain that this case will go to a higher court. Let's hope that underwear labels and attractive singers will find harmony soon again.

This post was contributed by Adrian Kleinheyer, trainee lawyer in the Munich office of Bardehle Pagenberg.

Sudden Death in Alicante

We note two recent OHIM design appeal decisions which demonstrate their remarkable, and regrettable, unsympathetic attitude towards design owners on renewal fee payments. 

In R 1011/2009-3 and R 1012/2009-3, the proprietor (an EU subsidiary of Korean company who have made substantial inward investments into Europe) had transferred representation for the designs concerned from one reputable firm of attorneys to another and, unfortunately, it seems that amongst other cases, in error the wrong file was sent over and the right file was not.  The recipients had the correct number of files and therefore didn't chase the missing one, or take over responsibility at OHIM, and the senders didn't resign responsibility at OHIM. 

Two years later, the renewal fee wasn't paid.  The Loss of Rights notice went on 17 November 2008 to the previous representatives, who forwarded it to the new representatives on 5th December.  That was the first point at which the "true" representatives became aware of the position, and therefore the very first point at which the applicant could have complied with the renewal payment.  The application for restitutio in integrum was filed two months later, on 4th February 2009, two months from the point at which the applicant was able to comply and therefore, from the point of view of the applicant, in time.

OHIM took a different view.  They held that since the change in representation had not been recorded, the date of sending to the old representative triggered the two month period, which therefore expired on 18 January.  The application for restitutio was therefore out of time.  The Appeal Board upheld the first instance.

We beg to differ.  It is not that OHIM's reasoning is illogical.  Mechanistically, one can follow their logic.  But these decisions, together with a host of others, fly in the face of reality and fairness to the proprietor.  The analysis is from OHIM's point of view, not that of the proprietor, and the proprietor here has done nothing wrong.  They registered their IP rights at OHIM.  They selected attorneys on OHIM's list, people who OHIM accepts as, and holds out to be, fit for purpose (and who are, to my direct knowledge, perfectly suitable).  They did not want their rights dropped, and they instructed their attorneys to renew them.  So why are they punished?

The underlying notion is that the acts of the agent are attributed to the principal, which is the whole basis of agency.  But:

1. It is stretching that notion to say that unintended, uninstructed, and unauthorised errors of the representative should be attributed to the principal. 
2. In this case, the errors in question were at least partly those of a person who, from the principal's point of view, was no longer their agent. 
3. As far as the principal knew, the previous agent should already have withdrawn in favour of the new one.

The statute is quite clear that it is the removal of the cause of non-compliance that is the issue.  That is a factual issue, and to give a deemed date (when the previous representative got the letter) rather than a real one (when the proprietor actually became aware of it) is to supply a fictional answer to a factual enquiry.

More generally, errors occasionally occur, even in the best-run machine.  If OHIM themselves never made an error, they might be in a moral position to impose extremely high standards on their users - but believe me, dear reader, they make plenty, and this case would certainly have been decided differently if the Board of Appeal applied OHIM's own error rates.

If intellectual property rights are, in general, a public good (and we have to start from that assumption, or else there is no logic in the existence of OHIM) then the underlying public policy should not be to try to kill them off on formalistic grounds.  Who benefits by this kind of logic-chopping?  Certainly not the applicant, who has done nothing wrong, and has in return lost their rights for ever.  Not, we presume, the public in general which benefits in general from the existence of creativity and its protection.  Not OHIM - they lose future fee income on this case.  Not the poor representatives, whose only sin was to make a slip.  Not the other clients of their insurers, who ultimately pay higher premiums, raising the cost of IP protection generally.  Perhaps one might assume that competitors benefit from the untimely death of a duly registered design - but in this case, they certainly have lost no legitimate expectation, since the application for restitutio was on file very shortly after two months from the lapse notice - long before anyone could have inspected the file and concluded that the rights were irretrievably lost.  And, of course, the statute itself would explicitly protect any such legitimate expectations.

These are, so far as anyone knows, valuable intellectual property rights.  The applicant has spent money at OHIM getting them registered.  It will often be possible to re-file a lost trade mark, but these designs can never be re-filed - they would lack novelty over their own publication by OHIM - and so they are lost for ever.   We strongly urge OHIM to drop the doublethink, to see matters from a real-world point of view, and to protect their users' investments in valuable IP rights from these arbitrary and disproportionate extinctions.

OHIM extends deadlines due to volcanic ash

Lava from the recent Iceland eruption has reached as far as Alicante, metaphorically speaking.  Yesterday, OHIM extended deadlines affected to 30 April, according to Decision EX-101 of the President concerning Time Limits.  This is a general extension; it is unnecessary to show that you suffered any disruption by post.

New Zealand Designs Act amended

Mike Hawkins from Baldwins reports that "the Designs Amendment Act 2010 has been passed which introduces significant changes to the New Zealand Designs Act 1953. In particular, restoration of a lapsed design application or a lapsed design registration , no provisions for which are specified in the present Act, will now be possible if the lapsing was unintentional and the application for restoration is made without undue delay. Third party opposition to restoration is however possible. There has also been a consequential amendment to the New Zealand Copyright Act 1994, so that full copyright protection for the design representations of 3-D designs which are restored, is also restored. The Act will come into force , as far as the above provisions are concerned , on 19 April 2011 or any earlier date appointed by the Governor General."

I haven't found the Act online, but hope to post a link soon.

Poland in the Alicante spotlight

Poland is the country under the spotlight in this month's country-by-country review of registered Community design activity in OHIM's Alicante News. News from Poland is encouraging, at least when viewed from a deckchair one of Alicante's sunny beaches. Says the review:

"With more than 9,200 registrations since 2003, the registered Community design has been consistently popular with Poland undertakings. There were around 2,600 RCD filings last year with classes 6, 25 and 9 in highest demand.

Once again, the majority of Polish filers prefer the online route, with over 93% now using e-filing. Around 4% of designs come by mail, and 2% by fax".

The feature also lists Poland's most prolific Community design applicants -- and the Top Ten firms of representatives of Poland-based applicants.

Stateside Spares Bill

A bill is before the House which would introduce a "Repair Clause" into US Design Patent Law.  H.R. 3059 (and S. 1368), the Access to Repair Parts Act, would add a new section 271(j) to 35 USC as follows:

‘(j) It shall not be an act of infringement of any design patent to make, use, offer to sell, or sell within the United States or import into the United States any article of manufacture that itself constitutes a component part of another article of manufacture, if the sole purpose of the component part is for the repair of the article of manufacture of which it is a part so as to restore its original appearance.’

It will not have escaped the notice of keen readers that this closely follows the language of the EU's CDR Art 110:

"protection as a Community design shall not exist for a design which constitutes a component part of a complex product used within the meaning of Article 19(1) [i.e. otherwise infringing uses] for the purpose of the repair of that complex product so as to restore its original appearance."

with the difference, however, that the US proposal bites not only on designs of spares, but on all designs.  It appears to be pretty much the same as H.R. 5638, for reasons I am too ignorant of US procedure to understand.

As always, we appreciate the meticulous background on Prof. Dennis Crouch's Patently-O blog, here and here.  Dennis points out a startling rise in car spare registrations since 2000.  Although many of these are foreign-owned, it is likely to have been the successful 2007 Ford ITC action against imported spares (which settled on appeal with a royalty-bearing licence) which motivated this US move.  The "Quality Parts Coalition"'s timeline giving some historical background is here.  (As one of my former colleagues used to say, there are two types of "quality" ...).

We suspect that the third-party spares suppliers are fighting a more uphill battle in the US than in the EU (and even there, they only half-won).  Perry Saidman comes out swinging here, concluding that the purpose of the Bill is merely "to give knock off companies a free ride on the coattails of legitimate designers."  Some of the other testimony is also worth reading.

Europeans will await the outcome with interest, and a certain sense of deja vu.

Too Like Likeabike!

I am grateful to my partner (and fellow beard wearer) Felix Rummler, of our German office, for the following summary.

The Federal High Court (the Bundesgerichthof or "BGH") has recently, in its "LIKEaBIKE" decision I ZR 124/06, taken the opportunity to illustrate some principles of the unfair competition prohibition on close imitation.

The case was concerned with a copied product consisting of a ride-on wooden vehicle for infants, resembling a bicycle. The original design had been registered back in 1997 (as International Design DM 040209), and the plaintiff later developed a "mountain bike" version which was the subject of the infringement action. The design of the product is characterised among other things by the streamlined appearance of the timber frame as well as a laminar steering wheel fork with an opening for the timber frame. These characteristics were also present - with slight modifications - in the imitation.

The Court held that imitation of a product is adverse to competition if the product has a "competitive characteristic" and the imitation is unfair. In order to have a competitive characteristic, the product must show special characteristics, which refer to its operational origin or characteristics of the product. However technically necessary characteristics cannot justify a competitive characteristic because they cannot be omitted without arriving at something technically inferior.

The imitation of a product with competitive characteristic is competition-adverse, if unfair circumstances are additionally present, for example if no suitable reasonable measures are taken in order to prevent possible confusion of the products as regards origin or characteristics.

In the infringement action the defendant pointed out the fact that some of these characteristics - in particular the organization of the fork - were technically necessary and could therefore be taken. The BGH rejected this. The characteristics were technically motivated, but the technical requirements did not dictate this particular physical arrangement. On the contrary, technically equivalent solutions existed, by use of which the danger of the deception over the origin of the product could have been avoided in a reasonable way.

This decision highlights the continuing importance of unfair competition protection for products in the civil law world.

Stuck on 99

The number 99 seems almost indissolubly linked with design protection,and not only on account of this weblog's name. "Judgments of the Community Design Courts", the Community Design Court webpage on the website of the Office for Harmonisation in the Internal Market (OHIM), now has a total of 99 accessible cases from national courts.

Right: nothing to do with this article, but too good to miss: the logo of the 99 designs community.

This case list, which contains decisions from as long ago as 2004, seems to have stalled somewhat, since only two fresh decisions have been added over the past three months. Some enrichment from Europe's less-well represented jurisdictions is needed, since the current total of 99 is drawn from just 12 of the European Union's 27 Member States. Countries which are not represented in the national design case database include Belgium, Denmark, Greece and Portugal. The countries from which the largest number of decisions have been submitted are as follows: Spain (26), the Netherlands (23), France and Germany (10 apiece).

Class 99's readers come from 51 different countries, 23 of which are Member States of the European Union (only Cyprus, Estonia, Luxembourg and Malta are missing). We call on our colleagues, wherever they are, to keep the flow of design law news going and, if possible, to populate further the OHIM Community Design Court website.

Effect of New Chinese Design Rules

New Implementing Regulations for the Chinese Patent and Design Law took effect on Feb. 1st, 2010. The Chinese Patent Office (SIPO) background briefing is here:

We are grateful to three fine Chinese firms (and, as always, any misunderstandings or errors are almost certainly at our end); Unitalen have a summary of the effects of the new Regulations in their Newsletter Special Edition of 26 January 2010, Sanyou have a comparative table setting out the differences between the old and new Regulations in their newsletter of 31st March 2010, and CCPIT have published a consolidated version of the current Regulations here.

Three particular provisions strike us as interesting. Firstly, under new Rule 35, the conditions for filing "multiple design" applications are tightened. All products concerned must be in the same class. There can be no more than ten in the same application. There must be a basic design and the other designs must be similar to it (though not necessarily to each other).

Secondly, the requirements for the mandatory the "brief description" are clarified. We quote from CCPIT's translation of Rule 28:

A brief explanation of a design shall include the title and usage of the product incorporating the design, the essential portion of the design, and designate a drawing or photograph which best represents the essential portion of the design. Where the views are omitted or there are colors for which protection are sought, it shall be indicated in the brief explanation.
Where one application for a patent for similar designs incorporated by the same product is filed, one of the designs shall be designated as the basic design in the brief explanation.
The brief explanation shall not contain any commercial advertising and shall not be used to indicate the function of the product.

In this Rule, the requirements for indicating the "basic design", the name and the usage of the product, and the most representative drawing, are new.

New Rule 31 deals with the very common situation where the priority filing lacks such a brief description (it is not mandatory in EU or the US for example). It provides that priority is not lost provided that the brief explanation submitted in China does not go beyond the scope of the drawings or photographs in the earlier application. However, it seems doubtful whether the "usage", for example, would always be described in the earlier application, so the comfort offered by Rule 31 is limited. It may be safest to file a China-compliant description in their priority application even where it is not mandatory (or even where it is forbidden) to do so.

The third interesting provision concerns designs made by employees (or, as we should perhaps call them in this context, the working class). Rules 76-78 provide that (where there is no contract governing the matter) the employee is entitled to compensation comprising "prize money" (due within three months of grant) of at least 1000 yuan (about $150), and thereafter a royalty of at least 0.2% of profits from the design. If the rights are licensed, the designer is entitled to 10% of the incoming royalties.

Personally, I am in favour of such employee compensation schemes (provided they don't break the bank), as they have the advantage of getting at least the designers on board for IP protection in an IP-sceptic world. These fairly modest Chinese provisions are the first I have seen in relation to designs. The prize money is a third, and the royalty rate a tenth, of that for an invention patent and, whilst there is no micrometer for quantifying such things with precision, the lower level of compensation seems appropriate as designs tend to be easier to design around and have been subjected to less scrutiny as to validity. What do readers think?