The Intellectual Property Enterprise Court (IPEC) in Beverly Hills Teddy Bear Company v PMS recently referred two important questions to the Court of Justice of the European Union (CJEU) regarding unregistered community design (UCD) protection.
The questions aim to clarify a grey area of UCD law: whether a design must first be disclosed (i.e. made public) in the EU to qualify for UCD protection or whether it is possible for UCD protection to commence as a result of a first disclosure outside of the EU (e.g. at a trade fair in the USA or Asia).
What is the dispute about?
BHTB sells soft animal-like plush toys called Squeezamals. BHTB first displayed a series of Squeezamals to the public in October 2017 at the Mega Show, a trade fair in Hong Kong. The toys were subsequently displayed at the Nuremberg Toy Fair in Germany in January 2018.
BHTB alleges that PMS (which famously won a case against the makers of the Trunki ride-on suitcase concerning Registered Community Designs) has produced toys that infringe, amongst other things, BHTB's UCD rights. PMS argues BHTB cannot rely on UCD right because the Squeezamals were first disclosed outside of the EU.
UCDs: a brief reminder
An UCD is an important intellectual property right that protects the appearance of a novel design. It is a cost-efficient right because it arises automatically, with no form of registration required. An UCD is given protection for a period of three years from the date on which the novel design was first made available to the public within the EU.
Why is first disclosure outside of the EU a problem?
Disclosing a design outside of the EU is problematic because, on the face of it, the EU Designs Regulation creates a "Fortress EU" when it comes to the creation of UCD rights. It states that UCD protection commences when the design was "first made available to the public within the Community".
However, this part, when read in the context of the entire Regulation, is ambiguous and it has been argued that any first disclosure of a design, whether within the EU or outside of the EU, is sufficient to create a UCD right, provided the relevant sector in the EU became aware of the disclosure.
In this case, BHTB said that the Hong Kong disclosure was at a large trade fair, of which the toy sector in the EU would be well aware. As such, the Hong Kong disclosure was enough to trigger UCD protection.
What questions did the IPEC refer?
There has been no clear authority on the point from the CJEU and UK commentators are divided, so the IPEC referred the following questions to the CJEU:
- For the protection of a UCD to begin, must the first disclosure be within the geographical confines of the EU or is it sufficient that the first disclosure, wherever it took place, could reasonably have become known to those specialised in the sector and operating within the EU?
- Is the date for assessing the novelty of a design for which UCD protection is claimed, the date at which the UCD purportedly commences, the date on which the design was disclosed per se, or some other date?
Why does this matter for businesses?
If your business relies on UCDs to protect your designs in the EU or considers the EU an important market for your designs, the CJEU's answers could have a significant impact on your business model.
To enjoy UCD protection, if the disclosure of a design must first occur within the geographical confines of the EU, the obvious practical consequence is that you must launch your design for the first time in the EU – so beware of using non-EU trade fairs to launch your designs. If you are a business that typically launches designs at non-EU trade fairs then you may no longer be able to rely on UCD protection.
This case is of particular importance to UK businesses post-Brexit, because designs launched for the first time in the UK post-Brexit may not qualify for UCD. The classic example concerns London Fashion Week, where many designs are disclosed publically for the first time. If the CJEU confirms "Fortress EU", then London Fashion Week may lose shows to Paris and Milan, unless it can come up with a clever way to "disclose" the designs within the EU at the same time, perhaps via live streaming of the shows.
Consider registered protection
Even if UCD protection might not be available in the future for some business, if the EU remains an important market for you but you do not have an EU "launch-first" policy, one alternative is to consider registering the designs in the EU. EU design registration will offer effective protection for the design and will last 25 years, subject to paying the relevant renewal fees.