More clarity on “normal use” in EU design law
The Court of Justice of the European Union has offered some clarity on what may be deemed ‘normal use’.
Unregistered community design (UCD) provides protection against copying for qualifying designs across the EU. Protection comes into force automatically but only lasts for a period of three years. UCD is particularly valuable in fast moving sectors, such as fashion, but has also proved to be useful in other areas since the automatic nature of protection, which does not require formal registration, provides a fall-back where the cost of registration is not thought to be worthwhile or perhaps simply not considered.
There is though a question mark as to whether a design can qualify for UCD if made available to the public for the first time outside the EU but in circumstances which would reasonably have become known in the normal course of business to the circle specialised in the sector in the EU. This issue has been considered recently in a case brought before the Intellectual Property and Enterprise Court (IPEC) in the UK and the court has referred questions to the Court of Justice of the European Union (CJEU) for guidance.
Given that the UK may soon be outside the EU, the outcome of this referral will have practical implications for the UK design industry and to anyone considering where to disclose their products for the first time.
There are two key areas of uncertainty:
If a UCD can only commence when a design is first made available to the public within the EU and the relevant date for accessing novelty of a UCD is the date on which UCD comes into being, then a design which is first made available to the public outside the EU (in a manner which could reasonably have become known in the normal course of business to the circles specialised in the sector concerned, operating within the EU) can never benefit from UCD. This circumstance might occur, for example, where a design is first shown at a major exhibition outside the EU and only later exhibited or marketed in the EU. This was the situation that had to be considered by the IPEC.
The case in question is Beverly Hills Teddy Bear Company v PMS International Group Plc  EWHC 219 (IPEC).
The claimant, Beverly Hills Teddy Bear Company (BHTB), is a Californian company which sells animal-like toys called ‘Squeezamals’. BHTB claimed that the designs of six of the toys relevant to the case were protected by registered community designs, UCDs and copyright in the design drawings. The defendant, PMS International Group Plc (PMS), sought a summary judgement to strike out part of BHTB’s claim in relation to UCDs.
Five of the six toys were first shown to the public in October 2017 at a trade fair in Hong Kong called the Mega Show and were subsequently exhibited for the first time within the EU at the Nuremburg Toy Fare in Germany in January 2018. Both sides agreed that the nature of the Mega Show was such that the design of each of the toys would have become known in October 2017 in the normal course of business to the circles specialising in the sector concerned, operating within the EU Community.
PMS argued that the relevant date for assessing the novelty of a UCD is the date on which the UCD comes into being. PMS continued that all the five UCDs in issue first existed in January 2018 when exhibited at the Nuremburg Toy Fare and that by then all five designs lacked novelty because of the Hong Kong Mega Show the previous October.
BHTB on the other hand argued that UCD in the five designs commenced in October 2017 when exhibited at the trade fair in Hong Kong or alternatively that a “split date” system should apply in which the UCDs commenced in January 2018 when the toys were first exhibited in the EU but that novelty should be assessed as of the date when the designs were exhibited in Hong Kong in October 2017.
The facts were not in dispute and so the only issue the court had to decide was on the correct interpretation of the law. The Judge reviewed the relevant provisions of the Design Regulation and took into account two previous judgments in Germany, including one from the Federal Supreme Court. Both judgments concluded that for a UCD to come into effect, the design had to be made available to the public within the EU and that novelty is to be assessed as of the date of UCD protection coming into being. The Judge noted that whilst these judgments were persuasive, they were not binding across the EU and that these questions of law had not been considered by the CJEU. The Judge also noted that there was disagreement amongst legal textbooks and commentators as to the correctness of the judgements in Germany.
The Judge in the end agreed with the findings of the Federal Supreme Court in Germany that for a UCD to come into effect, the design had to be made available to the public within the EU and that novelty is to be assessed as of the date of UCD protection coming into being. However, he felt that there was sufficient uncertainty on these two points of law that a reference to the CJEU was warranted. He also decided not to leave the question of reference to the Court of Appeal since it is possible that the UK may no longer be a part of the EU by the time any appeal is heard and that the Court of Appeal would not then be entitled to make a reference. The questions referred are set out below.
The outcome of this referral may have significant practical implications for designers in the UK, as well as for trade shows and exhibitions held in the UK, should the UK leave the EU as expected.
If the CJEU concludes that a design has to be made available to the public within the EU for UCD to come into effect and that novelty is to be assessed as of the date of UCD protection coming into being, this will mean that any design which is made available to the public for the first time in a non-EU UK will not benefit from UCD, provided of course that this would reasonably have become known in the normal course of business to the circles specialising in the sector concerned, operating within the EU Community.
Post Brexit, UK designers and businesses will have to consider whether they should first disclose their products in the UK or in the EU. Some have suggested that a simultaneous disclosure in the UK and the EU may be an option. There may also be an effect on trade shows and exhibitions held in the UK as designers and companies may be reluctant to exhibit their products for the first time in the UK, if this means giving up UCD.
We will continue to monitor developments on this issue and advise accordingly. If you have any questions regarding the protection of your designs, please get in touch to speak to one of our attorneys.
(1) For the protection of an unregistered Community design to come into being under art.11 of Council Regulation (EC) No. 6/2002 of 12 December 2001 (‘the Regulation’), by the design being made available to the public within the meaning of art.11(1), must an event of disclosure, within the meaning of art.11(2), take place within the geographical confines of the Community, or is it sufficient that the event, wherever it took place, was such that, in the normal course of business, the event could reasonably have become known to the circles specialised in the sector concerned, operating within the Community (assuming the design was not disclosed in confidence within the terms of the final sentence of art.11(2))?
(2) Is the date for assessing the novelty of a design for which unregistered Community design protection is claimed, within the meaning of art.5(1)(a) of the Regulation, the date on which the unregistered Community design protection for the design came into being according to art.11 of the Regulation, or alternatively the date on which the relevant event of disclosure of the design, within the meaning of art.7(1) of the Regulation, could reasonably have become known in the normal course of business to the circles specialised in the sector concerned, operating within the Community (assuming that the design was not disclosed in confidence within the terms of the final sentence of art.7(1)), or alternatively some other, and if so, which date?