Unregistered community design rights sometimes seem to be a good tool to protect your product designs, but is this really true? In Beverly Hills Teddy Bear Company v PMS International Group plc [2019] EWHC 2419 (IPEC) the English Intellectual Property Enterprise Court (IPEC) recently took the opportunity to shed some light on this by referring two questions to the Court of Justice of the European Union (CJEU), which have been controversially discussed in legal literature within the European Union (EU) for years.

What happened?

The plaintiff manufactures and markets plush toys under the name “Squeezamal”.

“Squeezamals” were first presented at the Mega Show in Hong Kong in October 2017. The first time “Squeezamals” were presented in the EU was in January 2018 at the Nuremberg International Toy Fair ("Spielwarenmesse").

The defendant started marketing similar plush toys prompting an infringement action before the IPEC. The plaintiff claimed infringement of its unregistered Community design rights in the “Squeezamal” design. Unregistered design protection under Article 11 of the Community Design Regulation (CDR) requires that the design is new, has individual character and was first made available to the public within the Community. Thereby, “made available to the public within the Community” is defined as “if it has been published, exhibited, used in trade or otherwise disclosed in such a way that, in the normal course of business, these events could reasonably have become known to the circles specialised in the sector concerned, operating within the Community” (Article 11(2) CDR).

Both parties agreed that the exhibition at the Hong Kong Mega Show could reasonably have become known to the circles specialised in the sector concerned, operating within the Community. Regardless, the defendant argued that the “Squeezamal” design could not enjoy protection as an unregistered Community design. Unregistered Community design protection would require the disclosure act to take place within the EU. At the time of first disclosure within the EU, however, the design would not have been novel due to the prior disclosure at the Hong Kong Mega Show.

The IPEC now had to decide on these two points of law, namely

  • Where does the act of disclosure have to take place? and
  • At what time does the novelty need to be assessed?

In its assessment of these two questions the IPEC carefully considered legal literature and jurisprudence within the EU. In particular, the IPEC referred to the “Gebäckpresse II” decision of the German Federal Supreme Court (Bundesgerichtshof – BGH).

The “Gebäckpresse II” decision concerned a similar case. A Hong Kong company had filed for a registered design of a pastry press in China, which was published in May 2002. Again, it was agreed that due to the publication of the design it could have reasonably become known to the circles specialised in the sector concerned and operating within the Community. Between June and October 2002, the pastry press was then sold in the UK. In November 2003, a competitor marketed a similar pastry press in Germany and the Hong Kong company claimed infringement of its unregistered Community design rights.

The BGH found that the publication of the registered design in China could not lead to unregistered Community design protection by answering the two questions as follows:

  • The act of disclosure has to take place within the geographical boundaries of the Community.
  • Any novelty has to be assessed at the time of first disclosure – regardless of the territorial bounds. This means any disclosure act worldwide would be harmful to novelty.

The BGH found this reasoning to be supported by the wording of Article 110(a) CDR.

Applying these laid down principles, the design of the pastry press lacked novelty at the time of disclosure in the UK because of the previous publication of the registered design in China.

In summary, the IPEC followed this reasoning, but ultimately did not want to render a decision on it. Rather, the IPEC referred the following questions to the CJEU:

  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?

What does that mean?

Should the CJEU follow the view of the IPEC and BGH, this could pose a problem for designers and companies only relying on unregistered design rights (especially in fast-moving industries).

A disclosure outside the EU would prevent unregistered Community design protection arising. Only registration of a design within the 12-month novelty period may achieve the desired protection. Further complications could arise in case of Brexit. A disclosure of a creation, for example during London Fashion Week, could then only result in design protection under English law, but exclude protection as an unregistered Community design.

Therefore, designers should take this as an opportunity to re-evaluate their market launch strategies and in particular the location of their product launch, for example could web launches be an alternative?

Where budget allows, it might also be worth taking the time to review novelty periods for already disclosed designs and to register them before it’s too late.

Nevertheless, it remains to be seen if and how the CJEU decides. After all, the CJEU may decline to adjudicate the matter in case of Brexit.

Case details at a glance

Jurisdiction: England & Wales Decision level: Intellectual Property Enterprise Court (IPEC) Parties: BEVERLY HILLS TEDDY BEAR COMPANY (claimant) and PMS INTERNATIONAL GROUP PLC (defendant). Date: 17 September 2019 Citation: [2019] EWHC 2419 (IPEC)

Link to IPEC decision