On August 16, 2012, the German Federal Supreme Court issued a decision, referring questions to the Court of Justice of the European Union for a preliminary ruling, related to the establishment, validity and enforcement of an unregistered Community design right, some of which are applicable to all design rights, including registered Community designs. The questions read as follows:

1. Is Article 11 (2) Community Designs Regulation (“CDR”) to be interpreted as meaning that, in the normal course of business, a design could reasonably have become known to the circles specialised in the sector concerned, operating within the European Union, if images of the design were distributed to traders?

2. Is the first sentence of Article 7 (1) CDR to be interpreted as meaning that a design could not reasonably have become known in the normal course of business to the circles specialised in the sector concerned, operating within the European Union, even though it was disclosed to third parties without any explicit or implicit conditions of confidentiality, if:

(a) it is made available to only one undertaking in the specialised circles, or

(b) it is exhibited in a showroom of an undertaking in China which lies outside the scope of normal market analysis?

3. (a) Is Article 19 (2) CDR to be interpreted as meaning that the holder of an unregistered Community design bears the burden of proving that the contested use results from copying the protected design?

3. (b) If Question 3 (a) is answered in the affirmative: Is the burden of proof reversed or is the burden of proof incumbent on the holder of the unregistered Community design lightened if there are material similarities between the design and the contested use?

4. (a) Is the right to obtain an injunction prohibiting further infringement of an unregistered Community design, provided for in Article 19 (2) and Article 89 (1) lit a CDR, extinguished over time?

4. (b) If Question 4 (a) is answered in the affirmative: Is such extinction governed by European Union law and, if so, by what provision?

5. (a) Is the right to bring an action seeking an injunction prohibiting further infringement of an unregistered Community design, provided for in Article 19 (2) and Article 89 (1) lit a CDR, subject to time-barring?

5. (b) If Question 5 (a) is answered in the affirmative: Is such time-barring governed by European Union law and, if so, by what provision?

6. Is Article 89 (1) lit d CDR to be interpreted as meaning that claims for destruction, disclosure of information and damages by reason of infringement of an unregistered Community design which are pursued in relation to the entirety of the European Union are subject to the law of the Member States in which the acts of infringement are committed?

On February 13, 2014, the Court of Justice of the European Union (Third Chamber) ruled as follows:

1. On a proper construction of Article 11 (2) CDR, it is possible that an unregistered design may reasonably have become known in the normal course of business to the circles specialised in the sector concerned, operating within the European Union, if images of the design were distributed to traders operating in that sector, which it is for the Community design court to assess, having regard to the circumstances of the case before it.

2. On a proper construction of the first sentence of Article 7 (1) CDR, it is possible that an unregistered design may not reasonably have become known in the normal course of business to the circles specialised in the sector concerned, operating within the European Union, even though it was disclosed to third parties without any explicit or implicit conditions of confidentiality, if it has been made available to only one undertaking in that sector or has been presented only in the showrooms of an undertaking outside the European Union, which it is for the Community design court to assess, having regard to the circumstances of the case before it.

3. On a proper construction of the first subparagraph of Article 19 (2) CDR, the holder of the protected design must bear the burden of proving that the contested use results from copying that design. However, if a Community design court finds that the fact of requiring that holder to prove that the contested use results from copying that design is likely to make it impossible or excessively difficult for such evidence to be produced, that court is required, in order to ensure observance of the principle of effectiveness, to use all procedures available to it under national law to counter that difficulty, including, where appropriate, rules of national law which provide for the burden of proof to be adjusted or lightened.

4. The defences of the extinction of rights over time and of an action being time-barred that may be raised against an action brought on the basis of Articles 19 (2) and 89 (1) lit a CDR are governed by national law, which must be applied in a manner that observes the principles of equivalence and effectiveness.

5. On a proper construction of Article 89 (1) lit d CDR, claims for the destruction of infringing products are governed by the law of the Member State in which the acts of infringement or threatened infringement have been committed, including its private international law. Claims for compensation for damage resulting from the activities of the person responsible for the acts of infringement or threatened infringement and for disclosure, in order to determine the extent of that damage, of information relating to those activities, are governed, pursuant to Article 88 (2) CDR, by the national law of the Community design court hearing the proceedings, including its private international law.

Remarks

The Court’s answers to the questions and subquestions above concern three different areas of unregistered Community design rights, namely questions of establishing (A 1), challenging (A 2) and enforcing such rights (A 3 – 5). More precisely, A 3 – 5 relate to the issue of demonstrating infringement of an unregistered Community design right (A 3), possible defences against infringement (A 4) and the law applicable to claims for destruction, information and damages asserted EU-wide due to an infringement of an unregistered Community design (A 5). A 2, 4 and 5 also have an impact on the law of registered Community designs (in addition to that, A 2 will influence national design law schemes in Europe as well), while A 4 and 5 also affect European trademark law because the applicable provisions in the Community design and trademark law are more or less the same.

I. A 1 does not come as a big surprise given that Article 11 (2) CDR indeed, according to the Court of Justice, “lays down no restrictions relating to the nature of the activity of natural or legal persons who may be considered to form part of the circles specialised in the sector concerned.” Also in light of the fact that the wording of that provision requires “the normal course of business” to be taken into account when assessing whether events constituting disclosure could reasonably have become known to the circles specialised, “… traders which have not been involved in the design of the product in question cannot, in principle, be excluded from the group of persons who may be considered to form part of those circles” (likewise, the German Federal Supreme Court suggested taking the distribution sector into account).

More important, the Court of Justice found that whether the distribution of an unregistered design to traders in the sector concerned operating within the European Union is sufficient grounds for considering that that design could reasonably have become known in the normal course of business to the circles specialised in that sector is a question of fact. Consequently, the German Supreme Court will not be able to decide the case itself but will have to remand it to the lower instance.

II. The same, in principle, is also true for A 2. The Court of Justice found that “… it is possible that an unregistered design may not reasonably have become known in the normal course of business to the circles specialised in the sector concerned, operating within the European Union, even though it was disclosed to third parties without any explicit or implicit conditions of confidentiality, if it has been made available to only one undertaking in that sector or has been presented only in the showrooms of an undertaking outside the European Union …”. However, the question whether events taking place outside the European Union could reasonably have become known to persons forming part of those circles is a “… question of fact; the answer to that question is dependent on the assessment, by the Community design court, of the particular circumstances of each individual case …”, according to the Court.

III. According to the Court of Justice, in view of the “… objective of providing uniform protection with uniform effect throughout the entire territory of the European Union […] and in view of the structure and broad logic of Article 19 (2) CDR, it should be held that […] the onus of proving that the contested use results from copying (a protected) design rests with (the) holder, whereas […] the onus of proving that the contested use results from an independent work of creation rests with the opposing party.” However, “… if the Community design court finds that the fact of requiring the holder of the protected design to prove that the contested use results from copying that design is likely to make it impossible or excessively difficult for such evidence to be produced, that court is required, in order to ensure observance of the principle of effectiveness, to use all procedures available to it under national law to counter that difficulty. Thus, that court may, where appropriate, apply rules of national law which provide for the burden of proof to be adjusted or lightened.” Consequently, again, national courts are authorized, and obliged, to make the specific findings in the individual case.

IV. The same, in principle, is also true for A 4 given that Community design law “… is silent on the subject of the extinction of rights over time (laches or acquiescence) and of an action being time-barred (statute of limitations), both of which are defences that may be raised against an action brought on the basis of Articles 19 (2) and 89 (1) lit a CDR thereof.” Accordingly, pursuant to Article 88 (2) CDR, these defences are “… governed by national law, which must be applied in a manner that observes the principles of equivalence and effectiveness …”.

V. Finally, when it comes to secondary claims other than those specifically provided for in Article 89 CDR, such as claims for destruction of infringing goods and for damages, the Court of Justice makes – somewhat surprisingly and contrary to what had been assumed by most observers – an important distinction between, on the one hand, claims for the destruction of infringing products, which the Court classifies as a sanction within the meaning of Article 89 (1) CDR, and, on the other, claims for compensation for the damage resulting from acts of infringement and for disclosure of information relating to those activities, which, by contrast, the Court considers not to be “sanctions” within the meaning of that provision.

As a consequence, according to the Court, “… claims for the destruction of infringing products […] are governed by the law of the Member State in which the acts of infringement or threatened infringement have been committed, including its private international law (and) claims for compensation for damage resulting from the activities of the person responsible for the acts of infringement or threatened infringement and for disclosure, in order to determine the extent of that damage, of information relating to those activities, […] are governed, pursuant to Article 88 (2) CDR by the national law of the Community design court hearing the proceedings, including its private international law.”

Overall, it will be exciting to see how the factfinding judges in the 28 Member States will apply this rather general guidance from Europe’s highest authority in design law to their many individual cases.