In a recent Court case involving Beverly Hills Teddy Bear Company (BHTBC) and PMS International, (claimant v defendant), His Honour Judge Hacon has decided that clarity is needed on what designers can rely on in terms of disclosure. He has therefore referred this case to the EU Court of Justice (CJEU). This is a particularly important case for ACID members and the broader UK design community. The designs in question are six soft toys called Squeezamals that BHTBC believe have been copied by PMS.

The CJEU decision will have significant implications for UK designers and in Judge Hacon’s words, this is a matter of “widespread interest” especially in light of what may happen after Brexit, deal or no deal, regarding the potential loss of EU unregistered designs in EU27 for most UK designers.

The issue to be clarified is that there must be an event of disclosure which takes place in a territory of the EU, or would it be enough that the event, wherever it takes place, could reasonably have become known to the relevant circles within the EU?

Dids Macdonald, OBE CEO of ACID said, “Judge Hacon’s decision to refer this case to the CJEU is timely. ACID has sent compelling evidence to the Government consistently for more than 3 years requesting clarity and/or guidelines which thus far has been unforthcoming.  We had also asked if reciprocity could be negotiated between the UK and EU27 regarding UDR. PMS International are no strangers at the centre of IP news having been involved in the Magnatex (Trunki) case. The case went all the way to the Supreme Court of Justice. ACID and many others thought it was a very unfair decision.

 According to the IPKat  “UK academic opinion is divided on this topic. Stone (European Design Law) and Bently, Sherman, Gangjee and Johnson (Intellectual Property Law) accept the view of the Bundesgerichtshof, in spite of potentially severe effects on designers if the legislative scheme is indeed as protectionist as it appears. In contrast, Howe, St Ville and Chantrielle (Russell-Clarke and Howe on Designs) consider that a disclosure outside of the EU could trigger UCD protection, as long as the design could reasonably have become known in the EU as a result in accordance with Article 7(1)”.

 Further in the IPKat article, “Counsel for BHTB raised an interesting point: is the “Fortress Europe” approach that an ‘EU disclosure only’ approach to qualification for UCD protection consistent with the requirement under Article 3 of TRIPS that signatory states do not treat their own nationals any more favourably than nationals of another signatory state? Although not directly an issue of nationality, it is reasonable to assume that EU nationals are more likely first to disclose their designs in the EU, and therefore to benefit from UCD protection under a narrow interpretation of Article 11. It seems unlikely that the CJEU will support BHTB on this point, but (in the author’s view) there is a difference between whether a non-EU resident could first disclose a design in the EU, and whether as a practical matter they would do so. This does seem unduly harsh when a UCD might otherwise be the only form of EU intellectual property protection that a small and/or legally unsophisticated designer might otherwise enjoy”.

Designers in the UK will be anxious to learn about whether the CJEU will make a decision as, hopefully, this case may provide more certainty on what is meant by simultaneous disclosure. As the majority of designers rely on unregistered EU and UK designs, this will be critical. Whilst the obvious route is to register designs in the UK and EU, which is inexpensive, for many it is simply not worth registering designs because it is cost and time prohibitive to take legal action because the Court process is so complicated and unwieldy.

Case History

BMHT were exhibiting the toy design at the Mega Fair in Hong Kong in October 2017 and then took the new designs to exhibit at a trade fair in Nuremburg Germany in January 2018 but PMS claimed that because the Hong Kong Fair was known as a venue for such toy products, visiting EU purchasers with a special interest in toy design, would, therefore, be aware of the design.  If this were the case they would not be able to claim novelty.

Interestingly, PMS quoted Article 11 of the Design Regulation which states that a design must be first disclosed actually in an EU member state to be able to rely on unregistered EU design rights.  The CJEU had previously ruled that if one is exhibiting a new product and therefore disclosing it would negate the necessity to disclose in the EU which was the point PMS were relying on when evaluating novelty of a design. This is a tricky anomaly because if non-EU designers disclose their design outside EU territory, in this case Hong Kong, it will not qualify for UCD protection, but worse still if the first time a design is seen outside the EU may render EU design protection invalid.