Registered Community Designs: Magmatic Ltd v PMS International Ltd

In Magmatic Ltd v PMS International Ltd [2013] EWHC 1925 (Pat) (11 July 2013) Mr Justice Arnold held that PMS International Ltd ("PMS") had infringed registered Community design number 43427-0001 ("the RCD"), some of Magmatic Ltd ("Magmatic")'s design rights and Magmatic's literary copyright in its safety notice. Magmatic appealed to the Court of Appeal on the grounds that the judge fell into error in finding infringement of the RCD in that he had wrongly interpreted the RCD and improperly excluded from his consideration various aspects of the design of Magimax's product. In Magmatic Ltd v PMS International Ltd [2014] EWCA Civ 181 (28 Feb 2014) the Court of Appeal (Lords Justices Moses and Kitchin and Lady Justice Black) allowed the appeal.

The Parties
Magamatic makes and sells ride-on suitcases for children under the trade mark Trunki. Photographs of one of the products in the Trunki range appear in the middle column above.  PMS imports and sells similar products under the trade mark Kiddee Case. Photos of a suitcase in the "Kiddies Case" range appear in the right hand column.  The left hand column consists of representations of the RCD which Magmatic had registered at the Office for Harmonization in the Internal Market ("OHIM") with effect from the 20 June 2003.

The Law
Art 19 (1) of the Community Design Directive (Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs (OJ EC No L 3 of 5.1.2002, p. 1) provides:

"A registered Community design shall confer on its holder the exclusive right to use it and to prevent any third party not having his consent from using it. The aforementioned use shall cover, in particular, the making, offering, putting on the market, importing, exporting or using of a product in which the design is incorporated or to which it is applied, or stocking such a product for those purposes."

This provision begs the question of what precisely is meant by the "Community design" and that question is answered by art 10 (1) which provides that "the scope of the protection conferred by a Community design shall include any design which does not produce on the informed user a different overall impression." The following paragraph adds that

"In assessing the scope of protection, the degree of freedom of the designer in developing his design shall be taken into consideration."

The Proceedings
On 18 Feb 2013 Magmatic sued PMS for infringement of its RCD, design rights and literary copyright. In a typically thorough analysis the judge considered the identity of the informed user, the existing design corpus, design freedom, the effect of design freedom on the scope of protection and the effect of differences between the registered design and the design corpus on the scope of protection. At paragraph [61] he decided that the RCD was entitled to a broad scope of protection as it represented a substantial departure from the design corpus and that the designer had considerable design freedom, Relying on Procter & Gamble Co v Reckitt Benckiser (UK) Ltd [2008] FSR 8, [2008] ECDR 3, [2007] EWCA Civ 936, [2008] Bus LR 801 where Lord Justice Jacob had said at [40] that "the proper comparison is with the shape of the alleged infringement" and that "graphics on that (or on the physical embodiment of the design) are irrelevant" his lordship disregarded the surface decoration on PMS's suitcases.

The Appeal
The Court of Appeal held that Mr Justice Arnold erred in principle in approaching the matter as he did and that he was wrong to disregard all of the decoration on the Kiddee Case. As to the Court of Appeal's previous decision in Procter & Gamble Lord Justice Kitchin said at paragraph [37] that Lord Justice Jacob's observation was entirely right in the context in which it was made but it did not apply to every case. In particular, it did not apply to cases where surface decoration (or the absence thereof) was a feature of the design as was the case in  Samsung Electronics (UK) Ltd v Apple Inc [2012] EWCA Civ 1339 (18 Oct 2012). In disregarding surface decoration, Mr Justice Arnold had fallen into error in two respects:

"The [RCD] consists of six monochrome representations of a suitcase. These representations are not simple line drawings, however. Rather, they are computer generated three dimensional images which show the suitcase from different perspectives and angles and show the effect of light upon its surfaces. Further and importantly, the suitcase looks like a horned animal with a nose and a tail, and it does so both because of its shape and because its flanks and front are not adorned with any other imagery which counteracts or interferes with the impression the shape creates. As [counsel for PMS] submits, the [RCD] is, in that sense, relatively uncluttered and it conveys a distinct visual message. Here then the first of the judge's errors can be seen: he failed to appreciate that this is a design for a suitcase which, considered as a whole, looks like a horned animal."

Secondly, although the judge was right to find that as the representations of the design in the left hand column were in  monochrome the design was not limited to particular colours, he had been wrong to ignore the distinct contrast in colour in the representations between the wheels and the strap, on the one hand, and the rest of the suitcase on the other.  Moreover the wheels and straps of the defendant's cases were the same colour as the rest of the structure.  Because of those differences the Kiddies' Cases did not infringe the RCD.

Comment
This is an important decision on the scope of registered and registered Community design protection. Its guidance on how to analyse representations of registered designs is perhaps comparable to such cases as  Kirin-Amgen, Improver and Catnic on the construction of patent claims. In anchoring the scope of design protection to what is visible in the representation of the design, this case places bounds on what can be claimed in a registered design. As Parliament is about to criminalize registered design infringement for the first time in the long history of design registration, such clarity is to be welcomed.   If you want to discuss this case or have any question on design law, call me on 020 7404 5252 during office hours. You can also tweet me, write on my wall or send me a message me through my contact form, G+, Linkedin or Xing.

Trade Marks: British Shorinji Kempo Federation v Shorinji Kempo Unity

Two interesting points arose in British Shorinji Kempo Federation v Shorinji Kempo Unity [2014] EWHC 285 (Ch) (17 Feb 2014) in which my colleague Thomas Dillon appeared for the British Shorinji Kempo Foundation ("BSKF") on a pro bono basis. The first was what constitutes genuine use for the purpose of s.6A of the Trade Marks Act 1994. The second was the methodology by which the judge determined whether the mark that had BSKF sought to register was similar to one that had previously been registered by Shorinji Kempo Unity ("SKU") and if so whether there was any likelihood of confusion for the purposes of s.5 (2) of the Act.

The Parties
SKU is an entity whose function is to hold the intellectual property rights of the World Shorinji Kempo Organisation ("WSKO"). WKSO had many branches or affiliated organizations around the world. According to WSKO's website, Shorinji Kempo is a Japanese martial art founded in the town of Tadotsu in 1947. The BSKF is an association of organizations which promote the art in the UK, The BSKF had been affiliated to the WSKO for a number of years but was no longer connected with it.

The Mark in Suit

On 21 Jan 2011, BSKF applied to register the following trade mark shown in respect of the following goods and services:

Class 26: Embroidered badges; badges of textile materials.
Class 35: Advertising, management, administration, office functions.
Class 41: Teaching of martial arts, training in martial arts, instruction in martial art.

The Earlier Mark

SKU opposed the application on the 30 Sept 2011 under s.5 (2), (3) and (4) of the Trade Marks Act 1994. It relied on the registration of the following sign as British and Community trade marks for various goods in classes 14, 16, 25, 28, 35, 37 and 41:

The Opposition

The opposition came on before Mr George Salthouse who dismissed it on the ground that there had been no genuine use of the earlier marks for the purposes of s.6A of the Act (see Re The British Shorinji Kempo Foundation's Application, Shorinji Kempo Unity v British Shorinji Kempo Federation (2013 BL O-258-13 20 June 2013)).

The Appeal

SKU appealed to the court under s.76 (2) of the Act.  The appeal came on before Mr. Justice Warren. The judgment does not mention the grounds of appeal or the respondent's response but it does state that both sides were allowed to adduce additional evidence (paragraph [2]).  His Lordship dismissed the appeal at paragraph [69] but on grounds that were different from those of the hearing officer.  The judge found that there had been genuine use of the earlier mark for the purposes of s.6A but the BSKF mark was not similar to the earlier mark, or if that was wrong, that there was no likelihood of confusion for the purposes of section 5(2) of the Act (paragraph [68 (iii)]).

Genuine Use

SKU relied on the following alleged use:

(i) Use by branches affiliated with BSKF itself of marks not identical to the Earlier mark but said to be use of the Earlier mark, such use, it is submitted, being with the consent of WSKO.
(ii) Use on BSKF's own Website.
(iii) Use by another entity, the United Kingdom Shorinji Kempo Federation ("UKSKF") of certain marks which was formed after BSKF had ceased to be affiliated with WSKO.

On the question of whether there had been any consent SKU argued that any use by the BSKF during its affiliation to WSKO was necessarily with its consent since the BSKF was simply an arm of WSKO until it and many of its branches ceased to be affiliated with WSKO. The judge found nothing in that point (see paragraph [25]). However, there was evidence that SKU had expressly consented to the use of the words Shorinji Kempo by students at Durham University and members of the Harrow Shorinji Kempo branch.

Mr Justice Warren adopted Ms Anna Carboni's summary of the law in Sant Ambroeus [2010] RPC 28:

"(1) Genuine use means actual use of the mark by the proprietor or a third party with authority to use the mark: Ansul, [35] and [37].
(2) The use must be more than merely "token", which means in this context that it must not serve solely to preserve the rights conferred by the registration: Ansul, [36].
(3) The use must be consistent with the essential function of a trade mark, which is to guarantee the identity of the origin of the goods or services to the consumer or end-user by enabling him, without any possibility of confusion, to distinguish the goods or services from others which have another origin: Ansul, [36]; Silberquelle, [17].
(4) The use must be by way of real commercial exploitation of the mark on the market for the relevant goods or services, i.e. exploitation that is aimed at maintaining or creating an outlet for the goods or services or a share in that market: Ansul, [37]-[38]; Silberquelle, [18].

(a) Example that meets this criterion: preparations to put goods or services on the market, such as advertising campaigns: Ansul, [37].
(b) Examples that do not meet this criterion:

(i) internal use by the proprietor: Ansul, [37];
(ii) the distribution of promotional items as a reward for the purchase of other goods and to encourage the sale of the latter: Silberquelle, [20]-[21].

(5) All the relevant facts and circumstances must be taken into account in determining whether there is real commercial exploitation of the mark, including in particular, the nature of the goods or services at issue, the characteristics of the market concerned, the scale and frequency of use of the mark, whether the mark is used for the purpose of marketing all the goods and services covered by the mark or just some of them, and the evidence that the proprietor is able to provide: Ansul, [38] and 39]; La Mer, [22] - [23].
(6) Use of the mark need not always be quantitatively significant for it to be deemed genuine. There is no de minimis rule. Even minimal use may qualify as genuine use if it is the sort of use that is appropriate in the economic sector concerned for preserving or creating market share for the relevant goods or services. For example, use of the mark by a single client which imports the relevant goods can be sufficient to demonstrate that such use is genuine, if it appears that the import operation has a genuine commercial justification for the proprietor: Ansul, [39]; La Mer, [21], [24] and [25]."

Applying those principles, the judge held at paragraph [55] that the use of the words Shorinji Kempo on clothing for the students and Harrow members by those branches pursuant to SKU's express consent was sufficient for the purposes of s.6A.

Confusing Similarity

At the start of his judgment (between paragraphs [8] and [15]) Mr Justice Warren had considered whether the words Shorinji Kempo were descriptive of shorinji kempo as an activity or whether they referred exclusively to the WSKO. The judge decided that they were descriptive of the activity. Having decided that point it followed that the only distinctive part were the Japanese characters below the words in Latin script. As the BSKF's mark did not include any of those Japanese characters but words that were descriptive it followed that there was no similarity or, if there was similarity, there was no likelihood of confusion on the part of the public that would includes the likelihood of association with SKU's trade mark.

Comment

This is a useful case for practitioners and covers a number of issues other than those upon which I have focused in this case note such as the circumstances in which use of a mark by an agent can satisfy the requirements of s.6A. It contains some useful analysis of a number of decisions of the Court of Justice of the European Union, the English courts and several appointed persons. For that reason the hearing officer's decision is worth reading as well as that of the judge. Probably the best person to discuss this case is Thomas who can be reached on 020 7404 5252 during normal office hours, though I would be happy to discuss it too and can be called on the same number. If you want to discuss this case or any matter relating to IP law, message me through my contact form, twitter, Facebook, G+, Linkedin or Xing.

"What is meant by "Due Cause" in s.10 (3) of the Trade Marks Act? The Red Bull Case

Amsterdam   Source Wikipedia

According to Wikipedia Red Bull is the most popular energy drink in the world, with 5.2 billion cans sold in 2012. Its manufacturer, Red Bull GmbH, has registered the RED BULL mark has registered those words and their accompanying logo as word and device marks in trade mark registries around the world including the Benelux Office for Intellectual Property ("BOIP"). The company registered that sign with BOIP for non-alcoholic drinks in class 32 with effect from 11 July 1983. After decades of massive sales and extensive advertising nobody could argue that that mark has a reputation within the meaning of art 5 (2) of the Trade Marks Directive (Directive 2008/95/EC of the European Parliament and the Council of 22 October 2008
to approximate the laws of the Member States relating to trade marks OJ 8.11.2008 p 299/25). S.10 (3) of our Trade Marks Act 1994  implements that provision.

There is in the Netherlands a chain of hotels, coffee shops and other establishments retailing a range of other goods and services known as The Bull Dog. The Bull Dog's history including why it chose its trade name which makes fascinating reading can be found on the About Us page of its website. Hendrikus de Vries, the entrepreneur behind The Bull Dog, registered the words ‘The Bulldog’ combined with a a device with BOIP for a range of goods in class 32 on 14 July 1983. Subsequently, he also registered the words "The Bull Dog" as a word mark and the the word and figurative mark ‘The Bulldog Energy Drink’.

On 27 June 2005 Red Bull GmbH sued Mr. de Vries and his company, Leidseplein Beheer BV, in the Rechtbank Amsterdam (Amsterdam District Court) for an order requiring them "to cease production and marketing of energy drinks in packaging that displays the ‘Bull Dog’ sign or any other sign containing the word element ‘Bull’ or any other signs which are confusingly similar to the trade mark registrations of Red Bull." Mr de Vries and his company counterclaimed for the revocation, in respect of the Benelux countries, of Red Bull’s rights in respect of the mark ‘Red Bull Krating‑Daeng’. The Rechtbank threw out the claim on 17 Jan 2007 so Red Bull appealed to Gerechtshof te Amsterdam (Amsterdam Regional Court of Appeal).

The appeal court allowed the appeal holding

"first, that the mark ‘Red Bull Krating‑Daeng’ had a reputation within the Benelux countries and, secondly, that, because of the similarity, consisting in the common word element ‘Bull’, between that mark and the sign ‘The Bulldog’ used by Mr de Vries for energy drinks, the relevant public would make a connection between the trade mark and the sign, even if the two were not mistaken for each other."

The court also found that

the sign ‘The Bulldog’ was similar to the mark ‘Red Bull Krating‑Daeng’ and that Mr de Vries, by riding on the coat - tails of that mark with a reputation, had sought to take advantage of the reputation of that mark with a view to having his share of the energy drinks market held by Red Bull and corresponding to a multimillion euro turnover.

Despite evidence that Mr de Vries had used ‘The Bulldog’ sign before Red Bull had applied to register its mark the Gerechtshof te Amsterdam held that did not constitute "due cause" for allowing the use of that sign. In reaching its decision the appeal court considered itself to be bound by the Benelux Court in Colgate-Palmolive BV v NV Royal Distillery Erven Lucas Bols 1 March 1975.

Mr de Vries and his company appealed to the Hoge Raad der Nederlanden (Netherlands Supreme Court) on the grounds that Bols was no longer good law following the adoption of the Trade Marks Directive and the decision of the Court of Justice of the European Union in Case C‑323/09 Interflora Inc and another v Marks & Spencer Plc [2011] ECR I‑8625.  Accordingly the Dutch court referred the following question to the Court of Justice:

‘Is Article 5(2) of Directive [89/104] to be interpreted as meaning that there can be due cause within the meaning of that provision also where the sign that is identical or similar to the trade mark with a reputation was already being used in good faith by the third party/parties concerned before that trade mark was filed?’

in  its judgment in C‑65/12, Leidseplein Beheer BV, v Red Bull GmbH [2014] EUECJ C-65/12, [2014] WLR(D) 48 the Court interpreted that question as follows at paragraph [20] of its judgment:

"By its question, the referring court asks, in essence, whether Article 5(2) of Directive 89/104 must be interpreted as meaning that the use by a third party of a sign that is similar to a trade mark with a reputation in relation to goods identical to those for which that mark is registered may be considered to be with ‘due cause’, within the meaning of that provision, if it is demonstrated that that sign was being used before that mark was filed."

In their submissions  Mr de Vries argued that the use, in good faith, of a sign that is similar to a mark with a reputation, in the case where that sign was being used before that mark was filed, can be covered by the "due cause" exception.  Red Bull on the other hand contended that that concept covers only objectively overriding reasons.

The Court decided first to determine the scope of the concept of ‘due cause’ before then going on to assess whether, in the light of the finding made in that regard, the use made of a sign similar to a mark with a reputation, before that mark was filed, is liable to come within the scope of that concept in the case where that sign is used in relation to goods or services which are identical to those for which that mark has been registered.

Taking as its starting point the policy of the Directive, the Court held at paragraph [41] that:

" ...... the purpose of Directive 89/104 is generally to strike a balance between the interest which the proprietor of a trade mark has in safeguarding its essential function, on the one hand, and the interests of other economic operators in having signs capable of denoting their products and services, on the other (Case C‑145/05 Levi Strauss [2006] ECR I‑3703, paragraph 29).
42 It follows that the protection of rights which the proprietor of a trade mark derives from that directive is not unconditional, since in order to maintain the balance between those interests that protection is limited, in particular, to those cases in which that proprietor shows himself to be sufficiently vigilant by opposing the use, by other operators, of signs likely to infringe his mark (Levi Strauss, paragraph 30).
43 In a system for the protection of marks such as that adopted, on the basis of Directive 89/104, by the Benelux Convention, however, the interests of a third party in using, in the course of trade, a sign similar to a mark with a reputation must be considered, in the context of Article 5(2) of that directive, in the light of the possibility for the user of that sign to claim ‘due cause’.
44 Where the proprietor of the mark with a reputation has demonstrated the existence of one of the forms of injury referred to in Article 5(2) of Directive 89/104 and, in particular, has shown that unfair advantage has been taken of the distinctive character or the repute of that mark, the onus is on the third party using a sign similar to the mark with a reputation to establish that he has due cause for using such a sign (see, by analogy, Case C‑252/07 Intel Corporation [2008] ECR I‑8823, paragraph 39).
45 It follows that the concept of ‘due cause’ may not only include objectively overriding reasons but may also relate to the subjective interests of a third party using a sign which is identical or similar to the mark with a reputation.
46 Thus, the concept of ‘due cause’ is intended, not to resolve a conflict between a mark with a reputation and a similar sign which was being used before that trade mark was filed or to restrict the rights which the proprietor of that mark is recognised as having, but to strike a balance between the interests in question by taking account, in the specific context of Article 5(2) of Directive 89/104 and in the light of the enhanced protection enjoyed by that mark, of the interests of the third party using that sign. In so doing, the claim by a third party that there is due cause for using a sign which is similar to a mark with a reputation cannot lead to the recognition, for the benefit of that third party, of the rights connected with a registered mark, but rather obliges the proprietor of the mark with a reputation to tolerate the use of the similar sign."

The Court then considered the conditions under which the use by a third party of a sign which is similar to a trade mark with a reputation in relation to goods which are identical to those for which that mark is registered, where that sign was already being used before that mark was filed, may be covered by the "due cause" exception:

"53  In order to determine whether the use by a third party, before a trade mark with a reputation was filed, of a sign similar to that mark may constitute ‘due cause’, within the meaning of Article 5(2) of Directive 89/104, and justify the fact that that third party takes advantage of the repute of that mark, the referring court must carry out an assessment, taking into account, in particular, two factors.
54 In the first place, such an assessment requires a determination as to how that sign has been accepted by, and what its reputation is with, the relevant public. In the present case, it is not disputed that the sign ‘The Bulldog’ has been used for a range of hotel, restaurant and café services since 1983 or before. The date from which Mr de Vries has offered energy drinks for sale is, however, not specified in the order for reference.
55 In the second place, it is necessary to examine the intention of the person using that sign.
56 In this regard, in order to determine whether the use of the sign similar to the mark with a reputation was in good faith, it is necessary to take account of the degree of proximity between the goods and services for which that sign has been used and the product for which that mark was registered, as well as to have regard for when that sign was first used for a product identical to that for which that mark was registered, and when that mark acquired its reputation.
57 First, where a sign has been used prior to the registration of a mark with a reputation in relation to services and goods which may be linked to the product for which that mark has been registered, the use of that sign in relation to that latter product may appear to be a natural extension of the range of services and goods for which that sign already enjoys a certain reputation with the relevant public.
58 In the present case, it is not disputed that Mr de Vries uses the sign ‘The Bulldog’ in relation to hotel, restaurant and café goods and services which include the sale of drinks. Consequently, in the light of the recognition enjoyed by that sign among the relevant public, and in the light of the nature of the goods and services for which it has been used, the sale of energy drinks contained in packaging which displays that sign may therefore be perceived, not as an attempt to take advantage of the repute of the mark ‘Red Bull’, but rather as a genuine extension of the range of goods and services offered by Mr de Vries. That impression would be strengthened even further if the sign ‘The Bulldog’ was used for energy drinks before the mark ‘Red Bull Krating‑Daeng’ acquired its reputation.
59 Secondly, the greater the repute of the sign used, prior to the registration of a similar mark with a reputation, for a certain range of goods and services, the more its use will be necessary for the marketing of a product identical to that for which the mark was registered, a fortiori as that product is close, by its nature, to the range of goods and services for which that sign was previously used.
60 Consequently, it follows from all of the foregoing considerations that the answer to the question referred is that Article 5(2) of Directive 89/104 must be interpreted as meaning that the proprietor of a trade mark with a reputation may be obliged, pursuant to the concept of ‘due cause’ within the meaning of that provision, to tolerate the use by a third party of a sign similar to that mark in relation to a product which is identical to that for which that mark was registered, if it is demonstrated that that sign was being used before that mark was filed and that the use of that sign in relation to the identical product is in good faith. In order to determine whether that is so, the national court must take account, in particular, of:
– how that sign has been accepted by, and what its reputation is with, the relevant public;
– the degree of proximity between the goods and services for which that sign was originally used and the product for which the mark with a reputation was registered; and
– the economic and commercial significance of the use for that product of the sign which is similar to that mark."

Although that decision applies only to cases where the allegedly infringing sign was used before the registration of the mark with a reputation it is submitted that the methodology has a wider application. When a s.10 (3) point arises the following questions should be asked:

1. Is the defendant using in the course of trade in relation to any goods or services a sign which is identical with or similar to the registered trade mark? If no cadit questio, but if yes:
2. Does the registered mark have a reputation in the United Kingdom? If no cadit questio, but if yes:
3. Is the use of the sign taking unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark. If no cadit questio, but if yes the claimant wins unless the defendant can show "due cause".
4. Has the defendant's sign been used before the registration of the mark? If so then paragraph [60] above applies. If not, are there any other circumstances that would objectively justify the use of the sign notwithstanding the unfair advantage or detriment? 

It is perhaps impossible to catalogue all the circumstances in which such use would be justified but consideration of the way the sign has been accepted by the public and the defendant's intention would be relevant factors.

Although it has nothing to do with this case I have to mention that Amsterdam is he home of Ernst Meisner's Junior Company about which I have written screeds in Terpsichore my ballet blog, Clearly Amsterdam is as exciting and creative a place in business as it is in the arts.

If anybody wants to discuss this case or trade mark law in general you can call me on  020 7404 5252 during normal office hours or you can message me through my contact form. You can also tweet me, write on my wall or send me a message through G+, Linkedin or Xing.

Bilateral Investment Treaties: Eli Lilly and Co. v Government of Canada

in "Bilateral Investment Treaties: Claiming Compensation from Foreign Governments under Bilateral Investment Treaties for failing to provide adequate IP Protection" 27 July 2013 I mentioned a possible claim by the US company Eli Lilly & Co. against the Canadian government under Chapter II of the agreement between the US, Canadian and Mexican governments establishing the North America Free Trade Area ("NAFTA") for compensation for the invalidation of its Canadian patents by the courts of Canada. Eli Lilly claims that the invalidation of those patents is tantamount to expropriation which is contrary to art 1110 (1) of NAFTA.

Lawyers acting for Eli Lilly have now filed a notice of arbitration demanding that their claim be referred to arbitration under art 3 of the UNCITRAL Arbitration Rules before a tribunal consisting of three arbitrators, one appointed by each of the parties and the third presiding member to be appointed by agreement of the appointing parties with the seat of the arbitration in New York.

The significance of this claim for British business is that Chapter II of NAFTA is in similar terms to over 100 bilateral investment treaties ("BIT") which Her Majesty's Government has concluded with foreign governments mainly in the developing world. If a British company finds that its brands, technology or other intellectual assets have been appropriated or exploited in a foreign country without its licence and that the local intellectual property laws provide inadequate protection or remedies the company may be entitled to claim compensation under a BIT between HMG and the government of that country.

There has already been a similar claim by Philip Morris Asia against the Australian government under the BIT between Australia and Hong Kong on the ground that Australia's Tobacco Plain Packaging Act 2011 amounts to expropriation of Philip Morris's trade mark rights. Philip Morris's notice of arbitration and the Australian government's response appear on the Australian Attorney-General's website.  According to that website

"Australia and Philip Morris have agreed that three arbitrators will hear the case. Australia appointed Professor Don McRae of the University of Ottawa as an arbitrator. Philip Morris Asia appointed Professor Gabrielle Kaufmann-Kohler as an arbitrator. The Secretary-General of the Permanent Court of Arbitration appointed Professor Dr Karl-Heinz Böckstiegel as the presiding arbitrator. The tribunal was constituted on 15 May 2012. The First Procedural Meeting was held on 30 July 2012 in Singapore."

I discussed these developments in an article entitled "Bilateral Investment Treaties: A Remedy for SME?" which has now been published in Issue 12 of Volume 35 of the European Intellectual Property Review on page 759 and I have also written about the UAE's bilateral investment treaties in "The UAE's Bilateral Investment Treaties" in my NIPC Gulf blog (26 July 2013).

Because of our chambers' strength in public law and arbitration, this is an area of law of intellectual property law in which we feel entitled to claim expertise. We are planning a conference on claims under bilateral investment treaties in chambers and how they can be funded as soon as it can be arranged at which I and other colleagues from 4-5 Gray's Inn Square will speak.  If you want to discuss this note or any of my publications you may call me on 020 7404 5252 during normal office hours or you can message me through my contact form.  You can also tweet me, write on my wall or send me a message through G+, Linkedin or Xing.

Clause 13 of the Intellectual Property Bill will probably go through. What next?

The "Denver" claimed as a work of artistic craftsmanship in Hensher v Restawhile  [1976] AC 64
Source Centre for Intellectual Property and Information Law, Virtual Museum

Despite the submissions of Sir Robin Jacob, leading academic lawyers, the IP Federation, the IP Bar Association and the other intellectual property professions HM government seems determined to force through criminal sanctions for registered design and registered Community design infringement. Why HMG has set and indeed held to this course in the face of almost unanimous opposition from those who know most about intellectual property is a mystery but there it is. Governments do silly things sometimes of which the Dangerous Dogs Act is but one example.

What happens next
I have done all that I can as a citizen to persuade HMG to think again by 

• explaining in this blog why this proposal is a very bad idea, 
• lobbying my MP and even 
• remonstrating with the Minister in person when we shared a platform last week.

But it is not really my battle. Criminalizing registered design infringement does not affect me personally except perhaps as a consumer in that it may feather bed designs such as the "Denver" chair and sofa shown above which were once alleged to be works of artistic craftsmanship. I have therefore given some thought as to the possible consequences (and indeed opportunities) of the proposed legislation.

Invalidation
A registered or registered Community design cannot be infringed if it is invalid.  Unlike the United States where designs are protected by patent law, there is no substantive examination of applications for design or Community design registration in Newport or Alicante. Consequently, there are a lot of designs on both the UK and Community registers that ought not to be there. S.11ZA of the Registered Designs Act 1949 provides a number of grounds upon which a registered design may be declared invalid.   Art 25 of the Community Design Regulation lists the grounds upon which a registered Community design may be invalidated.  Applications for declarations of invalidity of registered designs may be made to the Registrar (that is to say the Intellectual Property Office) under s.11ZB of the Act and applications for declarations of invalidity of registered Community designs may be made to OHIM (Office for Harmonization in the Internal Market) under art 24 (1) of the Regulation. Registered and registered Community designs may also be declared invalid by the Patents Court or Intellectual Property Enterprise Court though the costs of applying to those courts would be higher. Recoverable costs in the Intellectual Property Office are regulated by Tribunal Practice Notice 2/2000.

Opinions
A rather more sensible provision of the Intellectual Property Bill is clause 11 which would extend the IPO opinions service to registered designs,  The clause would insert a new s.28A into the Registered Designs Act 1949 giving the Secretary of State power to make provision for the Registrar to give an opinion on specified matters "relating to—

(a) designs registered under this Act;
(b) designs of such other description as may be specified."

If, as is likely, the "specified matters" include validity of a design registration this would be a low cost alternative to invalidation. Though the Registrar could not remove a design that he considers to be invalid from the register under this provision it could perhaps provide a defence under the proposed s.35ZA (4):

"It is a defence for a person charged with an offence under this section to show that the person reasonably believed that the registration of the design was invalid."

What grounds could be more reasonable to found a belief that a registration was invalid than an opinion to that effect of an IPO examiner?

Threats Actions
S.26 of the Registered Designs Act 1949 will remain in force. That section provides:

"Where any person (whether entitled to or interested in a registered design or an application for registration of a design or not) by circulars, advertisements or otherwise threatens any other person with proceedings for infringement of the right in a registered design, any person aggrieved thereby may bring an action against him for any such relief as is mentioned in the next following subsection."

Those remedies are a declaration that the threats are unjustifiable, an injunction against the continuance of the threats and damages.

The threats do not have to be explicit to fall within the scope of this section. Anything that would lead a reasonable person to conclude that proceedings will follow non-compliance will suffice. An action may lie not not just against the party on whose behalf a threat was made.  It may also lie against a solicitor, patent attorney or indeed anyone else who utters the threat.  At present the only proceedings caught by this section are civil proceedings because these are the only proceedings that are available at present but if clause 13 goes through I do not see why s.26 should not extend to threats to bring those too.   This section may be an important safeguard against intimidation of departing employees or competitors.

Judicial Review
The proposed s.11ZB would require trading standards officers to enforce the new legislation but the resources of trading standards departments were limited even before austerity. I remember a meeting of the Licensing Executive Society in Leeds in 2005 or 2006 which was addressed by a local trading standards officer. I can't remember the exact figure but the sum of £25,000 has stuck in my mind which I think was his annual budget for counterfeiting and piracy prosecutions in the whole of West Yorkshire. Now it is unlikely that local authorities which are already strapped for cash and are likely to be looking for further savings will increase the budgets of their trading standards officers to take account of this new responsibility. Decisions on priorities are a matter for discretion and I can certainly see battles ahead in the Administrative Court as to how that discretion is to be exercised. Colleagues in my chambers who do public law and local government work are likely to be very busy.

Training
So, too, will some of my junior colleagues such as Alexander Rozycki who is following clause 13 closely and is likely to be one of the first experts in registered designs prosecutions. In the New Year we shall be holding training sessions in London and other cities on IP crime solicitors who expect or would like to do more of that kind of work.  If you would like to put your name down for one of those courses call George Scanlan on 020 7404 5252 during normal business hours or send him a message through out contact form. We will, of course, also be training our solicitor and patent attorney clients and connexions on the other provisions of the Bill.

Ill Wind
Although criminalizing registered design infringement is unlikely to do much for designers or British industry as a whole, it could be very good news for the Bar and the rest of the legal industry. Intellectual property law does not exist solely for the benefit of intellectual asset creators. It is supposed to strike a balance between their interests and those of their competitors and consumers. When that balance gets out of sync - as it did before 31 July 1989 when artistic copyright protected all sorts of rubbish for the life of the designer plus 50 years - it is not good for manufacturing but it can be very good for lawyers. Lord Younger and his Coalition colleagues are no doubt acting with the best of intentions but they should be careful of what they wish for.

Copyright Licensing BBC v EOS

As everyone knows, copyright restricts the acts listed in s.16 (1) of the Copyright, Designs and Patents Act 1988 ("CDPA") in relation to a work in which copyright subsists ("a copyright work"). Those acts include copying, issuing copies, renting, lending or communicating the work to the public etc. Anyone who does any of those acts without the owner's licence infringes that copyright. He or she may be sued or in an extreme case prosecuted.

Clearly, if you want to broadcast, perform or otherwise make use of a copyright work it is a good idea to get a licence. As all those lovely artists, choreographers, composers. dramatists, novelists, poets, song writers and other authors need to live it is only right that they get paid a reasonable fee for their trouble. But therein lies the rub because what may seem reasonable to you and me as consumers may not feel reasonable to an artist in his garret or, more importantly, his agent in his BMW. As I argued  at the Arab-British Chamber of Commerce conference on IP last week, copyrights and other intellectual property are not an unalloyed good for they confer monopolies which restrict competition and consumer choice.

Monopolies and exclusive rights are particularly baleful when the owners of those rights get together in collecting societies or other licensing bodies.  In saying that I mean no criticism of authors or other intellectual property owners.  It is after all only human to exploit an advantage. But to prevent intellectual property owners from holding the public to ransom some safeguards are required. In the United Kingdom these are provided by Chapters VII and VIII of Part I of the CDPA.  

Chapter VII regulates licensing schemes, that is to say schemes setting out -

(a) the classes of case in which the operator of the scheme, or the person on whose behalf he acts, is willing to grant copyright licences, and
(b) the terms on which licences would be granted in those classes of case.
The definition " includes anything in the nature of a scheme, whether described as a scheme or as a tariff or by any other name (s.116 (1)).

Chapter VIII provides for the Copyright Tribunal (originally set up by S.23 of the Copyright Act 1956 and then known as "the Performing Right Tribunal") to adjudicate disputes over the terms of licensing schemes between those who grant licences such as collecting societies and those who want licences over the terms of such licensing schemes.

A very good example of such a dispute is the one that arose between Eos (an association of Welsh language song writers and others) and the BBC over the terms on which Welsh language content was to be licensed to the Corporation. The content providers wanted £1.5 million while the Beeb offered £100,000. As they couldn't agree the BBC referred the dispute to the Tribunal.   For the BBC's side of the story see "Eos loses £1.5m BBC royalty battle and get £100,000" 16 Dec 2013. For Eos's see "Basic Facts about Eos and the Current Dispute with the BBC". For the Tribunal's decision, see BBC v Eos  (16 Dec 2013).

The provision under which the BBC referred the dispute was s.125 of the CDPA:

"(1) The terms on which a licensing body proposes to grant a licence may be referred to the Copyright Tribunal by the prospective licensee.
(2) The Tribunal shall first decide whether to entertain the reference, and may decline to do so on the ground that the reference is premature.
(3) If the Tribunal decides to entertain the reference it shall consider the terms of the proposed licence and make such order, either confirming or varying the terms, as it may determine to be reasonable in the circumstances.
(4) The order may be made so as to be in force indefinitely or for such period as the Tribunal may determine".

The Tribunal had already accepted the reference earlier in the year as the BBC had applied for an interim order to allow it to use the Eos repertoire at such a rare and on such terms as the Tribunal thought fit pending a substantive hearing (see BBC v EOS (17 May 2013). The substantive hearing took place in September.

The Tribunal found for the BBC on the amount of the royalty because there was already a licensing scheme in place for non-Welsh content between the Performing Right Society ("PRS") and the Mechanical Copyright Protection Society ("MCPS") and the BBC for which s.129 of the CDPA required the Tribunal to have regard. Eos had argued that this scheme was inapplicable because Welsh language authors had not been separately represented in the negotiation. It also contended that Welsh language material was a special case needing special treatment and, in particular, more money for content providers.  The Tribunal was unimpressed with those arguments.   It concluded at paragraph [52] that the PRS and MCPS alliance agreement was a useful starting point and that the methodology used by the BBC to allocate the licence fee payable under that (scheme which was based on content consumption) was a fair basis for apportionment. That would have resulted in a licence fee of £46,000 but it allowed an uplift to £100,000 to take account of special factors relating to Welsh content.

The irony of this case is that the content providers found themselves bound ultimately by the terms of a scheme with which they were dissatisfied and which had prompted them to leave the PRS and set up Eos instead (see the press release "Over 2,000 composers in Wales go it alone" 4 Oct 2012), In the light of the Copyright Tribunal's decision they can be forgiven for wondering why they bothered.  At paragraph [7] of its decision the Tribunal said that its discretion was not unfettered because the Act required it to take account of certain factors in coming to its decision but, if that is so, it is surprising.  The discretion in s125 (3) seems wide enough in that it allows the Tribunal to "make such order, either confirming or varying the terms, as it may determine to be reasonable in the circumstances (my italics)." It is true that s.129 to have regard to the availability of other schemes, or the granting of other licences, and to the terms of those schemes and licences but it is not hidebound by them and in particular it has a duty under s.135 to have regard to all relevant circumstances. If it so wishes Eos can appeal to the High Court on a point of law under s.152 of the CDPA but it must do so within 28 days from the date of the decision in order (rule 33 (1) of the Copyright Tribunal Rules 2010).

Should anyone wish to discuss this article or indeed copyright licensing in general he or she is welcome to call me on 020 7404 5252 during normal business hours or message me through my contact form. He or she can also tweet me, write on my wall or contact me through G+, Linkedin or Xing.

What's in a Name? WIPO Domain Name Dispute Resolution Panellists' Meeting 28 Oct 2013

Every year at the end of October the World Intellectual Property Organization ("WIPO"), the UN agency for intellectual property holds a one day conference at its head office in Geneva for its domain name dispute resolution panellists. I have been a member of that panel for the last 10 years and I have attended every panellists' meeting since 2005. I have got to know quite a few of my fellow panellists over the years and several of them have become good friends. This year the conference took place on the 28 Oct.

In previous years the focus had been on practical issues arising under the Uniform Domain Name Dispute Resolution Policy ("UDRP") such as how to deal with privacy services and what constitutes evidence of registration and use in bad faith. There was some of that this year.  Andrew Lothian of Demys Ltd presented an analysis of the decisions where the domain name comprised the trade marks of more than one entity such as Dr. Ing. h.c. F. Porsche AG v. Automotive Parts Solutions WIPO Case No. D2003-0725 where the disputed domain name <911hyundai.com> was composed of trade marks belonging to Porsche and Hyundai. Richard Lyon and Adam Samuel spoke about drafting decisions and Scott Blackmer discussed "passive holding", that is to say parking a domain name on a holding page.

I must say that I found Scott's discussion particularly useful for such use is often the only evidence of registration and use in bad faith. The leading case on that point is Andrew Christie's decision in Telstra Corporation Limited v. Nuclear Marshmallows WIPO Case No. D2000-0003 where the panel said:

“the relevant issue is not whether the Respondent is undertaking a positive action in bad faith in relation to the domain name, but instead whether, in all the circumstances of the case, it can be said that the Respondent is acting in bad faith. The distinction between undertaking a positive action in bad faith and acting in bad faith may seem a rather fine distinction, but it is an important one. The significance of the distinction is that the concept of a domain name "being used in bad faith" is not limited to positive action; inaction is within the concept. That is to say, it is possible, in certain circumstances, for inactivity by the Respondent to amount to the domain name being used in bad faith.”

As I noted in "Dr. Martens" International Trading GmbH, “Dr. Maertens" Marketing GmbH v. Argo Blue LLC/ Domains By Proxy, LLC WIPO Case No. D2012-0209:

"Even though this passage has been quoted many times and endorsed by many distinguished panelists, this Panel has never been comfortable with it. It appears to substitute the concept of acting in bad faith for the very clear words of paragraph 4(a)(iii) of the Policy that require registration in bad faith and use in bad faith. The notion that “use” can somehow connote “inaction” on occasions has led to oxymorons such as “passive use” that could well have emanated from George Orwell’s Ministry of Truth."

The guidance that I draw from Nuclear Marshmallows is as follows:

"It is clear, however, from a careful reading of the Telstra case that the panel did not ignore the double probanda. On the contrary, in paragraphs 7.3 to 7.6 the panel restated the need to prove both registration in bad faith and use in bad faith. The real lesson from Telstra however is that though registration in bad faith and use in bad faith are separate probanda the same evidence can be used for both. In most cases, the evidential burden is discharged by proving one or more of the circumstances in paragraph 4(b) of the Policy. Where that is not possible the complainant has to satisfy the panel that the circumstances of the case are eiusdem generis those in that paragraph.

In the last sentence of paragraph 7.10 of Telstra the panel noted that the circumstances identified in paragraph 4(b) of the Policy are "without limitation" - that is, paragraph 4(b) of the Policy expressly recognizes that other circumstances can be evidence that a domain name was registered and is being used in bad faith. In the next paragraph the panel asked what those circumstances could be and concluded that the question could not be answered in the abstract but only in respect of the particular facts of a specific case."

And of course each case turns on its own facts.

Finally, David Bernstein discussed the relevance of the UDRP in other forums.  Having a personal and professional interest in bilateral investment treaties (see "Bilateral Investment Treaties: Claiming Compensation from Foreign Governments under Bilateral Investment Treaties for failing to provide adequate IP Protection"  27 July 2013) I was interested to learn that the US government had negotiated compliance the UDRP in several of its agreements.

Discussion on the UDRP ended at 11:20 and the rest of the day was devoted to dispute resolution in relation to the new generic top level domain names ("gTLD").  This was particularly timely in view of ICANN's announcement on the 23 Oct 2013 of the delegation of the first new gTLDs (see the ICANN press release "Internet Domain Name Expansion Now Underway"). For those who have not been following the story, ICANN (Internet Corporation for Assigned Names and Numbers the California not for profit corporation that oversees the Internet domain name system pursuant to a memorandum of understanding with the US government) has made elaborate arrangements for increasing the generic top level domain space from those ending in one of 22 suffixes (".com", ".org", ".net" ".biz", ".info" etc) to more or less any number. 

There has been a lot of hype about this expansion and I remember similar kerfuffles when ".biz", ".info" and ".pro" were announced in 2000 (see David Cohen "Magnificent Seven?" 17 Nov 2000 New Scientist) and later when the ".eu" TLD was trumpeted (Chris Morris "EU to launch its own web domain" 21 Apr 2005 BBC website). Whether we shall actually need all those new domain names in view of the new generation of apps that retrieve exactly the information we need which Andrew Christie pointed out on Monday remains to be seen.  This could be the biggest development in the internet since the launch of the worldwide web or it could be the dampest or damp squibs since the Thames jubilee pageant. 

For those who want to know more about this TLD expansion the bible is the "Applicants' Guidebook" which you can download in several languages from ICANN's new gTLD website.  ICANN intends to launch new gTLDs in phases and applications for the first phase opened on the 12 Jan 2012 and closed on 29 March 2012.  There have been quite a few applications - some 1,409 according to Blackknight's dotWhat.co website including 40 from the UK.  Although there have been applications from banks such as Barclays and HSBC, the luxury car makers Bentley, Jaguar and Landrover, fashion outlets Next and Lipsy as well as the BBC, ITV and The Guardian the opportunity to register a corporate name or trade mark as a TLD does not seem to have taken British industry by storm. Even the Cayman Islands, BVI and Gibraltar mustered more applications than the mother country (see "Number of applications per Country" dotWhat.co).

The most interesting statistic is the number of applications by company. Top of the list is the US start-up company Donuts Inc which has made 307 applications.  Next comes Charlston Road Registry on behalf of Goodgle with 101 and Amazon EU Sarl with 78. Donuts claims over US$100 million in VC and private equity funding and an experienced management team.  It will be instructive to analyse their business model once they are operating their domain spaces.

From a legal point of view the most interesting part of this expansion has been the resolution of disputes with existing trade mark proprietors and the rest of the speakers addressed that topic.  Andrew Christie and Ty Gray discussed the Legal Rights Objections filed with the WIPO Arbitration and Mediation Centre nearly all of which had been dismissed. Tony Willoughby outlined the other grounds of objection, namely string similarity and limited public interest and community objections.  Joanne Teng discussed the Trademark Clearinghouse which is supposed to make it easier for trade mark proprietors to register domain names during a "sunrise" or priority period, monitor adverse domain name registrations and launch Uniform Rapid Suspension ("URS") proceedings.  Nicholas Smith considered the URS which allows for the suspension but not transfer or cancellation of a domain name very quickly and at very low cost.  Joanne outlined the Post-Delegation Dispute Resolution Procedure ("PDDRP") which seems to be a very complex and expensive procedure.   Finally, Fred Abbott talked about the impact of the new gTLDs on the UDRP and Karen Fong and Matthew Harris suggested some trade mark strategies for the expanded domain name system.

Although the first phase of TLD expansion is over the Applicants' Guidebook promises more shortly.  It will be interesting to see whether there are any more and on what scale.   Also interesting will be how Donuts, Google and Amazon resolve any disputes that may arise in their domain spaces and what use, if any, is made of the URS, PDDRP and Trademark Clearinghouse.  If you are interested in any of those matters these chambers have more expertise than most when it comes to domain name dispute resolution with three members upon WIPO's arbitration, mediation and dispute resolution panels and our own domain name dispute resolution advisory and representation service. Call me on 020 7404 5252 during office hours or use my contact form. You can also tweet me, write on my wall or send me a message through G+, Linkedin or Xing.

Further Reading

New Generic Top Level Domains
Jane Lamber "London Pride: a Domain Name for Name for London" 4 Nov 2013 IP London
Mark Schweizer "New generic Top Level Domains – who registers them and why?" 13 Sep 2013 IPKat

Panellists Meetings
Jane Lambert "Needled in Geneva" 18 Oct 2005
Jane Lambert "Domain Names: 10 Years of UDRP" 10 Jan 2010