IP Myth #124,732: Patents and designs are useless without millions for their defence

IP Myth #124,732: Patents and designs are useless without millions for their defence

Summary

In good news for designers and inventors, a recent decision by the English High Court has forced a heavy reduction in expenditure associated with registered design infringement litigation. Australia has somewhat similar design and litigation rules; and given recent moves here in the same direction, the decision seems likely to influence further reductions in local IP enforcement costs.

Registered designs protect visual features of a product, and those substantially similar in overall impression. The protection is almost entirely provided by the drawings of the product. Comparison of those drawings with an alleged infringement is therefore simple and fast, which can make it a commercially desirable form of protection.

Pre-game warmup

This case concerns a toy that is often on the sold-out list in retail toy outlets. It is Bunchems, and it was Activity Toy of the Year 2016 for “inspiring creative play through various forms of activity”. A European community design for Bunchems was filed on 16 January 2015 by Spin Master Ltd. When Clingabeez (by PMS) later arrived on the European market, Spin Master alleged infringement.

The Bunchem looks like this in the design drawings:

Bunchem Clingabeez(In red: Clingabeez)

 

A fast game is a cheaper game

The parties came to a case management conference and had been preparing for a trial of about a week in length – Spin Master estimated six days and a budget of £776,000 and PMS estimated, four days (£360,000). There had been no allegation of invalidity – only a defence that Spin Master had made unjustified threats – so the case turned on infringement alone. Justice Carr thought that the higher figure was “far too much” and reminded the parties that there was clear guidance from the Court of Appeal for him to direct a shorter, more cost-effective hearing. In light of those guiding decisions, and being mindful of other users of the courts, he ordered that the parties therefore consider that:

  1. registered designs are concerned with visual impression, and that is best viewed by eye, and not described in words;
  2. the issues are mainly limited to freedom to innovate, and cross examination on that matter should be limited to that which is justifiably useful if at all allowed; and
  3. whether a defendant actually copied the design is not relevant to infringement.

Justice Carr proposed a limit on the length of expert evidence, to 15 pages. He forbade more than two pages from an expert on the background art, and there was to be nothing at all from an expert on the overall impression of the allegedly infringing product, it being a matter for the court to decide. He limited the trial length to three days, and flagged that it would be likely to be shorter.

This reduction in expenses will be welcome news to Spin Master, who has obtained injunctions in Poland, Germany and The Netherlands against various manufacturers, and have shut down 14 other manufacturers in China.

But would it happen here in Australia?

Good litigation is as little litigation as possible

In Australia, infringement of a design is decided by assessing substantial similarity in overall impression, just as in Europe, but decision makers must consider a range of other issues. Those include: a Statement of newness and distinctiveness as well as the importance of any similar features. Also, the amount, quality and importance of a feature that is highlighted in the Statement; all the while having an eye to the context of the overall design. Functionality is not a bar to registration. These factors may complicate things down here, but in designs at least, there seems no reason those issues cannot be economically put. If Dieter Rams were in charge, he would require it.

There may be changes coming up in a government response, due any day now, to the Productivity Commission’s report on IP arrangements. These may include a specialist IP judge list in a lower court with limited damage awards – the Federal Circuit Court – and trial limits there of two days. This may present businesses a compelling low-cost enforcement option, particularly if the goal is only to stop an infringer. The Productivity Commission suggests that in a similar lower UK court, the Intellectual Property Enterprise Court, most cases are dealt with for less than £40,000 (A$66,000).

Finally, the current prevalence of Federal Court-ordered mediation already assists with rapidly and surely dealing with disputes.

Conclusion

Registered designs can be simple and flexible and can be used to protect innovators from copycats in many ways. While they can be more limited in scope than patents, the scope of a design’s monopoly can be more easily understood and thus rapidly enforced. They are better than copyright because independent generation of an infringement is covered. We have found them to be effective in simple and inexpensive operations such as website takedowns in online marketplaces, to negotiating licences at mediation, and all the way to Federal Court injunctions.  These latest developments here in Australia and overseas in reduction of enforcement costs should make them even more commercially relevant to designers in maintaining a strong IP position against copycats.

 

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