UK Referral to CJEU on Unregistered Designs Could Have a Big Impact Post-Brexit

For many years, unregistered Community design (UCD) protection has offered designers a flexible and free form of protection for their designs across the European Union.  However, European case law suggests that this right is only generated by disclosures that take place within the EU, but is judged for novelty against disclosures that may have taken place anywhere in the world.

With the UK set to leave the EU, the implications are clear – after Brexit, the first disclosure of a design in the UK could have the unintended consequence of prohibiting access to unregistered Community design protection.  However, a new referral to the CJEU seeks to question whether the status quo surrounding UCDs is correct.

How Brexit Could Affect Unregistered Design Rights

Unregistered Community designs have long been a valuable form of protection in fast-moving industries such as the fashion industry, in which the 25 years of protection afforded by registered designs is overkill for products which may only be relevant for one season.  However, with the UK on its way out of the EU, this valuable Europe-wide protection is set to be broken up in to two separate unregistered design systems.

The present situation looks set to leave businesses having to choose between the impracticalities of arranging for simultaneous disclosure in the UK and EU, or deciding between unregistered UK and EU protection.  With the EU being the larger market and with UK registered designs being significantly less expensive than their registered European counterpart, it seems likely that many businesses will opt for a first disclosure in the EU, perhaps to the detriment of many UK industries.

The Law Governing Unregistered Design Rights

The leading jurisprudence on the circumstances of disclosure comes from the German Federal Supreme Court, and this decision is not without its critics.  The controversy surrounding their decision stems from the fact that the law sets out that the design right should be triggered by a disclosure that “could reasonably have become known” to the relevant sector within the EU, and using similar wording sets out that for any unregistered design to be valid, it must be novel over earlier designs made available to the public, except where their disclosure “could not reasonably have become known” to the relevant sector within the EU.

In reaching their decision, the German court relied on a transitional provision introduced in 2003 and applicable to new member states, which says that a “design which has not been made public within… the Community shall not enjoy protection as an unregistered Community design”.  However, critics have questioned why so much weight has been given to a transitional provision when the original wording of the law presented the two types of disclosure so similarly.

The Questions Referred to the CJEU

Now, the UK’s intellectual property court, IPEC, has been hearing a case between Beverly Hills Teddy Bear Company v PMS International Group plc, the latter of which is no stranger to landmark design cases, being a party to the Trunki case concerning registered UK designs that made its way to the UK Supreme Court.

In this case, the designer asked the question that many critics of German decision had been asking for years: how could it be that his disclosure in Hong Kong could become known to the sector in the EU for the purpose of novelty, but did not thereby act as a disclosure triggering the unregistered design right in view of the similar wording governing the two aspects of the law?

IPEC has now referred two questions to the CJEU to seek to bring clarity to the apparent asymmetry between the types of disclosure that bring about design protection and which act as prior art.

The first question asks whether unregistered design protection could be generated by a disclosure that takes place outside of the EU, and the second question asks what the relevant date is for judging the novelty of an unregistered design.

What Could Happen Now?

The CJEU will now have the opportunity to give its view on the present interpretation of the law surrounding UCDs and decide once and for all whether unregistered European design rights can be generated by disclosures outside of the EU that nonetheless become known within the territory.

If they endorse the established position, then businesses will have to reconsider their design strategy to avoid missing out on unregistered rights in the EU after Brexit.  The options for protecting their designs in both jurisdictions will require either simultaneous disclosure or at least one registered right.  Either way, the status quo looks set to cost businesses, as they have to take extra steps to secure their position across the UK and Europe.

On the other hand, if the CJEU takes the bold step of contradicting the jurisprudence, then this would not just mean that UK disclosures post-Brexit would generate UCDs, but would mean that many disclosures worldwide are and have been generating these unregistered rights in Europe.  Moreover, with the UK having proposed a supplemental registered design right after Brexit that would require first disclosure in the UK, this would appear to put EU companies on the back foot, as only a disclosure in the UK could provide unregistered protection across the whole of the UK and the EU.

Of course, another possibility is that, if the UK leaves the EU in the near future, the CJEU could decline to take this referral, in which case the opportunity for clarity on this issue could be missed.

Regardless of how this referral plays out, it is clear that businesses will have more to think about when it comes to securing their design rights after Brexit.  If you are a business that values the appearance of its products and would like to find out more about registered and unregistered designs, please contact our Designs team.