Friday, 26 October 2012

Design rights: remedies for innocent infringement

It's a hazard of modern business life that, if you are offering things for sale, at some point you will receive a letter from someone claiming that you are infringing their intellectual property rights. Fashion retailers in particular can suddenly be told that goods they are selling infringe a design right, registered or unregistered, UK or Community. The letters we see range from the very reasonable to the aggressively ridiculous. There seems to be an increasing trend of demanding all sorts of things (damages, expenses and the like) to which there is simply no entitlement from someone who has merely offered for sale something that they had no reason to suspect infringed anyone's rights: an innocent, secondary infringer. So what penalty might such a retailer face? The answer is, it depends.



Coco Chanel once said: “Only those with no memory insist on their originality.” She is also said to have asked how there could be fashion at all without copying. You can see what she meant. If there is to be a true fashion industry, as opposed to a few elite designers selling to the hyper-rich, then there are going to have be followers as well as leaders

"[There is] the familiar argument that copying helps to drive innovation. But copying does something even more important: it helps define what exactly is fashionable...copying helps condense the market into something that consumers can understand, so people want to follow trends, they want to be able to dress in a way that's in style; they have to understand that. That is, without copying, the sense of what is fashionable right now would be diminished, leading to a fractured fashion market."

But don't the same arguments apply in relation to popular music? No-one argues that it is unreasonable to grant protection (in the form of copyright) to the works of musicians and lyricists. Now, of course, there's copying and copying. The usual distinction as framed by fashion aesthetes is between “drawing inspiration from” (good) and “copying” (bad). A designer who “understands” the work of another may be “inspired by it” whilst one who doesn't is guilty of “slavish copying”. So, there are going to be competing views within the industry of whether any, and if so what, protection the law should give the work of fashion designers.

It is perhaps something of a surprise but in the United States the protection afforded is minimal. A couple of years ago, a set of proposals to introduce what to European eyes seemed fairly basic, sui generis, protection to fashion designs for a period of three years, caused a storm of criticism and ultimately failed. The basis of opposition was consistent. One commentator said:

"We know what a world without fashion copyrights would look like, because we live in one today and we’ve always lived in one. It’s a world full of innovation in the field of design, and also full of various kinds of knock-off. Fashion leaders introduce new concepts, and cheaper imitators come along and follow the pack. In order to remain distinctive, the leaders are driven to further imitate."

And another was just as trenchant:

"It's not like people are thinking, 'Hmm, I can either buy this $7,400 Marc Jacobs blazer or buy this identical one for $17.40 at Ye Olde Knockoff Shack.' Marc Jacobs is not going to sell any more $7,400 blazers because the cheap alternatives have been put out of business. All that is going to happen is that poor people are going to look less fashionable than ever when they have to wait to buy this year's runway looks..."

The position here is different. Designs may be registered at UK or European levels. In the UK, registered designs are protected under the Registered Designs Act 1949 by a 25 year long exclusive right to the design whilst the Copyright Designs and Patents Act 1988 prevents the copying of some unregistered designs . The European Regulation on Community Designs provides protection throughout the EU for both registered and unregistered designs. So, here, there is no doubt that designers are protected against the deliberate copying of their work.

But sometimes a design right can be unwittingly infringed. It is perhaps unlikely that a designer will, without copying, exactly reproduce the earlier work of someone else. But what about a retailer? The protection afforded prevents not just manufacturing but offering for sale an article that infringes an existing design right. How can a retailer know whether any range offered to him by a supplier infringes someone else's rights?

Reasonably enough, deliberate copying or intentional infringement will entitle the holder of a Community or UK design right to claim damages from an infringer, whether manufacturer, or retailer. The position is different, though, when it comes to unwitting or innocent infringement Not only is it different but it varies, according to the kind of right held. The decision in J Choo (Jersey) Ltd. V Towerstone Ltd established that even innocent breach of a Community right may allow a claim for accounting for profits. The rights available to holders of a UK unregistered right are provided by the Copyright,Designs and Patents Act 1988. The combined effects of sections 226 , 227, 229 and 233 are that a retailer who did not know, and had no reason to know, that the goods he has dealt with infringed a right will be liable to pay a reasonable royalty only and a manufacturer or importer will have to account for profits. The position in respect of a UK registered right is set out by s24B of the Registered Designs Act 1949 which provides that someone who was unaware, and had no reason to believe, that the right asserted existed will not be financially liable by way of damages or an accounting for profits.

In 2010, the UK's Intellectual Property Office launched a consultation into how the various regimes could be harmonised. Two options were proposed: the Community Design Regulations 2005 could be amended to provide that no damages or accounting could be demanded from an innocent infringer of a Community right or the 1949 Act could be amended to allow a claim for damages or accounting from even an innocent infringer. In light of the response received, the Government proposes to amend the 1949 Act to recover for innocent infringement but to restrict that to a claim for accounting for profits.

The rationale was that the Register of Designs is searchable. The compromise prevents someone who has chosen not to search the Register from keeping his profits whilst allowing innovation from designers who will not have to pay damages for innocently infringing an existing right. The IPO recognises that although the treatment of design rights is more closely harmonised, there are still discrepancies between the ways different kinds of intellectual property are treated: there are no differences, for example, between the remedies available against deliberate and unintentional trademark infringement. The IPO believes however that these differences reflect the different natures of the rights and the ease or otherwise of searching for prior rights or art and interpreting the results of such a search. It feels that the compromise is proportionate, balanced and fair.

The process for getting Parliamentary approval is such that it is likely to be spring next year before the changes take effect.

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