UK: Intellectual Property - Recent Changes in Law and Their Effect on Your Business

Last Updated: 20 November 2002
Article by Fiona Russell

gossIP

A.Fulton Company Ltd -v- Totes Isotoner (UK) Ltd: On 31 October His Honour Judge Fysh QC gave judgment for the claimant in the Patents County Court in this case for infringement of registered and unregistered design. Gouldens represented the claimant. See the article, "Stop Press".

  • Community Patent: The Danish Presidency left this issue alone for a while so as to provide a cooling off period. If agreement cannot be reached on the language and litigation issues it is unfortunately possible that the whole project will be dropped at the EU Summit in December.
  • European Patent: the litigation issue is also dogging the conclusion of a Litigation Agreement for European Patents. This will now be discussed by EPC Member States in December but it remains uncertain that any agreement will be reached.
  • Patents Court: the principal English Patent Judges have set up a working party to look at the present system for hearing patent disputes. The working party is headed by Mike Barlow, BP's head of IP and will look to see how the system might be streamlined to deliver a quicker more efficient service at reduced cost.
  • Community Registered Design: with the adoption by the Commission of the Implementing Regulation the advent of the Community Registered Design is not now far off. Applications are expected to be able to be made on 1st January 2003 and will be given a filing date of 1 April.

Design Right

L. Woolley Jewellers Ltd -v- A & A Jewellery (London) Ltd : [2002] EWCA CA Civ 1119

The Court of Appeal considered the trial judge’s approach to infringement of design right and concluded that in applying the test for infringement of copyright the judge had been wrong. The tests for infringement of the two rights were different.

The parties were both jewellery manufacturers. The piece of jewellery in question was a pendant which made use of obsolete and imitation coins called inserts which were kept in place by lugs within the mount. The lugs could also be formed within a bezel, a ring with lugs placed over the circumference of the insert. The claimant's design drawing was of a pendant without an insert and was a combination of the features - the bail (a piece of metal attached to the pendant through which a chain was threaded), the bezel, the mounting and the decorative edging. The area around the insert had an outline of three heart shapes into which a bail had been inserted. The centre of the bail was also cut out in a heart shape.

The judge had held that the parts protected by design right were the decorative edge, consisting of the three heart motif, and the bail which took the chain. There was no appeal against this finding. The bail was held to be the designer’s own design and the combination of the bail and heart motif was original, not commonplace and thus entitled to design right.

The bail but not the heart motif had been copied. The question at issue was therefore whether the copying of just the bail amounted to copying of the design. The judge applied the approach of copyright law – copying of a "substantial part". He considered whether the bail could be said to be a substantial part of the design and decided it was and so as it had been copied there was infringement.

The defendant appealed against that approach. The Court of Appeal referred to the judgment of Aldous J in the well known first reported design right case – C & H Engineering -v- Klucznik & Sons Ltd [1992] FSR 421 – where he said that under Section 226 Copyright, Designs and Patents Act 1988, there will only be infringement if the deisgn is copied "so as to produce articles exactly or substantially to the design". The alleged infringing article must be compared with the document or article embodying the design.

The Court of Appeal held that "there is a difference between an enquiry into whether the item copied forms a substantial part of the copyright work and an enquiry whether the whole design containing the element which has been copied is substantially the same design as that which enjoys design right protection." They added that it might not be enough to have copied a part, even a substantial part and that regard had to be had to the overall design. The judge had not done so.

The Court of Appeal remitted the case back to the judge for further consideration on this point.

Passing Off

NICHOLS Trade Mark Application

The Trade Marks Harmonisation Directive continues to throw up important questions of interpretation, on fundamental questions of trade mark law, some 8 years after its implementation by the Trade Marks Act 1994. The present case, an appeal from refusal of a trade mark application, heard by Mr Justice Jacob, asks the question whether a fairly common surname may be registered as a trade mark, or alternatively, should be regarded as "devoid of any distinctive character" until consumers come to recognise it, through its use in the course of trade, as identifying the goods and/or services of a particular business. The judge felt this question to be ripe for referral to the ECJ.

The traditional position in the United Kingdom is that the use of a common surname as a trade mark does not distinguish the particular trade source of the goods and/or services in question.

In the words of Mr Justice Jacob, "until the mark is known and established, all that one can say is it indicates that the goods come from a member of a large class having that name". Accordingly, the UK Trade Marks Registry has been reluctant to grant registration of common surnames, particularly where the goods and/or services are themselves fairly common, and likely to be provided by a large number of traders. The judge gave the example of a hypothetical Dr Smith registering his name as a trade mark in relation to medical services, and thereby potentially impeding thousands of similarly-named practitioners around the UK from running practices under their own name. For this reason, the UK Trade Marks Registry refuses registration of common surnames unless the applicant is able to show that the name already in fact functions as a trade mark, as the result of its use in connection with the applicant's business.

The present application by Nichols plc was unsupported by evidence of distinctiveness acquired through use. The applicant appears to have been encouraged to make this "bare" application by three factors:

  • the Trade Marks Harmonisation Directive does not expressly exclude surnames from registration. This is to be contrasted with geographical names which are specifically mentioned as being non-distinctive. The UK Registry's justification for continuing to refuse to register common surnames was that they fell within the category of "trade marks which aredevoid of any distinctive character" for the reasons mentioned above.
  • the Office for Harmonisation in the Internal Market, which administers the Community trade marks system does not object to common surnames as being non-distinctive;
  • the recent BABY DRY decision of the ECJ suggested that possible defences available to other traders should be taken into account when applications to register borderline trade marks, of little distinctive character, are being considered. In the present case, the availability of the "own name" defence meant that other traders called Nichols, Nicholls or Nichol should not be unduly prejudiced by the applicant's registration of its mark.

Jacob J made no bones about the fact that the law is currently unclear on this issue. There were good reasons why the traditional UK approach should be maintained, primarily the fact that if there is potentially a significant number of traders using the same name in relation to the same goods and/or services, the name cannot be said to distinguish one particular trader's goods or services from those of other businesses.

The judge's reasoning on the question of whether the "own name" defence (or defences generally) should be taken into account is very persuasive. Registration of weak trade marks is placing "a powerful weapon in powerful hands" and imposes a burden on other traders. Larger, more sophisticated, and better organised businesses would acquire rights which could be asserted against the public in general, and against weaker companies, who, even if they had a good defence, might not have the resources nor the inclination to resist a threatened infringement action. This would shift the balance of power too far in favour of big business. The BABY DRY decision had raised for the first time the possibility that defences should be taken into account when deciding to register a weak mark, and appeared to contradict the approach of the UK, other EU jurisdictions, and even earlier ECJ case law.

In accordance with the parties’ wishes, Mr Justice Jacob stated his reasons for making a reference to the European Court of Justice without providing his own provisional answer. The precise wording of the questions is not published in the approved judgment, but it is to be expected that they will deal with the treatment of applications to register common surnames without evidence of distinctiveness, and the extent to which defences to infringement are relevant when considering trade marks of borderline distinctiveness.

Although it can often be frustrating for businesses to have their trade mark applications refused on grounds of non-distinctiveness, the alternative, a first-come, first-served system which imposes on third parties the obligation to justify their use of their own surname, or of other weak or non-distinctive "trade marks", underlines the benefits of the traditional UK approach.

R.-v-Zaman [2002] : [2002] EWCA Crim 1862

The Defendant had been convicted under Section 92(1)(c) Trade Marks Act 1994 (the Act) of nine offences of possession of goods and material "with a view to" the unauthorised use of a registered trade mark contrary to that section. Under that section it is an offence for a person "with a view to" gain by himself or another, without the consent of the trade mark owner, to have in his possession, custody or control, in the course of business, any goods which bear a sign identical to or likely to be mistaken for a registered trade mark with a view to selling or exposing those goods for sale.

The Court of Appeal considered the meaning of the words "with a view to" in section 92(1). The Defendant had appealed on the ground that "with a view" should be construed as meaning "with intent to".

The Defendant had sold a quantity of jeans, imported form Pakistan, to a Mr Sami who subsequently failed to meet all of the outstanding debt. Mr Sami returned some 600 pairs, together with false designer labels and buttons (not being originally supplied by the Defendant) as security for the debt. The designer labels included Versace, Armani, Hilfiger, Calvin Klein and Levi Strauss.

Almost 18 months later, the Defendant had still not been paid by Mr Sami and he attempted to sell a few of the jeans to re-coup his losses. The jeans, buttons and labels were subsequently seized by the local Trading Standards officer and criminal proceedings commenced.

The Judge directed the jury that "with a view to gain by himself or another" meant that it was in the Defendant's mind a real possibility, something that might realistically happen to the jeans if they were returned to Mr Sami. The Court of Appeal on this definition agreed with the judge's summing up and that the sale by Mr. Sami of any jeans returned to him by the Defendant was something that might realistically happen.

On appeal, the Defendant referred the Court of Appeal to Morcom's Modern Law of Trade Marks (1999) where the view is expressed that "with a view to" should be equated with "with intent to". The Court of Appeal did not accept this argument noting that as the draftsman had differentiated the phrase "with a view to" and the phrase "with intent to" in the first part of section 92(1) it would be surprising if the concepts had the same meaning. On the basis a distinction was to be drawn, the Court of Appeal agreed that the Judge had correctly directed the jury.

The Court of Appeal felt that the apparent harshness of the offence (which does not require any element of dishonesty) was mitigated by the fact that an actual infringement had to be shown (Johnson – CA) and the defence under section 92(5) is available if theDefendant can show he believes on reasonable grounds that use of the sign was not an infringement of the registered trade mark. However, that defence had not been available on the facts and the Defendant's convictions were upheld.

In summary, the phrase "with a view to" should not be equated with "with intent to". As stated in Kerly's Law of Trade Marks (2001) this part of the test will almost always be satisfied if the Defendant's acts are done for any kind of commercial purposes.

E-commerce corner

E-Commerce Regulations

The main body of the Electronic Commerce (EC Directive) Regulations 2002 ("the Regulations") finally came into force on 21 August 2002. The Regulations implement the Electronic Commerce Directive for all purposes other than financial services (which are dealt with in four separate statutory instruments and are not discussed here). The aim of the Directive is to harmonise laws throughout the EU relating to "Information Society Services".

The Regulations address the following issues:

Governing Law / Jurisdiction: It had been hoped that the Directive would address the question of applicable law by adopting a strict country of origin approach (i.e. applicable law is that of a service provider's home state), but neither the Directive nor the Regulations go quite so far. Under the Regulations service providers established in the UK must comply with UK law both when providing services in the UK and to persons in the EU (and EEA under an equivalent instrument). Service providers established elsewhere in the EU will be regulated by the relevant authorities in the applicable Member State. However, certain fields are excluded altogether from the scope of the Regulations (e.g. taxation, data protection, competition, activities of notaries, representation in defence of a client before the courts and betting, gaming or lotteries), whilst others are excepted from the scope of the country of origin approach (e.g. copyright, industrial property rights, freedom of parties to choose applicable law to a contract, consumer related issues and permissibility of sending unsolicited email). This means that in some areas English law will continue to apply to non-UK service providers in the ordinary way and similarly, depending upon implementation of the Directive in other Member States, in certain areas UK based service providers supplying services outside the UK will still be subject to compliance with the laws of such Member States.

Disclosure Requirements: The Regulations also increase disclosure requirements for service providers in order to promote consumer confidence.

There are four categories of disclosure requirements under the Regulations:

(i) general information;

(ii) commercial communications;

(iii) unsolicited commercial communications:

(iv) contracting on line.

Unsolicited e-mail commercial communications or "spam" will also be subject to new rules under the conditions of the Directive on Electronic Communications Privacy (discussed in the previous edition).

Each of these categories requires compliance with certain disclosure regulations, some of which overlap with the Consumer Protection (Distance Selling) Regulations 2000. However, service providers will have to ensure that they comply with both pieces of legislation. Failure to comply with the disclosure requirements may, in certain circumstances, provide customers with a cause of action in damages for breach of statutory duty or may entitle a customer to rescind a contract.

ISP Liability: The Regulations aim to provide a degree of certainty regarding ISPs’ liability. ISPs that carry out the following activities will generally not be liable for damages or any criminal sanction for information conveyed or stored in the course of these activities, provided that only a passive role is undertaken:

(i) Acting as mere conduit – ISPs transmitting information on behalf of a recipient of the service or providing access to a communication network will be exempt from liability where they did not initiate the transmission, select the receiver of the transmission or select or modify the information contained in the transmission. Any storage of such information must be for no longer than is reasonably necessary for the transmission.

(ii) Caching – ISPs caching information on their servers for the sole purpose of facilitating access to information for subsequent users will not be liable in respect of such information provided, amongst other things, that they act expeditiously to remove or disable access to the information on obtaining actual knowledge of the fact that the information at the initial source of the transmission has been removed from the network, or that access to it has been disabled, or that a court or administrative order has ordered such removal or disablement.

(iii) Hosting – ISPs that host material at the request of a recipient of the service will not be liable in respect of such information providing that they do not have actual knowledge of any illegal activity and that on obtaining actual knowledge, they act expeditiously to remove or disable access to the information.

Unfortunately, the Regulations do not specify in what circumstances an ISP will be deemed fixed with "actual knowledge". This may still prove to be a contentious issue and ISPs must therefore continue to exercise vigilance.

Application: The Regulations will apply to all on-line aspects of a service irrespective of whether the goods or services are themselves delivered electronically. DTI guidelines indicate that "on-line" relates to goods or services provided via the Internet, interactive TV and mobile phones. The Regulations do not apply to any aspects of a transaction which are conducted off-line, nor do they apply to non-commercial on-line activities.

This article highlights current legal developments. It is not a substitute for proper advice.

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