UK: In Short... Intellectual Property

Last Updated: 15 December 2003

Article by Mr Charters Macdonald - Brown, Mr Simon Chalkley and Mr John Reddington

GossIP

Lord Justice Jacob Now in the Court of Appeal

Perhaps it is a sign of the growing importance of design rights that Lord Justice Jacob’s . rst case in the Court of Appeal related to a dispute over the design of an umbrella cover.

The case, Fulton v Totes Isotoner (UK), in which Jones Day acted for Fulton, was heard in October 2003 and judgment in favour of Fulton was delivered in November. Reported below.

Protection for designs in the EU has recently been extended with introduction of the new Community design rights. We look forward to seeing the extent to which those rights will be used by rights’ owners.

At Last! The EC Copyright Directive Comes to the UK

Finally, nearly a year late, the implementing legislation for the EC Copyright Directive was submitted to the UK Parliament and came into force on 31 October 2003.

The new right of "making available to the public" will strengthen copyright owners’ ability to control their copyrighted works on the Internet. The new provisions will crunch down on consumers using the DeCSS programmes to play DVDs on their computers. Also, the use of "modchips" to play computer games or DVDs imported from outside Europe will be under attack.

Civil and criminal remedies will be extended to cover previously permitted activities by consumers — activities such as photocopying may require wider licences and extra fees to be paid to copyright owners.

The Case Against: The Federation for Information Policy Research (FIPR) claims that little has been done to stop copyright law being used to raise prices to consumers for items such as game console accessories or printer cartridges.

The Madrid Protocol and the EU

The EU moves closer to accession to the Madrid Protocol following the advice of a European Council working group on 19 September to endorse a European Commission proposal on accession. Also, other obstacles blocking the EU’s accession to Madrid were removed on 25 September when members of the World Intellectual Property Organisation (WIPO) agreed on various technical amendments proposed by the EU to permit a combined use of the Community Trade Mark system in the Madrid Protocol. One of the main changes will be the insertion of an opt-back provision which will permit trade mark owners who designate the EU in their international registration to opt back to national designations if their EU designation fails.

Community Patent Gets Nearer

Following the meeting of the EU Council of Ministers Competitive Council on 3 March 2003, the European Community Patent looks closer to reality. Various political obstacles which have persisted for years have been overcome and it looks as if a single patent offering inventors one patent giving protection across the EU is now in sight. On 27 June 2003, a Presidency proposal for revision of the European Patent Convention to accommodate the Community Patent was sent to Council delegations. Some EU of. cials are saying that the new system will be operational before 2006. The deadline for establishing a central unitary court to be called the Community Patent Court, which will be based in Luxembourg, is 2010. This court will hear all Community Patent disputes with appeals to the European Court of First Instance.

New Streamlined Procedures in the UK Patent Courts

New Civil Procedure rules for patents and other intellectual property claims in the UK and a revised Patents Court Guide have come into effect this year. These will apply to the Patents Court and to the Patents County Court. There is great interest in the new streamlined procedure for determination of patent disputes under which all factual and expert evidence is in writing, there is no requirement for disclosure, no experiments, cross-examination is only permitted on any topic or topics where it is necessary and is con. ned to those topics and duration of the trial is . xed and will not normally be longer than one day. This procedure will exist alongside the more rigorous system traditionally associated with the UK courts so that parties have a choice: a cheap and quick system may be suitable for simpler, less valuable patents and smaller parties. For more complex and valuable patents, and where parties are more substantial, the old system remains available. Parties who want to use the new stream-lined system must . rst ask other parties to agree and then the court is likely to order it. If one party does not agree, an application has to be made to the court. Indications from the patent judges are that such applications are likely to be favourably dealt with by the courts.

We look forward to seeing how this system works in practice. We will report progress!

UK DESIGN RIGHT/COPYRIGHT

Lambretta Clothing Company Ltd v Teddy Smith (UK) Ltd & Next Retail plc [2003] EWHC 1204 Ch High Court

In a decision which will not go down well with designers in the fashion industry, the High Court has held that UK unregistered design right does not protect the "colourways" of a garment, namely the juxtaposition of different colours applied to a design for a garment (in this case a tracksuit top which comprised a blue body, red sleeves and white zip). In the case in question, there was nothing original in the tracksuit top itself, which had been based on an existing simple design supplied by the claimant’s manufacturer and which was described as "standard". As such no design right was claimed in any aspect of the design for the "Track Top" itself. The claim was therefore based purely on allegations against the two defendants that they had each copied the design right and/or copyright subsisting in these "colourways" and thereby infringed such rights.

Whilst it is beyond the scope of this case note to give readers as full a description and analysis of design right protection under UK law as it deserves, very brie. y, unregistered design right was introduced into UK law in 1988; its purpose was to limit the ability of rights owners to use copyright in design drawings as a basis for attacking plagiarism in industrial articles. The right is peculiar to United Kingdom law; it is not based on any European harmonisation legislation. Design right protects original design, that is to say "the design of any aspect of the shape or con. guration (whether internal or external) of the whole or part of an article" provided such design is not "commonplace in the design . eld in question". There are a number of aspects of design which are excluded from protection, the most relevant to this case being "surface decoration".

However, the key thing is the decision rather than the reasoning which is complicated. The decision is of interest because:

  1. The Court held that design right in colourways cannot form part of the "con. guration" of the article. Con. guration means a con. guration of three dimensional elements. The Judge rejected arguments that the colourways on the claimant’s garment represented 3-D elements since the colours permeate all the cloth and are not merely colours applied to the surface of the garment. Accordingly, the design right claim was bound to fail.
  2. Equally, the claimant had no enforceable copyright against the defendants. The Judge found that even if there were aspects of the design as recorded in the claimant’s design documents for the Track Top which were excluded from design right protection (but still, prima facie, protected by copyright, in relation to the enforcement of that copyright where a three dimensional article is concerned), the claimant cannot enforce any such copyright by virtue of section 51 of the Copyright, Designs and Patents Act 1988 ("the Act"). This section provides that "it is not an infringement of any copyright in a design document or model recording or embodying a design for anything other than an artistic work or a typeface to make an article to the design or to copy an article or to copy an article made to the design". In relation to this section, section 51(3) de. nes "design" as "the design of any aspect of the shape or con. guration (whether internal or external) of the whole or part of an article, other than surface decoration" and "design document" is de. ned as "any record of a design, whether in the form of a drawing, a written description, a photograph, data stored in a computer or otherwise".

The judge admitted interpretation of section 51 was not an easy issue. However, he accepted the defendants’ counsel’s submission that since the claimant’s design drawings for its Track Top were "design documents" within the meaning of section 51(3) of the Act, and since these recorded a design for something other than an artistic work or typeface (namely a track top), it follows that, giving the wording of section 51 its natural and ordinary meaning, it is not an infringement of any copyright in those documents to copy the claimant’s track top. Accordingly, in the case of copying an article made to the design, protection can only be found in design right, registered designs legislation and any other right available at common law or in equity, such as actions for passing off, breach of contract, con. dence and so on. Because the judge had already found that no design right subsisted in the colourways, the claimant’s case failed.

No doubt some people will regard this decision as providing a "copier’s charter" and it will be interesting to see if it is appealed. However, it is important to put this decision into perspective. These designs could be protectable under the new Community Unregistered Design right which provides a limited three year protection for designs which would, in our opinion, include the colourways and not have led to the enforcement issues which the claimant’s faced in this case. The quali. cation criteria mirror those for registration of designs. Design registration is comparatively cheap to obtain (when compared with trade mark protection) and similarly enforcement of a registered design (be it a national UK registered design or a Community Registered Design) registered under the current legislation would not encounter the dif. culties present in the claimant’s case.

The case therefore serves to reinforce our advice to clients that they should give serious consideration to registering their most important designs. For only a few hundred Euros they are cheap to obtain and potentially provide potent protection for design "leaders" against the "followers". Another attractive feature of the registered design system is that there is a limited right to defer the decision to register until after . rst launch (to give time to see whether or not the design is a success and therefore worth spending money to protect by registration). Whilst speci. c advice should always be taken before relying on the 12 month grace period which is provided, this does offer businesses a measure of . exibility which they should be aware of.

UK DESIGN RIGHT

Victory for Designers — Umbrella Case Litigation Success

A. Fulton Co. Ltd. v. Totes Isotoner (UK) Ltd. [2003] EWCA Civ. 1514 Court of Appeal

The Court of Appeal decision delivered on 4 November 2003 . nally brought to a successful conclusion proceedings by the UK’S leading umbrella designer and manufacturer, A. Fulton. At issue was the design right in an umbrella cover for miniumbrellas. Although simple in appearance, the design had been extremely popular with the public and had led to the best sales ever achieved by Fulton for a range of umbrellas. Not surprisingly, identical or similar umbrella covers were put on the market by competitors. Fulton took action to stop the infringing designs. Fulton took proceedings . rst of all against Grant Barnett, a well known umbrella manufacturer in the UK alleging infringement of UK unregistered design right. Almost every conceivable point available was taken by the defendant but unsuccessfully and Fulton won in the Patents County Court. Normally this decision would have been suf. cient to deter others but not Totes Isotoner who marketed a similar case for their umbrellas. Totes made some minor changes to the product in an attempt to avoid infringement and claimed that they had not copied but had designed independently. Copying is an essential element for infringement of the UK unregistered design right. Proceedings were brought against them. After conclusion of evidence in the Patents County Court, Totes withdrew its assertion of independent design. Totes, having lost, appealed on one point.

There were several versions of the Totes’ umbrella case in issue: the only version appealed was one in which a side cuff had been cut out. The version, not under appeal, was virtually identical to Fulton’s cover and the side cuff had not been cut out. The cut out version was an attempt by Totes to design away from Fulton’s design.

Totes argued that Fulton had only designed one thing — the cover as a whole and that the "cut-out" design was a different design not contemplated by the designer. Fulton asserted design rights in the whole cover and, alternatively, in the design of that aspect of the cover which consisted of the whole of it less the side cuff.

The decision in the Patents County Court was based on the relevant statutory language (s.213(2) of the Copyright Designs and Patents Act 1988) and case authority. The Court of Appeal reviewed the authorities and found that it was all one way — against Totes. The two most important cases considered were Ocular Sciences Ltd. v. Aspect Vision Care (1997) and Fulton’s . rst case against Grant Barnett. All the legal textbooks were against Totes as well.

In the end, the Court’s decision was based on the statutory language "unregistered design right subsists in any aspect of the shape and con. guration or part of an article". The effect is that a designer can complain if part of his design is copied. Totes submitted that you cannot arti. cially create a new design right under the guise of selecting a part of an actual design. It said that the cut-out design in issue was not part of the design relied upon, it was a different design from the design where this side cuff had not been cut out. The Court rejected this on the basis that Totes could not provide a satisfactory explanation for what was meant by "part". The Court said that if someone copied just the handle of a fork (putting on their own design of tines), then, given that the handle was original and not commonplace, they would infringe unregistered design right. And they would do so not because the defendant was making an article exactly or substantially to the design of the whole fork (though that might be the case too) but because they were making an article to the design of part of the fork, the handle. Totes submitted that in its case the position was different because the change it had made had altered the whole design, making a different overall design. The Court did not accept this. Its view was that a man may well create a different design when he copies only part of the design of another but a new design did not justify copying. Parliament had gone out of its way to protect not only overall designs but also parts of overall designs. The protection was only against copying and it was not necessary to copy.

Totes had copied an aspect of the design of part of Fulton’s umbrella cover; in fact the Court’s view was that Totes had copied nearly all of it. Subject to complying with the general quali. cations for subsistence of unregistered design right, a designer is entitled to prevent the copying exactly or substantially of part only of his design unless that part is excluded from protection because it is not original (i.e. is copied or is commonplace) or falls within the must . t/must match exceptions or any combination of those. Totes’ appeal failed.

Moral? Don’t copy!

PATENTS

U.S. Patents Law, Estoppel and Festo Come to the English Courts!

Celltech Chiroscience Ltd v Medimmune Inc. [2003] EWCA Civ 1008 Court of Appeal

This year the English courts had to consider U.S. patent law. This came about because Celltech had granted to Medimmune a patent licence covering most countries in the world. The licence was governed by English law and conferred jurisdiction on the English Courts. The dispute arose because Medimmune were selling a humanised antibody product SYNAGIS in the U.S. and, if that product was covered by a valid claim of Celltech’s U.S. patent, Medimmune would have to pay royalties under the terms of the licence. It was accepted that this issue would have to be determined under U.S. patent law. One aspect of SYNAGIS was not literally covered by the U.S. patent. An expert in the case said that the difference was so slight that the constituent used could be properly regarded as a conservative substitute for the other.

Celltech’s case therefore depended upon reliance on the U.S. doctrine of equivalents. Medimmune argued that Celltech were precluded from relying on this doctrine because of ". le wrapper" estoppel. This brought the well known U.S. Festo case into consideration because it had laid down the circumstances in which the doctrine of equivalents could apply. In fact, the English proceedings were stayed until after the U.S. Supreme Court had made a decision in Festo.

Since the purpose of this newsletter is to report UK and some EU developments in intellectual property law, we shall not report the English courts’ analysis of U.S. law in detail. In summary, the Court of Appeal considered the effect of ". le wrapper" or "prosecution history" estoppel. This has two branches: "amendment estoppel" and "argument estoppel". Amendment estoppel arises where the patentee has limited or amended the patent claims during prosecution to satisfy Patent Act requirements and the amendments narrow the patent’s scope. The patentee is then precluded from obtaining under the doctrine of equivalents coverage of the subject matter that has been relinquished during the prosecution of the patent application.

Argument estoppel arises when unmistakable assertions are made by the applicant to the Patent Of. ce in support of patentability, whether or not required to secure allowance of the claim, which may operate to preclude the patentee from asserting equivalency between a limitation of the claim and a substituted structure or process step.

In the High Court, Jacob, J. found that Celltech could not rely on the doctrine of equivalents on the basis of argument estoppel. However, with amendment estoppel, he held that the equivalent in question was irrelevant to the amendment made during prosecution, and therefore did not preclude the doctrine of equivalents. It made no difference to his decision against Celltech because they lost on the grounds of argument estoppel.

The Court of Appeal agreed with Jacob, J. on argument estoppel but not on amendment estoppel. By giving up, for the one infringing constituent of the product in question SYNAGIS, the territory occupied by all amino acids except the mouse residue, the amendment necessarily surrendered any equivalent of a mouse residue. In the end, therefore, Celltech was estopped on the grounds of both amendment and argument estoppel from relying on the doctrine of equivalents. It could not establish infringement of the U.S. patent and, therefore, its claim to royalties failed.

The fact that there is disagreement among English judges when analysing Festo indicates what a quagmire this area of U.S. patent law is and Jacob, J. made speci. c reference to this. Apparently, much patent litigation in the U.S. involves disputes about equivalents and estoppel and Jacob, J. thought that the advocates for similar doctrines in the EU should bear this in mind.

CAUSE OF ACTION ESTOPPEL AND £50 MILLION"

Co. exip SA v Stolt Offshore MS Ltd [2003] EWHC 1892 (Pat) Patents Court

In 1996 Co. exip sued Stolt for patent infringement. On 31st July 2000, the Court of Appeal upheld a High Court judgment of Laddie, J. whereby he held the patent valid and infringed. An inquiry as to damages followed in which between £50 and £70 million plus interest was claimed.

Following Co. exip’s success against Stolt, another company, Rockwater, sought revocation of the patent basing their case on prior art which had not been relied upon by Stolt. Rockwater was successful and on 15 April 2003, Laddie, J. ordered that the patent be revoked subject to a stay until after appeal.

In July 2003, Stolt sought a stay of the inquiry as to damages. Stolt argued that it would be monstrous if it had to pay an enormous sum in respect of a violation of a wholly nonexistent right.

Jacob, J. said that although this proposition had a lot to be said for it, it did not follow that it was right. After all, Stolt had lost its case and was seeking to take advantage of the success of others as though it applied to Stolt too.

Co. exip, the claimant, argued that, although revocation relates back to the date of grant, this could not help Stolt who were bound by the rule of cause of action estoppel. They, unlike anyone else, could not be heard to say "There never was a patent."

The formidable obstacle of Poulton v Adjustable Cover & Boiler Block Co. (1908) 25 RPC 529 was raised against Stolt. The facts were very similar and an unsuccessful defendant to a patent action had to pay damages even though the patent was revoked following the infringement proceedings. This case has stood for nearly 100 years and without criticism in any of the textbooks.

Jacob, J. found that the Poulton case still stood as did the general law of cause of action estoppel. He declined a stay. In reaching his decision, the judge referred to policy considerations. He said that if a defendant, having . nally lost a patent action, knew that an application for successful revocation by another might get him off the hook for damages, he would have every motive for digging up better prior art and encouraging another to attack the patent. So although he himself could not re-litigate validity, one of the heads of public policy (re-litigation) behind the rule could be subverted indirectly.

TRADE MARKS

Have a Break Goes to the ECJ

Nestle SA v. Mars UK Limited [2003] EWCA Civ 1072 Court of Appeal

The attempt by Nestle to register the advertising slogan "Have a break" as a trade mark has been referred to the ECJ after a ruling by the Court of Appeal on 25 July. So far the application has been refused by the Hearing Of. cer and then the High Court on the grounds of lack of distinctiveness. The Court of Appeal followed the ECJ Baby-Dry decision that there was no inherent distinctiveness in the mark but the question referred to the ECJ is whether distinctiveness may be acquired following or in consequence of the use of the mark as part of or in conjunction with another mark.

FURTHER INFORMATION

In Short…Intellectual Property is a publication of Jones Day and should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information purposes only and may not be quoted or referred to in any other publication or proceeding without the prior written consent of the Firm, to be given or withheld at its discretion. The mailing of this publication is not intended to create, and receipt does not constitute, an attorney-client relationship.

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