On 2 December 2020, the Designs Amendment (Advisory Council on Intellectual Property Response) Bill 2020 ("the Bill") was introduced into the Senate – one of two houses of Australia's Federal Parliament.

The purpose of the Bill is to amend the Australian designs system based on several of the recommendations in a Final Report by the Advisory Council on Intellectual Property ("ACIP") in respect of its review, conducted for the Australian Government in consultation with IP Australia and other stakeholders, to investigate the effectiveness of the designs system in stimulating innovation by Australian users and the impact the designs system has on economic growth.

Key amendments to Australia's design statute, the Designs Act 2003 ("the Act"), which are proposed in the Bill are discussed below.

Grace period

There is to be introduced a "grace period" whereby a design which has been published or used may remain nevertheless validly registrable. Under the provisions proposed, in deciding whether a design ("subject design") is "new and distinctive" (as it must be for a registration thereof to be valid) one would be required to disregard a publication or use of a design (whether it be the subject design or not) within a 12-month period before the priority date:

  • by (a) the registered owner of the subject design; (b) the registered owner's predecessor in title; or (c) the person who created the subject design (if neither (a) nor (b)); OR
  • by another person or body that derived or obtained the design from (a), (b) or (c).

The new grace period will not apply to official publications of a design by the Designs Office in Australia or any such office overseas. An applicant that leaves it too late to claim priority when filing in Australia could, owing to an intervening official publication associated with an earlier-filed application, be dispossessed of an ability to obtain valid registration.

Also, the new grace period provisions will not be retroactive. They will apply only in respect of publications or uses made from the date on which the provisions take effect.

Prior use infringement exemption

Provisions are to be introduced whereby a person can be exempted from registered design infringement by having used, or taken steps to use, a design before the priority date.

More particularly, a person who before the priority date relevantly dealt in a product embodying a "comparable design" (being a design that is identical or substantially similar in overall impression to the registered design), or took "definite steps (contractually or otherwise and whether or not in Australia)", may be afforded an ability to do particular acts otherwise constituting infringement of the registered design.

Pre-priority date dealings which may attract the benefit of the exemption are to include: (i) making the product; (ii) importing the product into Australia for sale, or for use for the purposes of any trade or business; (iii) selling, hiring or otherwise disposing of the product; (iv) using the product in any way for the purpose of any trade or business; and (v) keeping the product for the purpose of doing (iii) or (iv).

The exemption can apply provided the product was one to which the registered design relates, and only if immediately before the priority date, the person was either:

  1. dealing in the product or taking definite steps to do so; or
  2. not dealing in the product or taking such steps, by reason of having temporarily stopped doing so.

In relation to a comparable design that is derived from: (a) the person who becomes the registered owner of the registered design; (b) a predecessor in title of the registered owner; or (c) the person who created the registered design (if neither (a) nor (b)), the provisions can apply to the comparable design only if the derivation was from information made publicly available by or with consent of (a) or (b).

The provisions are especially apt in light of the new grace period, which may well see a higher incidence of parties legitimately adopting a published/used design ultimately to learn of a registration of the design that is later secured thanks to the grace period.

A right established under the exemption provisions is to be transferrable to another person.

A person to which a product is sold, or otherwise disposed, in the exercise of such a right is to be exempted from infringement in dealing with that product.

The exemption provisions are modelled on ones that already exist in Australia for (utility) patents.

Exclusive licensee to have standing to bring infringement proceedings

Presently, only the registered owner has standing to bring proceedings for infringement of a registered design. Where it is not the registered owner but rather an exclusive licensee thereof that is working a registered design which is being infringed, it may be the exclusive licensee that is motivated to bring proceedings, particularly if the registered owner is based overseas (as is not unusual when there is an exclusive licence in place).

The Act is to be amended to provide that an exclusive licensee of the registered rights can bring proceedings for infringement, aligning the designs system with the (utility) patent, trade mark and plant breeder's rights systems in Australia.

Standard applied in designs comparison to be that of "familiar person"

At present, in comparing a registered design and a prior art or purportedly infringing design, to assess whether the registration is valid or infringed respectively, one must (assuming the designs under comparison are not identical) apply the "standard of the informed user". The "informed user" is a notional person described in the Act as "familiar with the product to which the design relates, or products similar to the product to which the design relates".

Judges have differed as to whether it is necessary that such a person be a "user" of the products in question as the name might be taken to imply.

To make clear that the notional person need not be a user of such products, the Act is to be amended to provide that the standard to be applied is that of the "familiar person", and will describe the familiar person in the same manner as it does the informed user, i.e. as "familiar with the product to which the design relates, or products similar to the product to which the design relates" though with the new qualification "whether or not the familiar person is a user of the product to which the design relates or of products similar to the product to which the design relates".

Removal of option to publish (rather than register) design

The Act presently provides a design applicant the option of having the Australian Designs Office publish, rather than register, a design disclosed in a design application. The publication option may be used for defensive purposes, in that it places the design in the "prior art base" and can thus establish a ground of revocation of a registration, issued subsequently to another person, of a comparable design – such as a comparable design derived from the creator of the published design (in respect of which comparable design that other person lacks entitlement).

The option has not been extensively used, and is to be removed.

Removal of requirement to request registration

Presently in Australia, a design cannot be registered without having been the subject of an express request for registration and passed a subsequent formalities examination.

There is the possibility of deferring a request for registration, so long as a six-month period commencing on the priority date has not concluded. It is typically to delay publication of the design by the Designs Office that a registration request is deferred.

A design application lapses in the case of a failure to request registration in time. Given the failure and resulting lapsing may very well be unintentional, there is to be introduced a deeming provision whereby the applicant is taken to have requested registration, at the end of the time limit provided for doing so, if no registration request has been submitted.

More revocation grounds based on fraud, false suggestion and misrepresentation

The Act provides that a court may revoke a design registration that "was obtained by fraud, false suggestion or misrepresentation" – though has no express revocation provision for post-registration fraud, false suggestion or misrepresentation.

There is considerable scope for fraud, false suggestion or misrepresentation after registration, particularly given that registration per se is contingent essentially only on compliance with formalities requirements. The possibility of fraud, false suggestion or misrepresentation arises especially in substantive examination of a registered design (post-registration), which involves deciding (on the basis of a prior art search) whether the design is "new and distinctive" and which the registered design must pass, eliciting issuance of a "certificate of examination", in order to be assertable or enforceable.

The Act is to be amended to provide additionally that a Court may revoke a design registration on the ground that "the certificate of examination was obtained by fraud, false suggestion or misrepresentation".

Discretion to refuse or limit monetary relief for "innocent infringement"

Even though proceedings for infringement of a registered design can only be brought once the registration has issued, monetary relief, i.e. damages or an account of profits, for such infringement can accrue over the entire term of registration, which term commences at filing.

Problematically, the Australian Designs Office publishes the design only upon issuance of the registration, which (particularly where there is no priority claim) can be as late as nine months from filing. A third party, during the period between filing and registration, may commence exploiting a comparable design, unable to determine that the design application is on foot, whereby the infringement constituted by the exploitation is "innocent".

Although the court has a discretion to reduce the monetary relief it imposes, or not to impose any such relief at all, that discretion was deemed – in the Federal Court judgement in Review Australia Pty Ltd v Innovative Lifestyle Investments Pty Ltd [2008] FCA 74 (15 February 2008) – to be available only in respect of infringing activity taking place on or after the date of issuance of the registration, and thus unavailable in respect of pre-registration innocent infringement (see at [45] in the judgement).

The Act is to be amended such that the discretion will be available in the case of pre-registration innocent infringement, subject to the defendant satisfying the court that at the time of the infringement, the defendant was not aware, and could not reasonably have been expected to be aware, that an application in respect of the design had been filed.

What happens next?

Implementation of the amendments relies on the Bill being successful in both the Senate and the House of Representatives (the other house of Australia's Parliament), and receiving Royal Assent, which will hopefully be given before the end of 2021.

Possible future reforms

There is project work being undertaken by IP Australia to assess the merits of possible future reforms.

One such possible reform – which a number of stakeholders had hoped would be covered by the Bill but which in the consultation phase was ruled out from inclusion – is providing for protection of partial designs and non-physical or virtual designs (including graphical user interface designs).

Another possible future reform is an extension of the maximum registration term from 10 years to 15 years. Several stakeholders are also disappointed this is not covered by the Bill – notwithstanding that the recommendation in ACIP's Final Report was that the extension be introduced only if Australia ultimately joins the Hague System, which provides for obtaining protection for industrial designs in signatory countries by means of a single international application filed with the International Bureau of the World Intellectual Property Organization (WIPO).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.