On 30 August 2021 the Designs Amendment (Advisory Council on Intellectual Property Response) Bill 2020 ("Bill") passed both houses of Parliament and is expected to receive Royal Assent shortly. On the day after Royal Assent, the amendments set out in Schedule 7, Parts 1 and 2 of the Bill will commence. These changes are in respect of the legal test in the assessment of infringement and circumstances when a design may be revoked. The other sections of the Bill will commence 6 months after the date of Royal Assent, including the 12 month grace period provisions discussed below.
So, what are the changes to the Designs Act 2003 (Cth) and how might they impact you and your business?
1. 12-month grace period for prior use and publication
One of the key changes brought about by the Bill is the creation of a "grace period" that will protect applicants from instances of inadvertent disclosure that otherwise destroys the design's newness and distinctiveness. It will operate so that the person making the decision of whether a design is new and distinctive will be required to disregard publications or use of the design by an owner1 within the 12 months preceding the date of filing the application. However, there are some conditions that applicants should be aware of.
First, the grace period does not apply to publications by a Registrar under the Designs Act 2003 (Cth) or other persons or bodies overseas that have functions similar to the Registrar's functions. This will mean that design applicants who have applied for design protection in other jurisdictions will have to act fast in filing their application in Australia to avoid the risk of a publication by a Registrar in another jurisdiction destroying the newness and distinctiveness of the design in respect of the Australian application.
Second, the grace period only applies in relation to publications or use that occurs after the date that the amendments to section 17 become effective. Applicants who file their design applications before the amendments come into force and who may have inadvertently disclosed their designs in the preceding 12 months will not be able to rely on the protection afforded by the grace period. So, if you are aware that there has been an inadvertent disclosure by you (as the applicant) then it may be holding off filing the application for the design until the amendments come into effect.
In both cases, the Explanatory Memorandum advises that publications of these types are not the inadvertent publications that the grace period is intended to protect.
2. Exemption to infringement – Prior Use
A new section, section 71A, has been included so that certain conduct that would otherwise amount to infringement of the registered design does not constitute infringement because that conduct commenced before the priority date of the registered design. There are certain conditions that need to be satisfied in order to fall within the exemption, but it affords protection to persons who came up with the same idea without knowledge of the registered design.
There are, however, two things to note in relation to this "exemption". First, the section only applies in respect of designs that have a priority date on or after the commencement of section 71A. This means that if a registered design has a priority date before the section, the alleged infringer will not be able to rely on the exemption even if their conduct started before the registered owner applied for the design.
Second, the product embodying the impugned design has to have been created independently. That is, it cannot have been derived from information from the owner of the registered design, the owner's predecessor in title or the creator of the registered design except if that information is publicly available with the consent of the owner/predecessor in title/creator.
The person who has the benefit of subsection 71A(1) (which creates the exemption) is permitted to dispose of that right. This means that persons who purchase the business of someone who has the benefit of section 71A(1) are also permitted to continue engaging in the same conduct without the risk of being exposed to design infringement proceedings in respect of carrying on the same conduct as the person's predecessor in title.
3. Right of exclusive licensee to bring infringement proceedings
Section 71(1) has been amended to include the words "or an exclusive licensee". This amendment grants exclusive licensees the right to pursue parties for infringement of a registered design. This avoids the difficult position that an exclusive licensee of a design currently faces in being unable to do anything to stop an infringing party if the registered owner of the design does not want to enforce the design registration. Further, it will make the rights afforded to exclusive licensees under the Designs Act 2003 (Cth) consistent with those held by exclusive licensees in respect of patents, trade marks and copyright.
To ensure that they have the benefit of this amendment, it is important that exclusive licensees of registered designs have arrangements with the owner that reflect this change in their rights. Please note that the amendments do not operate retrospectively, so exclusive licensees will only have rights in respect of infringements that occur after the commencement of the amendments to section 71.
4. Change from "informed user" to "familiar person"
The inquiry of whether one design is substantially similar in overall impression to another uses the standard of a notional person, the "informed user", and whether they are familiar with the product to which the design relates. There are presently two approaches that are applied in relation to the "informed user" standard.
The first approach requires the notional person to be a user of the product. This approach has come from European case law and has been applied in some cases in Australia. The second approach, which was articulated in the Multisteps2 case, is one where the notional person only need be familiar with the product (that is, not necessarily a user of the product). There was some uncertainty about which approach should be applied and that uncertainty created a risk for litigants when developing expert testimony and calling witnesses in design infringement cases. The amendment to sections 19 and 72 seek to resolve that uncertainty.
Those amendments confirm that the Multisteps approach is the preferred approach as it accords with the language that is used within the Australian Designs Act 2003 (Cth) and will be the approach that is applied in the future. This will mean that when a party is considering the sort of expert witness it will need to engage, it has a broader selection of persons and has more certainty that there is no requirement for the particular person to be a "user" of the product but need only be familiar with the impugned product.
5. Notable Points
Several of the proposals and recommendations raised by the Advisory Council on Intellectual Property (ACIP) to improve the Australian Design System are not included in the Bill. These remain on IP Australia's Policy Register and include: the protection of partial designs; the protection of virtual, non-physical and active state designs; and the clarification of 'registered' and 'certified' designs. At some stage in the future, these further reforms may be given life.
Importantly for practitioners and applicants alike, IP Australia have advised that they are working on a new online filing system to improve the application process for designs and also to improve access to information regarding prosecution of a design. These changes will undoubtedly be welcomed by users of the system.
1This includes the registered owner, a predecessor in title and the creator of the design if they are not covered by the two preceding descriptions.
2 Multisteps Pty Ltd v Source & Sell Pty Ltd (2013) 309 ALR 83;  FCA 743
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.