Out-Law Legal Update
High Court guidance will reassure banks acting to freeze accounts suspected of holding proceeds of crime
Out-Law Guide | 13 Feb 2009 | 12:35 pm | 10 min. read
This guide is based on UK law. It was last updated in March 2009.
Copyright and unregistered design right protect material from being copied but do not create a monopoly. Therefore independently creating the same material as someone else is not an infringement. Proving independence can be difficult, however, so it is recommended that any evidence of this is kept and that material is permanently recorded with author, date of creation and "copyright/unregistered design protected" clearly marked upon it.
If you copy protected material you have on the face of it committed infringement. This type of infringement is known as 'primary infringement'.
Copyright law offers a defence of incidental inclusion, e.g. where a copyright-protected painting is visible in the background of a photograph that is focused elsewhere. Whether material is incidentally included is a question of fact and depends on the manner in which it is used and the intentions of the user at the time.
Ignorance, i.e. not knowing that a work is protected, is not a defence for either copyright or design right infringement. Since both rights subsist automatically and there is no public register of protected works, it can be difficult to know whether something is protected or not. If in doubt, it is sensible to assume that it is protected and not copy it without permission. Even when the copyright owner for a work cannot be traced – such works are known as 'orphan works' – copying will be infringement if the work enjoys protection (albeit the copyright owner may never come forward to assert that right).
Where an infringer did not know and had no reason to believe that copyright or design right subsisted in the work, the rights owner cannot claim damages (albeit there is still infringement). This protection appears in the Copyright, Designs and Patents Act of 1988. However, in practice it is rarely used as the knowledge goes to whether rights subsist, not who owns the rights; and in any event, the copyright owner can still stop the work being used.
Courts will not tolerate wilful blindness on the part of infringers and so a suggestion that anything other than an old work does not have rights protecting it is unlikely to attract the defence (even if there is no copyright notice on the work).
If the infringement has been carried out by someone else on your behalf, for example, because you are a retailer and bought the items in good faith, then you may be considered a 'secondary infringer', as long as you did not specifically authorise the seller to make the infringing goods for you (in which case you would be a 'primary infringer').
You may only be a secondary infringer if you carry out certain activities with works that you knew or had reason to believe were infringing another's rights. Knowledge is not relevant to acts of primary infringement.
Knowledge can be implied if the works were, for example, very cheap or bought on the grey market, though it will be a question of fact in each case. However, it is generally considered reasonable for a person to believe that a supplier or contractor will obtain all the necessary licences. Therefore, possessing goods in circumstances where you did not know or have reason to believe that the goods infringe the rights of others presents a good defence to allegations of secondary infringement.
If you find out that material is infringing another's rights, perhaps because you come across new information, or because you receive a threatening letter from the owner, this gives you the necessary knowledge and you must cease using the material right away in order to avoid further proceedings. Further, secondary infringement is only relevant to a limited number of activities and so any direct copying or communication of protected works, for example, the use of a photograph on a website, is primary infringement. If there is primary infringement, knowledge is irrelevant.
In copyright law the activities that can lead to secondary infringement are: (a) possessing in the course of business; (b) selling or letting for hire, or offering or exposing for sale or hire; (c) exhibiting in public or distributing in the course of business; (d) distributing otherwise than in the course of business to such an extent as to affect prejudicially the owner of the copyright; and (e) importing.
The activities that can lead to secondary infringement of an unregistered design right are: (a) possessing for commercial purposes; (b) selling or letting for hire, or offering or exposing for sale or hire in the course of business; and (c) importing. A secondary infringer of unregistered design right can only be pursued for a reasonable royalty.
A UK registered design confers a 25-year monopoly right in the design, and in similar and partially-reproduced designs. Similar protection is given to Community Registered Designs. Registration gives the owner the exclusive right to make articles incorporating the design, and sue for infringement even where the defendant did not actually copy the design.
The presence of a register of all valid registered designs at the UK Intellectual Property Office, and other European registries, means that express notice of the registered design is implied by the fact that it is registered.
Therefore, the use of a registered design within the jurisdiction that the design is registered, whether knowingly or unknowingly, will result in a breach of the owner's rights, and there is no 'unwitting copying' defence to this.
The unwitting infringer of a UK registered design may, however, be able to avoid paying any damages or an account of profits if they can prove that the infringement was unwitting, and that they had no reasonable grounds for supposing that the design was registered (under the Registered Designs Act 1949).
The onus is on the defendant to prove objectively that its actions were innocent. Case law suggests that the existence of a publicly-searchable register is not deemed conclusively to give 'grounds for supposing', but knowledge of the register could make proving innocence harder. Even if the defendant is successful in this argument, the court can still award an injunction or order that the goods in question are delivered up, or destroyed.
There is no obligation for an owner to mark its products in order for registered design right to have effect but it is often done as it is difficult for a defendant to prove that it did not have notice of a registered design if the original product was marked with 'registered design'. The legislation expressly states that the use of the word "registered" on the original product does not expressly prevent this provision having effect, unless it is accompanied with the registered design number.
There is no such exemption from damages available in relation to Community Registered Designs.
There is no concept of secondary infringement in relation to registered designs. If you import an infringing product, you will be treated in the same way that you would be if you were the manufacturer. Therefore, if you buy in products, have products made for you or manufacture to a customer's specification, ensure that you have suitable contractual protection from the other party, so that in the event of a breach you will be able to reclaim any losses. Additionally, you may wish to conduct your own searches of the design registers.
The unwitting use of a registered trade mark is a problem for many businesses. In the retail sector there is the potential that goods purchased from a third party supplier (especially if the supplier is based in another jurisdiction) may breach another party's rights. In the publishing sector there is also the potential that the use of marks either online or in print may breach a third party's rights. Therefore, there is good chance that a business may unwittingly breach another party's rights by merely acting in the normal course of business.
In the UK, trade marks are validated by being registered at the UK Intellectual Property Office. This registration gives the registrant exclusive rights over the mark when used in the course of trade in relation to the specified goods and services. This means that any use of that mark with/on those goods and services, subject to certain provisions, will result in a breach of the registrant's rights.
As there is a central register of trade marks, it is harder for a party unwittingly to use a third party's trade mark, as the register is deemed to give notice of its ownership. Despite this, there are some circumstances where a mark can be used by a third party, which may not result in a breach.
Comparative advertising is allowed as long as it is deemed objectively honest in industrial and commercial matters and that it does not take unfair advantage of, or be detrimental to, the distinctive character or repute of the registered mark. If this defence is used, the burden is on the registered owner of the mark to prove that the mark's use is not objectively honest (whether it would be considered honest by members of a reasonable audience). It should be noted that even if the use of a mark in comparative advertising does not breach the registrant's rights, it may still be subject to other regulations on comparative advertising.
The legislation also contains a number of defences, though as with comparative advertising, they must only be used honestly in industrial and commercial matters. Again the test as to whether the use is honest is objective.
The potential defences are:
This can apply to both the name of a person or a company. Though it should be noted that if the company name was expressly used for the purpose of trading off the reputation of the mark, this defence would not be successful as its use would not be deemed honest.
This can take a number of forms, such as the geographical origin, quality, quantity and value. An example of this was the publishing of an unauthorised biography of the band 'Wet Wet Wet'. The band's name was a registered trade mark. The book used the mark on the front cover as part of its title. The court held that the mark's use was descriptive of the contents of the book and therefore was not a breach of the registrant's rights.
This applies mainly to the marketing of spare parts or accessories and allows a third party to use a registered mark when marketing a product whose purpose is interlinked with the registered mark.
If the mark is used at the request of another party, e.g. where a website designer uses a mark at the request of a client, the designer, if he did not know that use of the mark was a breach, would not be a breach of the registrant's rights. In this case the designer would be the secondary infringer and the client the primary infringer. Once the secondary infringer had notice that the mark was registered, then he would not be able to rely on the defence of good faith and could be sued for breach along with the primary infringer.
It should be noted that of the use of the mark does not fall under any of the potential defences, the court may still take into consideration the fact that it was used unwittingly, when considering any award. This may have the effect that any damages or injunctive relief may be less prohibitive than if the defendant had knowingly used the mark.
As the use or sale of a product constitutes a breach of the registrant's rights, businesses that sell on a third party's goods, should seek suitable contractual protection from their supplier. If this is not possible as a result the supplier have insufficient assets or that the supplier is based in a jurisdiction in which it is difficult to enforce, then the business should seek third party advice as to whether any of their products are potentially infringing.
By registering a patent, the owner is granted a monopoly right over the claimed product or process for the specified period. The presence of a register of all valid patents at the UK Intellectual Property Office, and other European registries, means that express notice of the patent is implied by the fact that it is registered.
Therefore if you use a registered patent within the jurisdiction that the patent is registered, whether knowingly or unknowingly it will result in a breach of the registrant's rights.
It is therefore important for any business to make sure that its products are not breaching a third party's intellectual property rights in any patents. If the business buys in products, it must make sure that it has suitable contractual protection from its supplier, so that in the event of a breach of a third party's rights it will be able to reclaim any losses from the supplier.
However, in some cases this will not be sufficient, as the supplier may not have sufficient assets to repay the losses or the supplier may be based in a jurisdiction where it is difficult to enforce the contract. So in those situations the business may have to conduct patent searches itself.
If the business manufactures goods, either to another's specification or on the back of its own R&D, it should be aware that by producing the goods for disposal to a customer, it may again be breaching a third party's intellectual property rights. Again a solution would be to get contractual protection from the entity that requests the production, or to carry out extensive searches of the registered patents in the jurisdiction in which they are being produced and sold.
If the use of a registered patent does result in the breach of a registrant's rights and then subsequently a claim, the defendant may be able to avoid paying damages or an account of its profits if it can prove that it unwittingly infringed the patent, and that it had no reasonable grounds for supposing that the patent existed. Even if the defendant is successful in this argument, the court can still award an injunction or order that the goods in question are delivered up, or destroyed.
The legislation expressly states that the use of the word 'patent' or 'patented' on the original product does not expressly stop this defence, unless it is accompanied with the patent number. It would however be difficult for a defendant to prove that it did not have notice of a patent if the original product had the "patent" or "patented" printed on it. For the partial defence to succeed, the onus is on the defendant to prove objectively that its actions were innocent (would the reasonable man believe that the defendant had infringed the patent at the time of the infringement).
Out-Law Legal Update
High Court guidance will reassure banks acting to freeze accounts suspected of holding proceeds of crime