Unintentional innocent infringers of UK design rights will be required to repay profits to rights holders, Government says

Out-Law News | 14 Aug 2012 | 1:58 pm | 5 min. read

The Government is to change the law to enable the holders of UK registered designs to recover the profits earned by those who unintentionally innocently infringe on their rights.

The UK's Intellectual Property Office (IPO) announced plans to "equalise the available remedies" for the offence of unintentional innocent infringement of design rights in a response to a consultation it held on the subject approximately 18 months ago.

Whilst the Government plans to introduce a "financial remedy" for such an infringement of UK registered designs, it also plans to change the law to remove the ability of holders of registered Community design rights or unregistered Community designs to obtain damages for others' unintentional innocent infringement.

The IPO, which said that the UK laws around design rights would be altered "as soon as possible" to affect the changes, said that the near "universal" view of respondents to its consultation had been that it was "not desirable" for there to be different remedies available to rights holders for innocent infringements of registered UK or Community design rights.

"In view of such strong support for change, we will proceed with measures to equalize the available remedies," the IPO said in its consultation response (7-page / 45KB PDF). "Based on the responses received, we therefore propose to introduce provisions which will make it possible for the owner of a UK registered design to seek a financial remedy from an unintentional infringer of the registered design. However, the remedy available will only be for an account of profits, and not damages. In order to equalise the provisions, the existing provisions for financial remedies for the unintentional infringement of Community designs will be amended to mirror this approach."

The IPO said that the decision represented a "fair and balanced outcome."

"In particular, it is difficult to see why the courts should be prevented from ordering an unintentional infringer of a design to pay the holder of the right some or all of the profits that he has made from using that person’s intellectual property," it said. "On the other hand, unintentional infringers would not be liable for damage claimed to have been caused to the right holder. In this way the unintentional infringer’s liability would be effectively capped at the level of his own profits."

"Whilst a small number of respondents argued that the removal of financial remedies, including damages, for innocent infringement of Community designs would send the wrong message about respecting intellectual property rights, when a global view of the available remedies is taken (including the unchanged provisions for intentional infringement), the proposal provides effective and dissuasive remedies for infringement of UK registered designs and Community designs," the IPO added.

UK intellectual property (IP) laws distinguish between deliberate theft and innocent infringement. However, different rules apply in relation to innocent infringement depending on the IP right that is said to have been infringed.

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 currently, 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 terms of the Registered Designs Act.

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 rights 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 are further anomalies in relation to the remedies available for innocent infringements of copyright, trade marks, patents and unregistered designs.

"In terms of the broader spectrum of rights, there are no financial remedies available for the innocent infringement of patents, but in respect of trade marks the law makes no distinction in terms of available financial remedies between innocent and intentional infringement," the IPO said. "The way in which we intend to proceed differs, therefore, from the patent and trade mark provisions, but, it is consistent with the unintentional infringement provisions relating to copyright in the UK where all available remedies are available save for damages."

"The differences between the available financial remedies for unintentional infringement of different intellectual property rights reflects the nature of the right and the relative complexity involved in searching for prior rights/art and interpreting the results. It is considered that, having regard to the nature of the intellectual property right in question and the level of effort/skill involved in searching for prior designs, the response is a proportionate, balanced and fair outcome to designers and users of designs," it added.

Design rights expert Indradeep Bhattacharya of Pinsent Masons, the law firm behind Out-Law.com, described the move to standardise provisions relating to innocent infringers for Community design rights and UK registered designs as “commendable”.

“Ever since the Jimmy Choo case in 2008 highlighted the discrepancy between financial remedies for innocent infringements of design rights companies have proceeded differently in the UK, where the innocent infringer defence exists, as against the EU, where it does not,” he said. “The practical result has been that it is generally seen as advantageous for companies to obtain Community design registrations, rather than UK registrations, for their important designs. Companies have also had to go to the additional burden of placing appropriate intellectual property right notices on products protected only by UK design rights. The changes will address both of these issues.”

“The proposal to allow account of profits, and not damages, for innocent infringement also strikes the right balance,” Bhattacharya added. “The scope of design rights is notoriously difficult to assess. The recent Apple v Samsung cases demonstrate the underlying difficulties for instance, in identifying the relevant design corpus, the perspective of the informed user, etc, in order to calculate damages. My view is that whilst it makes sense to disgorge any profits made by an innocent infringer – it is a little unfair to hold them on the hook for damages, which could be substantial, in the absence of infringers’ knowledge of wrongdoing.”