The Court of Justice of the European Union Strengthens Unregistered Community Design Rights

by Ladas & Parry LLP
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The Court of Justice of the European Union (“CJEU”) issued its decision in Karen Millen Fashions Ltd v Dunnes Stores (C-345/13) on June 19, 2014, providing guidance on litigating unregistered Community designs and strengthening the rights afforded under these designs, particularly within the European fashion industry.

Protection of Community Designs

The European Union Regulation on Community Designs (6/2002/EC) (the “Regulation”) provides two distinct forms of design protection—(1) a long-term registered design that may be renewed for up to twenty-five years from the date of filing the application for registration of the design, and (2) an unregistered design, which receives protection for three years from the date that the design was made available to the public in the European Union. Both forms of protection prevent unauthorized parties from manufacturing, marketing, selling, importing, or exporting a product that incorporates the protected design. Registered designs are protected against similar designs, even where the infringing design was developed independently in good faith. On the other hand, proprietors of unregistered designs are only granted the right to protect against commercial use of a similar design if the design was an intentional copy of the protected one. The aim of unregistered design protection is to provide design rights to industries that produce large numbers of designs for products that have a short market life

Unregistered design protection is ideally suited to the fashion industry, where many products are seasonal, and so-called “fast fashion” retailers manufacture copycat designs very quickly in order to capture current fashion trends. In order for a design to be protectable as either a registered or unregistered design it must be: (1) “new,” meaning that there is no identical design that has previously been made available to the public (although there is a one-year grace period for the designer’s own disclosures for registered designs), and (2) possess an “individual character,” meaning that it creates a different overall impression than other designs in the market.

Background of the Case

The decision in Karen Millen Fashions Ltd v Dunnes Stores provided clarity regarding the standard for and burden of proving that a design has “individual character,” which were questions referred to the CJEU for a preliminary ruling by the Irish Supreme Court.

Karen Millen Fashions Ltd (“Karen Millen”) is a luxury women’s fashion designer and retailer, which sells its clothing throughout the United Kingdom and Ireland. Dunnes Store Group (“Dunnes”) is one of the largest retailers in Ireland, selling a variety of goods, including women’s clothing. The dispute centered around three articles of clothing designed by Karen Millen and sold beginning in December 2005—a black knit women’s top, and two striped women’s shirts, one in brown and one in blue. Representatives from Dunnes purchased examples of the garments from a Karen Millen outlet store in Ireland. The company subsequently had nearly-identical copies of the shirts manufactured outside of Europe and put them on sale in its stores in Ireland in late 2006, which was within Karen Millen’s three-year period of protection, provided it had a valid unregistered Community design.

Photos - The Courts Service of Ireland, Appendix to Judgment of The High Court of Ireland, available at: http://www.courts.ie/Judgments.nsf/6681dee4565ecf2c80256e7e0052005b/262b06223e667f02802573da005d20a0/$FILE/Appendix%20Karen%20Millen%20-v-%20Dunnes%20Stores%20Ltd.%20pdf.pdfPhotos - The Courts Service of Ireland, Appendix to Judgment of The High Court of Ireland, available at: http://www.courts.ie/Judgments.nsf/6681dee4565ecf2c80256e7e0052005b/262b06223e667f02802573da005d20a0/$FILE/Appendix%20Karen%20Millen%20-v-%20Dunnes%20Stores%20Ltd.%20pdf.pdf

Photos - The Courts Service of Ireland, Appendix to Judgment of The High Court of Ireland, available at: http://www.courts.ie/Judgments.nsf/6681dee4565ecf2c80256e7e0052005b/262b06223e667f02802573da005d20a0/$FILE/Appendix%20Karen%20Millen%20-v-%20Dunnes%20Stores%20Ltd.%20pdf.pdfPhotos - The Courts Service of Ireland, Appendix to Judgment of The High Court of Ireland, available at: http://www.courts.ie/Judgments.nsf/6681dee4565ecf2c80256e7e0052005b/262b06223e667f02802573da005d20a0/$FILE/Appendix%20Karen%20Millen%20-v-%20Dunnes%20Stores%20Ltd.%20pdf.pdf

Photos - The Courts Service of Ireland, Appendix to Judgment of The High Court of Ireland, available at: http://www.courts.ie/Judgments.nsf/6681dee4565ecf2c80256e7e0052005b/262b06223e667f02802573da005d20a0/$FILE/Appendix%20Karen%20Millen%20-v-%20Dunnes%20Stores%20Ltd.%20pdf.pdfPhotos - The Courts Service of Ireland, Appendix to Judgment of The High Court of Ireland, available at: http://www.courts.ie/Judgments.nsf/6681dee4565ecf2c80256e7e0052005b/262b06223e667f02802573da005d20a0/$FILE/Appendix%20Karen%20Millen%20-v-%20Dunnes%20Stores%20Ltd.%20pdf.pdf

After Karen Millen had succeeded in an action against Dunnes for infringement of its unregistered design right in the Irish High Court, Dunnes appealed to the Irish Supreme Court. Dunnes did not dispute that it (a) copied the Karen Millen garments, (b) that the copying occurred within three years from the date the Karen Millen garments were made available to the public, or (c) that the designs by Karen Millen were “new”—the first requirement for unregistered design protection. However, Dunnes contended that Karen Millen did not hold unregistered Community design protection because (1) the garments did not have “individual character”—the second requirement for unregistered design protection, and (2) that Karen Millen had not met its burden of proving that the garments had “individual character.”

The Decision by the Court of Justice of the European Union (“CJEU”)

The Irish Supreme Court stayed the proceedings and referred two questions to the CJEU for a preliminary ruling:

  1. whether the assessment of “individual character” should be based on a comparison between the contested design and any individual design that has previously been made available to the public, or between the contested design and any combination of known design features from multiple earlier designs; and
  2. whether the proclaimed right-holder is required to prove that the design has “individual character,” or whether “individual character” is presumed, so long as the proclaimed right-holder merely indicates what elements constitute the “individual character” of the design.

The CJEU agreed with Karen Millen’s position on both issues. On the first, it held that:

in order for a design to be considered to have individual character, the overall impression which that design produces on the informed user must be different from that produced on such a user, not by a combination of features taken in isolation and drawn from a number of earlier designs, but by one or more earlier designs, taken individually.

In other words, it is not possible to attack the validity of a Community design right by merely showing that each feature of the design has previously appeared in different earlier designs. Instead, a design has individual character, so long as it creates a different overall impression from a single earlier design, or multiple earlier designs that are individually compared to the design at issue. When multiple earlier designs are considered, each must be assessed as a whole in relation to the design, not as an amalgam of specific features or parts of earlier designs.

With respect to the second issue, it held that:

in order for a Community design court to treat an unregistered design as valid, the right holder of that design is not required to prove that it has individual character within the meaning of Article 6 of that Regulation, but need only indicate what constitutes the individual character of that design, that is to say, indicates [sic] what, in his view, are the element or elements of the design concerned which give it its individual character.

In other words, the unregistered design will be presumed valid, so long as it is new and the proclaimed right-holder indicates the aspects of the design that give it individual character.

The Future of Karen Millen Fashions Ltd v Dunnes Stores

The case will now be returned to the Irish Supreme Court to apply the CJEU’s ruling and determine whether the Karen Millen garments were protectable as valid unregistered Community designs. Even if the Court determines that the designs were valid, Karen Millen’s three-year period of protection expired in 2008; therefore, the designs may now be freely copied by anyone, including Dunnes Stores. The short-lived lifespan of unregistered designs and, often, even shorter lifespan of fashion items, demonstrates the strong impact of obtaining injunctions during proceedings such as this one.

The Impact of the Decision

The decision is being hailed as a massive win for the fashion industry, as designers can now be more certain that their unique designs qualify for unregistered Community design protection. Additionally, it lowers the risk that alleged infringers will be able to successfully challenge the validity of the design right in Europe based on the existence of individual elements of prior designs. It is also of potential importance having regard to growing concerns about the potential for 3-D printing to produce cheap copies of articles.

Because unregistered Community design protection is available to proprietors of qualified designs, even where they are not domiciled in the European Union, this decision may impact the way designers throughout the world conduct business. Unregistered Community design protection is generally understood to commence on the date when the design has first been publically disclosed within the territory of a member the European Union.

However, there has been debate regarding whether any disclosure that would have become known to the relevant sector in the Community would trigger the unregistered Community design right, whether or not the disclosure itself was made within the boundaries of the Community. In 2004, the Commission attempted to resolve the ambiguity by adding Article 110a(5), which says: “[A] design which has not been made public within the territory of the Community shall not enjoy protection as an unregistered Community design.” While this provision makes it clear that disclosure must have occurred within the European Union in order to enjoy unregistered Community design protection, it did not clarify when the date of protection commences if disclosure was first made outside of the territory.

Until it is clear where disclosure must occur in order to trigger protection, designers should consider filing an application for a registered community design prior to making the design publicly available. Registered design protection is relatively affordable and is generally not a very rigorous process. In the event that a designer does not wish to seek registered design, designers seeking unregistered Community design protection should document and have evidence of the date of first disclosure within the European Union, in case of later dispute, as knock-offs can be produced at an increasingly rapid rate.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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