Fashion and damages in the latest two IPEC designs decisions

13 minute read
15 December 2014

This article looks at the latest two cases in an ever-increasing series of design law disputes: DKH Retail v H Young (perhaps better understood as the "battle of the gilets: Superdry v Animal"), which was an unregistered UK and Community design dispute whose judgment was handed down on 8 December 2014, and UWUG v Derek Ball, which was a dispute about the design of equipment for, as the judge put it, "bondage sexual activities".

It is rare to see cases about fashion design coming before the courts; the values and speed of turnover are such that it has, historically, rarely been worth fighting all the way to the court. The Intellectual Property Enterprise Court, however, has shifted the balance on such issues; it hears cases faster, and for less cost (together with less downside risk of losing thanks to the costs cap).

The court is also allowing parties to ask the court to determine what should happen when infringement is found; in the High Court, parties rarely take a dispute to a full-blown damages inquiry in all but the most financially significant cases, as the costs can quickly outweigh the benefits. Here, too, the Intellectual Property Enterprise Court (IPEC) is proving useful, as it is much cheaper to obtain a finding.

DKH v Young (Superdry v Animal)

Looking at the battle of the gilets first, this was a fairly conventional design infringement case. However, it provides a useful reminder of how to approach such cases, and does opine on a few issues arising from the recent changes brought in by the Intellectual Property Act 2014.

One of the first things to consider when approaching an unregistered design infringement case is how to define your rights. The difficulty is that it can be challenging to put the design into words, but parties normally try to do so otherwise the Particulars of Claim are unlikely to be very useful. In this case, DKH did so (as is conventional) by setting out features of the designs relied on. There are, the court accepted, two ways that such lists of features can be interpreted:

  1. First, the design claimed is defined by and limited to the shape of the article, or part article, in question, and the pleaded list of features does nothing more than draw attention to the most relevant features that the claimant relies on.
  2. Secondly, the claimant defines his design as that of the configuration of the list of features, which may or may not be as embodied in the physical article that the claimant has designed. Such a list of features could include abstract features.

The problem with the second approach is that if the features are too vague or unnecessarily broad, it may not be possible to determine the scope of the claimed designs, meaning that the court will find them to be invalid (see for example the Arnold J High Court decisions in Trunki (Magmatic v PMS) and Clinisupplies v Park).

In this case, however, DKH relied on the first approach; it disclaimed any generalised claim to UK UDR - the list of features did no more than identify the significant features of the two designs that matter for the purposes of assessing the similarities.

The court looked quickly at the change in the law brought in by the Intellectual Property Act 2014 which removed "any aspect of" from the definition of a design in s213(2) of the Copyright Designs and Patents Act 1988. This change had no transitional provision and so the court found that the definition of design that applied in this case did not include the "any aspect of" wording. What does this change in the definition mean? Hacon J. held that the scope of the definition is now narrower, and that this is perhaps more likely to be relevant when the claimant is trying to rely on the more generalised "configuration" type cases. As DKH was not doing that, the change had no relevance in this case. It is clear that there is scope for significantly greater consideration of the impact of the removal of "any aspect of" in an appropriate case.

Turning to the other aspects of the UK UDR subsistence case:

  • Originality: the fact that the designer for DKH recollected earlier designs when designing his gilet was irrelevant; it was clear that he had expended sufficient skill, effort and aesthetic judgement such that the designs relied on were original.
  • Must fit: this was a red herring - the defendant tried to run it, but ended up narrowing it to the teeth of the zip, which was a pointless argument.
  • Method or principle of construction: the designs relied upon as embodied in the Academy gilet were similarly not a method or principle of construction, as the way that DKH defined the designs (by reference to the actual article) meant there was a clear limitation on the shape of each feature.
  • Commonplace: parts of the designs relied upon were commonplace in the design field in question at the time of its creation. Hacon J. noted that a new arrangement of commonplace features may not in itself be commonplace - it is only if the arrangement of the significant features of the design was common in the relevant design field at the relevant time that the design is commonplace. If there is no such arrangement in the prior art, the commonplace plea is likely to fail, and that is what happened here. (The court also noted that the change to the definition of commonplace introduced by the IPA 2014, to mean that to lack subsistence on this basis the design has to have been commonplace in a qualifying country at the relevant time, only applies to designs created after 1 October 2014, so it was not relevant here).

Looking at infringement under UK UDR:

  • Only secondary infringement was alleged - i.e. the acts of infringement were importation and sale, so the claimant had to prove that the defendant knew or had reason to believe that its products were in part infringing articles.
  • Substantially to the claimant's design: the test is assessed through the eyes of the person to whom the design is directed - here the potential customer of the gilet - C & H Engineering v F Klucznik. As the High Court said in Virgin Atlantic v Premium, "in practice, if copying is established, it is highly likely that the infringing article will have been made exactly or substantially to the protected design". The court found that the defendant's product's similarities to the pleaded design significantly outweighed the differences and as such the relevant parts of the defendant's gilet were made substantially to the pleaded designs.
  • Knowledge: two possible dates for knowledge were put forward - the date of the infringement, or the date of the letter of claim. The case appears to have been poorly argued on the first of these, as there were no submissions on the knowledge of the industry at large. The judge intimated that it would not have taken much for him to find for the claimant, but could not do so. On the second date, the letter of claim, the court held that there was knowledge from 14 days after the letter, this being a reasonable period for the defendant to have discovered, to the extent not already known, that the Academy gilet had been copied, and the extent of the copying. The judge added that a belief, however honest, that any copying that took place did not amount to infringement, does not prevent the defendant from having reason to believe that its gilets were in part infringing articles.

A claim was also brought under Community unregistered designs. This was a less significant part of the judgment, with the key points being as follows:

  • Solely dictated by function: as Samsung v Apple held, features excluded under this head must be purely functional and not to some degree chosen for the purpose of enhancing the product's visual appearance. Since the Academy gilet was a fashion item, the designer had choices about each of the relevant features of the designs relied upon. Those choices affected the look of the garment, and so the objection failed.
  • Novelty and individual character: the court cited the Court of Justice of the European Union (CJEU) in the recent Karen Millen case to say that the design in issue must be compared individually with each piece of prior art from the design corpus (you can't take features collectively from a number of different designs). As a result, the claimant's design had individual character.
  • Infringement: the test is whether the alleged infringement produces a different overall impression on the informed user, taking account of design freedom (which was not found to be a consideration in this case). The overall impression here is largely the same and such, there is infringement.

As an aside on this case, the judge noted that it was never a good idea for a witness to go into the box for cross-examination without having re-read his statement. The judge was unwilling to find that the evidence was unreliable as a result, but there was a risk that he would, and so it is a salutary reminder that any witness that is about to be cross-examined should ensure he or she is fully ready, so that their evidence is given the weight it deserves.

UWUG v Derek Ball

In a judgment handed down on 9 December 2014, the IPEC decided the level of damages that should be awarded where there has been a finding of design right infringement.

These cases are always fact-specific, and here the defendant (Mr Ball) and claimant (UWUG) had a history of dealings and financial troubles that coloured their behaviour and may have led to the infringement. Focusing on the findings that are likely to be of more general interest:

  • Damages were claimed under four heads:
    • Loss of profit from sales of frames that UWUG would have made had Mr Ball not supplied third parties with infringing frames;
    • Loss of profit from sales of convoyed goods that would have accompanied such sales of frames;
    • Damages on the user principle where sales were made by Mr Ball that did not affect UWUG's sales; and
    • Damages from UWUG's loss of opportunity to make sales of frames in the future.
  • The first two heads: The first head of claim was not as conventional as it first looks, due to underlying contractual arrangements UWUG's contention that if Mr Ball had not supplied the goods to third parties, he would have supplied them to UWUG. The claim was more akin to one for lost profits for failure to supply than anything else. Therefore, UWUG needed to prove that it was in a position to buy the frames when the infringing sales started, and that it was willing to do so. On the facts, UWUG could not prove this, so the claim for lost profit from the sales of frames, and the convoyed goods that might have been sold with them, failed.
  • Loss of profit on the 'user principle': if the parties had entered into a licence to enable Mr Ball to sell the frames lawfully, what would the terms of such licence have been? Mr Ball had, at the time, proposed 10% commission plus 30% discount on the wholesale price, on the goods that Mr Ball had manufactured for UWUG to sell. UWUG had also considered potential terms, but had never shared its deliberations with Ball: UWUG and one of its investors prepared a draft agreement that suggested a royalty of 10% on Mr Ball's sales price on all frames that were sold by Mr Ball with no efforts by UWUG. Although never the subject of negotiation, the court latched onto this figure and awarded it.
  • Loss of profits on future sales: the court found that the failure to build up a business which would have been profitable after the infringement was not Ball's fault. As such, this head failed.

The court therefore awarded 10% of the sales price to the claimant on all sales made by Mr Ball.

This approach taken by the court in this case shows the fairly rough and ready approach of the IPEC; there do not appear to have been detailed arguments about the user principle, and the court did not take any arguments into account about whether the 10% figure was appropriate other than to note that it had been put forward internally at the claimant's end, and therefore it would be a better number than pure guesswork.

As High Court damages assessments can end up costing more than the underlying dispute, the IPEC's willingness to carry out this more approximate approach is to be welcomed, especially in cases like this where neither party has very much money, even with the result that the reasoning is not as fine-tuned as it might be in equivalent more complex and/or valuable dispute in the High Court.

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