Designs for Life: Enforcement

Designs are key assets for many businesses and there are several aspects that are vital to success. In this guide from our Designs for Life series, we take a look at enforcement.

Once the manufacturer(s) and distributor(s) are lined up, and the design is ready to go to market, the next step to consider (if this has not been done already) is how to go about protecting it.

Design law can give monopoly rights over how a design looks and can be a powerful tool to stop would-be copycats. However, it should always be kept in mind that all forms of design protection require enforcement to give any effective protection. If they are not enforced, a business will soon discover that its IP rights have no real value.

Litigation

Which rights to sue under?

1. Unlike for registered designs, to show infringement of unregistered rights, a claimant must show that its designs were copied by the defendant (i.e. they were not independently designed). However, while this can make it harder to rely on unregistered designs, statistically unregistered design infringement cases are much more likely to succeed in UK courts than those for registered design infringement.
2. From experience, the majority of cases settle after a cease and desist letter is sent, and there is no need to commence proceedings. This is particularly the case when the claimant has a registered design to rely on (and represents a good reason to obtain such protection). However, sometimes court action does become unavoidable.
3. If it is necessary to sue an infringer, it is advisable to rely not only on any registered rights in possession, but also on any available unregistered rights.
4. The lower success rates for registered design cases may in part be due to clear cases of registered design infringement tending to be settled before trial, allowing the more borderline cases to skew the statistics. However, that is not the only reason. When pleading unregistered design infringement, the claimant can pick and choose those parts of the design which it asserts to have been infringed and rely solely on those as separate designs, directly targeting the infringing product. The claimant can leave out those parts of the design to which the alleged infringing product bears less resemblance, the net result being that the court is more likely to find infringement.
5. By contrast, with a registered design, the claimant has to rely on the full design as filed, and if the defendant's product differs to any material extent, it will be harder for the court to find infringement. This makes the way such designs are registered key to their success.

Where to sue?

1. With a few exceptions, rights owners need to sue in the country where an infringement takes place. In the UK, the Court of Session in Scotland and the Northern Ireland High Court are able to hear design rights cases, but the vast majority are heard in the High Court of England and Wales' Chancery Division and Intellectual Property Enterprise Court (IPEC). Any of these courts can hear cases concerning the forms of protection for designs, and their decisions can have effect throughout the UK.
2. In England, rights owners can choose between starting proceedings in the full High Court, the shorter trials scheme of the High Court (STS) or IPEC. The table below sets out the key differences between the three options but the key differences are as follows:
   1. Cost capping: IPEC caps costs recovery at £60k. Whereas in the STS and the full High Court the winner can recover 60 – 80% of their costs;
   2. Trial length: IPEC is limited to 2 days, STS to 4 days and there is no limit in the full High Court;
   3. Case management: both STS and IPEC actively limit the steps to trial, which can make costs much lower in appropriate cases, for example, by limiting disclosure and the amount of evidence.
3. The forum chosen will depend on a number of strategic considerations, including the desire to hedge against the risk of losing, and the pressure each option will put on the other side. We strongly recommend obtaining advice on the options if you find yourself making this decision.

Tackling multiple infringements

Finally, even where a designer has an extensive global IP portfolio, the practicalities of taking enforcement action against multiple infringers who are often small businesses or individuals can pose a logistical challenge.

Developing a clear and consistent strategy for managing these infringements is very important. The most appropriate strategy will differ in each case depending on the products, the designer's key territories and rights, and budget. However, there are a number of tools available to designers to allow them to identify and deal with small scale infringements in a timely and cost-effective manner, such as customs notices and online takedowns.

Customs notices

1. It is not necessary to have a customs notice in place for customs officials to seize goods which they suspect of infringing intellectual property rights. However, filing customs notices does help customs officials identify and seize infringing goods more easily and, in certain circumstances, to destroy them easily.
2. Within the EU regime, the powers conferred on customs authorities1 apply in respect of goods at their point of entry into or exit from the customs territory of the EU, not in respect of goods moving between two EU countries.
3. The UK, however, is no longer within the EU regime. Powers existing under the EU scheme to detain, seize and destroy goods suspected of infringing an intellectual property right have been retained by HMRC (the UK's customs authority), but they now apply at the point of goods' entry into or exit from the UK. For design owners, this provides enhanced opportunity for identifying and seizing goods suspected of infringing an IP right: the mechanisms are now available for and applicable to goods imported from the EU/EEA into the UK, as well as from the rest of the world into the UK.
4. It does not cost anything to file an application for action (AfA) with HMRC. However to be recognised by HMRC, AfAs now have to have been sought from or via HMRC: EU AfAs sought through the customs authority of a remaining EU Member State are no longer recognised in the UK. In order to have coverage in the UK, holders of such EU AfAs need to apply to HMRC.
5. With any AfA, the more information the application contains, the more effective it is likely to be. For example, if the designer is able to identify known infringers, routes to market and distinguishing features of the counterfeit goods (including price< point), it will be easier for customs officials to identify infringing goods and this information should be included. It can also sometimes be worthwhile to engage with customs officials to offer them training, to help them understand the particular issues regarding the original products.
6. If a potentially infringing product is identified by customs officials, they will often contact the rights owner to ascertain whether their rights have, in fact, been infringed. The rights owner has 10 days to confirm whether this is the case, and (unless the importer of the goods agrees to their destruction or ignores the contact altogether) to commence legal proceedings in relation to the goods.
7. The customs officials will not contact the rights owner where it has specifically indicated that it wishes to use the "small consignment" procedure. Under this procedure, small consignments (those containing three units or fewer or having a gross weight of less than 2kg) of goods suspected of being counterfeit are destroyed without checking whether they infringe the rights owner's intellectual property. This procedure does reduce the administrative burden on the rights owner of responding to customs enforcement notices and is worth considering if such small scale consignments are a particular issue for a designer. However, it also means that designers are not able to gather information about the infringing goods which can be useful in identifying patterns of infringement, and the source of the infringing goods, particularly in the early years of an enforcement programme.

Online takedowns

1. Online sales can prove a real problem for designers because small infringers can gain significant visibility for their counterfeit products quickly, and with minimal investment. The most prolific being online marketplaces, such as Amazon and eBay - and this is on the rise. It is also becomingly increasingly common for counterfeiters to use social media to advertise and sell counterfeit goods.
2. The lack of identity checks by many such platforms exacerbates the problem because even infringers who have been dealt with will often reappear under a different username. It can sometimes appear that the problem is too big to tackle. This is not necessarily the case.
3. First, it is important to understand the extent of the problem. This will involve conducting regular "sweeps" of specified sales platforms to understand the number of listings which infringe the rights owner's designs. Where overseas sales platforms are selling counterfeit goods, a search in the local language is also sensible to ensure that the full extent of the problem is revealed.
4. Second, many sales platforms offer a takedown service for infringing listings (such as the eBay VeRO service). These are often simple forms which allow rights owners to identify the trademark or design which is being infringed. Rather than filing take down requests against all infringing listings, it is sensible to begin with "easy wins' which will often be counterfeit products which infringe both the designer's designs and trademark rights. Once these listings have been brought under control, the rights holder can tackle the design infringements specifically, although one should always ask the question as to whether the infringement is realistically likely to harm their business, particularly as requesting a product listing be removed could be construed as a groundless threat in specific circumstances.
5. Finally there will be a class of "repeat" infringers who attempt to relist products. These companies should be considered potential targets for more formal legal proceedings. "Blocking orders" require intermediaries (such as internet service providers) to block access to a certain website(s). They have become a well-established form of relief in the UK to restrain infringements of intellectual property rights, particularly copyright and trademarks, and in a suitable case they could also prove effective in respect of design infringements.

Identifying "Mr Big"

The aim of both of the strategies discussed above is to deal with the specific instances of infringement in question, but also to gather information on the supply chain, which allows the designer to identify the source of the infringing products. Once the source of the infringing products has been identified, the designer can consider taking action against it. In order to reach the position where the manufacturer of the infringing products can be identified, it is sometimes sensible to incentivise lower level infringers to settle quickly and provide information on their supplier by offering to waive entitlement to costs and/or damages.

Alternatives to litigation

1. Finally, when protecting a design or defending against an infringement claim, it should be borne in mind that going to court is not the only option.
2. In the UK, the rules of litigation place a particular emphasis on encouraging parties to attempt alternative dispute resolution. Aside from the parties directly agreeing a settlement through negotiation, more formal approaches are mediation and arbitration.
3. Mediation is a form of dispute resolution where the parties agree to work towards a settlement with the assistance of a neutral third party. It is up to the parties to agree terms of settlement. Mediation can be a cost-effective and valuable tool to settlement, particularly in disputes where the costs of court action would far outstrip the potential to recover damages.
4. Arbitration is different in that the parties instead agree to submit to a binding decision made by an arbitrator (or panel of arbitrators) who then decide how the dispute should be resolved. This can either be done under a set of established rules or "ad hoc", where the parties determine what rules will apply themselves. Arbitration is rarely used for design infringement (unless it is part of a bigger dispute), but can be particularly useful in IP disputes with a cross-border angle, potentially resolving multiple disputes in multiple jurisdictions simultaneously in a way a court cannot.
5. There are other methods of alternative dispute resolution (such as expert determinations or neutral evaluations), but mediation and arbitration are the ones most commonly seen in IP disputes. The key message to remember is that there are often other options available when a party feels it is being forced into using the courts.

Gowling WLG's brands, advertising and designs team is a leading designs law team and are actively involved in shaping designs law. We have acted on a number of the significant, reported designs law cases in the UK over recent years, and have been the proud holders of the MIP Designs Firm of the Year Award for four years (2019 - 2022). We act for a number of design-led clients.

	General High Court	Shorter Trials Scheme	IPEC
Timescales	In excess of a year from issue to trial in standard cases - often 12-18 months	Trial within 12 months of issue, tight limits for scheduling of CMC, length of trial and judgment. Currently the quickest option	Generally takes 12-18 months from issue to trial
Pre-action	Pre-action Practice Direction applies	Truncated pre-action procedures, although practice direction still applies	Penalty for not complying with Pre-action Practice Direction that the Defendant has 70 days for Defence
Pleadings	Standard pleadings where less detail is required than other options	Pleadings expected to be thorough, but concise	Pleadings expected to be thorough, but concise
Case management	Not active case management	Active case management (preferably by a docketed judge)	Active case management with some innovative case management options available
Evidence	No limit on evidence of fact, though court's permission is required for expert evidence	Limited witness evidence. Expert evidence only if strictly required	Extent of witness evidence and expert evidence considered by judge at CMC
Disclosure	Standard disclosure	Limited or no disclosure	No standard disclosure; where specific disclosure is ordered will be limited to specific documents or classes of document
Costs budgeting/management	Precedent H costs management rules apply to all claims worth less than £10 million	No costs budgeting	No costs but capped costs recovery
Costs recovery and damages	Costs recovery usually on a standard basis (but parties may be held to budget). No limit to damages recovery	Summary assessment of costs after trial. No limit to damages recovery	Costs recovery capped at £60k (based on phases), damages capped at £500k