The European Commission’s proposed regulations for Designs. What does it mean for right holders?

On 29 November 2022, the European Commission published proposed wording for a new Regulation and Directive reforming the system for design protection. The aim of the proposals is to make design registrations cheaper, quicker and more predictable in the EU. The proposals modernise the existing Community design framework and parallel national design regimes to align procedural rules and make them more interoperable. The hope is that this will increase competition and encourage businesses to innovate. In particular, the hope is to make the spare parts aftermarket more competitive, and make Community designs more accessible, efficient and affordable.

One long overdue change is that registered Community designs will be renamed “registered EU designs”. This is simply because the term “Community design” is an anachronistic reference to the European Community, which was replaced by the EU in 2009. Ultimately, this change will not have any impact on design rights but is emblematic of the Commission’s aim to modernise the designs regime.

We analyse some of the other key changes below.

No design protection for “must-match” spare parts

Under the proposals, design protection will not be conferred to component parts of any complex product, where the component can be used to repair that complex product. This change is an attempt to harmonise the aftermarket for spare parts, which the Commission commented has significant divergence in terms of national laws.

This change is part of the EU’s greater drive towards sustainability. The rationale for the proposed changes is that they should extend the lifespan of products, including by creating more competition to produce replacement parts for popular products. The proposal follows on the coattails of new EU legislation ratified in October aimed at reducing e-waste. The legislation mandated that all new mobile phones, tablets and cameras will have to be equipped with USB Type-C ports by the end of 2024, with laptops to follow by 2026.

Introduction of new administrative invalidity proceedings for national designs

The proposed legislation also aims to introduce a requirement for each Member State’s Intellectual Property Office to deal with first instance invalidity proceedings concerning their respective national designs. A similar provision was introduced for trade marks in 2015. The change addresses the disparity between various member states in respect of the process and cost of bringing design invalidity proceedings. Several jurisdictions’ national intellectual property offices, including the UK, already have standing to hear first instance invalidation proceedings. However, in others, parties must resort to the courts, without any guarantee that the judge will have any background in designs or even intellectual property generally.

If implemented, the proposal should reduce the costs and timescale for challenging the validity of a national registered design, whilst also ensuring that the first instance assessment is conducted by someone with particular expertise in designs. In our view this is a welcome change, as it should result in a simpler (and therefore less costly) procedure for bringing and defending invalidity claims.

New Exemptions for Referential Use and for Critique and Parody

The proposals also include two new exceptions for referential use and for critique and parody.

The referential use exception is designed to protect parties using a design in the context of citations and teaching, but also in respect of comparative advertising. The latter is a particularly interesting addition. Currently, the Comparative Advertising regime permits parties to refer to the trade marks of others in marketing, provided such use complies with the requirements set out in the Comparative Advertising Directive. However, to the extent that such marketing also incorporates a third party design, the Comparative Advertising exemption would historically not apply, resulting in potential liability for design infringement. The Commission’s proposal therefore appears to amount to an extension of the Comparative Advertising regime, with a view to levelling the playing field (although, NB, the Comparative Advertising exemption also does not apply to third party use of copyright works).

As for the critique and parody exemption, it is not exactly clear what behaviours would be permitted. The explanatory memorandum to the proposals states that “use ought to be permitted where it is for the purpose of comment, critique or parody, provided those acts are compatible with fair trade practices and do not unduly prejudice the normal exploitation of the design”. However, there are no details on what specific actions could count as critique or parody, which are much clearer in the domain of copyright from which they have been transposed.

Presumably, products such as H. Moser & Cie’s $30,800 ‘Final Upgrade’, a high-end mechanical watch designed as a playful critique of the Apple Watch, would fall within the exception. However, the recent and highly public dispute between Hermes and the artist responsible for the MetaBirkin could also potentially fall under parody. Whilst that case dealt predominantly with trade marks, the replication of the design itself was also a potential ground for infringement. Given the growing trend of parody products in the metaverse, we expect this exception (if implemented) will be the subject of significant litigation. If you would like to read more about parodies in the metaverse, you can find our recent Law Now on the topic here.

Removal of unregistered national designs

The proposals would require EU members to abolish laws providing unregistered national design rights and would prevent any such national rights being created in the future. Whilst this looks like a big change on paper, it will not have a major impact in practice. Unregistered EU designs will continue to exist. Furthermore, none of the current 27 member states of the EU operate a national unregistered design rights regime. While the UK does provide protection for unregistered national design rights, those rights will remain unaffected due to Brexit.

Other changes

The Commission’s proposals will also – if passed – introduce a number of other changes, which are perhaps less significant but nonetheless noteworthy:

• No general requirement for visibility – in the interests of legal certainty, the Commission proposes to introduce provisions to clarify the ‘visibility requirement’. Save for component parts of complex products, which must be visible during ‘normal use’ of the complex products in question (see our Law-Now on the recent case of Monz Handelsgesellschaft International mbH & Co. KG here), the draft text confirms that design features otherwise do not need to be visible at any particular time or in any particular situation to attract protection.
• Codification of the overlap with copyright – Following the expansion of the scope of copyright protection, the Commission proposes to codify the consequent overlap with the designs regime. The blurring of copyright and design protection follows the decision in the case of Cofemel C-683/17. The encroachment of copyright into the field of designs has been the subject of significant commentary, with not all considering their conflation to be welcome. The proposals highlight that the new regime of dual protection is, as far as the European Commission is concerned, here to stay. If you would like to read our commentary on Cofemel you can find our previous Law-Now here.
• New definition of “design” and “product” – There are also proposals designed to better encompass 3D animated designs, so that the designs regime is fit for expansion into the metaverse. Changes include amendments to the definitions of “design” and “product” to include textural animation sequences that can be added to a 3D virtual design, but would be impossible to replicate on physical products.
• New Protections against illegitimate 3D printing – The proposals would extend design protection to better combat illegitimate 3D printing. Rights holders would have the power to authorise or prohibit the “creating, downloading, copying and sharing or distributing to others any medium or software recording the design” which would enable the design to be 3D printed. This relatively broad right takes aim at a loophole whereby rights holders had recourse against any individual that 3D prints their design, but not the person who enables that printing by creating the specific printable electronic file. The proposed wording specifies that the software must be “recording the design”, meaning that only software which contains an electronic version of an infringing design will be caught by the new provisions.
• New protections to deal with goods in transit – There are also proposals to extend protections to goods incorporating designs that are merely passing through the EU from one third country to another. This would allow rights holders to take action against infringing goods passing through the EU, regardless of whether or not they have applicable rights in the jurisdictions of manufacture or sale. Similar provisions were introduced for trade marks and have been heavily criticised, based on the risk of encroaching on freedom of transit and for the impact on international trade.

Comment

The proposals are still at an early stage of the legislative process and it is highly likely that they will be revised in some form before they are enacted. However, the proposals nonetheless give an indication of how the European Commission envisages the future of design rights and how it will seek to modernise the regime to fit with the modern age, metaverse and all.

CMS will be monitoring the status of the proposals and will issue updates periodically.

Co-authored by Oliver Roberts, Trainee Solicitor at CMS.