New dawn for Australia’s registered designs laws

By Wayne Condon and Richard Hoad.

Key Points:
The Designs Act 2003 should reinvigorate Australia’s designs laws, and provide welcome relief to the creators and owners of innovative designs.

new day is finally about to dawn for Australia’s registered design laws. After a lengthy period of gestation, the Australian Parliament has finally passed new legislation regarding the registration of industrial designs. (Industrial designs protect visual features of shape, config-uration, pattern or ornamentation applied to manufactured products.) With effect from 17 June 2004 (or such earlier date as may be proclaimed by the Australian Parliament beforehand), the Designs Act 2003 (Cth) will repeal and replace the existing Designs Act 1906 (Cth).

When the new legislation comes into force, Australia’s designs laws will be radically altered. The existing Designs Act has been strongly criticised by industry for many years. In particular, following a number of failed infringe-ment proceedings in Australian courts, there has been widespread industry concern that it is too easy to avoid infringing a registered design. The conventional wisdom has been that almost every registered design is valid but non-infringed. This article examines some of the more significant changes which will be brought into effect by the Designs Act 2003.

New definition of "design"

The existing definition of “design” covers only “features of shape, configuration, pattern or ornamentation applicable to an article, being features that, in the finished article, can be judged by the eye, but does not include a method or principle of construction”. This will be replaced by a new definition in section 5, defining design as “the overall appearance of a product resulting from one or more visual features of the product”.

“Visual features” is elaborated by section 7 so that it includes “the shape, configuration, pattern and ornamentation” of a product, but expressly provides that such visual features “may, but need not, serve a functional purpose”, and excludes the “feel” of a product, its materials and its dimensions.

Registration process and term of protection

Under the existing Act, a design has to be “new” and “original” to be registrable. The new Act retains the requirement that the design be new, but substitutes for “original” the requirement that the design be “distinctive”. A design will be “new” unless it is identical to a design that forms part of the prior art base and it will be “distinctive” unless it is “substantially similar in overall impression to a design that forms part of the prior art base”.

The concept of “substantial similarity in overall impression” will become a critical analysis in the context of both registration and infringement. The issue will be assessed as follows:

• The design will be assessed from the point of view of someone who is familiar with the product to which the design relates (the “informed user”). Expert evidence will, at least theoretically, become far less relevant. Under the existing Act, expert evidence is commonly called in relation to the issue of whether a registered design is new and original and to identify similarities and differences between a registered design and an allegedly infringing article.
• In comparing the design sought to be registered with a design forming part of the prior art base, greater weight will need to be given to the similarities between the designs rather than to their differences.
• Consideration of this issue requires assessing the state of development of the prior art base, any features of the design sought to be registered which are identified as being new and distinctive, the freedom of the designer to innovate and (if only part of the design were substantially similar to an earlier design) the amount, quality and importance of that part in relation to the whole design. If the design application identified particular features of the design as new and distinctive, greater weight will have to be given to those features but the issue will still have to be assessed in the context of the product as a whole.

The prior art base will be considerably expanded. Under the existing Act, an application for registration of a design will be refused if the design:

• differs only in immaterial details or in features commonly used in the relevant trade from a design “registered, published or used in Australia” before the priority date in relation to the same article; or
• is an obvious adaptation of a design “registered, published or used in Australia” before the priority date in relation to any article.

The new Act says that the application must be assessed against designs “publicly used in Australia” or “published within or outside Australia”. Under the new Act, the prior art base will be expanded to include:

• designs published overseas (including but not limited to overseas registrations);
• designs of different types of articles whether or not it was obvious to adapt those designs to the articles in respect of which the design is sought to be registered.

The new Act provides that a design application will only be subjected to a formalities check (to ensure that the application contains all relevant information) before the design is registered. The registered design will only be examined upon the request of any person, by order of a court, or at the initiative of the Registrar. Once examined, if satisfied that the registration was valid, the Registrar will be required to issue a certificate of examination.

The maximum term of registration will be significantly reduced, from 16 to 10 years. The reason given by the Government for this amendment is that Australia’s international obligations (under Article 26 of the Agreement on Trade-Related Aspects of Intellectual Property) only require a protection period of 10 years. This can also be seen as a trade-off for supposedly greater protection against the infringement of registered designs.

Infringement

The provisions dealing with infringement of a registered design have been completely rewritten with the intention of making it easier to establish infringement. The major amendments include:

• Infringement proceedings will only be able to be commenced after the design has been examined and a certificate of examination granted. A threat to commence proceedings before that time would be likely to constitute an unjustified threat and, on an application by the threatened party, a court could order an injunction preventing the threats being made again and damages to compensate the threatened party for its losses. However, the mere notification of the registration of a design will not be an unjustified threat.
• The current infringement tests of obvious and fraudulent imitations will be removed. Instead, a person will infringe a registered design if the person, without the consent of the owner of the registered design, makes, imports, sells, hires or offers for sale or hire “a product, in relation to which the design is registered, which embodies a design that is identical to, or substantially similar in overall impression to, the registered design”.

In assessing whether a product is “substantially similar in overall impression”, it will be necessary to consider the same factors as were discussed earlier in relation to the registrability of designs. Importantly, in considering infringement more weight must be given to similarities than to difference between the designs.

New spare parts defence

Some time ago, concerns were expressed to an inquiry into the overlap between intellectual property and competition laws [1] that design protection for spare parts (eg. car parts or printer cartridges) could enable the owners of such registered designs to leverage their market power in the spare parts market to dominate the market for the complete product (eg. cars or printers).

The new Act addresses these concerns by providing that a person will not infringe a registered design if the allegedly infringing product (which would otherwise infringe that registered design) is:

• a component part of a complex product (where a “complex product” is a product comprising at least two replaceable component parts permitting disassembly and reassembly); and
• made, sold or otherwise commercially dealt with “for the purpose of the repair of the complex product so as to restore its overall appearance in whole or part” (for the sake of convenience, this is referred to below as a “genuine repair”).

The first condition – that the allegedly infringing product is part of a complex product – means that the defence will not apply where there is no complex product which can be broken down into its component parts. This will pose some difficulties in practice. Consider the case of a muffler which is protected by a registered design. Is the muffler a component part of a complex product (eg. the exhaust system or perhaps the motor vehicle), or is it an entirely distinct product which cannot itself be broken down into component parts? If the latter, a replacement muffler would fall outside the ambit of the defence.

The second condition – that there is a genuine repair – will be satisfied if the overall appearance of the complex product immediately after the alleged repair was not materially different from its original overall appearance, and provided that any differences which do exist after the alleged repair were solely attributable to the fact that only part of the complex product had been repaired.

The owner of the registered design will bear the onus of proving that the alleged infringer knew, or ought reasonably to have known, that the use was not for the purpose of a genuine repair. An alleged infringer would be in a better position to establish that it did not have the requisite knowledge, than the owner of the registered design would be in to establish the converse. However, the Explanatory Memorandum states that the onus of proof is not placed on the alleged infringer because to do so would act as a disincentive for new participants to enter the market for the supply of the relevant spare parts.

Further, the whole concept of repair to restore overall appearance is somewhat odd. Repair is usually undertake to reinstate function, not appearance. It remains to be seen how the spare parts exception will be applied in practice.

Amended copyright / design overlap laws

Contemporaneously with the Designs Act 2003, the Australian Parliament has enacted a separate piece of legislation relating to designs law, the Designs (Consequential Amendments) Act 2003 (Cth). The primary purpose of these consequential amendments is to alter the so-called “copyright/design overlap” provisions in sections 74 to 77 of the Copyright Act 1968 (Cth).

In simple terms, this technical area of the Copyright Act is designed to provide a defence to a claim of infringement of copyright in a design which has not been registered under the Designs Act but has been “applied industrially”. However, the existing provisions lack clarity and their interpretation has always been a hotly debated issue.

We discuss these provisions further in a separate article in this edition.

Conclusion

The new Act will reduce the term of protection and provide a “spare parts” defence to design infringement. These changes can be considered a trade-off by the owners of registered designers for the fact that it should be easier establish infringement. The Designs Act 2003 should reinvigorate Australia’s designs laws, and provide welcome relief to the creators and owners of innovative designs.

For further information, please contact Richard Hoad.