Originally published in the Trademark Reporter® Vol 105 No 6 Nov-Dec 2015
In the European Union, rights holders may obtain unregistered rights in their designs under the Community Designs Regulation. These rights arise automatically, cover all member states of the European Union, and last for three years from the date of first public disclosure. This article considers the 2014 decision of the Court of Justice of the European Union (CJEU) in Karen Millen Fashions Ltd v. Dunnes Stores on the individual character of unregistered designs, and looks at the decision particularly through the prism of rights holders in the fashion industry. The CJEU confirmed that, when assessing the individual character of a Community design, the assessment must be made by reference to specific earlier designs, taken individually. The authors note that, especially with regard to the fast-fashion industry, designers need to take some care to avoid slavish copying of a single prior design because unregistered design rights post-Karen Millen have a stronger presumption of validity. This article demonstrates how the CJEU’s approach on this factor and in other respects is sensible and rooted in commercial reality.
I. INTRODUCTION
Today’s fashion market is constantly evolving, both in terms of the turnover of seasonal collections and the ability of fast-fashion companies to quickly place runway trends into mass production. Collections for the autumn/winter season disappear from the shop floor once spring/summer arrives, and fast-fashion retailers can take trends from the catwalk to the consumer at increasingly rapid speeds, all at lower price points. So how can right holders in the European Union protect products that have a short life span, where the cost and burden of obtaining long-term registered protection is hard to justify?
Council Regulation (EC) No. 6/2002 on Community Designs (“CDR”) provides one such mechanism. This provision allows right holders to obtain unregistered rights in their designs*1 that arise automatically (i.e., with no registration requirements), cover all member states of the European Union, and last for three years from the first public disclosure.*2 The owner of an unregistered Community design right (“UCD”) may prevent third parties from using that design, provided the third party use is the result of copying.*3 To be valid, the design must be new and possess individual character, to the extent that its overall impression differs from that of earlier designs that have been made available to the public.*4
The impetus for UCDs is to provide “protection without the burden of registration,” wher “the duration of protection is of lesser significance.”*5 The fashion industry falls right into this sweet spot.
This article considers the decision of the Court of Justice of the European Union (“CJEU”) in Karen Millen Fashions Ltd v. Dunnes Stores, Dunnes Stores (Limerick) Ltd*6 (the parties referred to hereinafter as “Karen Millen” and “Dunnes,” respectively) on the individual character of unregistered designs in the fashion industry. The CJEU’s comments apply equally to registered Community designs and to those designs from industries other than fashion.
II. FACTS
The factual background to the dispute is uncomplicated. In 2005, the well-known British brand Karen Millen produced a black knit top (“the KM top”) and two versions of a striped shirt—one in blue and one in brown (“the KM shirts”). Each style had been designed and developed by an employee of Karen Millen. By December 2005, the KM top and KM shirts were being produced and sold in Ireland under the Karen Millen label. Images are shown below at Figures 1 through 3:
In March 2006, Dunnes, an Irish retailer, arranged for a third party to purchase the KM top and KM shirts on its behalf. By November 2006, copies of the KM top and KM shirts had been made and were being sold by Dunnes under its SAVIDA sub-brand (the “SAVIDA top” and “SAVIDA shirts,” respectively). Images of these shirts are shown below in Figures 4 through 6:
The sale of the SAVIDA top and SAVIDA shirts soon came to the attention of Karen Millen, who commenced proceedings before the Irish High Court (the “High Court”) in January 2007.*7 It was not in dispute that Dunnes had copied the KM top and KM shirts.
III. CLAIMS BEFORE THE HIGH COURT
In its claim before the High Court, Karen Millen alleged that Dunnes had infringed its UCDs in the KM top and KM shirts pursuant to the CDR.
In response, Dunnes disputed that UCDs existed in the KM top and KM shirts, asserting that the underlying designs in the KM top and the KM shirts lacked individual character within the meaning of the CDR. If the KM top and the KM shirts indeed lacked individual character, then, as a matter of law, Karen Millen would not have valid UCDs*8 and would thus have no case.
The test for individual character of a design is set out in Article 6(1) of the CDR: “a design shall be considered to have individual character if the overall impression it produces on the informed user differs from the overall impression produced on such a user by any design which has been made available to the public, in the case of an unregistered Community design, before the date on which the design for which protection is claimed has first been made available to the public.”
At the heart of Dunnes’ argument was its contention that in order to have individual character, the overall impression produced by the designs in the KM top and KM shirts must differ from the overall impression created by a hypothetical combination of features taken from a number of prior designs. Dunnes cited a number of third-party designs that pre-date the KM top and KM shirts and that, in its view, had at least one design element in common with those garments.
The High Court rejected this, finding that Article 6 of the CDR is perfectly clear: it calls for a comparison between the overall impression of the contested design and that created by one or more specific and identifiable earlier designs that have been made available to the public. All the authorities relied on in the High Court proceedings that examine the validity of designs supported this view.*9
The High Court then went on to consider the specific prior designs relied on by Dunnes. The designs deemed to be most similar to the KM top and KM shirts were a DOLCE & GABBANA top and a PAUL SMITH shirt, and in both cases their overall impressions were held to be clearly different from those of Karen Millen’s designs.
Accordingly, the High Court held that the designs in the KM top and KM shirts had individual character. Karen Millen was therefore held to have valid UCDs and Dunnes was deemed to have infringed those rights. Relief came in the form of an order restraining Dunnes from selling the SAVIDA top and SAVIDA shirts, an order for delivery up of those garments, and an account of profits.
Consideration was also given to the onus of proof in infringement cases relating to UCDs. The High Court held that Karen Millen bore the initial onus of pinpointing which elements of the designs it considered gave rise to individual character (contrary to Dunnes’ view that it was for Karen Millen to actually prove that those elements had individual character). Once Karen Millen had discharged its burden, it was open to Dunnes to contest the validity of the designs by showing that they lacked individual character by reference to specific earlier designs that gave the same overall impression.
IV. APPEAL AND REFERRAL TO THE CJEU
Dunnes appealed to the Irish Supreme Court (the “Supreme Court”), which stayed the proceedings and referred the following questions to the CJEU for a preliminary ruling:
1. In consideration of the individual character of a design for which protection is claimed as a UCD for the purposes of the CDR, is the overall impression it produces on the informed user, within the meaning of Article 6 of the CDR, to be considered by reference to whether it differs from the overall impression produced on such a user by:
(i) any individual design that has previously been made available to the public, or
(ii) any combination of known design features from more than one such earlier design?
2. Is a Community design court obliged to treat a UCD as valid for the purposes of Article 85(2) of the CDR where the right holder merely indicates what constitutes the individual character of the design or is the right holder obliged to prove that the design has individual character in accordance with Article 6 of the CDR?
A. The First Question
Dunnes referred the CJEU to the phrases “any design” in Article 6 of the CDR, and “existing design corpus”*10 and “in comparison to other designs,”*11 which appear in the preamble. In Dunnes’ view, those phrases meant that the assessment of individual character must be based on a comparison between the contested design and an amalgam of features cherry-picked from several earlier designs.
The CJEU was not persuaded. With respect to Article 6 of the CDR, it found that “any design” meant that the assessment of individual character must be based on a comparison with one or more “specific, individualised, defined and identified designs from among all the designs which have been made available to the public previously.” As to the pre-amble, the CJEU found that “existing design corpus” and “in comparison to other designs” were not to be interpreted in the manner advocated by Dunnes. In any case, those terms do not appear in the main provisions of the CDR and do not have binding force, as they are contained in the preamble only.
Consideration was also given to European case law. The cases cited by the CJEU held that, when possible, the informed user will make a direct comparison between the designs in question, because that is how the overall impressions would be visualized and assessed.*12 Further, although in some circumstances a direct comparison would not be possible, this did not mean that Dunnes’ interpretation carried weight. After all, an indirect comparison is based on an imperfect recollection of specific designs, rather than a recollection of specific features of different designs.
Finally, the CJEU reflected on the meaning of Article 25(1) of the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (the “TRIPS Agreement”)*13 through which “members may provide that designs are not new or original if they do not significantly differ from known designs or combinations of known design features.” Because the provision is expressed in optional terms, the CJEU held that parties to the agreement are not required to provide for the novelty or individual character of a design to be assessed against a hypothetical mosaic of known earlier designs.
Based on the above findings, the CJEU concluded that for a design to have individual character, the overall impression it produces on the user must be different from that produced by one or more designs taken individually.
B. The Second Question
The second question called for a close examination of Article 85(2) of the CDR.*14 Under that provision, a UCD is presumed to be valid if the right holder proves that the conditions of Article 11 (and by corollary the requirements of Articles 3 through 9) of the CDR have been met, and indicates what constitutes the individual character of the design. Dunnes’ argument related to the latter— that Karen Millen must actually prove that the designs in the KM tops and KM shirts had individual character.
The CJEU rejected Dunnes’ argument. Article 85(2) gives rise to a presumption of validity that is fundamentally incompatible with Dunnes’ interpretation that Karen Millen must prove individual character.
Moreover, if Karen Millen had to prove individual character in its designs, there would be no reason for it to then indicate what constitutes individual character. It would also render meaningless the possibility for Dunnes to contest the validity of Karen Millen’s design rights.
Lastly, one of the objectives that underpins the creation of UCDs is the need for simplicity and expeditiousness for products with a short life span.*15 A burdensome provision requiring right holders such as Karen Millen to prove individual character would be contrary to this goal.
Taking these factors into account, the CJEU interpreted the meaning of Article 85(2) of the CDR as requiring the right holder only to indicate the features that bring about the individual character in the design at issue to establish the validity of a UCD, rather than requiring the right holder to prove that the UCD itself has individual character. It is sufficient for the right holder to indicate the features that bring about individual character in the said design.
V. BACK TO THE SUPREME COURT
The Supreme Court considered the CJEU’s preliminary ruling and rejected Dunnes’ appeal, upholding the decision of the High Court.
VI. PRACTICAL IMPLICATIONS
The CJEU has taken a sensible approach—one rooted in commercial reality. The approach is undoubtedly favorable to those, such as fashion designers, who rely on UCDs to protect design-based products with a short life span.
The ruling most significantly clarifies the nature of the prior designs against which the individual character of the later design must be assessed. First, the fashion industry often takes inspiration from past works when creating new designs; it is not unusual for a new garment to incorporate design elements of old garments. Had Dunnes’ interpretation of individual character been preferred, it would have had the potential to undermine the fashion design industry (and many other design-led industries) as a discipline and the ability of right holders to protect their designs.
Second, fast-fashion retailers, and others who engage in similar activities, will need to exercise care when creating their garments to avoid violating protections for UCDs. Slavish copying of a single prior design would clearly be an infringement, but there may be room to argue if features from a number of different designs are incorporated.
Further, the increased certainty around the presumption of validity for UCDs reduces the evidential burden on right holders and makes it easier for them to enforce their rights. This would apply throughout the European Union member states because clarification on this point was given at the CJEU level, despite the dispute originating in Ireland.
*1 The term “design” is defined in Article 3 of the CDR as “the appearance of the whole or a part of a product resulting from the features of, in particular, the lines, contours, colours, shape, texture and/or materials of the product itself and/or its ornamentation.”
*2 Article 11 of the CDR.
*3 Article 19(2) of the CDR.
*4 Articles 4-6 of the CDR.
*5 Recitals 15 and 16 in the preamble of the CDR, which state as follows:
(15) A Community design should, as far as possible, serve the needs of all sectors of industry in the Community.
(16) Some of those sectors produce large numbers of designs for products frequently having a short market life where protection without the burden of registration formalities is an advantage and the duration of protection is of lesser significance. On the other hand, there are sectors of industry which value the advantages of registration for the greater legal certainty it provides and which require the possibility of a longer term of protection corresponding to the foreseeable market life of their products.
*6 Karen Millen Fashions Ltd v. Dunnes Stores, Dunnes Stores (Limerick) Ltd, Case C-345/13 (CJEU, June 19, 2014).
*7 See the judgment of the Irish High Court in Karen Millen Fashions Ltd v. Dunnes Stores & Anor, [2007] IEHC 449 (Dec. 21, 2007).
*8 Article 85(2) of the CDR provides that “in proceedings in respect of an infringement action or an action for threatened infringement of an unregistered Community design, the Community design court shall treat the Community design as valid if the right holder produces proof that the conditions laid down in Article 11 have been met and indicates what constitutes the individual character of his Community design. However, the defendant may contest its validity by way of a plea or with a counterclaim for a declaration of invalidity.”
*9 Karen Millen Fashions Ltd v. Dunnes Stores & Anor, [2007] IEHC 449 (Dec. 21, 2007).
*10 Recital 14 in the preamble of the CDR reads “the assessment as to whether a design has individual character should be based on whether the overall impression produced on an informed user viewing the design clearly differs from that produced on him by the existing design corpus, taking into consideration the nature of the product to which the design is applied or in which it is incorporated, and in particular the industrial sector to which it belongs and the degree of freedom of the designer in developing the design.”
*11 Recital 19 in the preamble of the CDR reads “a Community design should not be upheld unless the design is new and unless it also possesses an individual character in comparison with other designs.”
*12 PepsiCo, Inc. v. Grupo Promer Mon Graphic SA, Case C-281/10 P (CJEU, Oct. 20, 2011) at paragraph 55; and Herbert Neuman and Andoni Galdeano del Sel v José Manuel Baena Grupo SA, Joined Cases C-101/11 P and C-102/11 P (CJEU, Oct. 18, 2012) at paragraph 54.
*13 Article 25(1) of the Agreement on Trade-Related Aspects of Intellectual Property Rights states that “members shall provide for the protection of independently created industrial designs that are new or original. Members may provide that designs are not new or original if they do not significantly differ from known designs or combinations of known design features. Members may provide that such protection shall not extend to designs dictated essentially by technical or functional considerations.”
*14 See note 8.
*15 Recitals 16 and 17 in the preamble of the CDR.