Legal Briefing

Registered designs: an overlooked asset

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Technology, Media and Telecoms | 01 June 2012

With around £23bn being invested in design in the UK each year1, there can be no doubt that designs are big business, or that they are vitally important for the UK economy. There is, however, significant doubt as to whether current design law and access to justice in this country provide sufficient protection for designs and those working in the creative industries.

In particular it seems that there is a very low take up of registered designs by UK businesses. In 2009 there were only 2,111 designs registered, yet there were approximately 232,000 designers in the UK2. This indicates that only faround 0.009% of designers are registering their design rights; a very low percentage given the size of the design industries and their success.

So what’s the reason for the low take up? Professor Ian Hargreaves, in his recent review of IP in the UK, considered this question and called for there to be more research on the subject. This prompted a recent call for evidence by the UK Intellectual Property Office (UKIPO) at the end of 2011. This article explores the reasons for the low take up of registered designs and some of the main findings of the recent research.

DISPARITY BETWEEN THE ACTUAL AND PERCEIVED BENEFIT

Registered designs have several benefits, which unregistered rights and copyright do not. First, registered design rights have a much longer term of protection than unregistered design rights, lasting up to 25 years, compared with three years for Community Unregistered Design Right (CUDR) and up to 15 years for UK Unregistered Design Right (UKUDR). Secondly, while copyright has a longer term than registered design rights (the life of the author plus 70 years) the scope of protection does not cover 3D designs unless they qualify as original artistic works or works of artistic craftsmanship, which many do not. Thirdly, registered designs protect surface decoration, which UKUDR does not. Fourthly, registered designs convey an exclusive right in the design. This gives the proprietor the ability to stop competitors making3 products to which the registered design is applied without the need to prove copying (which is necessary to establish infringement of copyright and UKUDR and is often hard to show). Therefore businesses without a registration to protect their design may find that they are out of time to rely on unregistered design rights and that their design is not protected by copyright, particularly if it is a 3D object.

Given these advantages, it seems strange that there is such a low take up of registered designs in the UK. One explanation is that despite the numerous actual benefits conferred by registered designs, UK businesses do not perceive there to be such benefits. Conversely, UK businesses may recognise that there are advantages but do not consider them to be worth the cost (in terms of time, or effort, or both) of registration.

COST AND/OR PERCEIVED DIFFICULTY OF REGISTRATION PROCESS

The procedure for registering a design is relatively straightforward and there is lots of guidance on how to complete the relevant forms on the websites of the UKIPO and the Office for Harmonisation of the Internal Market (OHIM). The costs of registering a design are also relatively low. The official fee for registering a UK Registered Design (UKRD) is £60 for one design and £40 for each subsequent design and the official fee for registering a Community Registered Design (CRD) is €350 for one design and another €175 for each extra design up to ten.

It seems unlikely that the registration procedure is a significant reason for the low level of registered designs in the UK, especially given that many designers appear to be willing to file their designs on an alternative register run by Anti Copying in Design (ACID), a membership organisation representing designers. ACID’s database provides a paper trail to demonstrate design ownership but doesn’t confer any design rights. Around 30,000 designs are added to ACID’s electronic database annually4, which is over ten times the number of filings received by the UKIPO each year5. The volume of registrations on ACID’s database suggests that designers do think that there is value in recording their designs.

It is not yet possible to file UKRD applications online, which may act as a deterrent to some designers. However given that the paper application forms are reasonably user friendly, this is unlikely to be a significantly prohibitive factor. The World Intellectual Property Organisation (WIPO) recently asked users of the design registration system for their views on a number of proposed changes to the registration of designs. The findings of this survey may reveal whether the current procedure is a contributory factor to the low level of design registrations in the UK6.

Perhaps one reason for the popularity of ACID’s register is that it’s free of charge. Some respondents to the call for evidence have suggested that the official fee for design registrations may be a barrier to smaller firms who generate many designs and need time to work out which are most likely to be commercially successful. There have been some suggestions that if the official registration fee was lower, say under £10, then this would enable businesses to use the designs register as a ‘deposit system’ and protect more ideas, rather than having to make an educated guess as to which ones are most likely to be copied7.

However, there are around ten times more trade marks registered in the UK than designs each year8 and registering a trade mark is nearly three times more expensive than registering an equivalent design (the cheapest registration fee for a UK trade mark is £170 and is €900 for a Community trade mark, compared to £60 and €350 for an equivalent design). This indicates that the size of the fee is unlikely to be a core reason for the low level of design registrations in the UK.

COMPLEXITY OF CURRENT LEGAL FRAMEWORK

A more significant factor may be a lack of understanding of design rights and the protection they provide9. There is currently a ‘patchwork of protection’ provided by UKRD, UKUDR, CRD, and CUDR as well as copyright and trade marks in some instances. Many businesses reported in the call for evidence that they were confused about the different terms and scope of protection of each of the different design rights available. This may be a factor that is contributing to the low level of registered designs in the UK.

UNCERTAINTY REGARDING VALIDITY

Instead of registering designs, many companies in the UK are relying on unregistered design rights, copyright and in some cases on confidential information to protect their designs10. One reason for this is the perceived weakness or vulnerability of registered designs. In order to be valid, both a UKRD and a CRD must be novel and have individual character. However, the UK, like most European offices, does not assess the validity of a design before registering it. The downside of this is that many businesses may feel that this gives a level of uncertainty and dilutes the strength of a registered design right. Companies may also feel less confident about writing cease and desist letters to infringers if they are unclear about the validity of their registered design and are apprehensive about making groundless threats. Some respondents to the call for evidence suggested that this may be remedied somewhat by introducing an optional novelty examination before registration.

NO PERFORMANCE BENEFIT

A recent study by Imperial College found that there is no real performance impact, in terms of improvements to a company’s financial performance, associated with holding designs registered in the UK or in Europe11. However, these findings need to be read with the extremely low numbers of designers who are registering their design rights in mind. This suggests that these findings may not be statistically significant or indicative of what the potential performance impact would be if the registered design system was more commonly used. A higher level of design registrations in the UK might well increase the perceived value of registered design rights as a tradeable asset to which market value can be assigned. This would be likely to have a positive effect on the financial performance of those companies holding registered designs.

COST/DIFFICULTY OF ENFORCEMENT

The value of an IP right to a company depends, to a large extent, on its ability to enforce it. Recent research has shown that many UK businesses are deterred from applying for registered designs because of the perceived cost and difficulty of enforcing them against infringers.

In the UK the costs of civil proceedings are notoriously high compared to other countries in continental Europe, such as Germany. This can act as a significant deterrent to enforcement of intellectual property rights (IPRs), especially to small and medium enterprises (SMEs)12. This problem has been reduced to some extent by the introduction of a £50,000 cap on recoverable costs by the Patents County Court (PCC). However, the potential that the losing party may be liable to pay their own costs, as well as up to £50,000 for the other side’s costs, is likely to still be a significant deterrent to many UK designers and businesses in the creative industries.

The UKIPO’s recent proposal to introduce a small claims track into the PCC, if implemented, will go some way towards alleviating this. Under the current small claims regime, there is very limited costs recovery and the maximum damages award is £5,000. The introduction of a similar system in the PCC would notably increase access to justice for the many design-related SMEs who have low-value IP claims and wish to reduce their exposure to costs, yet are keen to enforce their design rights.

The UKIPO’s call for evidence on the proposed small claims track suggested that the bulk of claims on an IP small claims track would involve disputes relating to copyright, unregistered designs and trade marks. It has not yet been decided what the small claims track will cover if it does go ahead. Hopefully the scope of the track, if and when it is implemented, will include registered designs in order to incentivise businesses to register their rights and benefit from the valuable protection they can provide. If not, it is likely that the perceived benefit of registered designs will decrease even further.

Following the findings of the call to evidence, the UKIPO commissioned a further survey, which was carried out in April this year, of the perceptions of people in industry of the costs involved in enforcing design rights and the way those perceptions affect behaviour13. Hopefully the findings from this survey will improve the government’s understanding of the current problems with enforcement of design rights and how the situation could be improved.

VALUABLE IPR WORTH REGISTERING

While there are currently some difficulties and barriers to registration of designs, the benefits provided by registration do outweigh the costs. Registered designs help prove title and act as a good ‘keep off the grass’ warning to competitors. They provide longer-term protection than UKURD and CUDR, a broader scope than UKURD and apply to many aspects of a design that other IPRs, such as trade marks and copyright, do not. Some of the difficulty and expense of enforcing design rights will also hopefully be remedied by a new IP small claims track in the PCC. The ongoing efforts of the UKIPO to understand designs better, and move them up the government’s agenda, are very promising. In short, there has never been a better time to register a design.

By Lindsay Cook, solicitor, Rouse.

E-mail: lcook@iprights.com.

Notes

  1. NESTA’s report on driving economic growth, 2008.
  2. Design Council Industry Insights 2010.
  3. And/or offering, putting on the market, importing, exporting, stocking or using (Article 19(1) of Regulation 6/2002/EC).
  4. ‘Digital Opportunity: A Review of Intellectual Property and Growth’, Professor Ian Hargreaves, May 2011.
  5. Based on the number of filings with the UKIPO in 2009.
  6. A questionnaire, asking users of the design registration system for their views on the potential benefits and costs of the proposed changes, can be found on the WIPO website. The cutoff date for replies was 11 May 2012.
  7. UKIPO ‘Assessment of the Need for Reform of the Design Intellectual Property Framework’, December 2011.
  8. In 2009, approximately 30,825 registered intellectual property rights were granted in the UK by the UKIPO (5,428 were patents, 2,111 were designs and 23,286 were trade marks).
  9. For example, ACID have reported that one of the most common questions asked by their members is ‘where can I patent my design?’
  10. Design Economics, chapter three, ‘Design Right Case Studies’ Dr James Moultrie and Finbarr Livesey.
  11. ‘Registered Designs & Business Performance – Exploring the Link’, Elif Bascavusoglu-Moreau and Bruce S Tether, Imperial College Business School, Imperial College London.
  12. ‘Intellectual Property Enforcement in Smaller UK Firms’ report, October 2010.
  13. The Design Rights and Innovation Survey also explores the effectiveness of design law in the UK and to research ways of bringing the system up to date. The deadline for responses to the survey was 20 April 2012.