Saturday, 21 March 2020

Concerning the originality of lampshades: Innermost v Warm

Innermost Ltd v Warm BL O/464/19 is that rare thing, a case about licensing of right under Part III of the Copyright, Designs and Patents Act 1988. I wrote it like that to avoid using the word "right" twice in close proximity, but of course design right is what it invloves.

The Act - the 1988 one, I hope that's obvious - permits a would-be user of the design right to claim a licence during the last five years of the term of protection. Because the term of protection for design right is 15 years from the end of the year in which the design was created, or 10 years from the end of the eyar in which articles made to the design were first made available for sale or hire if that happened within the first five years of the 15 year term (s.216(2)), it is not necessarily a simple matter to identify when a design is in the last five years of its protection, and that was one of the matters at issue in this decision of Mr Phil Thorpe on behalf of the Comptroller.

It's worth mentioning that ten years from first making available is the usual term of protection for designs. It is rare, though certainly not unheard of, for a design to be created and not exploited in this way for five years or more. But in this case we are in the realm not of aircraft, which take a long time to progress from drawing board to "making available", but of lighting, which can make much faster progress towards commercialisation.

Corinna Warm had designed the lights, which were referred to as the Glaze pendant light, the Circus pendant light and the Circus wall light. The Circus wall light used the existing Circus pendant shade. Innermost, the applicant for the licence, manufactured them under licences, which had expired. The parties were unable to agree terms for new licences, so Innermost invoked s.216, under which the Comptroller is empowered to set a royalty in default of agreement.

Mr Thorpe had to set the royalty rate for each of the three, but also had to decide when the Glaze pendant light had first been made available as this would determine the start date for the licence of right period. He also had to decide whether the Circus wall light even enjoyed design right protection, and if so when the licence of right period began. The royalty rates are probably the least interesting part of the case, so rather than leave you in suspense I will tell you now that he set this at 5 per cent for the two pendant lights (Innermost had offered 4 per cent, Ms Warm wanted 5 and 7 respectively, and in fact on the Glaze design Innermost conceded the higher rate during the hearing). As for the wall light, he decided for reasons that will become apparent that he didn't have jurisdiction to set a rate.

Prototypes of the Glaze pendant lights had been shown by Ms Warm before Innermost took a licence from her, and a couple of years before they started selling the lights, so which of those dates was to be used for calculating the beginning of the licence of right period was pretty important: would that period start on 1 January 2017 or 2019? The key to answering this question lies in paragraphs [116] to [119] of Lord Justice Jacob's judgment in Dyson Ltd v Qualtex (UK) Ltd. [2006] RPC 31, [2006] EWCA Civ 166 (the one in which he made some very scathing comments about Part III):
[116] If a man offers and takes orders for sale of articles for sale at the end of December, but does not actually deliver any until January, when does the five-year period of s.216 (1) (b) start to run? When are articles “made available for sale or hire?” In [307] the judge held that it when the public first actually could get the articles. So in the example, it is January. And it would make no difference if there had been prior manufacture of a prototype, shown to the public but no more. The judge held merely taking orders with future delivery (contemplated by the contract or in fact) was not enough. The first actual delivery is when the article is "made available for sale". 
[117] Mr Arnold said that was wrong—the statute was aimed at exploitation of designs. This starts when orders for the article are actually taken. Mr Carr submitted that UDR was for a short period in itself. It was unlikely that in some cases (e.g. the example above) the period of full protection would be cut down to virtually four years only. 
[118] Neither argument is particularly persuasive. Again the provision is not well-thought out—potentially it makes a 20 per cent difference in the period of full protection whichever party is right. In the end I think the judge was right to go by the actual words without any notion of underlying policy to guide him. He reasoned thus: 
"I consider that the natural meaning of the expression ‘made available’ connotes something that is actually in existence. If one imagines a case of an offer of goods which have yet to be made (in the sense that none of them are yet made) then I would not consider that those goods are ‘available’ for sale even if advance orders for them are taken. Taking orders for them is not making them available."
[119] I agree and see no point in trying to say the same in my own words.
(Counsel in that case, incidentally, subsequently became Lord Justice Arnold and Mr Justice Carr, who sadly died last year.)

On this basis, Mr Thorpe decided that it was when Innermost put the lights on the market that mattered, not when Ms Warm exhibited the prototypes. There was no need to argue about the relevant date for the Circus lights, as this was agreed at the case management conference, but it was necessary to decide whether the Circus wall light was protected at all. Ms Warm argued that it was a new design, several years younger than the pendant, whereas Innermost said it was just a variation of the pendant model, in which case it would lack the originality needed to give it protection in its own right so protection would begin and expire at the same time as for the pendant. Innermost also added a rather optimistic claim that the wall light was caught by the must-match exception, which Mr Thorpe struggled with before deciding that the argument had not been made out.

As for originality, the hearing officer found that
Ms Warm has taken the existing Circus lampshade as a starting point and designed a complimentary wall mount and arm arrangement which together support a swivel-mounted LED unit covered by the lampshade – the lampshade being made using existing tooling. It’s [sic - the decision contains a large number of colloquial contractions, almost as if it were a blog post!] a collection of parts that are designed to work in aesthetic harmony with one another. [Para 67]
 He added at paragraph [72] of his decision:
Ms Warm has employed originality in arriving at a new creation, something that is different to the Circus pendant lampshade. Certainly, the Circus lampshade has been used as a basis for the design and, except for some minor modifications to the modesty cap and cosmetic cover there appears to be very little, if any, difference in the shade’s shape or configuration. So does the combination of the shade and everything else result in something that is more than a mere collocation and render it original? I think it does. Whether this is regarded as adding ‘old’ to ‘new’, or ‘new’ to ‘old’, I think the result is a visually very different product, one where the whole is quite different to any one of its component parts. Ultimately the overall design is not a copy. I therefore conclude that design is original and thus design right does subsist.
You can't argue with that, although you can argue with whether the law makes sense. (Mr Thorpe couldn't, of course.) Does it really make sense to restart the term of protection, brief though it be in the first place, when an existing lampshade is fitted with a wall mount? Indeed, does it make sense to protect what to my untutored eye is a pretty ordinary-looking lampshade to start with? Well, yes, probably, because given the amount of freedom a designer has in this field there is no good reason to make a lampshade that comes close to looking like an existing one: in other words, the exclusive rights conferred by Part III will be very narrow. If Innermost didn't like the licence terms, they could probably have commissioned a new design that didn't look hugely different.

Monday, 16 March 2020

Whistleblowers' rights and breach of confidence: Pharmagona v Taheri

When a breach of confidence case has a 'whistleblower' dimension, things can get complicated. The history of Pharmagona Ltd v Taheri and Anor [2020] EWHC 312 (QB) (17 February 2020), which came before Mr Justice Nicol on 30 January (the judgment appearing on 17 February) is complicated - a sorry-looking tale of orders made and arguably not complied with - considering that it was nothing more than a simple breach of confidence action brought by an employer against a couple of employees, who happened to be husband-and-wife.

The defendants, IT manager and office manager respectively, had been summarily dismissed for stealing money by the claimant on 2nd February 2018, after which date they allegedly criminally hacked into the complainant's computer system and downloaded "various materials". The first defendant did the hacking, but communicated information to his wife who knew or ought to have known that she had confidential information.

The defendants maintained in their defence that the claimants had engaged in unlawful and criminal activities, including exporting goods to Iran. This, they argued, was why they were accused of theft and dismissed, although a police investigation had found no evidence against them. They claimed the protection of the Public Interest Disclosure Act 1998 and the Employment Rights Act 1996. Many elements make this a rather unusual breach of confidence case.

The defendants say that their hacking was to collect evidence of wrongdoing, and whistle-blowing would of course be immensely difficult if an injunction could be obtained to prevent information being passed on - indeed, to prevent the whistle being blown (or perhaps to remove its pea before blowing took place).

The claimant sought (so the judge inferred - the pleadings seem to have been somewhat unorthodox) an interim injunction. This would normally be dealt with according to the American Cyanamid principles, but the judge decided that s. 12 of the Human Rights Act applied: publication is not to be restrained before trial unless the court is satisfied that the applicant is likely to establish at trial that publication should not be allowed. The purpose of this provision is to protect the Convention right to freedom of expression (Article 10, of the European Convention on Human Rights of course). "Likely" means more likely than not, according to the House of Lords in Cream Holdings v Bannerjee [2004] UKHL 44, [2005] 1 AC 253, although this ordinary meaning might have to be applied flexibly sometimes.

The claimant argued that s. 12(3) did not apply, relying on the carve-out in Article 10(2) which allows freedom of expression to be curtailed to protect the rights of others - here, the claimant's proprietary rights in its confidential information. Counsel for the claimant pointed out that there had been no reference to Article 10 or s.12 in the key earlier Court of Appeal case Tchenguiz and Ors v Imerman (Rev 4) [2010] EWCA Civ 908 (29 July 2010) but the judge reckoned that the point about likely success at trial had been fully considered, even if the provisions had not been mentioned in so many words.

The judge was satisfied that unless the defendants were restrained, the claimant would be able to show at trial that the defendants would be likely to use the confidential information. However, the judge was also satisfied that the defendants should be free to co-operate with public authorities investigating the claimants' activities. They had, in short, to be allowed to blow their whistle. In the end, an injunction to prevent disclosure with a suitable public interest proviso, allowing the defendants to answer questions and provide documents, seems a very sensible (and in the circumstances quite simple) solution, and that is what the judge granted.

Thursday, 5 March 2020

Dilution and figurative trade marks: Red Bull v Bighorn

Red Bull energy drink has been around for a long time now. I discovered it during my stint teaching IP at Essex University, when I would take a day a week off from my day job and trek across the country. On arriving at Colchester a can of Red Bull would help me get through the two-hour class I was there to teach, and in fact I recall that it was Austrian students in that class, who drove home with the assistance of a few cans but had to take care because it was illegal in Switzerland, who first alerted me to its properties (I deliberately refrain from using the word "benefits").

Article 9(2)(c) of the EU trade mark regulation (2017/2001) (which is in pretty much the same terms as s.10(3) of the Trade Marks Act 1994) protects a trade mark with a reputation against acts that "without due cause" (I put that in inverted commas because it is hard to see how it could be otherwise) take unfair advantage or that reputation or are otherwise detrimental to it (or for brevity dilution and tarnishment). Back in 1994 (or perhaps more accurately 1989, when the original directive was made) that was a radical new departure in trade mark law, not just in the European Community and still less just in the UK, but in the world at large: the US had dabbled with such protection but even in the Dallas Cowboys Cheerleaders case the judge had stuck to the well-trodden path of confusion rather than following the "dilution" signpost.

A major problem is the notion of a trade mark with a reputation - haven't all trade marks got reputations, some larger than others? The French version of the directive looks to be referring to trade marks "of repute", which is a different matter - and Article L713-5 of the French Code refers to "une marque jouissant d'une renommée". But whatever the law means, we can probably assume that the trade mark RED BULL, and the same trade mark owner's figurative trade marks (what normal people would call logos) or at least some of them, have reputations. (Incidentally, it seems to be the trade mark not the product or the trade mark owner that must have the reputation, which is, well, interesting.) So no surprise that when Red Bull found another energy drink manufacturer selling its wares under the BIGHORN trade mark using signs that bore a certain similarity to Red Bull logos - in one of the three instances pleaded, charging rams rather than charging bulls - they sued for trade mark infringement on grounds of likelihood of confusion (the rams obviously meaning that the defendant's trade mark could not be identical) and unfair advantage (without due cause, of course).

The deputy judge, Kelyon Baker QC, found no infringement under Article 9(2)(b) - likelihood of confusion - but did consider that the defendant took unfair advantage of the reputation of the claimant's trade mark: Red Bull GmbH v Big Horn UK Ltd & Ors [2020] EWHC 124 (Ch) (30 January 2020). I have shown one of the claimant's registered trade marks and one of the defendant's signs, but you can see them all in the judgment if you click on the link, should you feel it necessary.

There was not a high enough level of similarity to find a likelihood of confusion under Article 9(2)(b), but that didn't matter much because the Deputy Judge held that there was unfair advantage, so Red Bull succeeded. Sky v Skykick [2018] EWHC 155 (Ch) told us that this required the global assessment so beloved of the Court of Justice, taking into account all the circumstances of the case. These would include the strength of the trade mark's reputation, the defree of its distinctive character, the degree of similarity, and the nature and degree of proximity of the goods or services. How strongly and immediately was the claimant's mark brought to mind by the defendant's sign? That would determine whether the use of the sign was taking unfair advantage of the trade mark's distinctive character or reputation.

The defendant did not try to argue that the Red Bull trade marks were not well-known within the EU, which would surely have been a waste of time had they attempted it. Nor did it try to justify its actions by showing "due cause", whatever that might look like (parody, perhaps?). The defendant's signs were visually and conceptually similar to the claimant's marks. They were being used for the same goods, which were sold in the same shops. They were therefore likely to cayuse the average consumer to link those signs with the claimant's marks, and unfair advantage was therefore being taken.

Cheat software infringes copyright in Grand Theft Auto V

It won't surprise you to learn that computer games are not my thing. I did have to look at one some years ago for a client who objected to the content (we took the view in the end that the Streisand Effect was likely to make anything the client did about it counter-productive). So if I don't relate to computer games themselves, what am I supposed to think about software that enables the user to cheat in the game?

Cheat software is what was in issue in Take-Two Interactive Software Inc & Anor v James & Ors [2020] EWHC 179 (Pat) (29 January 2020) where in an application for summary judgment the judge (Mrs Justice Falk) held that it infringed copyright in the game itself. Not only that, there were breaches of contract both by the defendants and induced by them, the elements of the tort of inducing a breach of contract (knowledge, intention and damage, as laid down in OBG Ltd v Allan [2008] 1 AC 1) being made out against most of the defendants. There were a couple of points (the liability of a minor defendant, and circumvention of technical protection measures under s.296 CDPA to which the defendants seem to have had a plausible factual defence) which were not candidates for summary judgment, but on the other claims the judge saw no reason to leave liability for a trial.

Leaving aside the contract issues, this being an intellectual property blog, the important finding here is that by providing the cheat software the fourth and fifth defendants (the first three having settled earlier) had authorised copying of Grand Theft Auto V or substantial parts of it. The cheat software took information from the game so it could reproduce an image of something for use in the game. That there was copying is plain, and the defendants had provided the means to do the copying. Using the cheat software as intended would inevitably result in infringement.

The defendants tried arguing that the game software on the user's device remained unaltered, and any affect from the cheat software was not permanent: but transient copying is clearly within the s.16 definition of infringement, so that got them nowhere. However, the fact that the impact of the cheat software was on the program when running meant that attention had to be focussed on elements that frankly look a bit peripheral to my mind: images of weapons used in the game, and their software-driven functionality, residing in libraries and code within the program, were the example the judge referred to. Cheating meant conjuring up weapons that the user was not entitled to have, according to the rules of the game, so the copies were infringing ones. It strikes me as a pretty small infringement, and perhaps the fact of the matter is that the wrong here lies outside the scope of copyright (the breach of contract claims look much more substantial and convincing to me), but it does show how copyright can be brought to bear on a problem like this.

Would copyright remedies be worth pursuing? That remains to be decided, and the judge expressed the hope that hte parties will be able to sort that out without a trial. It's hard to see where the damage to the claimant is, and I suppose it's even arguable that the defendants might have made the game a bit more popular by opening up new possibilities and providing a route to a satisfactory outcome that users might not be able to achieve on their own. An account of profits might yield more. However, with copying of elements of the game inherent in the cheating (making more weapons available, etcetera) I can see grounds for the grant of an injunction, which would effectively put a stop to the cheating, even though it seems like a roundabout way to get there.

Wednesday, 4 March 2020

Bundling high-class goods with cheap ones gives trade mark owner chance to sue

Repackaging goods sold under a trade mark, and bundling them for resale with third party products, can infringe the trade mark. The trade mark owner must have a legitimate reason to oppose the sales, though: this could be because the goods are being resold in cheap-looking packaging that damages the luxury cachet of the trade mark, which was the case in Brealey v Nomination de Antonio e Paolo Gensini SNC [2020] EWCA Cir 103 (3 February 2020).

The Intellectual Property Enterprise Court held that the defendant had infringed the trade mark, and now the Court of Appeal (Patten, Floyd and Arnold LJJ) has agreed. The trade mark owner also claimed for passing off, and that claim also succeeded.

That the claimant's products, charm bracelet links, were usually but not always sold in luxury packaging did not invalidate the finding that legitimate grounds existed to oppose the sales. Anyway there was no evidence about the frequency of such sales, and the judge had also found that consumers who bought the claimant's products from the claimant's own shops would have received the luxury packaging. The judge was (the appeal court thought) entitled to conclude that selling the claimant's bracelet links in blister packs and plastic bags - the antithesis, presumably, of luxury - would damage the reputation of the trade marks. Although the claimant sometimes sold goods in plastic bags, this was infrequent and did not justify the damage done to the trade marks by the defendant's activities, which deprived the trade mark owner of the opportunity to convey its luxury image to the consumers who bought from the defendant.

As for the passing-off claim, the judge had been entitled to conclude that consumers would not read the defendant's online advertisements with any great care or attention. It must have been pretty clear to the defendant that there was a risk of confusion if it did not make clear that the packages it sold contained the claimant's links as well as the defendant's. 

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