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):
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
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".
(Counsel in that case, incidentally, subsequently became Lord Justice Arnold and Mr Justice Carr, who sadly died last year.)[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.
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.
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