20 June 2013
Archive

IP Federation turns against the design industry and rallies against criminal sanctions for Registered Design Infringement!

Astonishingly the IP Federation has rounded on the design community by opposing criminal sanctions be applied for deliberate infringement of Registered Designs. Yet the IP Federation itself states that it represents its corporate member’s interests against IP infringement relating to improving the intellectual property framework to meet the needs of innovation industry.

Consultation on the Reform of the UK Designs Legal Framework resulted in a recommendation (clause 13) that deliberate infringement of registered designs be amended to include criminal sanctions. This simply brings design infringement in line with trademark infringement and copyright infringement which can attract up to a 10 year custodial sentence.

Trade body Anti-Copying In Design (ACID) tirelessly fought and won this recent IP battle but it’s CEO Did’s MacDonald believes there is still a long way to go to ensure designers receive the same protection as musicians or filmmakers. ACID stated they will continue to make the case for what is a 33.5 billion pound design industry, employing over 350,000 people and dominated mainly by micro and small businesses, the majority of whom rely on unregistered design rights protection, which has not been included in the current Government proposals.

Creative Barcode back-up ACID and call for support of clause 13 of the IP Bill and the extension of criminal sanctions to cover unregistered design rights which involve the vast majority of designs, designers and design firms.

A cynical person could be forgiven for thinking the IPO favoured criminal sanctions for registered designs in order to encourage more firms to spend on design registration fees and left non-fee-payers relying on unregistered designs, out in the cold.  

The digital age has, in part, led to a reduction in the shelf-life of a design reducing from circa 15 years a decade ago down to 4.8 years* in the digital age. This may have had an impact on the IPO’s decision to introduce criminal sanctions for design infringement.

*Imperial College research statistic following IPO commissioned research 2011

 

Arguably criminal sanctions for infringement of Registered Designs support larger corporates who are better resourced than individual designers and micro-sized firms, to apply for and maintain Design Registrations. Formerly Designs were protected under copyright law until the introduction of design registration in 1989 which resulted in 3D design protection falling outside of the Copyright Act. Ironically the 2D drawing of the designs are protected under Copyright yet not the 3D design implementation.   

Why do the IP Federation members oppose criminal sanctions for design infringement when they do not appear to object to criminal sanctions for infringement of trademark or counterfeit goods, for example?

In an eye brow raising letter addressed to the IPO’s Divisional Director of Trade Marks and Designs, the IP Federation stated that it is against the introduction of criminal sanctions for Registered Designs infringement even if the requirement is made that there must be direct copying of the design.

Their reason is that the IP Federation members are concerned that unjustified allegations of infringement may be made causing distress and unjustified expense for legitimate businesses. Oh really?

Does that mean they are concerned that claims, for example from Rachael Taylor against M & S might cause the perpetrators distress? I wonder what level of distress the infringement caused to legitimate micro business Rachael Taylor Design?

 

Marks & Spencers, on the left settle out of court with Designer, Rachael Taylor, on the right

And hang on a moment, the IP Federation list of members includes Dyson but was it not Dyson who claimed design infringement against French Company Vax and its subsidiary company Dirt Devil when it near replicated one of its products?

Below are the Dyson DC02 and Vax Mach Zen. Dyson lost the case against Vax but oddly won a very similar design infringement case against Vax sister company Dirt Devil ?  

 

Dyson DC02 (left), Vax Mach Zen (right)

What is Dyson’s legal counsel advocating? Is it saying it is fine to litigate design infringement so long as the outcome is purely monetary but they are opposed to criminal sanctions for design registration infringement, because?  Dyson are presumably perfectly comfortable with criminal sanctions being maintained for trademark and copyright infringement and counterfeiting?  

 

So what is the difference?  Apparently it’s Innovation.

 Some corporates and other representative groups have cited that ‘designing around others works’ is ‘innovation (or derivative) and therefore should criminal sanctions apply to near or direct copies of designs, it would somehow hold back innovation.

Poppycock

Innovation can be defined as something original and new which opens up ‘new’ markets or delivers something new and better to society than that which existed before.

Innovation by its definition is ‘new stuff’- innovation is not a ‘derivative’ of something that exists and is itself perfectly fit for purpose – such as an interlocking candle holder replicated by a retailer where the only real difference being a lower retail price due to mass production. Legitimately licensing the original design could arguably have achieved the same cost benefit for the consumer, if a slightly reduced profit for the retailer.

I have never formally heard innovation described as direct or near-replica nor a retailer stocking a new design from a designer-maker, assessing its popularity with its customer base before investing in the tooling and production of a near replica product. Then, badging as their own brand and selling at a lower price and retaining all profit without remuneration or regard for the original design firm, its staff or it staying in business. Is that ‘innovation’? No. Its unfair exploitation

 

 

 

Given the opportunity to comment the majority consumer opinion would likely term it as ‘rip-off’. That is, the theft of a property created by, paid for and owned by another party which if the corporate firm replicate and sell it, its shareholders commercially benefit to the detriment of the Originator.

Creative Barcode recommended an ‘Imitation Tax’ be introduced that requires corporates who closely replicate the design of products already at market to pay a % of net sales receipts to the Originator and attribute the original on the label, packaging and marketing materials, ‘based on an original design by XYZ Design Company’. Thus, the value of ‘originals’ could be maintained, the retailer mass produces and sells a popular product netting sales income and the consumer gains the choice of an original at a higher price or the replica at a lower price. The designer earns from all sales, is motivated to invest in new designs and grow their business. Of course the designer / design firm would need to be agreeable to the method of settlement and details need working through, but it’s a positive thought towards a more equitable solution than the scenario that currently exists.

It would seem that the IP Federation Corporate members oppose criminal sanctions for deliberate design infringement because they feel guilty of designing close to originals of their ‘like for like ‘competitors’ or that they wish to be free to do so, and likewise that of any good product design that takes their fancy.

What they appear to dis-regard entirely is the David & Goliath syndrome that exists between individual designers and their micro to SME companies who suffer unfairly when their original designs are replicated, mass produced and sold lower than the price of the originals.   

In consumer / human / ethical terms I am going to bring this down to the most basic of consumer level. You decide to create your own sandwich for lunch and invest time and £3.00 of ingredient costs. You put it in the office fridge but come lunchtime not only do you find your sandwich missing but discover your colleague has sold it to another party for £2 and pocketed the money for themselves. Other than hungry, how are you feeling?

The IP Federation have said that should the IPO be unwilling to completely remove criminal sanctions from the IP Bill, that it requires the wording of clause 13 to be amended to re-strict the offence to one in which there has been deliberate intent to deceive the purchaser of the product?  

They suggest (a) in the course of a business, the person copies a registered design so as to make a product exactly or substantially to that design with intent to deceive the purchaser of the product as to the origin of the product and/or the origin of the design of the product.

Humm, you could drive a bus through that statement in context of ‘proving’ that a corporate had intended to deceive a consumer into believing they were buying an original design rather than a retailers ‘own brand’. And of course they rely on the consumer not complaining that they can buy a near replica design at a lower price than the original.

Some readers might say – so what – consumers get nicely designed products at a lower price that’s a good thing right? Well yes but the same outcome could be achieved if Corporates licensed from Originators and shared profits with them whilst still enabling the consumer to have a high quality product at a lower price. Or even a reduced quality, lower priced product with an identification tag that stated this is a replica of an original product designed by XYZ design firm, produced under license. To purchase originals visit www.creativebarcode.com [insert link to design firm]

In our humble opinion, there is nothing standing in the way of such deal-making other than the potential unreasonable behaviour, ego, greed or any other such issue blocking negotiations.

So it is a weak IP argument for the IP Federation and its members to use. And an even weaker ethical one.

The IP Federation also claimed that criminal sanctions would just result in design firms suing each other because they copy each other’s designs all the time. Such sweeping statements are extremely unhelpful. Whilst core ideas or designs can be similar if addressing the same problem or opportunity, designers maintain records of the design journey and use other means of establishing provenance, time line and evidence. Thus shutting down deliberate infringement claims honestly and swiftly.

Establishing prevenance and charting the design and innovation journey is one of the core uses of Creative Barcode where time stamped, QR codes with original metadata attribute the work to the Creator and are applied to all concept sketches and files from the outset to the final production drawing.  

The IP Federation genuinely suggested design firms use unfair competition law as the means for recompense against theft of their unregistered designs. But as I understand it, unfair competition needs to demonstrate that one party needs to gain whilst another proves it suffered significant losses. However, it is hard to prove the loss of sales when the opportunity to mass produce and sell under license was never made available.  Consumers, aware or unaware of the unethical issues surrounding a product or service being available at less cost are not going to favour the individual designer / design firm. They just want the product at the lowest possible cost and if it were digital they’d expect to download it for free. Therefore competition law would in most instances be an unsuitable path to follow.

And why should such matters become subject to litigation at all – surely all that is required is that large corporates act in an ethical and fair manner towards originators, engage with them and deal make on a fair basis rather than exploit. Why is that so hard to imagine?

Unless a design firm, fairly treated made unreasonable or imbalanced demands causing a deal-break, the first best practice action of the Corporate should be an equitably deal, sharing % of revenues and acknowledging the difference between a lower cost mass market copy and that of a higher price original product.

It would benefit consumers and the creative industries if a ‘code of conduct’ and best practice procedure were drawn up and implemented by Corporates as part of their Corporate Social Responsibility policies. To respect, honour, remunerate and preserve original Creative works and to favour licensing and deal-making to meet consumer benefit, over replication, theft, greed and unfair exploitation.

And surely such partnerships between Creators and corporates to the benefit of consumers would boost innovation not restrict it. Additionally it should support the UK balance of trade with export growth and bolster the UK Plc. international reputation for design, innovation, originality and creativity worldwide

Editors Notes

13. Criminal Sanctions (infringement deterrent, parity)

The implementation of criminal sanctions for UK and EU registered design could create a significant deterrent effect against deliberate copying that current civil sanctions do not supply, a view supported by the majority of respondents in consultation.

There will be familiarisation and on-going costs to police, trading standards authorities, magistrates and judges. In addition, the increased number of cases will incur costs to the Crown Prosecution Service, HM Courts and Tribunal Services and HM Prison and Probation Services.

The introduction of criminal sanctions for the counterfeiting and piracy of copyright protected audio-visual products in the UK provides a precedent and also means that implementing criminal sanctions for registered design infringement will create a coherent approach to the protection of IPR matched with copyright and trademarks. In addition, the civil regime could become more effective if businesses know the escalation of their activity may result in criminal proceedings

 

Full recommendation document http://www.ipo.gov.uk/response-2012-designs.pdf

 

The controversial letter addressed to the IPO’s Divisional Director of Trade Marks and Designs was issued by the IP Federation on behalf of the following list of companies who oppose criminal sanctions be applied for design infringement even if the requirement is made that there must be direct copying of the design.

 

ARM Ltd

AstraZeneca plc

Babcock International Ltd

BAE Systems plc

BP p.l.c.

British Telecommunications plc

British-American Tobacco Co Ltd

BTG plc

Caterpillar U.K. Ltd

Delphi Corp.

Dyson Technology Ltd

Element Six Ltd

Eli Lilly & Co Ltd

ExxonMobil Chemical Europe Inc

Ford of Europe

Fujitsu Services Ltd

GE Healthcare

GKN plc

GlaxoSmithKline plc

Hewlett-Packard Ltd

IBM UK Ltd

Infineum UK Ltd

Johnson Matthey PLC

Merck Sharp & Dohme Ltd

Microsoft Limited

Nokia UK Ltd

Pfizer Ltd

Philips Electronics UK Ltd

Pilkington Group Ltd

Procter & Gamble Ltd

Renishaw plc

Rolls-Royce plc

Shell International Ltd

Smith & Nephew

Syngenta Ltd

The Linde Group

UCB Pharma plc

Unilever plc

Vectura Limited

 

About Creative Barcode


In just over two years, Creative Barcode has attracted thousands of users from more than 29 countries and has gained the endorsement of the World Intellectual Property Organisation (WIPO).

The CB system has never been breached.

Creative Barcode comprises a digital App (not mobile), QR code-based identifiers, a database-driven portal, a file transfer facility and a Trust Charter and Transfer of Ownership facility.  

The App enables users to generate their unique QR codes embedded with their ownership Meta Data and contact details, where applicable, plus other formal registrations and licensing information.

Uniquely a QR code can be edited to simultaneously update every item it has formerly been applied to, whether online or in print.

Thus, if an item of work and its IP is sold outright it only takes 3 minutes to change ownership details and simultaneously apply worldwide.

Creative Barcode is a trusted brand.  Its digital and visible IP system has removed a great deal of the IP complexity from early stage concept disclosure.  

Online, internet users can easily recognise 'Rights Reserved' or 'Free-Use' terms associated with the creative work and can swiftly contact the creator to gain permission to use, to license, to purchase or to commission original works.

Creative Barcode trust charter operates to three key principles - Etiquette (ask permission), Trust (don't rip me off), Ethics (do the right thing).

The principles are easy to abide by and hence the Creative Barcode system has built a substantial international framework around trust and ethics all supported by the WIPO's mediation service.

 If you Value it, Barcode it

Twitter @creativebarcode

www.creativebarcode.com

team@creativebarcode.com

01273 906067

 



Maxine J Horn
Creative Barcode
UK
team@creativebarcode.com
www.creativebarcode.com

 
 
Title
Body
Login
Email
Password
Place Holder text