Design infringement: Cegasa v Proin Clear Traffic

In the field of trade marks, it is well established that obtaining your own (later) right may not necessarily help you to avoid infringement of an earlier registration belonging to another party. However, registered design law is less developed and for many years there has been something of a gut feeling that somehow the act of obtaining your own (later) registered design might act as some kind of shield against accusations of infringement of an earlier registered design.

We now know that the CJEU considers that the later registered design does not provide a shield. Specifically, the CJEU in its capacity as the appellate court for the EU, has decreed that a later RCD does not provide a shield against being held to infringe an earlier RCD belonging to another party.

Up until this decision, it has sometimes been tempting for a party, worried about infringing (or accused of infringing) an existing RCD, to consider trying to frustrate enforcement of that RCD by applying for and obtaining their own (later) RCD for their product.

This strategy had been possible because, firstly, an RCD application is not substantively examined for novelty or individual character (in the sense of producing a different overall visual impression relative to existing designs) by the EU Designs Registry (OHIM) and an RCD can be granted in a matter of just a couple of weeks. Thus, an invalid RCD can be obtained very quickly, and at low cost.

OHIM considers that it falls to interested parties to apply to have the granted RCD declared invalid by commencing invalidity proceedings and to show that the RCD in question either lacks novelty or individual character. These invalidity proceedings typically last much longer than the short timescale for obtaining the RCD in the first place, and it can be months or years before an invalid RCD is struck off the Register at OHIM.

Secondly, the EU Regulation laying down the law governing RCDs is not as well worded as it could have been, and has opened the door to a line of argument that a later RCD acts as a shield against infringement of an earlier RCD (at least until the later RCD is declared invalid). Specifically, Article 19(1) of Council Regulation (EC) No. 6/2002 states:

A registered Community design shall confer on its holder the exclusive right to use it and to prevent any third party not having his consent from using it.

The wording “shall confer on its holder the exclusive right … to prevent any third party from using” is the wording that one would typically expect for a monopoly right where the granted IP right is a ‘right to stop others’ and is not a right to use the IP oneself.

It is this line of argument that has now been struck down by the CJEU and may no longer be used by an importer of counterfeit goods who stalls and delays action against the counterfeit goods by obtaining their own (later) RCD.

The case decided by the CJEU does not relate to branded goods or counterfeits, but has general applicability even though it relates to the functional and less glamorous world of traffic bollards.

In this case, Cegasa obtained its RCD (the ‘earlier’ RCD) in 2005 as RCD No. 000421649-0001 and the visual appearance of their ‘road sign’ (or traffic bollard) is shown left as Fig. 1.

Proin started marketing its competing bollard in 2007, and Cegasa served a cease-and-desist demand upon Proin in January 2008.

In April 2008, Proin filed its own RCD application and it was granted a month later as RCD No. 000915426-0001 (the ‘later’ RCD): its appearance is shown left as Fig. 2.

In the infringement proceedings before a Spanish court, Cegasa argued that the Proin bollard was an infringement of its RCD because the Proin bollard does not produce a different overall impression on the informed user compared with its design.

Proin replied with the ‘shield’ argument that the later RCD gives Proin the exclusive right to use the Proin design and thus the Proin bollard is not an infringement of the earlier RCD, at least until the Proin RCD is cancelled by means of invalidity proceedings. Interestingly, Cegasa did not attempt to invalidate the later RCD.

Instead, the merits of the shield defence were referred by the Spanish court up to the CJEU for a preliminary ruling.

The Polish government intervened in favour of the shield defence, and the European Commission intervened to argue that the shield defence does not apply. Perhaps the European Commission was keen to intervene in order to try to make amends for the original poor drafting of the wording of Article 19 in the Regulation.

The CJEU essentially decided that the earlier RCD trumps the later RCD on “the priority principle, under which the earlier registered Community design takes precedence over later registered Community designs”.

In other words, the shield defence is not valid, and the right of the proprietor of the earlier RCD to “the exclusive right … to prevent any third party” applies even when that third party is the proprietor of a later RCD and irrespective of the conduct of that third party, such as the fact that the third party applied for their RCD after becoming aware of the earlier RCD.

This is good news for RCD owners who now know that attempting to enforce their RCD against a competitor will not be frustrated and delayed by any later RCD obtained by the competitor. Specifically, it will no longer be necessary to remove from the Register the later RCD in order to have a clear run at enforcing the earlier RCD.

Overall, the ruling from the CJEU may make the RCD system more attractive as it has always offered a cheap and quick route to obtaining an IP right in the EU and it will no longer be blighted by the worry that a competitor will try to escape liability for infringement by indulging in the delaying tactic of obtaining their own later RCD for essentially the same design or a variant that does not produce a different overall visual impression.