Among the changes to look forward from the upcoming review of the 2002 Community Design Regulation (“CDR”), which has been endorsed by the Parliament and awaits formal approval by the Council before entering into force, one lies under Art. 1(126) of the current draft proposal (text available here, state of approval here). Despite not being discussed in the explanatory memorandum, the new Regulation looks to remove the second sentence of Art. 110a(5) CDR, which is currently in force and provides as follows:

“Pursuant to Article 11, a design which has not been made public within the territory of the Community shall not enjoy protection as an unregistered Community design”

This provision was added to the CDR among the many changes made to EU legislation in the context of the Treaty of Accession of the ten countries that joined the EU on 1 May 2004 (Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia, Slovakia – full text here). Since its introduction, it has caused an inconsistency between the making available of unregistered community designs (“UCDs”) for the purposes of obtaining the three-year protection provided upon first disclosure (Art. 11 CDR) and destroying/maintaining novelty, which is required to obtain registered/unregistered design protection in the first place (cf. Art. 11 CDR combined with Articles 4, 5 and 7 CDR).

More specifically, as the law currently stands, first time disclosure outside the EU does not give rise to an unregistered design right (as it would if the same design were disclosed “within the Community”), but does destroy novelty, both for the purposes of later seeking an EU registration and/or obtaining a UCD by subsequently disclosing the design within the EU. While the consequence for obtaining registration is mitigated by the one-year grace period provided under Art. 7(2) CDR, unregistered protection is lost without remedy.

The discrepancy, which has been deemed “protectionist” and in breach of Art. 3(1) TRIPS (national treatment), lies in the fact that – by virtue of Art. 110a(5) CDR – the CDR disregards foreign disclosures for the purposes of awarding unregistered protection, but contains no equivalent provision for preserving novelty. As a result, products launched outside the EU – such as in one of the many trade fairs taking place in Asia, the USA or, following Brexit, the UK – are de facto deprived of unregistered design rights (the novelty of a design disclosed abroad could still be saved if one were able to argue that the design disclosed could not “reasonably have become known in the normal course of business to the circles specialized in the sector concerned, operating within the Community” (Art. 7 CDR). Room for this defence however appears minimal).

Throughout the years, attempts have been made to question the interpretation of Art. 110a(5) CDR to try to fix the issue, unsurprisingly without success. In 2008, the German Federal Court of Justice (“Bundesgerichtshof” – BGH) refused to refer the matter to the CJEU, stating that the wording of Art. 110a(5) CDR left no room for interpretation (cf. decision of 9 October 2008 in case I ZR 126/06 (“Gebäckpresse”), [28]-[30], where the BGH held that an application for registered design in China had destroyed novelty for the purposes of subsequently claiming UCD). The issue was then raised again before HHJ Hacon, in the UK, who referred interpretation of Art. 110a(5) CDR to the CJEU in Beverly Hills Teddy Bear Company v PMS International Group Plc [2019] EWHC 2419 (IPEC) (17 September 2019) – available here. The dispute, which concerned toys first disclosed at a trade fair in Hong Kong, was however settled before the CJEU could provide clarity on the matter (here).

As anticipated, the upcoming Regulation on European Union designs should address this loophole by removing Art. 110a(5) altogether. Notably, a minor inconsistency will remain between the wording regarding disclosure under Art. 7(1) and 11(1) CDR, as the latter will still refer – for unregistered design protection – to making available to the public “within the Community” (but not within “the territory” of the Community, as does Art.110a(5) CDR). The relevance, if any, that the Courts will attribute to this, following reform of the CDR, remains to be seen.

Until then, designers should be mindful of the existing legal framework when planning first disclosure of their next creation, ensuring that they seek registration if they intend to launch their products outside of EU territory (either before they do so or within the one year grace period provided under Art. 7(2) CDR), especially for products that they expect will have significant market potential within the EU.