First Design Decision Issued by European General Court

This article was included in our Summer 2010 edition of Inside IP magazine.

The European General Court has recently given its very first ruling on a Registered Community Design (RCD).

Background

PepsiCo Inc. (‘PepsiCo’) owned an RCD as shown in figure 1 under the product classification ‘Promotional item for games’, with a filing date of 9th September 2003, claiming a Spanish priority date of 23rd July 2003.

Grupo Promer Mon Graphic SA (‘Grupo’) owned an earlier RCD shown below, filed on 17th July 2003, claiming a Spanish priority of 8th July 2003, published 16th November 2003, under the classification ‘Metal Plate for Games’ (Figure 2).

Grupo had previously disclosed their product designs to PepsiCo in confidence, who then filed their application for the design in figure 1 at OHIM. Grupo subsequently applied to OHIM for a declaration of invalidity of PepsiCo’s RCD based on the fact that it lacked novelty over their earlier disclosure to them and also that it was ‘in conflict’ with their above earlier RCD. Although OHIM rejected the invalidity argument based on lack of novelty, they declared PepsiCo’s RCD invalid for being in conflict with Grupo’s earlier RCD.

However, PepsiCo appealed the invalidity decision and the OHIM Board of Appeal overturned the decision. The Board of Appeal rejected Grupo’s invalidity argument which was based on the allegation that PepsiCo acted in bad faith, but found that PepsiCo’s RCD was not in conflict with Grupo’s RCD.  Reasoning for the latter finding was that the Board of Appeal decided that, whereas the Invalidity Division found that the RCDs in question related to a category of goods of ‘promotional items for games’, the Board of Appeal decided that they belonged to the narrower category of promotional items known as ‘tazos’, ‘rappers’ or ‘pogs’ and so the degree of freedom of the designer in developing his design was severely restricted.  Accordingly, the apparently small differences between the designs were sufficient to produce a different overall impression on an informed user.

The Findings of the European General Court

In considering the case, the EGC decided on a number of points of Registered Community Design law considered by the Board of Appeal, concurring on many, but eventually annulled the Board of Appeal’s decision and finding PepsiCo’s RCD invalid for being in conflict with Grupo’s earlier RCD.

i) Bad Faith

The EGC concluded that the Board of Appeal was correct in its decision that PepsiCo’s alleged bad faith in registering their design was not a valid ground for invalidity.  It reaffirmed the point that the list of grounds of invalidity for a RCD as set out in the Regulation is exhaustive.

ii) ‘In Conflict’

A ground for invalidity of an RCD is if it is ‘in conflict’ with an earlier-filed but later-published design.  However, ‘in conflict’ is not defined in the Design Regulation.The EGC found that the Board of Appeal was correct to interpret a design as being ‘in conflict’ with a prior design if it produces the same overall impression onan informed user, taking into account the freedom of the designer in producing the contested design.

The EGC also confirmed that the above interpretation of ‘in conflict’ is the only one which can ensure the rights of a prior design holder are protected against infringement of the design resulting from the coexistence of a later-filed RCD which produces that same overall impression on an informed user.

iii) Product

An application for an RCD must include an indication of the product in which the design is intended to be incorporated or to which it is to be applied, although this indication does not affect the scope of protection of the design.

However, the EGC determined that, where necessary, the design itself should be taken into account in addition to the product category indicated in the application, in so far as it makes clear the nature of the product, its intended purpose or function, as this may help in placing the product in a particular category of goods and therefore to determine the informed user and degree of freedom of the designer in developing his design.

In the case in question, the Invalidity Division had judged the product to fall within the category of ‘promotional items for games’, but the EGC found that the Board of Appeal was correct to have determined that the products fell within the particular, narrower category of game pieces known as ‘pogs’, ‘rappers’ or ‘tazos’.

iv) Informed User

The notional ‘informed user’ is an important definition in European Design law, as it is used to determine whether an RCD is valid over the prior art and the scope of protection conferred by the RCD. Accordingly, the EGC gave useful consideration as to who was the ‘informed user’ in this case.

The EGC determined that the ‘informed user’ was not a manufacturer or seller of the products in which the designs are incorporated/applied.

The EGC determined that the ‘informed user’ is ‘particularly observant’ and ‘has some awareness of the state of the prior art’.

Grupo had previously argued that the ‘informed user’ in this case is a child aged 5 – 10 years.  The EGC found that the Board of Appeal was correct to find that the informed user could be such a child, but also that the informed user may also be a marketing manager in a company that sells goods to be promoted by giving the products in question away with its goods.  The EGC commented that, as the Board of Appeal had stated, it makes little difference whether the informed user is such a child or a marketing manager, but is more important that both of these ‘informed users’ are familiar with the products in question.

v) Degree of Freedom of the Designer

The EGC found that the Board of Appeal was correct to find that the degree of freedom of the designer in the present case was severely restricted since the product in question was ‘rappers’, ‘pogs’ or ‘tazos’ which necessarily incorporate certain common features.

The EGC stated that, generally, the degree of freedom of the designer is to be established, inter alia, by the constraints imposed by the technical function and/or by statutory requirements of the product being designed.  In the present case, the EGC also confirmed the Board of Appeal’s findings that the designer’s freedom was also limited by the necessity of the products being inexpensive, child-safe and fit to be added to the goods to be promoted.

vi) Overall Impression

The EGC confirmed that the degree of freedom of the designer in producing his design is to be taken into account when assessing the overall impression a design produces on an informed user.  The EGC also confirmed the Board of Appeal’s finding that similarities between the designs relating to features common to the product in question, such a those present by necessity for its technical function or to meet statutory requirements, will have only minor importance in the assessment of the overall impression produced on an informed user.

The EGC also confirmed that the more the degree of freedom of the designer is restricted, the more likely it is that minor differences between the designs will produce a different overall impression.

The Board of Appeal had found that in assessing the overall impression, the informed user would disregard elements which are banal and/or common to all examples of the type of product in question, and the informed user would concentrate on features that are arbitrary or different to the norm.

Having established the above criteria of degree of freedom of the designer and the informed user, the EGC then compared in some detail the various features of the respective Grupo and contested PepsiCo designs, and noted the similarities of those features not constrained by function or product type (and which the designer was therefore free to develop himself), and concluded that the Board of Appeal was wrong to state that these differences were sufficient to produce a different overall impression on an informed user between the two designs.  Accordingly, the EGC annulled the Board of Appeal’s decision and found PepsiCo’s design in conflict with the earlier Grupo design as producing the same overall impression on an informed user.

Summary

In overturning the OHIM Board of Appeal’s decision and concurring with the original decision of the OHIM Invalidity Division, the EGC produced a decision which gives useful guidance on some legal definitions and concepts in European Community Design law.  In particular, it is beneficial to have the guidance of a judgment from a central European authority as distinct from varying past decisions on RCDs which have arisen from the courts of the various member states.

We will now have to wait to see whether PepsiCo decide to take this case to the final level and appeal this latest decision at the European Court of Justice and, if so, how this decision holds up against further detailed scrutiny.

Alex Brown 14 Jun 2010

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