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23 May 2016
Article 8(1) of the EU Community Design Regulation (6/2002) provides that "a Community design shall not subsist in features of appearance of a product that are solely dictated by its technical function".
On March 29 2016 the Court of Appeal of The Hague delivered a judgment interpreting when a feature of a model is 'solely' dictated by its technical function. This judgment followed preliminary injunction proceedings initiated by Dutch company Koz Products BV against its former distributor Adinco BV, in which Koz claimed infringement of design rights for cable blocks (used for wiring cables).
Interestingly, the court also introduced the possibility that implicit obligations can arise from a contractual relationship, obliging a (former) contractual counterparty to refrain from placing confusing products on the market.
Koz claimed that the cable blocks used by Adinco (see Figure 1) infringed its 2005 and 2006 registered Community designs and its copyrights in the designs (Figures 2 and 3 indicate Registered Community Design 000426283-0001 and Registered Community Design 000426283-0002 respectively; both are from 2005), and that this further constituted the unlawful act of slavish imitation.
The district court refused the preliminary injunction and dismissed all of Koz's claims.
The court held there was a serious chance that the 2006 registered Community designs invoked by Koz would be declared invalid in substantive proceedings or before the EU Intellectual Property Office, since they lacked individual character in comparison with two registered Community designs filed by Koz in 2005.
The court also held that there was a serious chance of the remaining 2005 registered Community designs (as depicted above) being declared invalid for lack of individual character, since they did not produce a different overall impression when compared with an earlier design by a German company. In this regard, Koz emphasised the differences in the coverings at the bottom of the cable block; however, the court held that these coverings could not give the designs individual character, as they were solely dictated by their technical function.
Similarly, the court found that Koz's cable blocks could not be considered as works protected by copyright because of their technical functionality. As for the other characteristics of the cable block, the court noted that although creative choices were made, these were too minimal to merit copyright protection.
Lastly, the court rejected Koz's claims of slavish imitation. Disregarding the question of whether Koz's product had its own place in the market (which is required for a successful slavish imitation claim in the Netherlands), the court held that Adinco had taken sufficient measures to prevent confusion.
On appeal, Koz invoked only the 2005 registered Community designs. Adinco repeated its invalidity defence, stating that the 2005 designs lacked individual character given the existence of the German company's earlier design (see Figures 4 and 5).
Koz acknowledged that its designs shared certain characteristics with the earlier design – namely:
However, Koz alleged that its designs nevertheless had individual character, since two of their most characteristic features were not present in the earlier design. These were:
The court recalled that under Section 8(1) of the Community Designs Regulation, design protection does not apply to features of appearance of a product that are solely dictated by its technical function. According to the court, a 'technical function' exists if the design makes the product more suitable for its functional use.
Adinco further argued that the so-called 'result-oriented' doctrine applied, which precludes protection of features of appearance that are primarily determined by a technical function, irrespective of whether the same technical effect could be acquired through alternative designs. The court explained that according to the result-oriented doctrine, an element would also be solely dictated by its technical function if many alternatives existed for shaping the technical solution (eg, the handle of a cup).
However, the court did not share this view. It held instead that when alternatives are available, the following would apply:
"[an] element of a design that is determined by a technical function in principle will be solely dictated by a technical function,
I. if there is only one or a number of alternative technical solutions, which can achieve the same technical effect or;
II. if there is only one or a limited number of real alternatives in the design of the same technical solution; such an alternative not being realistic if it would only involve:
a. an addition of a (technically considered) pointless element (such as an ornament or a thickening) to the technically determined element;
b. a deviation in the appearance of the technically determined element which is so futile it does not have individual character compared to the design relative (causing this alternative to fall within the scope of protection of the design)."
The court held that to view it any other way would mean that a design could almost never have an element caused solely by a technical function, since it would almost always be possible to add pointless or futile additions. The court held that design law may not be used to monopolise a certain technical effect in order to prevent others from making use of technical achievements.
On the facts, the court found that the elements in Koz's designs were solely dictated by technical function because of a lack of real alternatives. There was thus a serious chance that the 2006 designs would be declared invalid for lacking individual character.
Like the district court, the court of appeal held that Koz's cable blocks were not protected by copyright because they consisted of elements which were technical or functional or that could already be found in an earlier design.
Regarding the claim of slavish imitation, the court noted that in principle, one is free to imitate a product that is not protected by IP rights. However, this would become unlawful if the imitator could have deviated from the design of the original product without impairing the reliability and usefulness of the imitation, but created confusion by not doing so. The court found that the imitation by Adinco (admitted despite the differences between the products) was allowed, even if one assumed that Koz's product had a place in the market and the imitation would create confusion.
Lastly, the court of appeal noted that its judgment did not preclude the possibility that Adinco should refrain from placing on the market cable blocks that could create confusion, on the grounds of the reasonableness and fairness that parties must take into account with regard to each other during and after a contractual relationship (ie, because Adinco was a former distributor of Koz's products). This obligation exists during the term of the agreement and for some time thereafter (given the circumstances of the case, the court mentioned that a one-year period was reasonable). In this case that period had already expired.
This case illustrates the difficulties with registering the design of an updated product if only small changes have been made. In such case the risk arises that the rights holder's own earlier products can be cited as prior art, which might affect the novelty or individual character of a later registered Community design (eg, Koz's 2006 designs were considered invalid based on its 2005 designs).
'Solely dictated by technical function'
Most interestingly, the decision introduces a criterion regarding the features of a design that are solely dictated by technical function, which are precluded from design protection. The criterion essentially allows design protection for features that are dictated by a technical function where there are more than "a number" of "realistic alternatives".
Dutch jurisprudence follows two doctrines on interpretation of the phrase 'solely dictated by technical function':
It is generally thought that the European Court of Justice (ECJ) decisions in ECJ Philips/Remington (C-299/99) and ECJ Lego (C-48/09) undermined the result-oriented doctrine. In these cases, in the context of the technical refusal ground in trademark law, the ECJ explained that the existence of other shapes which could achieve the same technical result does not in itself preclude application of the ground for refusal. The provision was intended to preclude the registration of shapes whose essential characteristics perform a technical function, with the result that the exclusivity inherent in the trademark right would limit the possibility of competitors supplying a product incorporating such a function or at least limit their freedom of choice regarding the technical solution they can adopt in order to incorporate such a function in their products. In ECJ Lego the ECJ also remarked that a similar rationale applies in design law.
The Court of Appeal of The Hague has now expressly rejected the device-orientated doctrine and provided a criterion which emphasises the number of realistic available alternatives. In so doing the court has positioned itself somewhere in between the two doctrines.
Perhaps even more interesting is the court's introduction of yet another argument to invoke in a design dispute if one cannot successfully rely on infringement of IP rights or slavish imitation. If one is or has been in a contractual relationship with the respondent, the reasonableness and fairness that must be taken into account regarding a contractual partner can force the respondent to refrain from bringing onto the market products which create confusion (ie, even in a situation where it is not stipulated in the agreement).
This may be the case during the contractual relationship and even for some time thereafter. The court made this remark in the context of Adinco being a former distributor of Koz's cable blocks. Whether the court's interpretation of reasonableness and fairness is in accordance with competition law is questionable.
The judgment leaves unclear:
The answers to these questions remain to be seen. Given the far-reaching consequences of doing so, it is expected that courts should be restrictive in recognising such implicit obligations.
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