Registered Community Design protection: Crocs & the importance of timing
The EU General Court’s recent decision to uphold the EUIPO Board of Appeal’s decision to invalidate a Community Registered Design belonging to Crocs, Inc. is… Read more
The EU General Court’s recent decision to uphold the EUIPO Board of Appeal’s decision to invalidate a Community Registered Design belonging to Crocs, Inc. is a stark reminder of the importance of getting a design registered if it has been disclosed.
Do not delay in filing the application for registration once the design has been disclosed for the first time, no matter how “insignificant” you may consider that first disclosure to be, as the 12-month grace period for making the application will start to tick away from the date of the first disclosure.
The design of Crocs’ now famous shoe is no longer protected as a registered Community design because of the failure to do so which now paves the way for competitors to produce shoes to the same design without fear of infringing registered Community design rights.
Community registered designs are governed by Council Regulation (EC) No 6/2002 of 12 December 2001 on Community Designs (the “Regulation”).
A design must be “new” (or novel) to be protectable (Article 4 of the Regulation). To constitute new, no identical design must have been “available to the public before the date of filing of the application for registration of the design for which protection is claimed, or, if priority is claimed, the date of priority” (Article 5.1(b)).
The novelty of the design will therefore be assessed as at the point of one of the following two dates: (a) the date the application for registration of the design was filed; or (b) the date of priority (if priority is claimed).
Article 7 of the Regulation determines when a design will be considered to have been made available to the public (and therefore disclosed). A design will have been made available to the public / disclosed if:
“it has been published following registration or otherwise, or exhibited, used in trade or otherwise disclosed, before the date referred to in… Article 5(1)(b)…, except where these events could not reasonably have become known in the normal course of business to the circles specialised in the sector concerned, operating within the Community.
This creates a two-stage test:
- An event must have taken place which results in the design being “exhibited, used in trade or otherwise disclosed”; and
- That event must have been capable of becoming known to individuals operating in the relevant sector in the Community in the normal course of their business.
Burden of proof
The burden of proof in respect of stage 1, i.e. evidencing that disclosure took place, is on the party seeking to invalidate the registered Community Design. However, the burden of proof switches to the registered Community design owner in respect of stage 2, i.e. evidencing that the disclosure events could not reasonably have become known in the normal course of business to the circles specialised in the sector concerned, operating within the Community.
12 month grace period
There is a 12-month grace period which means that any disclosure taking place within 12 months before the date the application is filed or the date of priority (if priority is claimed) will not destroy the design’s novelty, which would otherwise have rendered it un-registrable (Article 7(2)).
As with many disputes relating to registered IP rights, it arose because of a challenge to the validity of the registration. Gifi Diffusion applied for a declaration of invalidity of Croc’s registered Community design (the “Design”).
Timeline of events
Due to the importance of timing, a timeline of the key dates is set out below.
i. 28 May 2003 – beginning of the 12 month grace period before the date of priority claimed in the application for registration of the Design, referred to in this article as the “Start of the Relevant Period”.
ii. 28 May 2004 – date of priority claimed in the application for registration of the Design (based on it being the date of the filing of a US design patent application).
iii. 22 November 2004 – the application for registration of the Design was filed, claiming priority from 28 May 2004.
iv. 8 February 2005 – the Design was registered.
v. 20 March 2013 – Gifi Diffusion filed an application for a declaration of invalidity of the Design on the basis that it lacked novelty as it had been disclosed prior to the Start of the Relevant Period (i.e. more than 12 months before the priority date referred to at i. above).
vi. 13 February 2014 – the Invalidity Division dismissed Gifi Diffusion’s application and held that the Design was valid.
vii. 27 March 2014 – Gifi Diffusion filed a notice of appeal challenging the Invalidity Division’s decision.
viii. 6 June 2016 – the Board of Appeal granted the appeal and held that the Design was invalid and therefore not registrable as a Community design.
ix. 14 September 2016 – Crocs filed a notice of appeal challenging the Board of Appeal’s decision.
x. 14 March 2018 – the General Court dismissed the appeal and agreed with the Board of Appeal’s decision that the Design was invalid.
Disclosure of the design
Gifi Diffusion and EUIPO submitted that the Design was invalid because it’s novelty had been destroyed by disclosure before the Start of the Relevant Period, i.e. before the beginning of the 12 month grace period for registration (as set out at point i. in the timeline).
Gifi Diffusion and EUIPO relied on three events:
- The Design was displayed at a boat show in Fort Lauderdale in Florida in November 2002;
- 10,000 pairs of Crocs to the design were sold before the start of the Relevant Period; and
- The Design was disclosed on Croc’s website from July 2002.
The general court’s decision
In order to determine whether the Design lacked novelty under Article 5(1)(b) of the Regulation, the General Court carried out the following two-step analysis:
- the first step being to assess whether the evidence demonstrated that the Design had been disclosed before the Relevant Period started; and
- if it had, the second step being to assess whether Crocs (as the owner of the Design) was able to demonstrate that the disclosure “could not reasonably have become known in the normal course of business to the to the circles specialised in the sector concerned, operating within the European Union”.
The parties did not dispute the Board of Appeal’s finding that the Design had been disclosed before the Relevant Period started. The General Court agreed with the Board of Appeal’s finding that Article 7 did not limit disclosure to the EU and that disclosure outside of the EU (i.e. in the US as the position in this case) did not preclude the disclosure from being considered “exhibited, used in trade or otherwise disclosed”.
Accordingly, the General Court only had to consider the second limb of the test, i.e. whether the disclosure could reasonably have become known.
The Board of Appeal found that the “relevant sector” were “professionals in the trade and manufacture of footwear” (“Footwear Professionals”) and the parties did not dispute this.
As the burden of proof shifted to Crocs once Gifi Diffusion had demonstrated that disclosure had taken place, Crocs then had to seek to rebut the presumption by demonstrating that Footwear Professionals operating in the EU would not have become aware of the design before the Relevant Period started.
When assessing the knowledge of the “relevant sector” the General Court held that the following facts were relevant:
- “the composition of the specialised circles, their qualification, customs and behaviour;
- their presence at events where designs are presented;
- the characteristics of the design at issue, such as its interdependency with other products or sectors; and
- the characteristics of the products into which the design at issue has been integrated, including the degree of technicality of the products concerned”.
The General Court also noted that the disclosure being discoverable “only by chance” would not be deemed to be known in the normal course of business.
1 – Display at the boat show in Fort Lauderdale
The General Court agreed with EUIPO’s submissions and noted that that the boat show was an “international fair, which could be attended by professionals of the footwear industry”.
The General Court concluded that Croc’s had failed to prove that the disclosure at the boat show could not have become known to Footwear Professionals in the EU.
2 – Sale of 10,000 pairs
Crocs submitted that Footwear Professionals operating in the EU were unlikely to have known about a limited number of sales in Florida and Colorado. However, Gifi Diffusion exhibited evidence demonstrating that sales had also taken place in Vermont, South Carolina, the US Virgin Islands, Texas, Tennessee, North Carolina, Georgia, Virginia, New York State and the State of Washington.
Bearing in mind the importance of trends in the US market to the EU market, the General Court concluded that it would be unlikely that such widespread sales would have gone “unnoticed” by Footwear Professionals in the EU.
3 – Disclosure on the website
Crocs accepted that its website was technically accessible worldwide. However, as an internet search for “shoe”, “clog” or “footwear” would not have returned any hits for Crocs’ website, Crocs submitted that the website could not therefore reasonably have become known to Footwear Professionals in the EU.
On the basis that: (a) it was not clear from Croc’s expert evidence that a search of “crocs” would not have resulted in a relevant hit; and (b) the use of a search engine was not the only way of accessing the website (i.e. someone may have gone to the website after hearing about Crocs at the boat show or seeing them for sale when visiting New York), the General Court concluded that the arguments put forward by Crocs failed to show that the disclosure on its website could not have become known to Footwear Professionals operating in the EU.
The difficulty in proving a negative
The General Court noted the difficulty presented by the shift in the burden of proof and Croc’s requirement to prove a negative fact, i.e. the disclosure could not be known to Footwear Professionals in the EU.
Notwithstanding that difficulty, the General Court noted that Crocs could have supplied:
- data showing there was no, or very little, traffic on its website originating from EU users;
- a list of attendees showing that no, or very few, of the participants / attendees originated from the EU; or
- evidence that the distribution / retail network in the US was not yet operational.
Practical points to remember
- There is no requirement for the events constituting disclosure to have taken place within the EU
- Do not delay in filing the application for registration once the design has been disclosed for the first time, no matter how “insignificant” you may consider that first disclosure to be.