Assignment – International Law and Intellectual Property Rights

Name- Kumar Sourav

Q1. Options available to obtain protection for the tilting mechanism

The business B which has a similar design or the tilting mechanism could be based in Germany
or any other part of the world. Different intellectual property rights protect different features
of the same work. A patent relates to the innovativeness and industrial applicability of the new
product. A design on the other hand, performs the functionality of protecting the outward
appearance of the product and not its function. The ‘Bundesministerium der Justiz und fuer
Verbraucherschutz’ provides guidelines regarding the design protection which says that the
design shall be protected as registered if it is new and has individual character. Also, the design
could be considered new if no identical design was disclosed earlier prior to the date of filing
the application. If the designs differ only in immaterial details, then the other design will be
considered identical to the previous design. Finally, the design is considered to be of a unique
character if the overall impression produced on the informed users is different than the
impression produced on a user by a design prior to the date on which the application is filed.
The following protection mechanisms could be used to safeguard the rights of the company A
which holds rights to the design.

Under the EU community designs regulation (6/2002), the companies have three options to
protect their designs. First, a registered community design could be obtained from the office of
harmonization in the internal market. The registered community design provides protection in
all the member states of the EU with a single application. A community design which is
registered can provide EU-wide protection for 25 years. It protects the colors, patterns, and
shapes of products. Parts of products and in this case, bicycle can also be protected by a
registered design. Registered community design protects against similar designs even if the
infringing design has not been developed in ill faith. As a holder of a registered design, the
right to exclusive usage of the design is conferred. Third parties can thus be prohibited from
using the design for making, selling or even importing and exporting the product. Secondly,
the design could be commercialized directly without registration and it has to be relied on the
unregistered community design right. The protection in this case is by the way of a disclosure
which means that the design is first made available to the public within the European Union. It
is disclosed by exhibiting it, offering it or otherwise publishing it. Lastly, an international
registration is also possible under the ‘Hague Agreement Concerning the International
Registration of Industrial Designs’. The intellectual property can be protected by the use of
protection mechanisms in the form of patents, copyright and trademarks.
The patents would allow to stop third parties from making, using and selling the tilting
mechanism for a certain period. One of the patent implementations ‘Unitary Patent Protection’
could be utilized making it possible to protect the said tilting mechanism in 26 EU countries
by only submitting one application and thus making it less expensive for the organization.
Although, ‘Utility Models’ method has been used by company B for design protection, but in
general it could be used to provide fast and low cost protection. These are accessible to
individual innovators and also to small and medium-sized enterprises. These are sometimes
referred to as ‘innovation patents’. Since the tilting mechanism is mechanical in nature, utility
protection works the best as it is intended mostly for minor or incremental innovation and more
frequently for electrical and mechanical features.

Copyrights could be used without the need for formal registration. This would inform others
about the intention of the person issuing the copyrights to control the production, distribution
and performance of the work. In most EU member states, the designs can also be protected
under the copyright law. However, copyright protection for the shape of a product differs
significantly from one EU member to other.

A trademark is a sign or design which can identify a product coming from a particular source.
In the EU, a four tier system exists for registering trademarks. If the protection is intended only
for Germany, the trademark application can be filed directly at the relevant intellectual property
office. The company can consider filing a community trademark application to cover the 2D
or 3D appearance of a design. If the protection is also intended for Belgium, Netherlands or
Luxembourg an application for the trademark can be made to the Benelux Office of Intellectual
Property. If the protection is intended for more European nations, an application for EU
trademark from EUIPO could be filed. A more widely accepted trademark could be through
the use of international route. The international registration for the trademark could be done
through the World Intellectual Property Organization (WIPO). Any country that is a signatory
of the Madrid Protocol is obliged to follow the international trademark. One of the options
which could be used is the implementation of the industrial design rights. The industrial design
rights protects the visual appearance of the product in question, which results from attributes
such as shape, colors and materials. The EU adopted the ‘Directive 98/71/EC on the legal
protection of designs’ in 1998. The objective of the directive is to ensure that the right holder
of the design is provided the registered design rights and protection in all the EU countries.
The appearance of the product can be protected by unfair competition. Unfair competition law
can also help in the protection of the patent, although the same has only been partially
harmonized in the European Union. For the protection of design, the national legislature and
courts can determine if the copied design amounts to the act of unfair competition.

Confidential information is very closely related to intellectual property. The most common
form of protection for confidential information could be non-disclosure agreement (NDA).
Along the lines of which have been proposed by the ‘Agreement on Trade Related Aspects of
Intellectual Property Rights’, only that information which must a secret or it must have a
commercial value or the owner has taken responsible steps to keep the information secret then
the information can be deemed to be legally protectable. An NDA could protect one by
documenting someone’s confirmation that in case of disclosure of confidential information
related to the company and its product, the infringer would risk legal action. In addition, NDA’s
can only restrain others from disclosing or using specific information which one gets from the
company.

Q2. Options available to stop the engineer from selling those bikes

The utility model is available for inventions that cater to the regulations of being new, involving
an inventive step and which are susceptible of industrial application. The issue with utility
model is that it does not consider whether the invention meets the conditions of novelty,
inventive step and industrial applicability. The utility model stated in this case is an extension
of the technical solution earlier proposed by the engineer. There are two particular scenarios
which could be considered while trying to safeguard the bicycle design viz. if there is already
a protection like copyright or patent already available for the product or if there is no current
protection for the design available like patent or copyright.

In case there is no design protection, due to the provisions of law against unfair competition,
imitation of products that do not have protective rights may also be illegal. Special
circumstances must exist that should make the manufacturer’s practice appear dishonest. In
order to protect the product and hence stop the engineer from selling the bicycle by using utility
model, the ‘Act Against Unfair Competition’ could be used. This act performs the function of
protecting competitors, consumers and other market participants against unfair commercial
practices. The section 4 of the law entitled ‘Protection of competitors’ states that unfairness
shall have occurred when a person does not give credit or disparages the distinguishing marks,
goods or services of a competitor. Unfairness is also said to have occurred if one of the
competitors offers good or services that are replicas of goods and services of competitors if
deception regarding the commercial origin is made. Also, if the knowledge or documents
needed for the replicas to be produced is obtained dishonestly it shall be treated as an act of
unfairness. An application for a patent protection can be filed and an assignee search can be
conducted for design patent and utility patent so as to determine if the competitor has obtained
or seeking patent protection for the product. The unregistered community design right provides
a shorter three year period against copying. The right would only exist if the design is first
located within the territory of EU. The disclosure of the product as per EUIPO is to make a
design available to the public in such a way that the interested circles operating inside the EU
are made aware of the design. Thus, in this particular case the disclosure for the product i,e the
bicycle in our case created an unregistered community design right. The disclosure for the same
can be proved by a printed review comprising of a date, mass publicity or display at an
international exhibition. Patent offices provide administrative procedures that allow the
questioning parties to request cancellation of the registration of a utility model. One such
example could be on the basis that the innovation which has been claimed is not new or does
not involve required inventiveness.

In case the design is registered in the registered community design, it will provide exclusive
rights for the outward appearance of a product or even a part of it. The registered community
design would confer special rights to use it and prevent any third party from using it without
the consent of company A. In a possible case if there exists a written description, drawing or
photo of the design which bears a signed and dated statement from an independent witness and
an envelope which contains these documents was sealed on the date when the witness examined
it, then it can be later proven that the company A is the original holder of the idea.

One effective way of stopping the company B from selling the bikes is to apply for preliminary
injunction. This would involve a cease and desist order. The ‘cease and desist’ letter is a
document which can be sent to an individual or business to halt the illegal activities and not
take it up again at a later point of time. The letter can warn the infringer or the recipient of the
letter that if the specific conduct is not discontinued by the deadlines as specified in the letter
then the recipient of the letter can be sued. The holder of the intellectual property such as
copyright, trademark or patent can also offer a license in such a case. Another method which
can be followed in such a case is legally entitling the share of IP with the original designer
which is the engineer in such a case. The agreement in such should be advised by a patent
attorney. Also, if the design can be proved as a standard then it comes under the category of
‘Standard-essential Patent (SEP)’. After having an SEP, the company A has to alert the
company B of the infringement and also has to present a written offer for a license on fair,
reasonable and non-discriminatory terms.

Q3. Assessing the legal situation

Initially the facts regarding infringement has to be established by the claiming party which can
be done with test orders. It has to be then decided by the claiming party whether to move
forward with the investigation or not and this can be done by requesting the production of
legitimacy or by a cease and desist letter. The minimum requirements such as DIN or ISO
regulations have to be met by the products and this can help in providing clues to the basic
design of infringing item. Also, through independent evidentiary proceeding the evidences can
be gathered in an assessment by the expert. This could later be used as a fully valid opinion in
the infringement proceedings. The patent owner in other way can request the alleged infringer
for a request to produce legitimacy so as to know why the infringer feels entitled to use the
invention. This usually can lead to out of court negotiations which can be beneficial for both
the parties considering the monetary aspects. If the design is patented, then the main acts to be
considered are the manufacturing, offering and marketing of the patented goods. A plaintiff in
this case can allege both infringements that have already occurred and those that are imminent.
A case of direct infringement is also possible as the infringer manufactures a patent protected
item (considering that the bicycle design is already patented). As a rule all the features must be
present but even after lacking one or two features, the courts agrees to direct infringement due
to implementation of a readily available addition. The plaintiff can sue companies for direct
infringement for the patent protected item or method. Also, the bicycle which has not been sold
as of now still contains the possibility of being promoted. As such, the courts can be approached
which have a broad understanding of the same.

The most powerful remedy which can be utilized by the patent holder could be cease and desist
order (injunction). Since in this case, the competitor is planning to enter the market with an
infringing product, it could be considered as a case of a risk of first time infringement. The
court can therefore grant cease and desist order although the infringer can continue to trade
with those design of bicycles after obtaining a license. Also, since the patent infringement has
already occurred, a disclosure of detailed information can be requested by the plaintiff. This
can give rights to the plaintiff to identify customers and suppliers who are involved in the
infringement and take suitable action against them. In case some damages have already
occurred, the claim for such can be asserted during infringement proceedings. The causal share
is determined by how important the technical solution is for the customer’s purchase decision.

In addition to the cease and desist letter, the claim for destruction of infringing goods can be
enforced, on the condition that the infringer is in Germany (which is the case of the company
B) and that a claim has to be made that a direct infringement of goods has occurred. The patent
holder or company A also reserves the right to demand a recall of infringing goods from the
distribution channels of company B.

On the other hand, the company B also has the option of protecting itself from the plaintiff
using certain measures. The defendant can provide an argument that the bicycle design is free
from patent rights due to exhaustion. Exhaustion can occur if the products have been places on
the market by the patent holder and in this case the same has been placed in UK. Also, recently
the courts have begun to prioritize usage of products in market over the interests of the patent
holder. Again, if the mechanism or the component necessary for the invention is patented then
the patent exhaustion does not happen in this case. The fact that the exhaustion of patented
good has occurred, should be invoked by the defendant.

If the defendant can prove with clear documentary evidence that during the time at which the
patent application was filed, the invention had already begun to be used in Germany then the
defendant can invoke the right of prior use. The invention can thus be used for own business
purpose by the person or in this case the engineer of company B who would have begun to use
the invention in his own workshop.

The defendant can also protect itself by using ‘protective writ’. It is basically an anticipatory
defense. The defendant can try to convince the court that in a situation of summary proceeding
no injunction shall be applicable and the enforcement of an injunction will be subjected to
security deposit.

The case of the Unified Patent Court (UPC) coming into existence has to also be considered
irrespective of whether UK stays within the European Union or not. The direct infringement in
article 25 UPCA would prevent the company B from making, offering and placing the product
in the market. Article 26 UPCA would prohibit the third party from supplying or offering to
supply any essential element of that invention. Article 29 UPCA stating exhaustion principle
does not change. In case of injunction, the UPC would have the power to provide remedies like
permanent and preliminary injunctions. Article 63(1) and 62(1) UPCA provide the patent
holder some benefits. Article 63(1) UPCA can be a valid tool for company A because if the
decision that patent infringement has occurred is taken then the continuation of this
infringement would have to be discontinued in the future. Permanent injunctions through
imminent infringement (if found out) would stay the same in the UPC agreement. In case of
preliminary injunction under article 62(1) UPCA, a provisional injunction could be issued to
prevent an imminent infringement.

Finally, keeping in consideration the bifurcation principle of Germany i,e different handling of
infringement and validity, it is in the best interest of the patent holder, that is, company A to
opt out of the UPC system. On one hand, the bifurcation system is inclined towards the plaintiff
and therefore acts negatively towards the defendant but on the other hand, the revocation
actions are brought in almost 50% during which in 80% of the revocation cases, the patents are
declared invalid or partially valid making it a loss for company A. Considering, that the UPC
system would soon follow and company A would backout of UPC, it is in the best interest of
both companies to settle the IP issue out of the court without going through heavy expenditure.