Jo PotburyA Letter Before Action (LBA) or Cease and Desist

What are they?

A Letter Before Action (LBA), sometimes known as a “Cease and Desist”,  is quite simply a letter drafted by a qualified solicitor informing a prospective defendant that unless they settle, you intend to start legal action. In the case of intellectual property (IP) rights infringement an LBA usually sets out why you believe your rights have been infringed together with evidence of your rights ownership.

How effective are they?

Out of ACID’s 400+ settlements by its accredited lawyers on behalf of members, only 4 have reached a final Court hearing and of those, many have settled satisfactorily following an effective LBA and/or a short series of legal correspondence. To the recipient it can be perceived as an official “shot across the bows” or “last chance” before more serious letters follow, which may lead to the claim being heard in Court.

Why does the cost sometimes vary and may seem high?

Generally, the rationale for a letter before action varying in costs is that, basically, some are simple and straight forward and some are much more complicated. In ACID’s experience of many legal actions, the more effective an LBA is, the better the chances are for the least amount of protracted legal response.

Another good reason for an effective LBA (which takes time to prepare) is that there should be little scope for a lawyer on the other side to challenge any points of ownership. There are also many other variables which affect the time spent i.e. gathering comprehensive information (and evidence of rights ownership) in order to prepare an effective LBA. This can be easy or complicated, often depending on the efficiency of the ACID member in giving him/her all the relevant facts and evidence of design ownership and clarity of title. As we know too,  IP law is not straight forward and it may be necessary to look through case studies and precedents to clarify the legal position. It may also be necessary to seek a second legal opinion. Why? Because compared to other rights, there is little case history under unregistered and registered design right. This all takes time.

The amount of time taken to prepare an LBA can also vary if. For example,  a lawyer has to follow up an ACID member for more information which is not forthcoming. Most lawyers charge in 6 minute slots so it is important to ensure that your lawyer has all the relevant facts so that he/she can form a legal opinion! Typically, it is not unreasonable for a lawyer to spend anything from 2 – 5/6 hours on an LBA depending on the complexity of the issue.  Another variable may be the time it takes establishing clarity of rights’ ownership – say in a license arrangement or collaborative design etc.

Watchpoints

If you discover a copy always  be prepared and save expensive legal time by having all the following in place ( the ACID Infringement Purchase Information Sheet is a fast track checklist to ensure that you have collected all the relevant information together):

1.    Archived drawings and documents ready to prove the history of your designs

2.    If you are at an exhibition always ensure that you have evidence of your design ownership with you or have easy access to this evidence

3.    A complete set of legal documents, including contracts of employment with designers, written agreements with freelance designers, suppliers, manufacturers and customers, confirming that you own all the rights in your designs

4.    If your designs or trade marks are registered at the UK Intellectual Property Office or at OHIM (The Office for Harmonization in the Internal Market), retain and archive all these valuable certificates

Many designers do not realise that intellectual property (IP) law is based on property law. When  buying a house, most people will spend several hundred pounds on employing a solicitor to check that the house is free from any unforeseen nightmares such as the seller not actually being the original owner of the property; there is a sitting tenant; there is a public footpath running through the garden; or the land has be designated for nuclear waste. It is the same in IP law, so:

If there are any documents, which are required to PROVE the ownership of your designs, these will need to be drafted and signed before an action can commence. This is when it can be costly, however, never forget that it is never wasted money, it will cover you for the future.

When lawyers ask you to PROVE YOUR CASE you are being asked to ‘prove your case’ to the Court and the other side – it is your lawyer’s job to make sure that the rights are in place at the start so that the strength of your case is not damaged.

Joanna Potbury from DHM Stallard stresses the importance of getting the letter of claim spot on in terms of setting out the claim accurately; not leaving and gaps, and also setting the right tone.  “A good letter of claim can set the scene for much of the pre-action stage and can put you in control of the debate from the off.  If there are any weaknesses or gaps, they will be exploited by the opponent, which inevitably gives the potential defendant a psychological boost, it is our job as effective lawyers to get this right.”

Image of WizardJK Rowling and Bloomsbury Publishing may well face a 10-day High Court trial following a ruling by Mr Justice Kitchin in the claim brought against them by Paul Allen, the trustee of the estate of Adrian Jacobs deceased. Mr. Jacobs was the author of a wizard adventure novella entitled ‘Willy the Wizard’. Mr. Allen claims in proceedings brought in 2009 that copyright in Willy the Wizard has been infringed by ‘Harry Potter and the Goblet of Fire’, the well known book written by JK Rowling and published in the UK by Bloomsbury.

Both JK Rowling and Bloomsbury deny all of the claims. However, after an interim hearing in July, lasting three days, the Judge decided that the claim against JK Rowling and Bloomsbury Publishing may succeed and would not be dismissed at this early stage.

Nick Kounoupias, acting on behalf of Mr. Allen said; “Mr. Allen is delighted with this decision, although this is precisely the result we expected. We were surprised that any attempt was made to dispose of the claim at this stage and before all the relevant documents had been made available. Even at this early stage, the judge has concluded that the claim may succeed at a full trial. If the claim does proceed then JK Rowling and Bloomsbury will be required to explain how the similarities between the two works came about, when to date there has been a refusal to disclose key manuscripts and notebooks despite our request that they do so.”

The proceedings are being handled by a team at law firm DMH Stallard LLP led by Nick Kounoupias. DMH Stallard LLP are experts at handling complex disputes relating to intellectual property infringement and reputation management.

For Media Enquiries please contact James Caulfield of DMH Stallard on 07841 065604 or james.caulfield@dmhstallard.com

For more information please visit the DMH Stallard website

Dids MacdonaldWhy should designers register their designs? There is little commercial value in shouting that you’ve got a good idea, or the latest new design “gismo”, but if you have numbered design registration, stating that you effectively own the design, then you have a tangible, tradable IP asset. Registration details included on marketing literature and websites may also act as a strong deterrent against copying. If a designer is unlucky enough to be copied, but has a registered Community design (RCD), it is much more cost and time effective for an IP lawyer to write a powerful letter before action which will be more difficult to legally challenge. Investors, too, are more likely to be persuaded if they can see tangible evidence of tradable IP assets. Another key benefit of an RCD is that, for a small sum, publication (public disclosure) can be delayed (in the UK by 12 months and in the EU by 30 months) so that competitors cannot see a new design/design range before its official launch. This gives originators a clear and fair lead in the marketplace plus the added protection assurance of an RCD.

Is RCD cost an issue? How can unregistered rights be used effectively to decide on registration?

Many micro enterprises and SME’s find that registration is still too expensive. ACID’s advice in most cases is to always try to register new designs. However, if cost is an issue, there is a useful option of a year’s grace period to register allowed by OHIM. Designers can therefore, rely on unregistered rights to test the market during this period and then invest in the registration of any products identified as clear market leaders. However, there is a down side. Those who seek the fast track to market through IP infringement may seize on a new design and register it themselves. This can lead to a messy legal debacle to prove clarity of ownership, especially if an alleged infringer’s registration in another country.

Are designers generally aware of the benefits of design registration?

Design is everywhere; everything we use has gone through some sort of design process in its creation to a greater or lesser degree. Yet despite designers having access to the relatively new registered Community design (RCD) (introduced in 2003) there has been a slow uptake of registrations. The Office for Harmonization (OHIM) up until this year held only 400,000 registrations. So across 27 member states, over 7 years, this represents an approximate annual average of 2116 design registrations per country. To put this into perspective, in the UK, for example, there are 232,000 designers. The good news is that EU design registrations are finally picking up and increasing by 80,000 per year (or an average of an additional 2962 per year, per country).

Does this mean that the RCD benefits are being more widely publicised and acknowledged or that infringements are on the increase? Or does it mean that designers are finally waking up to the fact that registration is a key component of a healthy intellectual (IP) strategy? Maybe it is a combination of all these factors? Why don’t designers register more, is it still too expensive? At €350 per single design, maybe it is, although there are reductions for volume.

National registrations granted in the UK amounted to 2976 in 2008 and 2111 in 2009, a decrease of 29.1%. However, on the other side of the coin, for those relying on unregistered rights,  ACID’s Design Data Bank receives approximately 30,000 designs per year indicating, that by the sheer volume, many of the UK’s designers are still relying on unregistered rights. If a designer relies on unregistered rights, by creating an independently held IP audit trail this provides compelling evidence and can reverse the burden of proof against an alleged infringer. Out of ACID’s 400 settlements, the majority have been settled by designers relying on unregistered rights.

The UK used to be a nation of shopkeepers and manufacturers. If a shopkeeper’s stock is stolen, they can’t trade. Now the UK is a knowledge economy. If an IP originators tradable knowledge is stolen, their capacity to continue to market and sell designs may be seriously eroded. EU and National policy makers should seriously consider reducing registration fees and making cost and time effective legal redress a priority in a significant policy shift change. Introducing accessible IP enforcement with meaningful exemplary damages wouldn’t be a bad start.

© Dids Macdonald is the Chief Executive of ACID (Anti Copying in Design)

RW Sig KnifeACID member UK-based Robert Welch Designs is delighted to announce that its Signature knives have won the Excellence in Housewares ‘Cutting Edge’ category for the second year running. The complete range of Signature knives and the knife block won the award in 2009 and in 2010 the 20cm cooks knife, the 16cm flexi utility knife and the 10cm vegetable knife (the new additions to the range) have also been successful in the same category.

The Excellence in Housewares Awards are owned and organised by Progressive Housewares magazine in conjunction with the Cookshop and Housewares Association and are considered to be the ‘Oscars’ of the housewares industry.

Speaking about the win just after the awards ceremony in London, Rupert Welch, Managing Director of Robert Welch Designs, said:

“Our initial reaction was surprise, swiftly followed by delight that the quality of the Signature knife range has been recognized yet again by an awards panel. We understand that until this year it was unprecedented for a product/extension to a product range to win this award in two consecutive years. This is a wonderful endorsement of the Signature range and we are very proud to have won.”

Key facts about the Signature knife range:
•    The Signature knife block and knives were designed in-house by Paul deBretton Gordon and Rupert Welch.
•    The 2010 Excellence in Housewares ‘Cutting Edge’ award is the latest success for the Signature knives which have also won an iF design award (Germany), the GOOD DESIGN™ award (from the Chicago Athenaeum: Museum of Architecture and Design), a red dot design award (Germany), the Excellence in Housewares ‘Cutting Edge’ award (UK) 2009 and a Gold accolade in the ‘Product of the Year’ awards organized by Housewares and DIY week magazine (UK). The knives have also achieved the highest possible rating from the Craft Guild of Chefs.
•    The knives have been performance-tested by Sheffield’s leading test establishment and found to be in the world’s top 1% (of all knives tested) for initial sharpness and edge retention.
•    Each blade is honed and tempered to razor sharpness using World Edge Geometry™ inspired by master sword craftsmen from Japan to produce a precision blade.
•    Each block contains the innovative, patented Robert Welch Signature knife sharpening mechanism designed to care for the knives, simply and effectively.
•    The block has been designed for ease of use when inserting and removing the knives. A magnetic locator in each slot prevents damage to the blade edge when inserting or removing the knives.
•    The full range includes fourteen knives, two carving forks, a sharpening steel and a hand-held knife sharpener.

For more information view the Robert Welch Website

DImage of new Scabetti designrawn to the Light XL by Dominic and Frances Bromley

Motivated by exciting possibilities for large scale installations the Drawn to the Light china form has been re-sculpted to a larger 180mm diameter scale. Drawn to the Light, launched at 100%Design 2003, was Dominic and Frances Bromley’s first fine bone china chandelier. This now iconic sculpture inspired the design of their acclaimed Shoal. Scabetti’s 10th year exhibiting at 100%Design London, saw Drawn to the Light XL presented for the first time and taking centre stage on the Scabetti stand. In a 2m tall sculptural arrangement, 150 fine bone china forms surrounded their central light source in a striking diamond shaped composition.

For more information visit the Scabetti website

Image showing Aspinal brandAnti Copying in Design (ACID) members Aspinal of London have secured a settlement after a long battle against copycat predators who  marched off with their products, mimicked their website and shamelessly created a look alike business, free riding on the back of Aspinal’s hard- fought- for brand identity and reputation. Despite denying liability, the defendants, in a confidential settlement, agreed not to trade in any capacity in the leather goods business for 10 years and to pass over all the assets including all the stock and their entire business to Aspinal. The case was described as being one of the most complex cases to come before the London Patents Court in fifty years.

An outraged Iain Burton the Chairman and Founder of Aspinal said, “This was an extraordinary example of unscrupulous business persons believing that they could, with impunity, walk off with an entire business and create a copycat trading company using every aspect of Aspinal’s brand identity, including its look and feel, text, brand voice and communication platform. The case boiled down to infringement of intellectual copyrights and also breach of numerous common law torts. The case was, of course, difficult to pursue and the costs were quite extraordinary, but in building a brand for generations to come it is an important principle that a company’s intellectual property and its brand identity and its confidential information must be fiercely protected.”

Aspinal of London, one of the UK’s fastest growing British luxury brands, had been forced to take action against individuals with whom they trustingly shared an office and warehouse premises.  Without warning, they vacated the shared premises and  promptly set about to manufacture a wide range of more than 100 designs, copying or mimicking Aspinal’s entire range of products and  designs, the Aspinal “ look and feel”  and the entire Aspinal business model. The case against the defendants was pursued in two parts. The first was breach of copyright, Community rights, registered designs and unregistered designs. The second was a case of common law tort, including the misuse of confidential information and inducement of Aspinal’s manufacturers to breach their agreements and exclusivity.

Dids Macdonald, ACID’s Chief Executive said of the case, “The fact that we are not allowed to mention the other party’s names is a great shame but the message to Aspinal’s competitors (and others who may think about following the same business strategy), must be crystal clear, brand protection and the intellectual property that underpins the success of Aspinal of London is its lifeblood and any infringement whatsoever by third parties will be taken very seriously indeed in the future.”

Aspinal is opening its new boutique Flagship in Brook Street. W1. At end of October and will be launching the first of 30 planned 2000 sq feet stand alone stores in the Middle East and East Europe early in the New Year.

Aspinal of London Head Office 01428 648180
Aspinal of London Press & PR Front Row Maria Blake:  0207 731 6077

Tim AshdownCourt of Appeal creates uncertainty for trade mark owners by allowing euro-defences to be argued by parallel importer of second hand computer hardware.

Through our support to ACID members, I am well aware that some of you sell your products outside the European Economic Area (“EEA”) under your own trade marks, and often at lower prices to those at which you may sell within the EEA member states.  For any business that does this, the risk of those goods then being imported and sold within the EEA without your consent is often a real and expensive pain.

There has always been a tension between the rights of trade mark owners to control the first marketing of their goods within the EEA, and the rights of those trading in the grey market.  This tension was intensified following a decision by the English Court of Appeal on 24 August 2010 in a dispute between Sun Microsystems Inc v. M-Tech Data Limited.

Trade Mark owners – and their lawyers – have for some time felt comfortable in taking action against those importing branded goods into the EEA which had not been first placed on the market within the EEA by the trade mark owner (or with its consent).  We had all assumed (as supported by the well-honed trade mark skills of Mr Justice Kitchin, who heard the case in the Chancery Division), that the so-called “Euro-defences” based on EU competition laws were not readily available to the parallel importers.  It now seems that in some circumstances they might be. Sun (now Oracle) was trying to prevent the vast trade in second hand Sun hardware which was being imported from outside the EEA. However, the practices it deployed in an attempt to stifle that trade, have potentially enabled M-tech to deploy some “Euro-defences”.  For example, Sun refused to publish its database of serial codes enabling resellers to identify whether goods were first market in the EEA with the consent of Sun or not.  This, combined with the aggressive pursuit of resellers through litigation, enabled the lawyers for M-Tech to present an argument that this behaviour was anti-competitive as its effect was to prevent the attainment of a single market in the EEA for legitimate trade in Sun products which had been first marketed in the EEA with the consent of Sun.

The decision was made following an early attempt by Sun to obtain early judgment.  Assuming it is not settled, the case has a way to go until trial and may well then be the subject of a reference to the European Court of Justice.  The downside of all this is the potential uncertainty – and legal expense – created for brand owners attempting to prevent parallel imports by legitimate means.  Trade mark owners pursing legitimate Infringement cases, now risk getting stuck in a quagmire of casually deployed euro-defences.

However the judgement is a useful reminder to trade marks owners that they might usefully consider assisting resellers in attempting to identify which branded goods they can legitimately re-sell in the EEA, either by marking goods or publishing other such data.

Tim Ashdown Partner at ACID accredited law firm DMH Stallard

image of NiallNew rules coming into force On October 1 2010 in the Patents County Court will limit costs recovery from the other side to £50,000. For those that may not be aware, the Patents County Court deals with all types of intellectual property issues and there is a recommendation from the CBI and the Jackson Review that this be renamed the Intellectual Property County Court to adequately reflect its purpose.

The Patents County Court was originally established to provide an alternative for Patent cases to be heard.  It has evolved to a point where all Intellectual Property matters can be heard in the Patents County Court.  The rules are being introduced in an attempt to streamline the process; to make it more efficient and more cost effective.

The headline grabbing issue is that the limit of the costs that can be recovered from your opponent has been capped.

There are two aspects to an Intellectual Property matter, which are what lawyers call a split trial.  Basically two trials take place; the first to decide whether an infringement has taken place and the second to decide how much money you should be awarded if you win.  The costs that you can recover from your opponent are capped at £50,000 for the former and a maximum of £25,000 for the latter. If the receiving party is not VAT registered then VAT is payable and if there are any cost awards for applications during the procedure which are dealt with on a summary basis then these are costs which are awarded in addition.

The main aim is to speed up the process which should be a positive aspect for those with limited time and legal budgets.  Cases will be presented by written arguments.  There will be no factual or experts evidence unless there is what is known as a cost benefit analysis and any trials will be limited to one or two days and there will be no cross examination of witnesses.

Following the introduction of this new cap, it will remain to be seen how popular these reforming steps will be.   If you already have a case going through the Patents County Court and you think this might affect you, our understanding is that these rules will only apply to cases commenced after 1 October 2010.

We will be watching closely to see what effect this has on enforcement and will keep you informed  In essence the new limits have been introduced to allow smaller organisations to take enforcement proceedings without the larger risks associated with litigation.

Niall Head-Rapson Partner at ACID accredited law firm McDaniel & Co

IPO Logo

ACID Ambassador Dr Frederick Mostert, Nick Kounoupias, ACID’s Chief legal counsel and CEO Dids Macdonald held further constructive talks with UK IPO’s John Alty to present the rationale behind our claim for design rights to be brought in line with copyright and trade marks. ACID’s argument is based on the fact that copyright is a property right subsisting inter alia in “artistic works” – see Section 1(1) (a) CDPA and Design right is a property right subsisting in original designs (S.213 (1) CDPA).  ACID believes that copyright and design rights are exactly the same type of legal right and should be treated similarly. ACID further argues the fact that copyright infringement is in certain circumstances a criminal offence (see S.198 CDPA). Trade mark infringement is also a criminal offence (S. 92 TMA). These crimes are punishable by up to ten years imprisonment. Infringement of design right is not a criminal offence and can be dealt with by way of civil proceedings only and we believe that this gives rise to anomalies and inequality of treatment. Dids Macdonald said, “We have provided a compelling rationale and now that we have full backing from the influential Alliance against IP Theft, I feel that this will be a positive step forward in ensuring that Andrew Gower’s recommendations to the UKIPO for parity in IP rights will be nearer reality. It is long overdue for the design industry. Our next step is to present our case to IP Minister Baroness Wilcox.”

Alliance logo

The Alliance Against IP Theft puts ACID’s lobbying issues in main strategy for 2011 onwards

  • Design right to have parity with copyright
  • Increase in exemplary damages for IP infringement

Scope of Protection

•    Copyright is a property right subsisting inter alia in “artistic works” –see Section 1(1) (a) CDPA.
•    Design right is a property right subsisting in original designs (S.213 (1) CDPA).
•    So copyright and design rights are exactly the same type of legal right
•    The copyright protection of artistic works is usually restricted to 2 dimensional works but it does also protect 3 dimensional works. Section 4 CDPA states that artistic works means
(a)-a graphic work (2D), photograph (2D), sculpture (3D) or collage (2D or 3D) irrespective of artistic quality
(b) a work of architecture being a building (3D) or model for a building (3D)
(c) a work of artistic craftsmanship (3D)
•    Graphic work is further defined to include any painting, drawing, diagram, map, chart or plan (2D)
•    Sculpture is defined to include a cast or model made for purposes of sculpture (3D)
•    The case law on works of artistic craftsmanship (unsurprisingly) requires a number of criteria to be met before a work will be considered as one of artistic craftsmanship and mass produced articles will not qualify.
•    Design Right only subsists in 3D. The word “design” means the design of any aspect of the shape or configuration (whether internal or external) of the whole or part of an article (S. 213 (2) CDPA).
•    Some 3D objects are therefore protected by both artistic work copyright protection and design right so long as they can be classified either as sculptures or as works of artistic craftsmanship but most 3D objects will be protected by design right alone.

Offences

•    Copyright infringement is in certain circumstances a criminal offence (see Ss 107-110 CDPA, S.198 CDPA. Trade mark infringement is also a criminal offence S. 92 TMA). These crimes are punishable by up to ten years imprisonment.
•    Infringement of design right is not a criminal offence and can be dealt with by way of civil proceedings only.
•    This gives rise to anomalies and inequality of treatment.
•    For example 2D design drawings are protected by copyright as artistic works. If these drawings are copied or a 3D object is made from the design drawing in circumstances where the person making the object knows or has reason to believe that he is making an infringing copy of a copyright work a criminal offence is committed.  But if that same person takes the 3D object and copies that rather than the design drawing then unless the 3D object qualifies for copyright protection as either a sculpture or as a work of artistic craftsmanship no criminal offence will be committed.
•    In the first case an offence punishable by ten years imprisonment is committed and the infringer gets a criminal record. If the infringer is a company S.110 CDPA confers criminal liability on directors, managers, secretary and other similar officers.  Police and Trading Standards can be deployed to disrupt the business of the suspected criminal and to arrest and / or search premises. The suspect can be interviewed under caution.
•    In the second case (on almost identical facts and certainly with no lesser harm caused to the victim) there is no criminal offence committed, neither the Police nor Trading Standards will be interested and disclosure of information and search of premises can only be obtained through expensive civil litigation remedies  . This is unfair.
•    Given that in nearly all cases the infringer will copy from the 3D design not from the 2D design document, and that this is perhaps a more serious problem for the design right owner, it is clear that weaker legal protection is currently provided for  more serious infringing behaviour .
Why the inequality of protection?

•    There is no obvious reason for the disparity of protection. This may have been overlooked during the frenzied last minute lobbying and amendments made to the CDPA in 1988 as it was passing through Parliament. Design right protection was a relatively late innovation in 1988 and at the time it was probably felt that it was a step too far to extend to design right the new improved protection introduced for copyright in 1988. Certainly no rational basis for the inequality has been advanced by Government.

Solution

•    The legal solution is to introduce into the CDPA two new Sections to mirror S.107(1) and 110 CDPA. The wording would be pretty much identical to Sections 107(1) and 110 and would be designed to criminalise the infringement of the design right subsisting in 3D designs. This can be done very simply by replacing the word “copyright” every time it appears in Sections 107(1) and 110 with the words “design right” and the words “copyright work” with the word “design.”  It would then be necessary to make consequential amendments to mirror Sections 107 (4), 107 (5) 107A, 108 and 109 CDPA.
•    It is necessary to specifically spell out what is required. Simply to point out the inconsistent treatment might lead to attempts to water down the protection available to copyright owners of artistic works rather than increase the protection for design right proprietors.

Nick Kounoupias
Legal Counsel – ACID (Anti Copying in Design) LOBBY
Partner, DMH Stallard

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