Enforcing Designs Globally: Same or Different?

The available remedies for design infringement vary greatly among countries around the world. To understand both similarities and differences across jurisdictions and to help INTA develop a position on the harmonization of design remedies for its model design law guidelines, the Association’s Designs Committee conducted a survey among its members and obtained input from other INTA members.

The Committee selected Australia, Brazil, Canada, China, the European Union, Japan, Korea, the United Kingdom, and the United States for the survey as exemplars because of their importance in terms of design infringement jurisprudence and to capture diverse legal systems.

The main findings of the survey—included in this article—cover non-financial and financial remedies that are available for infringement of registered design rights, recovery of attorney fees, and other remedies, such as criminal sanctions and customs proceedings. The complete survey is available here.

Please note that this article is for informational purposes only as it is a broad overview by definition and because the laws in this area are subject to change. Thus, independent research and verification of the survey results are recommended together with a more detailed review of applicable standards.

Non-Financial Remedies

In the event of an infringement, perhaps the most important role of design rights owners is to find a way to promptly and permanently thwart the infringing activity. While the burden of proof requirements differ, preliminary and permanent injunction relief is an available option in all countries surveyed.

Following a final finding of infringement of a design right, permanent injunctive relief is an appropriate remedy in all the jurisdictions surveyed. However, jurisdictions differ on the burden to prove infringement of a registered design as well as on legal defenses such as laches, unclean hands, and other equitable issues. In Japan, for example, an abuse of rights can defeat an injunction.

Additionally, to secure permanent injunctive relief, in many countries, the design must have been analyzed on the merits to prove validity (e.g., Brazil and Korea), whereas in other countries, a plaintiff must show irreparable harm such that monetary remedies are insufficient relief to protect the damage allegedly done by the design infringement. The public interest is also a factor that can serve to defeat a permanent injunction in several countries, such as China and the United States.

One unique benefit of an EU-registered design right is the ability to secure an injunction throughout the EU from a court located in a single member state country, subject to domicile issues of the parties and the courts’ jurisdiction.

In terms of temporary (interlocutory) injunctions, courts in most countries have the power to grant such orders with the goal of maintaining the status quo between the parties until a final adjudication on the merits can be made. In Australia, Brazil, Canada, the EU, Japan, the UK, and the United States, the party seeking the interim injunction will need to demonstrate prima facie case as to likely success on the merits.

Additionally, in every country surveyed, the court can require an undertaking of some sort, such as a bond or search report, to compensate the defendant should the plaintiff ultimately not prevail. The undertaking is intended to cover damages suffered by the defendant due to the interim injunction.

For example, in China, because design patents have not gone through a substantive examination, a novelty search report or official patent evaluation report must be submitted to support the interlocutory injunction request.

In some surveyed jurisdictions—including Australia, some EU jurisdictions, Korea, and the United States—parties should support a request for interim injunctive relief by temporal urgency. In waiting too long to assert rights, the concept of immediate harm absent an injunction is strained and an interim injunction request will likely be denied.

Financial Remedies

Compensatory damages are available in all countries surveyed. Typically, there are several calculation methods available to claimants. All countries allow calculation of damages based on either actual loss of profits or a reasonable license fee, and restitution of an infringer’s profits is available as an alternative to compensatory damages. In some countries, further determination methods exist. For example, China awards discretionary and statutory damages, recognizing that it can be difficult to prove actual loss and obtain reliable information on the infringer’s profits.

Notably, there are different approaches to calculate an infringer’s profits. In most countries, costs associated with the production or sale of the infringing products are deducted. However, where the infringing design constitutes only a feature of the article, as opposed to the whole, there are diverging views on whether only those profits directly related to the infringing feature or all profits gained from the making and selling of the article are recoverable. Whereas some countries only award profits that are directly related to use of the infringing feature, other countries explicitly reject this approach.

In addition, in some common-law jurisdictions, additional or punitive damages are available in case of the defendant’s flagrant conduct, such as continuing the infringement despite an injunction. The calculation is typically left to the discretion of the court. In the United States, for example, damages can be tripled in the case of willful infringement.

Further, in some countries, reputational damages are awarded in addition to other damages. This is usually only possible in exceptional cases where the claimant can show harm to its reputation or market confusion that is not already compensated for by the other damages.

Typically, damages will only be awarded in cases of the defendant’s negligent or willful conduct. Whereas some countries consider that the infringer has a duty to ascertain that its article is not infringing any other entity’s design rights, and therefore find negligence quite easily, other countries will not award damages if the infringer can show that it was not aware that the design was registered.

To avoid this defense, marking the product with the word “registered” and its design number is considered a good strategy in the UK. Similarly, in the United States, damages are only available when the infringer had “notice” of the infringement and continued to infringe. Proper marking (“Patent [Number]” or “Pat. [Number]”) gives the infringer constructive notice of the infringement and allows the claimant to collect damages from the beginning of the infringing activity rather than only after sending a warning letter or filing of an infringement suit.

Recovery of Attorney Fees

In design cases, the question arises whether the winning party may recover some or all its legal costs from the losing party. In the countries surveyed, each provided some options for recovery of costs to at least a limited extent. The costs are typically calculated separately from damages.

In Australia, the unsuccessful party may be liable to pay a proportion of the legal costs of the successful party, and the court has broad discretionary powers regarding costs. In contrast, in Brazil, in most cases, the winning party recovers all legal costs, including attorney fees and court fees. Similarly, in Canada, all or part of the costs are generally awarded to the successful party, although costs remain at the discretion of the court.

Regarding attorney fees, each of the jurisdictions provides some type of mechanism to obtain at least some of the attorney fees. In the United States, reasonable fees may be awarded to the prevailing party in an exceptional case”—one “that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” Octane Fitness, LLC v. Icon Health & Fitness, Inc., 134 US 1749 (2014).

In the UK, the winning party may recover a reasonable proportion of its actual legal costs and attorney fees, although the recovery can be reduced if they are unreasonable. In addition, the losing party may also be entitled to recover some of its own costs if it has won part of the case. In China, there are options for recovery of attorney fees if the party can prove the patentee’s obvious misconduct, such as abuse of patent rights.

Other Remedies and Sanctions

With design cases, sanctions or relief other than injunctions and financial remedies are generally available, but they vary based on jurisdiction. Other than in the United States, where sanctions or relief other than injunctions and financial remedies are not available for registered designs, alternate relief options are available.

For example, relief as to an order of destruction of infringing products is widely available. Depending on the jurisdiction, delivery up of infringing products is available as an alternative to destruction of the infringing products. (See, e.g., in Canada, Findlay v. Ottawa Furnace & Foundry Co., (1902), 7 Ex. C.R. 338 (Ex. Ct.); see also, in Australia, there is no special provision for delivery up in the Act; however, the courts have an inherent equitable power to order delivery up of infringing goods as it sees fit: Geodesic Constrs. Pty. Ltd. v. Gaston, (1976) 16 SASR 45). Further, other jurisdictions, such as Brazil, the EU, Japan, and Korea, also have options for delivery up. Additionally, in a number of jurisdictions, it is possible to have the court order the seizure of materials and implements predominately used to manufacture the infringing goods. This seizure may include destruction of molds or other materials.

A court may order publicity orders in some jurisdictions. In Korea, at the request of a design right holder, the court may order that “necessary measures” be taken to restore the business reputation of the owner or the exclusive licensee.

In Japan, at the request of the patentee or exclusive licensee, the court may order “a person that has harmed the business credibility of the patentee or exclusive licensee by intentionally or negligently infringing upon the patent right or violating the exclusive license[,] to take measures necessary to restore the business credibility of the patentee or exclusive licensee in lieu of or beyond compensation for damages.” This would include “publication of an apology,” although this is rarely issued by the courts.

In Australia, court orders are generally published, and the court can order publication of apologies and corrective advertising (e.g.. Section 246 of the Australian Consumer Law). Publicity orders are not available in other jurisdictions, such as China and the United States.

The availability of criminal sanctions varies among jurisdictions. For example, Australia, Brazil, the EU (Germany), Japan, Korea, and the UK provide for both criminal imprisonment and criminal fines. In contrast, criminal sanctions are not available in Canada, China, and the United States.

Some jurisdictions have maximum imprisonment terms, such as not more than seven years of imprisonment with labor in Korea, and imprisonment with work for a term not exceeding 10 years in Japan.

Similarly, some jurisdictions cap the criminal fine. For example, Korea provides a fine of up to 100 million won, whereas Japan sets the fine at a maximum of 10,000,000 yen. Of note, in Japan, the criminal penalty may be imposed not only on the individual but also on the company.

Depending on the jurisdiction of interest, other remedies and sanctions may also be available. For example, in the UK, the court may freeze the infringer’s bank account. Further, even though not part of the remedies or sanctions, the result of the judgment may have a cooling effect. For example, in China, a design infringement judgment will be published online and become part of an infringer’s credit records. The infringement records can have some ill effect on the infringer’s business, such as concerns by business partners about doing business with an infringer, and banks may hesitate in granting loans.

Conclusion

While survey results indicate that a wide variety of remedies are available for design right infringements, some degree of harmonization would certainly be beneficial to facilitate enforcement of design rights, especially where infringement takes place in many countries simultaneously.

Although every effort has been made to verify the accuracy of this article, readers are urged to check independently on matters of specific concern or interest.

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