Business Law & Compliance

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Legal loophole in Intellectual Property Act could drive away business

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Withers & Rogers, a leading British firm of patent and trade mark attorneys, explains that UK Unregistered Design Right ensures that its owner is able to prevent third parties from copying their products or parts of them for a period of ten years from the date of its commercialisation. To date this has proved to be an extremely useful tool, used by product designers to stop the sale of imitation copies of their products. In addition to the UK design right, there are UK and EU systems for protecting new designs via a registration process, for a period of 25 years.

The first marketer of a new product (that was designed and manufactured by a company based in a non-qualifying country) would only be able to become the owner of the UK design right if it was ‘exclusively authorised’ to do so. 

However, as a result of legal changes that took effect on 1 October 2014, companies from outside the EU that are seeking to first market a new product in the EU may need to take precautions to avoid the UK design right falling into the wrong hands.

Michael Jaeger, patent attorney at Withers & Rogers, said: “This legal change is intended to simplify the qualification requirements for design right protection, but it could have some unexpected consequences. In particular, it may be possible for an individual to obtain exclusivity in the UK, either mischievously or inadvertently, simply by marketing a product ahead of any competition. 

“For example, if a qualifying person is able to obtain a sample of a product prior to its official worldwide launch and then markets the product in a qualifying country, they would then be able to stop other companies selling the product in the UK, or at least try and hold them to ransom.

“This could have serious implications for some overseas businesses and the UK retailers of their products, particularly where a product is planned for pre-order, which would be considered ‘first marketing’, as this activity could hand an online retailer unintentional exclusivity.”

Jaeger adds that there is also a risk that some third parties could be waiting in the wings to start snapping up UK design rights for products developed by overseas companies.

“In the US we have a situation where ‘patent trolls’ are causing havoc for companies both small and large, by threatening them with patent infringement suits in order to extort money for the problem to ‘go away’. Our concern is that this loophole may entice companies to pursue similar business models here in the UK.”

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