News & Insights

Background

The Designs Act 2003 (Cth) (Designs Act) has long been a poor cousin to other IP protection regimes. Its utilisation has been hampered by a short registration period, lack of a grace period and poor public awareness.

Reforming Australia’s designs law is back in the spotlight, so to get you up to speed here is what has occurred:

• 2015 – the Advisory Council on Intellectual Property (ACIP) put forward recommendations to IP Australia regarding changes to IP protection in Australia.
• Late 2019 – IP Australia consulted with stakeholders on the implementation of the former (ACIP) recommendations.
• May 2020 – IP Australia released its response to the ACIP report, which included amendments to the Designs Act.
• 2 December 2020 – the Designs Amendment (Advisory Council on Intellectual Property Response) Bill 2020 was introduced to the Senate to amend the Designs Act and is currently before the Parliament for consideration.

The proposed amendments

The proposed amendments are:

1. 12-month grace period – providing designers with 12 months to apply for design protection after publishing or using their design to protect designers from losing their rights through inadvertent disclosure;
2. Prior use defence – introducing an infringement exemption for prior use;
3. Simplifying the design registration process by removing the publication option and making registration automatic six months after the filling date;
4. Providing exclusive licensees legal standing to take infringement action through the courts; and
5. Other technical amendments to the Designs Act.

The introduction of a grace period would be particularly significant. At present, a design cannot be registered once it has been publicised in any way. Put another way, once a product embodying that design is exposed for sale, it is too late to secure protection in Australia.

This requirement is particularly harsh due to how the Designs Act interacts with the Copyright Act 1968 (Cth) (Copyright Act).

Physical products can sometimes be protected under the Copyright Act as artistic works.

However, this protection is lost once the design is applied industrially (i.e. have 50 or more reproductions made, depending on the type of product).

Unfortunately, at that point, it is too late to seek design registration because the design has been disclosed and the designer is left without any protection.

It requires the designer to decide before entering the market whether that particular product will be commercially successful. It is a fraught decision, because once the design is registered then copyright protection is lost, even if the design is never industrially applied.

That means foregoing the life of author plus 70 years for copyright and making do with a 10 year design life. This is crystal ball gazing and not a sound premise on which to base your business.

Case example

The recent case of State of Escape Accessories Pty Limited v Schwartz [2020] FCA 1606 made the need for the 12-month grace period amendment clear.

In this case, Australian company State of Escape designed and sold neoprene handbags. Schwartz then purchased imitation bags on Alibaba and sold them in Australia.

While the Federal Court acknowledged that a substantial part of the original State of Escape bag was reproduced by Schwartz’s bags, no copyright infringement arose. This was because State of Escape’s design had been industrially applied.

State of Escape argued that its bags were “works of artistic craftsmanship”, which would have been an exception to the loss of copyright protection. However, the court rejected that argument. It meant that State of Escape’s only avenue for protection is Designs Act registration. However, at this point, it was too late to seek protection.

Ultimately, this Federal Court case illustrates how the proposed amendments can have a real impact on increasing IP protection. With a grace period, designers like State of Escape could test the waters with a product and seek protection if it shows signs of taking off.

While the case is now on appeal to the Full Court of the Federal Court, its value as an illustration of the issue should remain regardless of the outcome.

Will these changes impact your business?

Yes, in a positive way. Practically, this means that Australian businesses will be able to have greater flexibility when registering their designs and protecting the use of their designs.

we are here to help

We will continue to monitor the progress of the Bill and publish updates accordingly.

However, if you are unsure about how these changes apply to your business or have any questions regarding the registration system for designs in Australia, please contact a member of Macpherson Kelley’s Intellectual Property team.