Listing taken down by a registered design?
December 06, 2023
In the ever-expanding world of online marketplaces, sellers often find themselves at the receiving end of takedown notices based on claims of registered design infringement. This article sheds light on the growing issue of unjustified threats and outlines strategic responses for those facing such challenges.
Major online platforms such as eBay, Amazon, and Etsy, as well as hosting platforms such as Shopify, provide reporting tools enabling intellectual property (IP) rights holders to report listings deemed infringing. These rights encompass patents, trade marks, copyright, and the focus of this discussion – design rights and registered designs. Registered designs protect a wide variety of 2D and 3D designs.
In recent years, an alarming surge has been observed in anti-competitive bad-faith design registrations, particularly by rival shops. The lack of novelty examination of registered design applications, coupled with online marketplaces' readiness to accept takedown requests, has created an environment ripe for abuse. When faced with a registered design dispute, platforms may require you to resolve the matter with the proprietor (registration holder).
Victims of such takedowns often find themselves in a precarious position. Re-uploading the contested product listing may result in suspensions, de-ranking of their shop in the search algorithm to limit visibility and sales, and potential removal of their shop from the platform, unless a settlement is negotiated or the registered design is successfully invalidated.
The most commonly invoked ground for invalidity is that the design had already been made available to the public before its registration date. Certain disclosures within 12 months of the registration date may not invalidate the design, if the disclosure traces back to the holder of the registration – this is referred to as a 'designer’s grace period'. Another common ground for invalidity is that you are the true owner of the design, rather than the proprietor. Other grounds exist too.
IP law in the UK offers measures to protect those unfairly targeted by takedowns:
a) The UKIPO provides a registered design invalidation service, allowing defendants to challenge the validity of a registered design without resorting to the courts; and
b) UK design law enables defendants to claim relief against unjustified threats, the threat being unjustified if the registered design is later invalidated or held not to be infringed, and other criteria are met. Damages may cover loss of earnings during the takedown period.
If faced with a registered design takedown, swift and informed action is crucial.
Considerations for responding:
1. Treat takedown notices seriously:
a. Treat a takedown notice seriously, because a registered design may be valid even if you think it is not. In addition, a mere statement that the registered design is invalid is unlikely to suffice, with revocation or voluntary cancellation of the design being necessary. eBay, Amazon, Etsy, and Shopify, etc., could apply sanctions to your shop if you do not respond to a takedown in accordance with their relevant policies.
2. Early Representation:
a. Seek representation early to navigate the intricacies of the process. We may not be allowed to amend a statement of case after it has been filed, or to reapply for invalidation if you are unsuccessful.
3. Evidence Gathering:
a. For invalidating a registration based on the same or very similar earlier designs, evidence gathering is either the easiest or most difficult part. Sometimes, high-quality usable evidence can be found during initial investigations. If our initial investigations do not uncover high-quality usable evidence, additional investment may be required in order to perform extensive searches. Crucially, the UKIPO needs to see credible evidence depicting one or more images of an earlier design, along with a date that indicates when the design was made available to the public.
b. The date of publication of the earlier design must pre-date the registration date of the registered design, or must pre-date the designer’s grace period if the publication was covered by the designer’s grace period.
c. If the only evidence is, for example, a sales invoice dated before the registration date, we may be unsuccessful if the invoice does not include an image of the earlier design. Likewise, if the only evidence is a screenshot of a product web page, we may be unsuccessful if the web page is not clearly dated.
4. Communication with Registered Design Holder:
a. While it is not an absolute requirement to contact the proprietor before applying for invalidation, we recommend contacting them first in most cases. A legal threat of invalidation proceedings and unjustified threats proceedings (if applicable) may be sufficient.
5. Apply for invalidation:
a. We would file Designs Form DF19A, along with a statement of case including copies of evidence. The quality of the evidence is critical.
6. Subsequent procedure:
a. Once an invalidation application has been filed, the UKIPO will contact the holder of the registration and will invite them to file a counter-statement. The UKIPO will also schedule a hearing if requested to do so, and will otherwise decide based on the papers. A written decision will be issued, and the design will be removed from the UKIPO register if applicable.
7. Costs and duration:
a. The UKIPO does not have the power to award damages to compensate for your loss of income while your listing had been taken down. However, a damages claim can be pursued by separately threatening unjustified threats proceedings through the courts if the invalidation application is successful. If the registered design is invalidated, an unjustified threats claim is likely to succeed if unjustified threats law is applicable to your case.
b. Although the official fee for invalidation is only £48, attorney costs are higher and must be factored in. 2023 attorney costs for applying for invalidation of a UK registered design may range from one to two thousand pounds, assuming that high-quality evidence is found during initial investigations. Additional costs would be involved for complex evidence searches, unjustified threats claims, attending a hearing, or attacking multiple registrations, among other things.
c. If the proprietor defends the claim but you are ultimately successful without needing a hearing, the UKIPO will typically award you scale costs of typically £748 (2023). If you are unsuccessful, the UKIPO may award costs against you. Costs awards may be higher in cases with hearings, or where one party abuses the process.
d. In view of the above, the UKIPO’s cost caps will not cover all of your attorney costs, but they do fortunately limit your exposure to costs should you be unsuccessful. The idea of cost caps is to limit the risk for both parties, and to promote out-of-court settlement.
e. The UKIPO does not enforce costs orders, so you may need to hire a debt recovery agency if the other party does not pay. To reduce the chance of non-payment, the UKIPO may order the proprietor to pay a security upfront in certain cases.
f. The pendency from filing an invalidation application to receiving a written decision from the UKIPO is around 8 to 18 months, which may be further prolonged if a party appeals the decision. While this is a long period of time, you may emerge in a strong position to demand damages for settling an unjustified threats claim, to cover the period between your product being de-listed and the design registration being invalidated.
In the face of unjustified threats of registered design infringement on online marketplaces, sellers can employ legal avenues provided by the UKIPO to protect their rights. A strategic and well-informed response is essential to navigate the complexities of the system and safeguard against potential damages.
If you have any questions with regards to this article or how Swindell & Pearson can help you and your business with intellectual property, please don’t hesitate to get in touch with the author Tim Gilbert or call +44 1332 367 051.