A recent dispute between Georgia-Pacific and Kimberly-Clark highlights the importance of these issues when it comes to securing protection.   The case involved alleged infringement of trade marks held by GP relating to the quilted design of toilet paper, a product they have been selling for over 100 years, and which they had improved with a diamond-shaped quilted design 20 years ago when also rebranding it as Quilted Northern.  In addition to trade mark protection, GP had also obtained utility and design patents for their innovative tissue, a strategy which would arguably be their undoing.

Notable here is that some of the IP protection secured by GP had expired by the time the dispute arose, however, as rights which can be renewed indefinitely, their trade marks continued to be in force.

In the early 1990s, Kimberly-Clark also added a quilted design to its toilet paper, sparking a dispute between the two companies involving 675,000 documents and more than 12 witnesses.  Crucial in determining the existence of trade mark infringement was whether the subject of the trade marks was functional.   Trade marks are used to distinguish the origin of goods, and under US law a defence is available to alleged infringers of a trade mark if they can show that the mark is functional.  In this instance the Court found clearly in favour of KC.

The Court’s finding that there was no trade mark infringement rested in part on Georgia-Pacific’s proprietorship of several utility patents covering the quilted design.  These operated as evidence that the design was in fact functional.  In case law cited by the Judge, it was explained that a design is functional:

‘if it is essential to the use or purpose of the article or if it affects the cost or quality of the article’

In GP’s utility patent, the quilted design was claimed to improve the perception of softness and bulk, and reduced ‘nesting’ and ‘ridging’.

The Court stated that ‘if a design is functional the owner cannot trademark the design and block innovation. Georgia-Pacific, whether intentionally or not, patented their Quilted Diamond Design and claimed it to be functional. They must now live with that choice and can benefit only under the protection of a patent, not that of a trademark.’

Another key factor in the decision was the advertising strategy employed by GP.  The Court looked queried whether the advertising ‘tout[ed] the utilitarian advantages of the asserted design’, finding evidence of functionality in GP advertising, which included the following claims:

-          Quilted to Absorb;

-          Quilted to create thousands of places for moisture to go;

-          Our two softest layers of premium tissue are gently quilted together to give you and your family exceptional softness and comfort; and

-          Quilted Northern Ultra with a unique new quilted design for more quilting and comfort than ever before.

This case offers an important lesson about patents and trade marks products.  By filing patents covering or related to the functionality of the quilted designs, the company made it far more difficult to argue a case for trade mark infringement.  Similarly, by marketing the product based on the functionality of the quilted diamond design, GP further weakened its argument.

While some might argue that GP effectively shot itself in the foot, on the other hand could it not simply be the case that irrespective of the IP registration strategy adopted, protection of the quilted designs belongs in the realm of patents.  That the utilitarian properties of the design render them subject to more time-limited protection than the indefinite security offered by the trade mark regime.

Either way, the dispute is a timely reminder that marketing, design and legal professionals need to cooperate in order to manage risk effectively, make informed decisions, and succeed in the marketplace and the courts.

These difficulties are widely acknowledged and understood, but there is another feature of information which seems set to cause further difficulties for rights owners.  New and varied ways of using it.  While the bandwidth available to the public has had a substantial impact on the prevalence of copyright infringement online, another, similarly important factor has been the introduction of new formats, new ways of using data.  An early illustration is the availability of home video recorders, allowing members of the public to record and share video content.  Ubiquitous adoption of the  MP3 format made it easier for people to share music online.  Now, 3-dimensional printing promises to allow the public to copy actual physical goods.  New 3D printers are coming down in price, and give users the ability to print out products which have been downloaded from the internet, or scanned in.  A recent article by the Economist notes that this technology is likely to make it ‘easier for imitators as well as innovators to get goods to market fast‘ as good ideas will be more readily reproduced.  one website, Thingiverse.com, has already been issued a take down notice for offering the means to print out a 3D ornament, and the recent  Hargreaves report raised concerns over the possible implications of 3-D printing as convenient engines of piracy, but simultaneously vital tools in many trades, recommending further investigation.

Another interesting development is increasing interest in DIY genetics, an esoteric field traditionally restricted to specialist laboratories, but where more affordable technology may enable the public to develop their own biological products, or copy existing ones.  It is also not far fetched to envisage affordable machinery becoming available which enables the public to develop, produce and share pharmaceuticals.

These emerging technologies have the potential to revolutionise accessibility to treatments, drugs, and products where cost was previously prohibitive, but they also mean new challenges for rights owners who may find it increasingly difficult to protect their intellectual property.

To avoid a large hole in your IP portfolio when trade picks up, it’s important to be savvy during these tough times, and manage your Intellectual Property actively by either taking advice on strategy, or having an IP audit if you have an IP portfolio.

IP Audit

An IP audit is a great way to review your domain, trade mark, design or patent registrations. It will look to identify ways in which you may consolidate your portfolio or make savings. If you’re lucky, there may even be unexpected surprises, such as product licensing opportunities that may have been overlooked.

An IP audit helps in prioritising those IP rights that add value, whilst weeding out non-essential or redundant ones by letting them lapse or consolidating them to avoid paying renewal fees.

Strategic consultation

If you are a smaller business, consider having a strategy consultation. With the access to information that the internet has opened up, it is easy for SMEs to assume that they do not need to pay for advice.  So they will often do their own research, decide whether they need to register a trade mark, or design, and then buy that service.

Often the opportunity to find out about other IPR protection, such as trade secrets, or copyrights is missed, as is the possibility of establishing from an experienced practitioner whether there are alternative ways of achieving your desired objectives.  These could well be more cost effective.

For example, we often find that SMEs are really keen to protect their logos with trade marks, but are less concerned about trade marking their name.  Yet protecting the name is generally far more important, and there are other ways of protecting logos which are missed.

OBIS – Do Your Own IP registrations?

Proper advice, combined with doing your own registrations, could be a cost effective way forward during these recessionary times. Our product OBIS which was released in beta last month enables you to do some of your own legal work under our overall guidance.

This includes trade mark and design registration. DIY may not appeal to everyone, but if the alternative is to fail to protect essential IP, then it is preferable to not securing essential registrations. Using an assisted self help system such as that available on OBIS is better than simply doing your own registration by using the IPO’s assistance.  The IPO is very helpful, but will not check your form to pick up some of the glaring mistakes I have seen SMEs make when they file their own trade mark applications.

Product naming

Another useful step to reduce outgoings during these tough times may be to put in place a policy to guide your marketing team when selecting product names. Some name choices may reduce clearance costs.

Failing to have proper trade mark searches is a serious risk which no business should run. However, it may be feasible to opt for less extensive searches if they would be good enough to guard against the risk of infringing on the rights of others. By consulting an experienced intellectual property lawyer, you will be able to put in place a search strategy for your business which will be appropriate to the risks in your industry, and to the type of product you are releasing.

Other brand protection measures not to be neglected

Other basic preventative steps you may want to consider to reduce your legal exposure are to register your name on popular social networking sites, and paying relatively small sums to have company and trade mark watch services in place which will help you catch problems early and avoid more costly litigation later.

Remember too that a patent only gives you a right to stop others using your invention. Consider whether you have all the necessary permissions you need to make your product.

The key is to make your investment in IP go as far as possible, taking steps now to protect it, and avoid problems instead of having to overcome them later.

Where, however, the function of a product dictates how the design is formed then Intellectual Property law provides few solutions, bar patents, to protect the design. In general, Design law is clear that it does not protect the functional elements of registered designs.

So, take for example a design of a new light bulb. The shape may be registerable in that it may display novel features or contours, but it would not obtain protection for the bayonet or thread solution, as that part of the design would be dictated by the function of connecting to the electrical socket.

Trade marks and designs
Although trade marks are not commonly associated with product designs, they can in fact be registered for shapes. Take, for example, the coca cola bottle this is a registered trade mark, or the Chiquita banana box.

Yet, again, the same principle of excluding functional shapes from protection is found in trade mark law and a recent decision of the Court of Justice of the European Union (CJEU) on the fate of the Lego brick strengthens this view.

Lego have been in a long standing dispute regarding their application for the red coloured brick. This case found its way to the CJEU which concluded that such a trade mark was not registrable.

This was due to the brick shape being a sign which was deemed ‘exclusively’ of the ‘shape of goods… necessary to obtain a technical result’ – one of the absolute grounds for refusing a trade mark.

In terms of what is exclusively a functional shape, the Court would look at its ‘essential elements’.

It was considered the ‘essential element’ of the lego brick to be the row of studs on the top side of the brick. This part of the brick was designed to achieve the result of interlocking with other bricks and on this basis the mark was refused.

If the shape had other elements which were aesthetic, “decorative or imaginative” and which played an “important role in the shape”, then there may have been a chance for the lego brick to be registered. However, the distinctive red colour for the bricks was deemed not significant enough.

Limiting the role of trade marks
The rationale behind this somewhat restrictive stance for trade marks is to prevent trade mark owners from having a “monopoly over technical solutions or functional characteristics of a product” (see Philips judgment C-299/99, para 78).

Trade marks have a particularly wide scope of protection, as they extend their arm to prevent not only identical copying but also similar copying of a sign.

When applied to logos or words the impact is superficial. But when applied to shapes of products the impact could stifle competition within markets.

The registration of a red toy brick could hinder other toy manufacturers selling similar bricks to the market for better prices or providing better solutions to consumers. This would not be akin to promoting a “healthy and fair system of competition” – a prime consideration for the Court.

Trade marks as substitute patents
What also transpires in the reasoning of the Court is the desire to keep a clear demarcation line between patents and trade marks.

Patent rights last 20 years and are not renewable. Trade marks are renewable. To allow patented products to be trade marked without limitation could effectively undermine the credibility of the patent system.

In fact in identifying the ‘essential elements’ of the lego brick the previous Courts referred to the patents applied for by the owners.
There they found an overlap of the elements in both applications. The elements the owners sought to protect with patents were the same elements displayed in their trade mark application.

This finding was ‘practically irrefutable evidence’ of the functionality of the sign and of clear detriment to their trade mark application.

Product designs may be fine to trade mark, but beware of the limitations of this solution where the elements of shape are overly functional.

One consequence of their financial situation has been their inability to pay their website service provider, who responded by removing access to the site temporarily.  This kind of incident can have a considerable impact on businesses, especially where their online presence contributes a lot  to their marketing and revenue streams, but what other option does a service provider have in the face of non-payment?

The response of the hosting company might seem reasonable to anyone that has had difficulties chasing clients for payment, but this type of action may not always be as legitimate as it seems.

The Computer Misuse Act makes it a criminal offence to intentionally attempt to secure access to any program or data, held in any computer, without authorisation.  If this is done with intent to prevent or hinder access to any program or data held in any computer, then the offence is dealt with much more seriously.  To clarify the notion of authorisation, the House of Lords, in the case of R v Bow Street Magistrates Court and Allison ex p. USA, explained that the offence should cover a person who causes a computer to perform a function when he should know that that particular access is unauthorised.

The potential consequences are not immediately clear, but consider the following: a web design company that provides hosting for its clients, in response to non-payment for the design of a website, decides to suspend access to that site.  The company might be authorised to control access to the data on their own systems, notwithstanding certain clauses in their service agreement, but what if they don’t provide the hosting, only the design?

If they have access to their clients web hosting, only in order to upload and manipulate the website, they are not implicitly authorised to control access to the hosted data.  So if they block access to the website they are breaching the Act, by intentionally accessing a system to hinder access to data held therein, without authorisation.

To draw an analogy which may be more familiar: say, for example, you as an artist were to sculpt statues for two different clients. It is agreed that the first is intended to be housed in your own gallery, and the second is given to your other client to display on their own premises. On both accounts payment is not received, and so you decide to take action. You remove the first sculpture from your gallery, refusing to keep it on display until your invoice is settled; and to retrieve the second you break into the premises where it is kept and take it.

While you may be within your rights to suspend performance of your contractual obligations, on the second set of facts you commit a criminal offence by entering premises without permission. Similarly, under an agreement to design a website and arrange hosting for it you may be entitled to block access to it in response to non-payment, but if your agreement covers only the design and not the hosting, which is arranged by your client, then your unauthorised exercise of control over access to data on their systems may fall foul of the Computer Misuse Act.

What is important to understand here is that non-payment by a client does not entitle you to take reckless action.  There are other options available, for example in the circumstances outlined above you might bring a claim for breach of contract, or copyright infringement.  If you find yourself in this sort of dispute it is always advisable to consult a lawyer who, with a proper understanding of your circumstances, can advise you of the best course of action.

Before explaining what legal methods are available to protect logos here are a few examples of the different types of logos that we might be talking about.

1.    A combined mark – that is a word and an image, looks like this:

The words or numbers incorporated within such a logo should be cleared for trademark purposes before using the logo to ensure it is not already trademarked by a competitor.  This is necessary even if you have already registered the company or domain name.  As a separate matter also have a trademark search to check that the image element is not too similar to a competitor’s trademark.

2.    A stylised mark – that means a word on its own like this:

The words or numbers incorporated within such a logo should be cleared for trademark purposes before using the logo to ensure it is not already trademarked by a competitor.  This is necessary even if you have already registered the company or domain name.

3.    A device mark – that is an image on its own like this:

The image element should be cleared for trademark purposes to ensure it is not too similar to a competitor’s trademark.

As trademark registration is often what people ask about, I will just say that what you register as a trademark depends on how you USE the mark in practice.  If you use it only as a combined mark then a single combined registration is sufficient.  If you use the elements separately then you should register each one separately as well as in combination.  For those on a strict budget, start off with a combined registration and then later apply for the separate elements.

However, trademarks are not the only way to register logos.  Essentially there are three ways to register logos:

•    Copyright registration
•    Registering just a design OR a trademark
•    Registering the logo both as a trademark and as a design.

Copyright registration

Copyright protects ‘works’ such as logos, graphic designs, drawings, and photographs.  In the UK copyright automatically vests in the creator of a ‘work’.  The ownership rule can be changed by contract.
While it is not necessary to register copyright in the UK, in some countries such as the USA it is established practice to do so through the Library of Congress.

To stop someone using an identical or similar logo – on their website say – you would need to prove they copied your logo. They could argue you copied theirs or that they came up with the same logo independently without copying yours.

So if you copyright the logo by registering it (you may do so with us or other reputable services) you can establish solid evidence about your logo upfront before any problems arise.  Such evidence should be acceptable to a court of law.  Without evidence it would be time consuming and expensive to sort out disputes over rights to the logo.  Your rights would seem less strong to whoever had copied your logo and therefore your chances of a negotiated settlement would diminish.  However, you still have the problem of proving that the other person copied your logo.

Contrary to popular myth it is not enough to simply post a copy of the logo to yourself.  This is not suitable evidence for a court of law as it could be argued you tampered with the envelope after it was posted.

Registering just a design OR a trademark

Given that logos will automatically have some copyright protection, what is gained by registering the logo as a design or a trademark?

Trademarks are tools to protect the reputation and goodwill of a business.  They enable your customers to recognise your products and services, and to distinguish you from your competitors.
Registering a trademark is the way to secure exclusive ownership of your unique brand signs, and to protect your business against competitors who use similar names or signs to take business away from you. While in the UK and USA rights in trademarks can be built up through use of the mark, in most countries the first to register will have the rights to a mark.  Indeed even in the UK, if someone else has registered the trademark for 5 years you will find it virtually impossible to stop them using the mark, and would need to rebrand.  Also passing off disputes are time consuming and messy.  My advice to anyone is to register their brand as soon as possible, unless they really don’t care if they have to rebrand and start over with a new name and logo.

Registering Designs is more powerful than copyright, and the problem of proof of the date of creation of it does not arise in the same way as it does with copyright disputes.    Registration of logos as designs can therefore act as a good deterrent to copying. The mere fact that someone else’s logo is too similar to your registered design gives you the ability to stop them using the logo.  In other words it does not matter that they happen to have come up with a similar design without copying yours.

Design registration is available in the UK or in the EU Once registered as a design you may renew the registration every 5 years for up to 25 years.

For those on a strict budget, wanting both trademark and design protection, I would suggest first registering a design.  This is because the right to register a logo as a design is only available for a short window of time (a year).

For international protection an EU registered design combined with a US copyright registration would be a good start.

Registering the logo both as a trademark and as a design

If you have the resources you could obtain both a registered design and a trademark registration (as previously mentioned, it is relevant how you intend to use the trademark as this determines whether to register a combined mark, a logo mark, or a word mark or all three) .

The best way to use a design registration is in conjunction with trademarks.  Having both types of registration gives you a  level of protection that increases the range of situations in which you can stop others stealing your intellectual property.

Design registration protects logos in ways that trademarking the logo does not.  For example, if someone is using your logo on their website for a non competing business, your design registration could put a stop to it, whereas your trademark registration could not. You may only stop others using your trademark if their use of it confuses your customers as to the source of your goods or services.

Also, if someone is using  your logo in a comparative advertising campaign you would be able to object to their use of your registered design logo in their advertisement if you had a registered design whereas trademark law would be unlikely to help you to stop a comparative advertisement – see here.

For information on trade mark pricing, see here

the real thing

When finding out his bottle was a possible infringement of the Westmalle Belgian ringed bottle (trademark rights in which had been assigned to the New Belgium Company in Colorado) Mr Hindy, the owner of the Brooklyn Brewery was happy to withdraw the similar bottle design his designer had come up with for the Brooklyn Local 1 bottle.  See here and here

Before and after (Photo: David W. Dunlap/The New York Times)

The bottle featured a double ring around the base of the neck and was amber in colour.   

So, he had a ring free bottle mould created at a cost of over $60,000.  Reportedly he was already involved in a trademark litigation matter and wanted to avoid further litigation.    

What is interesting about this case is how much publicity it has attracted for Mr Hindy’s Brooklyn Brewery.  I would guess that having the story run in places like the New York Times must be worth a lot more than the $60,000 it cost to redesign the bottles.

[Notes: The trademark for the Belgian ringed bottle was registered on 27 February 2007, registration number 3211981 by ABDIJ DER TRAPPISTEN WESTMALLE V.Z.W. CORPORATION BELGIUM Antwerpwesteenweg 496 B-2390 Westmalle BELGIUM :  (LAST LISTED OWNER) W - N BELGIUM, LLC LTD LIAB CO NEVADA 500 LINDEN STREET FORT COLLINS COLORADO 80524]

Registering a design

During the last year several cases have highlighted the current state of flux in Registered Community Designs (RCDs). This area of law remains a frequently overlooked and underrated intellectual property right). RCDs can potentially offer organisations with a very effective tool when faced with infringing copycat designs.

Key to relying on RCDs to attack copycat products is the RCD application itself. Applications should be drafted with infringers in mind – i.e. the goal is to look at ways to represent your designs in ways which most effectively ring fence the most important elements of your designs from copycats.

Using a series of photographs or even just one photograph of a design should nearly always be avoided. Although this approach may well be accepted for registration purposes by the Office for Harmonization in the Internal Market (OHIM), the approach will in many instances allow others to simply ‘design around’ a RCD. It will often fail to encapsulate those features of the design which the organisation wants to prevent others from copying.

The actual representation of the design contained on the registration itself is what is scrutinised when considering alleged infringing designs – not the actual product out in the market. This point is illustrated by the relatively recent design infringement case involving handbags, in which a photograph was used to represent the overall finished product sold to consumers. While it is undoubtedly straight forward and time effective to use a photograph to represent the design at the application stage, a more tactical approach to design applications is likely to give a claimant much greater chances of success when placing reliance on the design.

The best approach to design protection by RCD is to either use fine line drawings, or if budget permits, register each separate element of the design as well as the overall design. Separate registrations will often give a greater chance of successfully preventing copycat designs.

Whilst RCDs cannot guarantee to catch all copycats in all circumstances, the fact is that good representations of designs at the application stage stand a much greater chance of success than reliance on a grainy photograph filed in haste at OHIM.

Building a strong IP portfolio should never involve treating IP rights in isolation of each other, a bundle of registered designs, along with other IP rights such as trade mark registrations amount to a menacing arsenal of protection to any copycat designers.

One challenging aspect of advising small businesses is the vagueness of the law. It is difficult to give the clear, black and white answers business people need. One client recently asked me what letters we would be able to send out to enforce her design or trade mark rights if she registered them. She even wanted to know how much we would charge for such letters. She was unimpressed to hear about the threats legislation and that the price would largely depend on the facts. For a recent example of the threats provisions at work see here and for more details of the legislative provisions about designs see here, for trade marks, see s21 here and for Patents see here.

So, is it not worth registering rights given the uncertainties that exist and the potential costs of enforcement? I can only express my own opinion by explaining why Azrights has applied for a trade mark even though I know we would not be able to outspend a big corporation if it were minded to steal our brand. But that is to look at a worst case scenario. As the costs of infringement actions are so high for business – both in financial and resource terms – in practice, people are wary of infringing on other’s rights and try to get round them wherever possible. So, IP law does not generally involve squabbling in court over the existence or scope of rights. Rather than going to court to get a judge to tell them what they can and can’t do, the focus is on getting into the best position for reaching agreement on who should be allowed to do what.

In practice, if we did not register our rights it would be even more difficult to enforce them. Passing off actions are notoriously expensive to bring, and sustain. On the other hand a registered trade mark deters most people from infringing the rights. So, a registered right strengthens your position in achieving a negotiated solution. Disputes generally do not reach the courts and are settled, if both sides get the same advice about their respective prospects. It is only if both sides think they are going to win, or that anything can happen that settlement is less likely. As this is an important issue to many of our clients we will be coming back to these questions in future postings.