Explanatory Memorandum to COM(2022)667 - Legal protection of designs (recast) - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2022)667 - Legal protection of designs (recast). |
|---|---|
| source | COM(2022)667  |
| date | 28-11-2022 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
Industrial design rights protect the appearance of a product. Industrial design is what makes a product appealing. Visual appeal is one of the key factors that influence consumers' choice of one product over another. Well-designed products create a significant competitive advantage for producers. To encourage innovation and the creation of new product design in the digital age, there is an increasing need for accessible, future-proofed, effective and consistent legal protection of design rights.
The design protection system in Europe is more than 20 years old. The laws of the Member States relating to industrial designs were partially harmonised by Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 (‘the Directive’). Alongside the national design protection systems, Council Regulation (EC) No 6/2002 of 12 December 2001 (‘the Regulation’) set up a stand-alone system for the protection of unitary rights having equal effect throughout the EU. The Regulation has only been amended once so far, in 2006, to give effect to the EU’s accession to the international Hague registration system.
In addition, a transitional legal regime still exists in relation to design protection for repair spare parts. As no agreement could be reached on that point, the Directive includes a ‘freeze-plus’ clause allowing Member States to retain their existing laws on whether spare parts should benefit from protection until amendments to the Directive are adopted on a proposal from the Commission. They are however permitted to introduce changes to those laws only, provided the purpose is to liberalise the spare parts market.
A proposal presented by the Commission in 2004 1 to harmonise design protection of visible spare parts by introducing a ‘repair clause’ into the Directive (as already contained in the Regulation), did not receive sufficient support in the Council, despite overwhelming support from the European Parliament 2 . The proposal was withdrawn in 2014.
In line with the Commission’s Better Regulation agenda 3 to review EU policies regularly, in 2014, the Commission launched an evaluation of the functioning of design protection systems in the EU, involving a comprehensive economic and legal assessment, supported by a series of studies. On 11 November 2020, the Council of the European Union adopted conclusions on intellectual property policy and the revision of the industrial designs system in the EU 4 . The Council called on the Commission to present proposals for the revision of the EU’s designs legislation with a view to modernising the design protection systems and making design protection more attractive for individual designers and businesses, especially small and medium-sized enterprises (SMEs).
Based on the final results of the evaluation 5 , the Commission announced in its communication of 25 November 2020 entitled ‘Making the most of the EU’s innovative potential – An intellectual property action plan to support the EU’s recovery and resilience’ 6 that it would revise EU legislation on design protection, following the successful reform of EU trade mark legislation. On 25 June 2021, the Council adopted further conclusions on intellectual property policy 7 , urging the Commission to prioritise the timely presentation of a proposal as soon as possible to revise and modernise the legislation on industrial designs. Furthermore, in its supportive Opinion on the IP action plan, the European Parliament stressed the need for revision of the now 20-year-old design protection system 8 .
Considered together as a package within the regulatory fitness programme (REFIT), the main common objective of this initiative and of the parallel proposal for the amendment to the Regulation is to promote design excellence, innovation and competitiveness in the EU. This is to be done by ensuring that the design protection system is fit for purpose in the digital age and becomes substantially more accessible and efficient for individual designers, SMEs and design intensive industries in terms of lower costs and complexity, increased speed, greater predictability and legal certainty.
Specifically, the present initiative to recast the Directive is driven by the following objectives:
–modernising and improving the existing provisions of the Directive, by amending outdated provisions, increasing legal certainty and clarifying design rights in terms of scope and limitations;
–achieving greater approximation of national design laws and procedures to strengthen interoperability and complementarity with the Community design system, by adding further substantive rules and introducing principal procedural rules into the Directive in accordance with provisions contained in the Regulation.
–completing the single market in repair spare parts by introducing a repair clause into the Directive as already contained in the Regulation.
• Consistency with existing policy provisions in the policy area
This proposal repeals and replaces the existing Directive 98/71/EC. Together with the parallel proposal for the amendment to Regulation (EC) No 6/2002, this proposal forms a coherent package in implementation of the IP action plan, and with the purpose of modernising and further harmonising the current EU legislation on design protection.
In order to achieve a greater alignment of national provisions on design protection with the rules governing the successful EU design regime, this proposal involves introducing certain provisions from Regulation (EC) No 6/2002 into the Directive, to be mirrored there and to increase the degree of coherence between these two instruments. This proposal is also consistent with Directive (EU) 2015/2436 of the European Parliament and of the Council to approximate the laws of the Member States on trade marks. This applies in particular to the provisions on counterfeit goods in transit and the provisions on procedures such as application and filing date requirements and on administrative invalidity procedures.
• Consistency with other EU policies
This proposal is consistent with and complementary to Regulation (EU) 461/2010 (the Motor Vehicle Block Exemption Reguation or ‘MVBER’) in the field of antitrust policy. The proposed liberalisation of the spare parts market may help that antitrust regime to protect effective competition in the entire market for vehicle spare parts, service and repair and thus achieve its full benefits for businesses and consumers in the automotive aftermarket. The proposal is also consistent with and complements efforts put forward in the sustainable product initiative aimed at promoting repairs and the circular economy.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
The proposal is based on Article 114(1) of the Treaty on the Functioning of the European Union (TFEU) empowering the European Parliament and the Council to adopt measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States, which have as their object the establishment and functioning of the internal market.
• Subsidiarity (for non-exclusive competence)
The problems identified relate to the significant divergences of the regulatory framework, which either do not allow, or notably distort, a level playing field for EU companies with further negative consequences for their competitiveness and that of the EU as a whole (e.g. for spare parts). It is therefore advisable to adopt measures that can improve the relevant conditions for the functioning of the single market. Such measures aimed at extending the current level of approximation through the Directive can only be taken at EU level, not least, given the need to ensure consistency with the Community design system.
It must be considered in this context that the Community design system is embedded in the European design system which is built on the principle of coexistence and complementarity between national and EU-wide design protection. While the Regulation provides a complete system where all issues of substantive and procedural law are provided for, the current level of legislative approximation reflected in the Directive is limited to selected provisions of substantive law. To ensure effective and sustainable coexistence and complementarity between the components involved, it is necessary to create an overall harmonious design protection system in Europe with similar substantive rules and at least principal procedural provisions which are compatible. As regards the issue of design protection for spare parts specifically, it needs to be added that the completion of the internal market for spare parts can only be achieved at EU level. Over 20 years of experience with the freeze-plus clause in the Directive have shown no strong trend towards harmonisation among Member States on a voluntary basis (despite the introduction of a repair clause in a few more Member States) or through self-regulation by the industry.
Action at EU level would make the design protection system in Europe as a whole substantially more accessible and efficient for businesses, in particular SMEs and individual designers. It would further close the remaining gaps in the single market for repair spare parts to the substantial benefit of consumers, who would be able to choose between competing parts at lower prices.
• Proportionality
The addition of targeted harmonisation, particularly for registration and invalidity procedures, focuses on principal provisions in procedural areas identified by stakeholders as being in greatest need of alignment with relevant provisions of the Regulation. The impact assessment also looked at the option of a full-scale harmonisation of all design provisions (option 4.2) but considered it disproportionate to the actual needs (see Section 6.4 of the impact assessment).
As regards the issue of spare parts protection, the insertion of a repair clause by means of preferred option 1.2 is considered to be most proportional way of completing the single market on the principle of liberalisation. Such action at EU level does not incur any immediate costs. Aftermarket liberalisation requires legal acts only in those Member States that currently protect spare parts, to lift this protection. It therefore incurs the lowest administrative costs of all options considered. Furthermore, by providing for a transitional period of 10 years during which existing design rights will continue to be protected, vehicle manufacturers will be allowed to adjust their market conduct with minimum risk or disruption to investment and innovation. This option is also adequately prudent when it comes to the issue of fundamental rights and international obligations (see Section 8.1 of the impact assessment).
• Choice of the instrument
This proposal is intended to provide for targeted amendments to Directive 98/71/EC to address certain shortcomings. Since the proposed instrument is to recast the Directive, the same legal instrument is the most appropriate.
3. RESULTS OF EX POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Ex post evaluations/fitness checks of existing legislation
The Commission carried out an overall evaluation of the current Directive and Regulation, which was published in November 2020 9 . It concluded that the EU legislation on design protection had met the objectives and was still largely fit for purpose.
However, with respect to Directive 98/71/EC, the evaluation identified certain shortcomings, in particular a still strongly fragmented spare parts market as consequence of the non-harmonisation of provisions on design protection for component parts used for the repair of complex products. This was found to cause considerable legal uncertainty and to severely distort competition while adding costs for consumers. The evaluation also found inconsistencies both between the Member States’ design laws and in relation to the Regulation regarding design registration and invalidity procedures. These have a negative impact on the interoperability of the design protection systems in the EU.
Based on the findings of the evaluation, the European Commission conducted an impact assessment and decided afterwards to revise the legislation. The various steps of the impact assessment, from the definition of problems and their drivers to the identification of objectives and possible policy options, relied on the findings of the evaluation report.
• Stakeholder consultations
A comprehensive first public consultation was conducted between 18 December 2018 and 30 April 2019 10 with the aim of gathering sufficient stakeholder evidence and views in order to support the evaluation of the EU’s designs legislation and establishing the degree to which that legislation works as intended and can still be considered fit for purpose. Almost two thirds of the respondents considered that the design protection system in the EU (national design system under the Directive and the Community design regime altogether) works well. At the same time, almost half of the respondents pointed to unintended consequences or shortcomings of the Directive and/or the Regulation.
In addition to the extensive consultation for the evaluation, the Commission carried out a second public consultation between 29 April and 22 July 2021 11 to obtain additional stakeholder evidence and views on selected issues and potential options and their impacts, to support the review of the legislation on designs.
The shortcomings identified in the consultations have been taken into account and addressed in the proposal.
• Collection and use of expertise
The impact assessment on the revision of Directive 98/71/EC and Regulation (EC) No 6/2002 drew on two major external studies, considering both economic 12 and legal 13 aspects of the functioning of design protection systems in the EU. In addition, on the issue of spare parts protection specifically, the impact assessment was supported by two further studies on the effect of protection on price and price dispersion 14 and on the market structure of motor vehicle spare parts in the EU 15 . Further information in support was drawn from close collaboration with the European Union Intellectual Property Office (EUIPO) and several EUIPO studies and reports, as well as other available studies and data collections produced by national or international public authorities, including national IP offices, academics or other stakeholders.
• Impact assessment
As this proposal is presented in a package alongside the proposal to revise Regulation (EC) No 6/2002, the Commission conducted a joint impact assessment for this proposal and the parallel proposal for the amendment to Regulation (EC) No 6/2002 16 . The impact assessment was submitted to the Regulatory Scrutiny Board on 27 October and received a positive opinion from the Board on 26 November 2021. The final impact assessment takes into account comments contained in that opinion.
In the impact assessment the Commission considered two main problems:
1. The disruption in intra-EU trade and barriers to competition in some Member States with regard to repair spare parts.
2. The discouragement of businesses, in particular, SMEs and individual designers from seeking for registered design protection at EU or national level - due to the high costs, burdens and delays in obtaining protection and the limited predictability around it.
Some aspects of the second problem (outdated procedures for the registration of registered Community designs (RCDs) and sub-optimal fees to be paid for the RCD), are due to be addressed in the parallel revision of Regulation (EC) No 6/2002, but the spare parts issue (first problem) and the issue of divergent (procedural) provisions must be dealt with in the revision of Directive 98/71/EC.
The following options were considered for resolving the spare parts issue and tackling the objective of opening up the spare parts aftermarket for competition:
·Option 1.1: Full liberalisation for all designs, i.e. the market of ‘must-match’ spare parts should be opened for competition across the entire EU, extending it to both existing and new designs. This option would involve inserting into the Directive a ‘repair clause’, as contained in Article 110(1) of Regulation (EC) No 6/2002, and allowing the identical reproduction of protected parts of complex products for the purpose of repair. The inserted repair clause would have legal effect for both the future and the past (i.e. be applicable to designs granted before and after its entry into force).
·Option 1.2: Instant full liberalisation for new designs followed by full liberalisation for old designs after transitional 10-year period. This option would involve the same changes as the previous option, except that the repair clause to be inserted into the Directive would have instant legal effect only for the future (i.e. be applicable only to designs applied for after entry into force). Designs already granted before entry into force should continue to be protected for a transitional period of 10 years.
·Option 1.3: Full liberalisation for new designs. As in the previous option, in this option, the repair clause to be inserted into the Directive would have legal effect only for the future. Existing design rights granted before the entry into force would not change and could thus be protected for up to 25 years.
The following options were considered for resolving the issue of divergent procedural rules and enhancing complementarity and interoperability between the Community and national design systems:
·Option 4.1: Partial further approximation of national laws and their coherence with the RCD system. This option would involve adding provisions to the Directive on selected design law aspects not yet addressed in therein and identified by stakeholders as being in greatest need of harmonisation, in particular procedures, in line with relevant provisions in Regulation (EC) No 6/2002. The addition of principal procedural rules to the Directive should be combined with the further alignment of a few selected substantive law aspects (apart from the spare parts issue) in accordance with the provisions of Regulation (EC) No 6/2002.
·Option 4.2: Full approximation of national design laws and procedures. This option would cover option 4.1 but also include remaining aspects of substantive design laws and procedures which are part of Regulation (EC) No 6/2002 but not of the Directive.
In this context it was also assessed how such further approximation could be pursued: on a voluntary basis (sub-options 4.1a and 4.2a), or on a mandatory basis, i.e. driven by an EU legislative measure requiring Member States to align their design laws (sub-options 4.1b and 4.2b).
Based on the outcome of the impact assessment, the preferred set of options includes option 1.2 and option 4.1b.
Option 1.2 promises, after the 10-year transition period, to bring potential savings to consumers in markets where currently no repair clause is in place ranging from EUR 340 million and to EUR 544 million annually due to price competition (during the 10-year transition period, benefits will increase by EUR 4 m to 13 m a year to reach EUR 40 m to EUR 130 m in the last year). During the 10-year transition period, full liberalisation for new designs will promote competition and market entry in collision parts for new cars. After the 10-year transition period, both original equipment suppliers (OESs) and independent suppliers (non-OESs) will benefit from significantly greater operational freedom, which will allow them to strengthen their market position and to consolidate.
Option 4.1b will make it easier and less costly for firms and designers to obtain design protection across Member States, in particular by adding principal procedural rules into the Directive in line with the Regulation. This will further increase predictability, help reduce costs in managing multinational IP portfolios, and make it easier and cheaper to have invalid designs removed from the register. Such further approximation of laws will also have additional positive impacts on cooperation between the EUIPO and national IP offices under the existing framework laid down in Article 152 of Regulation (EU) 2017/1001 in the European Union trade mark.
• Regulatory fitness and simplification
This proposal to recast Directive 98/71/EC and the parallel proposal for the amendment to Regulation (EC) No 6/2002 was included in Annex II to the 2022 Commission work programme 17 . They are therefore part of the regulatory fitness programme (REFIT).
This proposal aims to update design protection systems in the EU for the digital age and make them more accessible and efficient for applicants and those seeking to cancel invalid designs. In terms of digitalisation, the proposed harmonisation of the requirements for the representation of designs will allow applicants to reproduce their designs anywhere in a clear and precise way, using generally available technology. This will facilitate in particular the filing of new digital designs. In terms of simplification, proposed further harmonisation will allow businesses to file multiple applications anywhere at national level by combining several designs in one application, and without being restricted to products of the same nature. While this will clearly make life easier for design applicants, benefits could not be quantified as they will essentially depend on fees set at national level. In addition, the abandonment of ex-officio examination of prior art at national level (to provide for the same level of accessibility to protection as at EU level) promises to significantly reduce the duration of registration proceedings in those Member Stares where it is still carried out. Businesses will thus be able to obtain protection much faster and at lower costs. Furthermore, the (mandatory) introduction of office-based invalidity proceedings to get an invalid design registration cancelled without having to go to court should be clearly beneficial for both competitors and right holders as being less complex and less costly.
This proposal also aims to complete the single market in repair spare parts by introducing a repair clause exempting those parts from design protection. The full liberalisation of the spare parts market promises to bring substantial benefits to consumers in terms of greater choice and lower prices.
Relevant cost savings are specified and summarised in Table 8.1 of the impact assessment.
• Fundamental rights
The initiative should improve the possibilities for designers to protect their rights, with a positive impact for the fundamental rights such as the right to property and the right to an effective remedy. With a view to making the design protection system in the EU more balanced, it also aims to provide for a more robust catalogue of limitations of the design rights and the insertion of a repair clause, taking account of fairness- and competition-based considerations.
4. BUDGETARY IMPLICATIONS
This proposal will not have an impact on the European Union budget and is therefore not accompanied by the financial statement provided for under Article 35 of the Financial Regulation (Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union and repealing Regulation (EU, Euratom) No 966/2012).
5. OTHER ELEMENTS
• Implementation plans and monitoring, evaluation and reporting arrangements
The Commission will be monitoring the EU market for spare parts to see whether introducing an EU-wide repair clause does indeed result in the savings predicted. It will also consider the launch of specific studies and surveys to follow developments in pricing and customer behaviour in particular.
As for further approximation of national laws, the Commission will scrutinise Member States’ notifications of transposing measures and react to any delays or inconsistencies. A set of pertinent indicators as referred to in Section 9 of the impact assessment will be considered for evaluation when all rules are properly transposed.
• Explanatory documents (for directives)
Explanatory documents are not required as the provisions of the Directive are not of a complex nature for their target recipients.
• Detailed explanation of the specific provisions of the proposal
As this is a proposal for the recast of Directive 98/71/EC, the detailed explanation below focuses solely on new provisions or provisions that are to be amended.
- Definition of design and product (Article 2)
Updated and more detailed definitions of the product and design notions are proposed to be part of the general provisions. This update, clarification and broadening of the current definitions aim to future-proof the proposal for a recast Directive against technological advances and provide greater legal certainty and transparency as to the eligible subject matter of design protection.
- Design protection through registration only (Article 3)
The current Directive permits Member States to provide design protection also in unregistered form 18 . It is proposed to remove that discretion by limiting design protection to registered protection only. Unitary protection in the form of the unregistered EU design is available such that there is no actual need for parallel (potentially diverging) unregistered protection.
- Commencement of protection (Article 10)
To iron out existing inconsistencies, it is clarified that design protection commences only with the registration in the register.
- Right to a registered design (Articles 11 and 12)
New provisions on the right to the registered design, including presumption of ownership, are proposed, to be added in line with Articles 14 and 17 of Regulation (EC) No 6/2002.
- Grounds for non-registrability and scope of substantive examination (Articles 13 and 29)
In order to fully align the scope of substantive examination across the EU with that carried out at EUIPO level (Article 47 of Regulation (EC) No 6/2002), the grounds for non-registrability should be set out in an exhaustive manner, ensuring that the procedure for obtaining a registered design presents the minimum cost and difficulty to applicants, as with the EUIPO.
- Grounds for invalidity (Article 14)
It is proposed to convert optional provisions into mandatory ones to increase predictability and consistency with the EU design system.
- Object of protection (Article 15)
For greater legal certainty in relation to the ‘visibility requirement’, a specific provision is proposed, to be added to the Directive (in addition to recital 17) whereby design protection is conferred on those features of appearance (only), which are shown visibly in the application for registration.
It is further clarified (in new recital 18) that design features otherwise do not need to be visible at any particular time or in any particular situation to attract protection, except for component parts being not visible during normal use of a complex product.
- Scope of rights conferred by a registered design (Article 16)
To enable design right holders to more effectively address the challenges brought by the increased deployment of 3D printing technologies, it is proposed to adjust the scope of design rights accordingly.
In addition, following the reform of the EU legislation on trade marks (new Article 10 i of Directive (EU) 2015/2436), it is considered important, for the effective fight against ever-increasing counterfeiting activities, to also add to the legal framework on industrial designs a corresponding provision permitting right holders to prevent counterfeit products from transiting EU territory or from being placed in another customs situation without being released for free circulation there.
- Presumption of validity (Article 17)
For the sake of greater consistency with Regulation (EC) No 6/2002 (Article 85(1)), it is proposed that a provision on presumption of validity be added also to the Directive.
- Limitation of the rights conferred (Article 18)
In order to ensure a better balance of legitimate interests involved and taking account of the case law of the Court of Justice of the European Union (CJEU) 19 , it is proposed to complement the list of permissible uses by the addition of referential use and critique and parody.
- Repair clause (Article 19)
In order to eventually terminate the existing transitional regime and complete the single market in repair spare parts, it is proposed to insert into the Directive a repair clause similar to that already contained in Article 110 of Regulation (EC) No 6/2002. This clause is explicitly limited to (form-dependent) ‘must match’ parts of complex products, to make allowance for the judgment of the CJEU in the Acacia case 20 .
In addition, it should be made explicit that the repair clause can be used as a defence against infringement claims only if consumers are duly informed of the origin of the product to be used for the purpose of the repair of the complex product.
To address the legitimate interests of the holders of existing design rights, the repair clause would have (unlimited) instant legal effect only for the future, while safeguarding protection of existing rights for a transitional 10-year period.
- Prior use defence (Article 21)
A right of prior use is introduced in line with Article 22 of Regulation (EC) No 6/2002. This defence against infringement will protect those who invested in good faith in a product design before the priority date of a registered design and therefore have a legitimate interest in marketing the products even if their appearance falls within the scope of protection of the registered design.
- Principle of cumulation (Article 23)
The principle of cumulation of design and copyright protection is maintained, while taking account of the fact that, since the original legislation was adopted, harmonisation has progressed in the copyright area.
- Design notice (Article 24)
A design notice is made available to holders of registered designs permitting them to inform the public about the registration of a design.
A set of principal rules on procedures are added to the Directive in line with Directive (EU) 2015/2436 to approximate the laws of the Member States on trade marks.
- Requirements of representation (Article 26)
To ensure that the representation of designs is subject to the same future-proofed requirements for clear and precise representation of designs throughout the EU, a set of detailed provisions is proposed, to be added to the Directive.
- Multiple applications (Article 27)
It is proposed to provide for the possibility to combine several designs in one application as currently also provided for by Article 37 of Regulation (EC) No 6/2002, and without requiring that the combined designs concern products of the same class of the Locarno Classification, as also proposed in the corresponding amendment to the Regulation.
- Deferment of publication (Article 30)
In line with Article 50 of Regulation (EC) No 6/2002, it is proposed to provide for the option of requesting deferment of the publication of a design application for a period of 30 months from the date of filing the application.
- Administrative invalidity proceedings (Article 31)
As introduced for trade mark cancellation proceedings under Article 45 of Directive (EU) 2015/2436, Member States should provide for an administrative procedure for challenging the validity of a design registration to be handled by their intellectual property offices. In some Member States, the validity of a registered design can be contested only in court proceedings. These systems are more cumbersome and expensive.
98/71/EC (adapted)