Appendix B
Letter from The Patent Office to the Committee
Specialist
Proposal for the Regulatory Reform (Registered
Designs) Order 2006: response to request for information
Thank you for your letter of 23 March 2006 which
seeks our comments on a number of points concerning the RRO proposal.
I have copied your questions into this letter in the order that
you have raised them, and to enable you to follow the answers
more easily, I have presented these in red.
Whether the proposal requires elucidation,
is not written in plain English or appears to be defectively drafted
(S.O. No 141 (6)(h))
1. Where the 1949 Act refers to a section of that
Act, it always does so in terms of "section X of this Act".
Most of the amendments made by the proposed Order maintain this
approach, but those in articles 8 and 9 do not. A consistent approach
would be in keeping with proper drafting practice.
Q1 Please indicate whether the Patent Office agrees
that that articles 8 and 9 should be changed so that the provisions
which they amend will continue to refer to sections "of this
Act".
Answer: The Patent Office agrees that articles
8 and 9 should be changed so that the provisions which they amend
will continue to refer to sections "of this Act".
Whether the proposal would remove or reduce
a burden or the authorisation or requirement of a burden (S.O.
No 141 (6)(b))
2. The Committee notes that the Patent Office proposes
to repeal section 3(4) of the 1949 Act which gives the registrar
power to make searches for the purpose of deciding whether, and
the extent to which, a design application is new or has individual
character.
Q2 Please indicate what number of design applications
each year are the subject of an initial objection by the registrar
on novelty grounds and of these, how many go on to secure registration,
how many are rejected by the registrar and how many are discontinued
by the applicant.
Answer: In the last financial year, 2% of design
applications made to the UK Patent Office were the subject of
a substantive objection on novelty grounds. Of this 2%, around
0.5% (that is around 17 designs) were subsequently allowed to
go forward to registration because the applicant or his agent
successfully submitted arguments in support of registration, with
the remaining 1.5% being eventually refused registration by the
registrar. This is either because, in the case of professional
representatives, they failed to persuade the registrar to waive
the objection, or, in a larger number of these cases, the unrepresented
applicant accepted the decision without question. This 1.5% equates
to 55 refused applications (out of just over 3500 applications).
Q3 Please provide an indication of the typical
delay and cost involved for applicants in challenging an initial
objection from the registrar to the registration of a design.
Answer: A period of 2 months is allowed for applicants
or their professional representatives to consider the objection
raised, and to respond to the registrar. Where the applicant is
legally represented, such objections typically generate one or
two rounds of correspondence over a period of 4 or 5 months. Those
who choose professional representation will be charged in the
region of £200 per letter by their legal representative.
An unrepresented applicant will bear the costs of his own time
and postage in making his submissions.
Whether the proposal has the effect of continuing
any necessary protection as required in Section 3(1)(a) of the
Regulatory Reform Act 2001 (S.O. No 141(6)(c))
3. The Committee notes that under the proposal there
would no longer be any power for the registrar to carry out novelty
searches with respect to design applications and the validity
of any registered design on novelty grounds would only be considered
when application for a declaration of invalidity in respect of
it was made to him by the proprietor of another design under section
11ZB of the 1949 Act.
Q4 Please indicate whether it is intended that
the registrar will in practice accept a design application even
if he knew that a similar design was already registered. Would
he draw it to the attention of the applicant so as to protect
the rights of the original designer and prevent the applicant
from liability for claims against him?
Answer: The proposal envisages that the registrar
would no longer have the power to refuse registration on novelty
grounds, so he would have no legal right to reject an application
on this basis. In any event, in practice it would be extremely
difficult for the Designs Examiners to raise such an objection
without having first conducted searches in order to identify and
lay before the applicant what they consider to be the earlier
use or registration of the same design. But they could, in principle,
draw attention to the existence of an earlier use or registration
of the same design if they were aware of it.
Q5 Please explain the process for making an application
to the registrar for a declaration of invalidity and the costs
involved in this.
Answer: The process for making an application
to invalidate a registered design is simple and not costly. The
applicant needs to file an application form and pay the fee of
£50. In making his application, the applicant for invalidation
must set out his case in support. The most common reason cited
is that the applicant created the design at an earlier time than
the date of the registration of the design by its holder. If the
earlier design is registered in the UK or as a Community design,
and is clearly the same design, nothing more should be required.
However, if the earlier design is not registered, further documentary
evidence will be necessary in order for the applicant to establish
that he created the design prior to its registration by the holder.
If the applicant for invalidation is indeed the
owner of the design from an earlier date then he will win his
case. The successful party is usually awarded a contribution towards
his costs, which is at least sufficient to cover the cost of making
the application and providing the basic factual information to
support it. If all documentary evidence is provided in the early
stages of the process, then the time taken to issue a registrar's
decision need only be between 12 and 16 weeks, especially if the
parties are content for the decision to be taken from the papers
and without the need for an oral hearing. In reality, many applications
for invalidation do not take anywhere near this time to resolve,
because one party often withdraws from the proceedings as soon
as they see the strength of the opposing case. In 2005 there were
12 applications to the Patent Office for design registrations
to be declared invalid.
Q6 Please explain on what basis the Patent Office
has predicted that only slightly more invalid designs would be
registered under the new proposals.
Answer: The reason for this prediction is twofold.
Firstly, as noted above, only 1.5% of national applications are
actually refused registration on novelty grounds. In 2005, out
of 3,586 new national designs, this would have equated to, at
most, 55 additional invalid registered designs. There is sometimes
room for argument as to whether one design creates the same overall
impression as an earlier design. Where there is room for such
argument, the matter is likely to be more thoroughly tested in
invalidity proceedings than during ex parte examination by the
Patent Office. It is therefore possible that if each of the 55
refused applications had been fully argued by the applicant, the
Patent Office may have been persuaded that a few more of them
were registrable. Equally, it is likely that a proportion of the
designs amongst the 98% of national applications that are not
objected to on novelty grounds (90% of which have not been subject
to any searches) have nevertheless been anticipated by some prior
(probably unregistered) art.
The second reason is that the registered Community
design system granted registration to a much larger number of
new designs in 2005. These 63,500 Community design registrations
represent 95% of the new registered designs which became legally
enforceable in the UK last year. However, the Community system
does not permit examination on novelty grounds because it was
judged to be an ineffective method of identifying whether the
design is already known in the Community. If it was feasible for
an examining office to assess the state of knowledge of earlier
designs in the Community, it is likely that a proportion of these
very large numbers of new Community designs would also be found
to be invalid on novelty grounds.
It is on this basis that we concluded that the
ending of the remaining examination of national applications on
novelty grounds would only result in a slight increase in the
number of invalid design registrations effective in the UK.
Q7 Please explain how the rights of small businesses
are protected where under the proposal they would be required
fully to assume the burden of proving a design was invalid on
the basis that it was an infringement of their rights in prior
art.
Answer: As is clear from the answers above, it
is already possible for businesses, including small businesses,
to find that a design which they have created has subsequently
been registered by a third party. In that situation the process
of invalidating the design registration is quicker and cheaper
where the creator of the design has registered it and can produce
a registration certificate. Registration also makes the first
creator's designs more visible to third parties and therefore
less likely to be infringed. Further, it makes it easier to enforce
the designer's rights through the courts.
The proposals for a new streamlined registration
system are aimed at encouraging small businesses to register their
designs. That way more small businesses will be able to enforce
their legitimate rights more easily, both against later registrants
of the same design (whether at the national or Community level)
and, just as importantly, against those who are commercially exploiting
their designs without their consent.
Whether the proposal has been the subject of,
and taken appropriate account of, estimates or increases or reductions
in costs or other benefits which may result from its implementation
(S.O. No 141 (6) (m))
4. The Committee notes that the effect of articles
11 to 15 of the proposed Order would be to permit a single application
to cover details of a number of individual designs. The Patent
Office considers that allowing multiple design applications will
make it possible to reduce costs for applicants who would otherwise
need to apply separately for each design. The Patent Office has
forecast that the processing costs per applications will reduce
by 30% in respect of multiple applications, and that this equates
to about £20 per design.
Q8 Please explain how the Patent Office will ensure
that the proposed provision for multiple design applications does
not have the effect of reducing applications costs for large businesses
while increasing by displacement the registration costs for those
who apply to register single designs.
Answer: The administrative costs of processing
a new design application through to registration is in excess
of the current single fee of £60. For some years now, the
Patent Office has subsidised the process of examining applications
from the income received from subsequent renewal fees. The introduction
of the Community design has reduced demand for national registration
and within a few years this will result in a reduction in income
from renewal fees. If the registration system stays as it is,
the Patent Office will probably have to increase the application
fees for design registration. That would almost certainly result
in even fewer small businesses protecting their new designs through
registration.
If the proposals are adopted, the Patent Office
should not have to increase the cost of making a single design
application in the near future. That will stay at £60, which
has been the application fee since 1995. So there will be no additional
cost for anyone making an application under the new system, only
a decrease if more than one design is made through a multiple
application. We predict that these cost savings for applicants
will encourage the registration of an extra 20% of new designs.
The savings of scale which will result from that should further
protect the system from an increase in fees in the near future.
At the same time it will encourage those designers who produce
a number of designs at the same time, which is by no means a situation
limited to large businesses, to register them in a way that minimises
the Patent Office's costs and permits the Office to pass that
efficiency saving on to the applicant.
Q9 Please explain on what basis the Patent Office
forecasts that processing costs for multiple applications will
fall by 30%.
Answer: The changes proposed will further simplify
the registration process and mean that most of the cost of registering
new designs arises from the cost of recording and publishing information,
from correcting procedural errors in the application, and from
dealing with other mainly administrative queries. In this system,
the Patent Office estimates that the cost of processing an average
multiple application containing three designs will reduce the
administration costs by around 30% when compared to the cost of
processing three single design applications from the same applicant.
This is because common information such as the name and address
of the applicant, relevant dates and so on need only be captured
onto the computer system once, and stored in a central place.
Similarly, it is more efficient to handle one application fee
than three. And in correspondence, only one letter need be sent
to an applicant rather than a number of letters being sent at
different times by different examiners.
Other matters arising from the Committee's
consideration of the proposal (S.O. 141(5))
5. The Committee notes that Patent Office considers
the effect of this Order would be to make it more attractive for
designers to register designs in the UK, rather than the alternative
of registering at the European Design Registry.
Q10 Please explain the benefits to UK businesses
of a modernised UK design registration system and any drawbacks
for businesses of the EU level scheme.
Answer: The benefits of the new system are:
a) that it will remove any misunderstanding in
the market place about whether new designs have been assessed
for novelty prior to registration.
b) that it will be quicker, easier and cheaper
to register new designs, and
c) that it will encourage businesses to register
their new designs instead of having to rely on their unregistered
design rights which are more difficult and usually more costly
to enforce, and
d) because registered designs are more visible
than unregistered designs, a higher rate of registration should
reduce the incidence of inadvertent infringement.
We consider that there are no drawbacks for businesses
of the EU level scheme.
Q11 Please explain the benefit to the UK overall
of encouraging domestic registration of designs as an alternative
to EU level registration.
Answer: There would be no benefit in encouraging
domestic registration as an alternative to EU registration. The
Patent Office does not seek to gain UK design applications at
the expense of the Community system. Our aim is to offer those
businesses who currently do not register their designs at all
and/or whose business is such that they are unlikely to need to
assert their design rights outside the UK, with an easy to use
and affordable registration option.
The cost of registration for a single Community
design is 350 euros (about £240) against just £60 for
a UK registration. Some small businesses are therefore reluctant
to register their new designs throughout the EU because of the
cost. In these cases a national registration would make it easier
for them to enforce their rights, at least in the UK, and this
would have the added benefit of creating grounds for invalidation
if the same design is later registered by a third party as a Community
design.
6. The Committee notes that the majority of those
who currently submit design applications to the UK Design Registry
do so without the benefit of professional advice.
Q12 Please explain what guidance may be available
to design applicants in preparing applications and, specifically,
in deciding whether to submit design applications to the UK Design
Registry or to the alternative registration processes at EU level.
Is it intended to make any change to guidance, in whatever form,
to take account of the legislative changes to which this proposal
would give effect?
Answer: The UK Patent Office operates very much
in tandem with the Community Design Office in Alicante. We not
only tell of their existence in our marketing activities, in our
literature, on our website and during telephone conversations
with small businesses, but we offer help and advice in understanding
the Community system and how to go about making a Community design
application. Our website contains downloadable booklets entitled
"How to apply to register a UK design" and "How
to apply for a registered Community design" as well as other
information on registered and unregistered designs in both the
UK and the Community. The Designs Examiners take telephone and
e-mail enquiries from small business and legal representatives
on issues concerning EU design registration.
In advance of the new system becoming operational,
we will issue fresh guidance to the public. The availability of
a Community design registration will feature just as prominently
in our new guidance. The object is to provide designers with options
which best reflect their commercial aspirations and the resources
they have available to protect their intellectual property.
7. The Committee notes that the Registered Designs
Act 1949 applies throughout the United Kingdom.
Q13 Does the Patent Office consider that it might
be helpful, given the application of the Order to Scotland, to
specify in the Explanatory Note to the Order that consultation
has been carried out with both the Welsh Assembly and the Scottish
Parliament, neither of which have offered any comment on it?
Answer: The reason why the Welsh Assembly is mentioned
in the preamble to the Order is because consultation with the
Assembly is a requirement of the Regulatory Reform Act 2001. If
we include the fact that we have consulted the Scottish Parliament
in the Explanatory Note, we will be at odds with the current Statutory
Instrument Practice requirements as to what should be included
in such Explanatory Notes. Further, there may be questions about
the exclusion of reference to other organisations who have also,
in practice, been consulted. As the Explanatory Document for this
Regulatory Reform Order will be published on the Cabinet Office
website, and this makes clear in Annex A that the Scottish Parliament
has in fact been consulted, we consider that anyone with an interest
in this issue will be able to find out the extent of the consultation
quite easily and quickly. Having discussed the matter with our
colleagues in the Cabinet Office, we therefore feel that the mention
of consultation with the Scottish Parliament in the Order is unnecessary
and contrary to current drafting guidelines for statutory instruments.
I hope that these answers fully satisfy your questions,
but if you would like any further explanation of any of the points
then I would be happy to provide you with any further information.
10 April 2006
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