ACIP’s Review of the Designs Systems proposes three approaches to reform

In 2012, the Advisory Council on Intellectual Property (ACIP) was tasked by the Government with conducting a review of the operation and effectiveness of the Designs Act 2003 (Cth) in supporting innovation. Late last year, ACIP released its Options Paper on the Designs Act (available online here). The Options Paper proposed three approaches to reform. In summary:

• The first option is a “minimal approach”, which involves making amendments to address specific issues which have arisen since the enactment of the designs Act in 2003.
• The second option includes Option 1’s amendments, together with considering whether Australia should join the Hague Agreement, an extension of the maximum term of protection and bringing Australian law in line with major trading partners.
• The third option is a wholesale revision of the designs system, including the possibility of unregistered design protection, the scope of design protection (including secondary liability) and whether protection should be extended to partial designs and virtual or non-physical designs.

ACIP is receiving submissions on the three options, and the closing date for submissions is 23 January 2015.

Further details of ACIP’s review and each of three approaches is set out below.

ACIP’s Review of the Designs Act

ACIP was asked to review the operation and effectiveness of the Designs Act in supporting innovation, having regard to any new opportunities for enhancing the Designs Act’s effectiveness and efficiency. The review was also designed to determine whether there were any adverse consequences as a result of the Designs Act’s implementation.

ACIP’s review of the Designs Act addressed three broad questions:

1. Has the Designs Act achieved the goal stated in the Explanatory Memorandum: to “provide a simple, cost-effective designs system that provides Australian designers with more effective rights”?
2. Are the legal mechanisms in the Designs Act operating as intended?
3. Should policy decisions in the 1995 ALRC Report, and the Designs Act, be reconsidered in light of the operation of the Designs Act, and international and technological changes in the intervening decade?

In the course of its review, ACIP made four broad findings, which can be summarised as follows:

1. Use of the designs system by Australian companies has not increased and use by Australian individuals has decreased significantly.
2. Submissions have identified a number of minor improvements that could be made to the legal details of the designs system.
3. Some policy decisions embodied in the Designs Act may need to be reconsidered in light of overseas trends in design protection.
4. The role of design protection may need to be reconsidered as a result of wider technological trends; particularly the fact that design protection is currently tied to physical products and therefore does not encompass ‘virtual’ or software designs which have become important through technology’s transformation of the nature of design. ACIP noted 3D printing and scanning technologies which are not currently captured by design law.

Three Options for change in light of ACIP’s findings

In light of its four findings, ACIP proposed three broad approaches to revising the Designs Act, each of which entail various changes.

Option 1: fix details in the Designs Act (the “minimal” approach)

This option involves purely focussing on specific issues that have arisen since the Designs Act was introduced in order to make the Designs Act operate better without revisiting any of the policy decisions embodied in the Designs Act. This option involves fixing “anomalies” identified in the Designs Act to either make the Designs Act consistent with other IP rules or improve internal consistency, namely:

• changing the terminology for a registered, but uncertified, design to make it clear that the design does not, until certification, confer enforceable rights;
• removing the option of the publication regime from the process;
• improving the process for multiple design applications to reduce the fees for each additional design added to the application, in accordance with the original proposal of the ALRC; and
• addressing anomalies in copyright-design overlap, especially in relation to the boundary between two and three dimensional ‘embodiments’.

Option 2: fix the Designs Act and adopt some changes designed to improve the system and to bring Australian design law into line with international standards

This option involves (in addition to making the changes proposed in Option 1) retaining most of the significant policy decisions in the Designs Act, but also making additional changes to bring Australian law in line with major trading partners.   A key consideration under Option 2 is whether Australia should join the Hague Agreement, of which a trade-off could be to extend the maximum protection for designs to 15 years. Other changes in Option 2 could include an automatic deferral of publication to the point of registration, a system of opposition following certification, and border protection for alleged infringements of design.

According to ACIP, this option would provide advantages to those who are already engaged in international trade and acquisition of international IP rights; however it would do little to protect anyone who does not currently find design protection useful. This option could assist Australian applicants to better utilise the international system but it would also likely encourage increased use of the system by foreign companies.

Option 3: wholesale reconsideration

Unlike the first two options, the third option would involve a wholesale revision of the role of the designs system in Australian IP law. This would include considering:

• whether Australia should have a narrowly tailored designs system based entirely on registration, or whether there is a need for unregistered design protection. This would require adjustments to commercial practice.
• the scope of design protection (including secondary liability) in the context of technological developments such as 3D scanning and printing.
• whether protection should be extended to partial designs and whether virtual or non-physical designs (such as graphical user interfaces) should themselves be treated as products.
• whether, if design protection is broadened in accordance with the above, the narrow defences available under the Designs Act are sufficient.

The third option would obviously require considering not only of the designs system, but how it interacts with the copyright system and the patents system.

ACIP also noted that the Australian designs system is expensive for what it offers, and as a result, it is often neglected by designers for whom it doesn’t offer the rights that they need.

Other key issues considered by ACIP

In addition to the wholesale changes suggested under Option 3, ACIP considered submissions on other key issues, including a particular focus on the copyright/design overlap and 3D printing.

With regards to the copyright/design overlap, ACIP recognised that this is an area of “perennial” confusion. The provisions are intended to limit copyright protection for artistic works which are embodied in a product that has been mass produced. The provisions are not intended to apply to the exploitation of an artistic work in two dimensional form. The copyright/design overlap provisions have been the subject of litigation and considerable uncertainty. ACIP’s recommended approach for revising this overlap therefore involves clarifying areas in the provisions that are currently uncertain, namely the boundary between ‘embodiment’ of designs and mere two dimensional reproductions.

3D printing technology functions by using a computer aided design (CAD) file to provide instructions to a printer which then is able to print a 3D object. ACIP identified three particular limitations in the Designs Act that may create gaps in the legal protection provided to registered design owners:

1. a digital representation of a product or design is not in itself an infringement of a Registered Design Right;
2. non-commercial or personal importation or use of a products embodying a design does not infringe registered design rights; and
3. liability is unclear and limited.

ACIP also considered a number of other key issues in designs:

• ACIP recommended that at least some protection should be available to virtual or non-physical designs, such as graphical user interfaces;
• ACIP considered that broader protection for “partial designs” was not warranted. Currently, the design must relate to the overall appearance of a product, and protection for part of a product is not generally available.
• ACIP noted that some overseas systems have moved beyond design registration to embrace unregistered designs. ACIP considered that on balance, an unregistered design right should not be introduced to Australia at this stage.

Conclusion

While recent technological innovation, such as 3D printing, has highlighted areas for which design protection could require some revision, ACIP said that it presently does not have sufficient evidence to suggest that wholesale change would be in the national interest. However, ACIP did find that the current designs system is too expensive for what it offers and recommended some amendment.

It will be interesting to see whether submissions to ACIP’s review embrace the idea of wholesale revision of the Act. Such wholesale revision may assist Australia’s design and copyright law to deal with technological development and virtual designs. However, wholesale revision may cause uncertainty and have an impact on current commercial practices and licensing.   We are inclined to agree with ACIP that if Option 3 is adopted, an extensive review of intellectual property laws would be required, best undertaken with detailed evidence by intellectual property economic, business and legal analysts.