Fundamental reforms to the Australian designs system are underway

The Designs Amendment (Advisory Council on Intellectual Property Response) Bill 2020 (Cth) (Bill) was introduced before the Senate on 2 December 2020 and is currently before Parliament for its third reading. If passed, the Bill will amend the Designs Act 2003 (Cth) (Designs Act) by introducing several fundamental changes. These changes include the: (i) introduction of a 12-month grace period for designers to apply for design protection after publishing or using their design; (ii) introduction of an infringement exemption for prior use; (iii) streamlining of the initial steps for registering a design; and (iv) provision of standing for exclusive licensees to bring design infringement proceedings.

Purpose of the Bill

The purpose of the Bill is to improve the registered designs system; to provide more flexibility for designers during the early stages of getting protection and to simplify and clarify aspects of the designs system.

These reforms were prompted by an Advisory Council on Intellectual Property report (ACIP Report) that identified significant issues with the current Australian designs system. It stated that there is a “clear need for increased harmonisation with international practices and treaties” and “there is clear scope to improve design protection and clarify the law for both owners and third parties”. In 2016, the Australian Government responded to the ACIP Report and agreed to the majority of the recommendations.

In 2019, IP Australia initiated 12 months of exploratory research into Australia’s designs system as part of its Designs Review Project. The inquiry found, among other things, that design-related industries and workers more broadly contribute approximately AU$67.5 billion per annum to the Australian economy – more than 3.5% of GDP – yet less than 0.5% of Australian businesses have held a design right in the last 16 years. Following the review and extensive public consultation, IP Australia committed to undertaking a holistic review of the designs system and is now progressing legislation and other reforms to deliver a more fit-for-purpose designs system.

12-month grace period to apply for design protection

A defining feature of the current Australian designs system is that, in most circumstances, the disclosure of a design prevents any subsequent registration of that design, as the design is no longer considered “new and distinctive”. The ACIP Report identified this as a real problem for designers who, either inadvertently or due to ignorance of the requirements of the Designs Act, publish their design before seeking legal protection.

Currently, section 17 of the Designs Act and regulation 2.01 of the Designs Regulations 2004 (Cth) (Designs Regulations) provide a 6-month grace period that allows designers to seek registration of a design after its disclosure only under very limited circumstances.

If passed, the Bill will introduce a 12-month grace period for filing a design application. In effect, disclosures made up to 12 months before the priority date will be disregarded when examining a design for newness and distinctiveness. According to the Explanatory Memorandum, the “primary function of the grace period is to protect designers from losing their rights because of inadvertent disclosure, rather than to act as a mechanism to test the market and protect iterative designs.”

Infringement exemption for prior use

The Bill also introduces an infringement exemption to protect third parties against infringing a design if they start using a design after a disclosure (e.g. during the 12-month grace period), but before the priority date of the registered design. The purpose of this reform is to balance the rights of designers and third parties after the introduction of the 12-month grace period, as third parties will be unable to predict if a design will later be registered. The new provisions also give protection to third parties who take definite steps towards using, or secretly use, an independently created design, but either choose not to obtain a design registration, or choose to file too late, after someone else has filed for an identical design (or one substantially similar in overall impression).

The new infringement exemption will continue to apply after the design is registered, meaning that the third party can continue to use the design without fear of infringement proceedings being successful after a design is registered.

If passed into law, designers should therefore not rely on the 12-month grace period to test the market before filing for design registration. Doing so will run the risk of third parties commencing use in that period and having the benefit of the infringement.

Registration of designs – removal of publication option

The Bill also streamlines the initial steps for registering a design. The reforms include:

  1. Permitting an applicant to request registration of a design upon filing a design application or during the prescribed period of 6 months from the priority date.
  2. Removing the option to request only publication of a design upon filing a design application.
  3. Deeming an applicant to have requested registration if a request is not made within the prescribed period, so, subject to a formalities check, registration is the default outcome for applications.
  4. Simplifying the process for registration of multiple designs. Where a design application contains multiple designs, requesting registration of some or only one of the designs will not affect the remainder of the designs. The applicant may subsequently request registration of the remaining designs, allow them to proceed to a deemed request for registration after expiry of the prescribed period, or withdraw or exclude them.

Relief from infringement before registration

There is an anomaly in the current form of the Designs Act that means relief for “innocent” infringers has not been available between filing and registration. The Bill extends the current “innocent infringer” defence to provide relief from infringement to third parties who may unknowingly infringe a design registration in the period between the filing date of a design application and the date of registration.

This amendment reduces the risk to competitors of infringing a design that they could not have found on the Register, because the design is not yet published on the Register of Designs between filing and registration.

Right of an exclusive licensee to bring infringement proceedings

The Bill amends the Designs Act to allow the exclusive licensee of a registered design to bring proceedings against third parties for any alleged infringement of the registered design. In the case of other IP rights, such as trade marks, patents, copyright and plants breeder’s rights, an exclusive licensee (or similar person) currently has standing to commence a legal action.