Case BriefsInternational Courts

General Court (Second Chamber): The Bench comprising of V. Tomljenović, President, F. Schalin and I. Nõmm (Rapporteur), JJ., settles the design right dispute regarding a building block toy set in favour of Danish toy manufacturer, Lego. The Bench said, the European Union Intellectual Property Office (EUIPO) erred in law in declaring the design invalid.

 The applicant, Lego A/S, filed an application for registration of a Community design with the EUIPO. The goods to which the contested design was intended to be applied were in Class 21.01 of the Locarno Agreement, 1968 and corresponded to the following description: “building blocks from a toy building set”. By its decision on 10 -04-2019, the Third Board of Appeal (BoA) of EUIPO declared the contested design invalid, holding that that all the features of appearance of the product concerned by the contested design were solely dictated by the technical function of the product, namely to allow assembly with, and disassembly from, the rest of the bricks of the set.

Analysis by the Court

The main question before the Court was whether the proprietor of a contested design can claim the benefit of Article 8(3) of Regulation No 6/2002 (which provides an exception for Art. 8(2)) for the first time before the BoA. The Court answered that no provision of Regulation No 6/2002 precludes the benefit of the exception laid down in Article 8(3) of that regulation from being relied on, for the first time, before the BoA as the BoA has jurisdiction, inter alia, to rule on the claims of the proprietor of the contested design relating to the benefit of Article 8(3) and it could not be deprived of that jurisdiction merely because the proprietor of the contested design had chosen to claim the benefit of Article 8(3) for the first time at the stage of appeal proceedings.  Similarly, since neither Regulation No 6/2002 nor the rules of procedure of the BoA specify the conditions for the application of Article 8(3) of that regulation, it was not possible to consider that the applicant’s reliance on that provision, for the first time before the Board of Appeal, was out of time.

To examine whether the exempting Article 8(3) was applicable on the instant case or not the Bench assessed the application of preceding clauses of the same Article. Article 8(1) excludes protection under the law on Community designs for features of appearance of a product where considerations other than the need for that product to fulfil its technical function, in particular visual aspect had not played any role in the choice of those features. Furthermore, since, in order to fulfil the function of assembly and disassembly of the product concerned by the contested design, the features of appearance of that design must be reproduced in the exact dimensions in order to permit their connection, they also fall within Article 8(2) of that regulation. Thus, the Bench opined that such features would fall within both Article 8(1) and Article 8(2) since they were both solely dictated by the technical function of the product, namely to allow the connection and disconnection of that product, and constitute features of interconnection.

EUIPO could not apply merely Article 8(1) to the features which fall within both Articles 8(1) and 8(2) as the provisions of Article 8 must be interpreted in such a way as to preserve their effectiveness.

The Court opined that, the interpretation given by EUIPO could not be adopted since it was too restrictive. The BoA erred in law since it failed to assess whether the contested design met the requirements of Article 8(3).

The Court of Justice stated that, in order to determine whether the features of appearance of a product were solely dictated by its technical function, it must be established that that technical function was the only factor that determined those features. Accordingly,

If at least one of the features of appearance of the product concerned by a contested design was not solely dictated by the technical function of that product, the design at issue could not be declared invalid under Article 8(1).

Decision 

Rejecting the findings of BoA, the General Court held that the smooth surface of the upper face of the toy brick was a feature of the specific appearance of the product concerned by the contested design and was not limited to a mere ‘absence of studs on the upper surface of the brick’. Hence, the BoA infringed Article 8(1) as it did not identify all the features of appearance of the product concerned by the contested design and, a fortiori, did not establish that all of those features were solely dictated by the technical function of that product.

However, the Court dismissed the plea for making alteration in the findings of BoA opining that the conditions for alteration were not satisfied as the BoA had not established all the elements of fact and of law to enable the Court to determine the decision.

The decision of the Third Board of Appeal was annulled. The EUIPO and Delta Sport Handelskontor GmbH (Intervener) were ordered to bear their own costs and each to pay half of the costs incurred by Lego A/S.[Lego A/S, v. European Union Intellectual Property Office (EUIPO), T‑515/19, decided on 24-03-2021]


Kamini Sharma, Editorial Assistant has reported this brief.

Op EdsOP. ED.

This year’s World Intellectual Property (IP) Day campaign—Reach for Gold—takes a closer look to the universal values sports encompass—excellence, respect and fair play—power their global appeal. It explores how innovation, creativity and the IP rights that encourage and protect them support the development of sport and its enjoyment around the world.[1]

There is virtually no sport that has remained unchanged since its inception; all have seen innovation and growth. What has driven this progress? To a large extent, IP rights have provided the right incentives to continuously inspire advancement in sports. Different kinds of IP rights stimulate the growth of the sports industry in different ways. This article examines how five important categories of IP rights (patents, trade marks, design rights, copyrights, and trade secrets) are used in the sports sector to protect assets, generate value, and stimulate growth.

Patents

Patent system has proved to be a powerful incentive to innovate with a no less important societal benefit of enhancing the common pool of knowledge and stimulating others to build on and improve the current state of the art—setting a virtuous cycle in motion. Sports is a sector that directly uses and benefits from the patent system. Sporting equipment is continuously evolving. New technologies help athletes jump higher, swim faster, cycle longer, and hit a ball harder and farther. Safety also improves with technologies that lessen impact and stress on athletes’ bodies. There are literally tens of thousands of utility patents relating to sports. A search of the Google patents public datasets reveals hundreds of thousands of utility patents related to sports and making reference to such terms as “athletic” or “athletes”.[2]

Trade Marks

Branding plays an essential role in creating value, interest, and vitality in sports. It drives consumer loyalty and confidence in the quality and features of sporting goods. It also generates allegiance to sports teams and sportswear styles. The sports sector presents a unique opportunity to create a “domino effect” in trade mark value creation.[3] Consider an individual athlete who becomes a dominant player in a team sport and develops his or her own individual brand. The dominance of this athlete drives the growth and popularity of the athlete’s team as well as the entire professional league in which he or she plays. There are numerous examples of athletes who raise teams and entire sports leagues to national and even global prominence and strengthen the brand and goodwill associated with both.

Designs

An equally important IP right in the sports sector is aesthetics protected by design-specific IP rights. Industrial designs are key to making a product attractive and desirable. Companies spend vast amounts of resources on understanding consumers’ tastes and developing stylish and attractive product designs to capture valuable market segments. These designs often become their most valuable assets .

Copyrights

Copyright plays a critical role in maintaining the vitality of sports, keeping fans interested and inspired, and enhancing value. The promotion and marketing of championships and sporting events, the artistic designs of the logos of sports teams and sports competitions, the literature contained in game day programmes sold to fans and supporters, the merchandise, and the software of computer and online games are all copyrightable subject-matter. Revenues from broadcasting and media rights are often the main source of funds for sports organisations to build stadiums, host sporting events, and carry out community outreach to maintain high levels of interest.[4] Major sporting events can now be streamed or broadcast anywhere in the world, giving millions of fans the opportunity to participate in the excitement of an event .

Trade Secrets

Sports also generate an important volume of trade secrets that play a key role in competitive advantage and value creation. Teams gather proprietary information in the form of statistical analysis, scouting reports, dietary regimens, physiological metrics, and psychological assessment techniques—all to gain potential competitive advantage over their rivals.[5] Sports gear often features secret new compounds and materials to allow athletes to perform better. Companies invest heavily in elaborate focus groups to find the right mix of features and designs to make their products more attractive and marketable.

Juxtaposition of Trade Secrets and Patents/Design Rights

Patents and design rights are the publicly known aspects of the invention, while trade secrets encompass the undisclosed knowledge behind it. In exchange for disclosure the inventor obtains a patent that prevents others from copying the invention for a period of time. Conversely, there is no need to register trade secrets, and they can last indefinitely as long as the information is kept confidential. But protection is much more limited; others are only prevented from breaching the security measures in place. Moreover, competitors are free to independently develop that very same invention. Hence the two sides of the innovation coin: elements of an invention subject to reverse engineering are candidates for patent protection, while trade secrets can protect what is not apparent from examining the product. Often patents and other registrable forms of IP rights are the tip of the iceberg. The rest is knowledge acquired over time during many iterations of the development process. Some inventions, like the secret syrup formula for Coca-Cola for instance, are difficult if not impossible to determine how to copy and as such can be kept entirely secret indefinitely, as long as measures are in place to ensure their security. Trade secrets can take many forms in the world of sports, from proprietary information and processes used by individual teams and leagues to techniques and business strategies used by sporting goods and product manufacturers. Sports gear and equipment utilise undisclosed formulas, material, and processes, so, for example, golf balls can be more aerodynamic or skateboards can be lighter and stronger.[6] The development process of new products and designs takes years of prototyping and testing that must be kept secret to prevent tipping off the competition.

Conclusion

Sports have become a multi billion dollar global industry—one that generates investment in facilities, employs millions of people around the world, and entertains many more. We look at how sports businesses use patents and designs to foster development of new sports technologies, materials, training, and equipment to help improve athletic performance and engage fans worldwide.

We find out how trade marks and branding maximise commercial revenue from sponsorship, merchandising and licensing agreements. These revenues offset the cost of organising world class events, such as the Olympic Games and World Cup series, and ensure that the value and integrity of these spectacular events are safeguarded. We explore how broadcasting rights underpin the relationship between sport and television and other media that bring fans ever closer to sporting action. At their core, IP protections and incentives allow industries and individuals to prosper in their pursuit of innovation and brand development. This creates a synergistic and reinforcing effect. The development of new technologies strengthens a given brand; the strengthening of a given brand leads to the development of new technologies and products, which in turn further strengthens the brand. Additionally, the popularisation of a given sport leads to the development of related industries and technologies. Think of wearable fitness devices, which have led to the creation of a whole new sub-industry of app development. Similarly, there is a powerful symbiosis between individual players, their sports, their teams, the respective leagues, and related industries, including branding, sporting goods, and sportswear. The success of one part of this ecosystem leads to potential commercial opportunities and the development of new products and services for all related industries.


*Vaishali Singh is an Assistant Professor of Law, School of Law, University of Petroleum and Energy Sciences.

[1]    Reach for Gold: IP and Sports, see <https://www.wipo.int/ip-outreach/en/ipday/>.

[2]    The data produced by Google patents is from the respective patent offices, not from Google patents itself. See <https://cloud.google.com/blog/big-data/2017/10/google-patents-public-datasets-connecting-public-paid-and-private-patent-data>.

[3]    See  <http://www.wipo.int/ip-sport/en/>.

[4]    See <http://www.wipo.int/ipadvantage/en/details.jsp?id=3110>.

[5]    D.C. Lippoldt and M.F. Schultz, Uncovering Trade Secrets—An Empirical Assessment of Economic Implications of Protection for Undisclosed Data, OECD Trade Policy Papers, No. 167, OECD Publishing, p. 29.

[6]    The most durable skateboard deck ever, Tech StartUps. See <https://techstartups.com/2017/07/31/capsule-skateboard-durable-skateboard-deck-ever/>.