Benefits (and some limitations) of Registered Community Designs : CJEU judgement in Nintendo case (Koan Law Firm)
Date of publication: 13/10/2017
Recently, the Court of Justice of the European Union (“CJEU”) delivered its judgement in a case between Nintendo and BigBen Interactive (joined cases C-24/16 and C-25/16).
The judgement is particularly interesting and demonstrates some of the benefits and limitations of Registered Community Designs (“RCD”). For those of you not familiar with RCD’s, we first provide a short introduction to the subject. We then explain how the recent judgement from the CJEU effects the protection offered by an RCD.
What is an RCD?
RCD’s allow you to protect the appearance of a product or a part thereof. The appearance results from such elements as the lines, contours, colours, shape, texture and materials of the product. An RCD can be used to protect several categories of products such as fashion items, packaging of products, furniture, drawings, and also accessories of game consoles, which were the subject of the present case.
An RCD has ‘unitary effects’, which means that it grants protection of your design within the entire territory of the European Union, without having to register it separately in each country.
In order to constitute a valid RCD, a design must however be novel (i.e. no identical design has ever been made available) and possess individual character (i.e. that the overall impression of the design is different from all other designs that have already been made available).
Facts of the case
The facts of the case can be summarized as follows: as part of its IP strategy to protect the Wii console, Nintendo used an RCD to protect the Wii controller, also known as the “Nunchuk”.
BigBen wanted to use the popularity of the Wii console to sell controllers that are compatible with the Wii. It did so, without asking for Nintendo’s permission first.
BigBen offered the products via a website to consumers located in several EU member states: in France, Belgium and Luxembourg via its French mother entity (BigBen France) and in Germany and Austria via its German subsidiary (BigBen Germany).
On the website BigBen it also used images of Nintendo’s products which are protected by an RCD.
Naturally, Nintendo wanted to take action against BigBen and started proceedings in Germany to prevent further sales based on an infringement of their RCD’s.
The German appeal court decided that it first needed to refer certain questions to the CJEU before it could render its final decision.
What is the territorial effect of a national decision involving RCD’s?
First, the German appeal court wanted to know what its jurisdiction was in the present case. This means that it wanted to know where its decision would produce effects. The German court asked the CJEU to clarify whether (i) its decision would only have effects in Germany, namely upon the acts of companies established in Germany (i.e. BigBen Germany); or whether (ii) it would also have effect on the acts of companies established outside of Germany, in other EU member states (i.e. BigBen France).
If the CJEU would have followed the first approach, Nintendo would have been forced to also start proceedings in France in order to make sure that it could acquire a court decision against BigBen France. This could have decreased the advantage of owning an RCD because, even though an RCD grants rights throughout the EU, proceedings would still have to be launched in several countries against an infringer working through subsidiaries in multiple EU member states.
However, the CJEU decided instead to opt for the second approach. It determined that the German courts could render a decision that would also have effects in other EU member states. The CJEU justified its decision based on (a) the fact that the claims against BigBen France and Germany were so closely connected that it would be better to hear them together instead of having multiple decisions in different countries; and (b) the objective of RCD’s, namely to ensure effective protection of designs throughout the EU.
Which national laws apply to areas not regulated on EU-level?
Secondly, the CJEU was also asked to clarify which national laws apply to those areas not harmonised on EU-level. Even though the RCD is the subject of an EU regulation and several areas of the law regarding RCD’s are already harmonised in the EU, certain areas still are not. For example the available measures to act against infringers (e.g. preliminary injunctions, damages, etc.), have not been fully harmonized and differences between member states still exist.
Normally, the national laws of the country where the infringing acts have taken place apply. This could mean that for the infringing acts carried out by BigBen France, French law would apply (and potentially Belgian and Luxembourgian law for sales in those countries). In addition, for those acts carried out by BigBen Germany, German law would apply (and potentially Austrian law for sales in Austria). This would obviously make the matter very complicated and could result in significant additional costs and long proceedings for an owner of an RCD acting against an infringer operating on EU-level.
Luckily, the CJEU took into account the need for predictability and provided a criteria that may lead to favorable results for owners of RCD’s. It stated that in order to determine the applicable national law in cases such as the present , it is necessary to determine the place where the initial act of infringement at the origin of the conduct took place. The national laws of that place, will be applicable for all infringing acts.
Applied to the case at hand, the CJEU stated that the relevant place is the one where the process of putting the offer for sale online by BigBen on its website was activated. It did leave it up to the German court to decide where exactly that place was.
Can images of RCD’s be used to promote compatible accessories
Finally, the German appeal court also had to consider whether BigBen could use images of Nintendo’s RCD to promote its accessories, those being compatible with Nintendo’s products. BigBen relied on an exception to the rights of RCD holders for “citations” purposes. As the German appeal court was not certain what could be considered a “citation”, it asked the CJEU to clarify this exception.
Undoubtedly to the dislike of Nintendo, the CJEU determined that BigBen could indeed use the images of Nintendo to promote its own compatible products. However, some limitations still apply. Indeed, BigBen would not when using images of an RCD be allowed to give the impression that ther/e is a commercial link between itself and Nintendo.
This judgement is a clear demonstration of the advantages of an RCD, as well as of some of its limitations. The main advantage demonstrated here is that an RCD could help to more effectively and cost-efficiently act against infringers throughout the EU. Relying on copyright for instance to protect designs, it may be much more difficult to enforce rights throughout the EU.