1 February 2010Jurisdiction reportsMichael Lantos

Jurisdictional headaches for registered designs

In such proceedings, the petitioner submits a particular technical solution (be it an apparatus, a method or a design) to determine whether it falls within the scope of a particular granted right or not.

If the petition is successful, the technical solution is deemed not to fall within the scope of the patent and the rights owner is prevented from initiating an infringement proceeding. The main benefit of non-infringement proceedings lies in substantially decreasing the risk to the petitioner.

If a non-infringement proceeding is underway and the rights owner initiates an infringement proceeding, the competent court has to suspend the infringement proceeding until it has decided on the non-infringement proceeding.

From our point of view, the position of the parties is significant. In a conventional IP infringement proceeding, the rights owner is the plaintiff and the entity that uses the protected technology is the defendant.

The competent court is normally determined by the site where the act of infringement has been committed or (if this cannot be decided) by the seat of the defendant. In a non-infringement proceeding, the competent court is decided by the seat of the rights owner. This reversal is not a problem if the country has a single court for deciding IP cases, like Hungary.

Before the introduction of registered Community designs, determining the competent court and the reversed positions of the parties in these two complementary proceedings was straightforward.

If a design has a national registration in Hungary, the final decision is issued by the same courts (Metropolitan Court as first instance court and Metropolitan Appeal Court as second instance court), in both non-infringement and infringement proceedings. Therefore, the winner of a non-infringement proceeding can be certain that it won’t face design infringement proceedings.

However, the situation is different if the ruling right is a registered Community design and the seat of the rights owner is in a different EU member state. According to the common interpretation of Articles 81 and 82 of the EU Council Regulation on Registered Community Designs, the competent authority for disputes (including non-infringement proceedings) is determined by the law of the state in which the rights owner is domiciled.

If the rights owner comes from a member state that does not have non-infringement proceedings, the legal possibility for a Hungarian national design to initiate non-infringement proceedings in that state will not exist.

“The main benefit of non-infringement proceedings lies in substantially decreasing the risk to the petitioner."

Even if the rights owner’s member state allows non-infringement proceedings, the proceeding must be fought in that member state. Assuming that a favourable decision is made for the petitioner, and the competent authority in that member state decides that the particular product is outside the scope of protection of the registered Community design, the decision in that other country will still not be binding in the Hungarian courts. Decisions made in non-infringement proceedings do not automatically prevent a rights owner from initiating an infringement proceeding against the previous petitioner on the same factual basis.

From this, it follows that the effects and enforceability of a Hungarian national design and a registered Community design will not be the same in Hungary. This contradicts Article 1, paragraph (3) of the cited Council Regulation, which establishes the identical legal effects of national and Community designs, and also contradicts the guidance included in point (29) of the regulation’s preamble.

This contradiction needs rectifying. While the regulation’s basic prescriptions for deciding competence is correct, it doesn’t take into account that in non-infringement proceedings, the real plaintiff remains the rights owner, as it can still threaten the petitioner with an infringement proceeding if the scope of protection covers its product.

The reversal of positions in non-infringement proceedings is only formal (as the potential defendant plays the role of the petitioner). It would be logical if both proceedings could be carried out in the same country, namely in the country where the infringement is threatened.

In an exemplary first case, this problem has come to the surface in Hungary, and the final procedural decision was that the non-infringement proceeding has to be dealt with in the country where the rights owner is domiciled. A special supervisory request was filed with the Supreme Court to reverse this decision, but the final outcome is not yet known.

Michael Lantos is managing partner and Hungarian and European patent attorney at Danubia Patent & Law Office LLC. He can be contacted at: lantos@danubia.hu

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