Neutral Citation Number: [2007] EWHC 1712 (Pat)
Case No: HC07C00539
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 19 July 2007

Before :

MR JUSTICE LEWISON
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Between :

	GREEN LANE PRODUCTS LIMITED	Claimant	
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	(1) PMS INTERNATIONAL GROUP LIMITED
(2) PMS INTERNATIONAL (FAR EAST) LIMITED
(3) POUNDLAND LIMITED	Defendants	

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Dr Heather Lawrence (instructed by Briffa & Co.) for the Claimant
Mr Richard Hacon (instructed by Gordons Partnership LLP) for the Defendants

Hearing dates: 11 July 2007 
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Judgment

Mr Justice Lewison: 
Introduction
1.	A design may be protected as a Community Registered Design (a “CRD”). The legislation is contained in Council Regulation (EC) No. 6/2002 of December 12, 2001 (“the Regulation”). In order to qualify for protection a design must be new and have individual character. A design is new if no identical design has been ‘made available to the public’ before the date of filing of the application for the CRD (Article 5). Whether a design has individual character is also to be assessed by reference to any design which has been ‘made available to the public’ before the date of filing the application for the CRD (Article 6). Designs pre-dating the application for the CRD are usually referred to as “prior art”.
2.	Article 7 provides:
“For the purpose of applying Articles 5 and 6, a design shall be deemed to have been made available to the public if it has been published following registration or otherwise, or exhibited, used in trade or otherwise disclosed, before [the date of filing of the application for the CRD] except where these events could not reasonably have become known in the normal course of business to the circles specialised in the sector concerned, operating within the Community.  The design shall not, however, be deemed to have been made available to the public for the sole reason that it has been disclosed to a third person under explicit or implicit conditions of confidentiality.”
3.	The question raised by the preliminary issue before me is: what is “the sector concerned”?
The assumed factual context
4.	The facts have not yet been found so anything I say about them is necessarily provisional.
5.	Green Lane Products Ltd (“Green Lane”) sells laundry balls. They are packaged as a pair of spiky blue and pink pastel plastic balls, one with square nodes and one with rounded nodes, which you put in a tumble dryer.  The idea is that they help to soften fabrics without chemicals, because the design of nodes helps to break down the stiffness created by water drying in fabric. In addition they claim to reduce drying time by up to 25 per cent by lifting and separating the laundry while tumble drying, and by retaining the heat and transferring it to the clothes as they tumble; to reduce creases and wrinkles and  to cut down on lint. 
6.	Green Lane has registered its designs as CRDs (Nos. 000217187-0001 – 0004). The application date for all four registrations is 23 August 2004. The certificate of registration described the class of products (in the Locarno classification) to which the designs are intended to be applied as:
“Flatirons and washing, cleaning and drying equipment.”
7.	PMS International Group plc and PMS International Far East Ltd (“PMS Far East”) buy and distribute high volume low cost products mainly sourced in China. In August 2001 PMS Far East ordered a company in China to create a tool for manufacturing spiky plastic balls.  Balls made from this tool were marketed extensively by both PMS companies in territories including the EU from 2002. They were not marketed as laundry balls but as massage balls. The idea was that rubbing the body with the ball would tighten the skin and muscles and increase blood flow. In October 2006 it occurred to PMS that the tool created in 2002 for making massage balls could be used to make more of the same balls to the same design, but this time sold as laundry dryer balls.  It also has devised other potential uses for the balls. One package I was shown described the self-same balls as “Massage, Hand Exerciser, Easy-Catch Toy, Dog Trainer”.
8.	Green Lane say that PMS will infringe their CRDs if they continue to sell their product for anything other than use as a massage ball. 
More about community designs
9.	To explain the relevance of the preliminary issue it is necessary to say a little more about the way in which community designs are protected. First, community designs are of two kinds: registered designs and unregistered designs. In the case of a registered design the protection can last for up to “a total term” of twenty five years (Article 12). In the case of an unregistered design the protection lasts for three years (Article 11). Second, in the case of a registered design, the designer must apply for registration. If the design is registered, protection runs from the date of application. In the case of an unregistered design, there is no need to apply for anything. Protection runs from the time when the design is made available to the public. Third, the scope of the protection conferred by a community design (either registered or unregistered) includes “any design which does not produce on the informed user a different overall impression” (Article 10). Fourth, the nature of the protection as between registered designs and unregistered designs is very different. Article 19.1 of the Regulation states: 
“A registered Community design shall confer on its holder the exclusive right to use it and to prevent any third party not having his consent from using it.  The aforementioned use shall cover, in particular, the making, offering, putting on the market, importing, exporting or using of a product in which the design is incorporated or to which it is applied, or stocking such a product for those purposes.”
10.	This right is in the nature of a monopoly. By contrast an unregistered design is only protected against copying (Article 19.2).
11.	Article 22 protects certain existing activities. It provides:
“1. A right of prior use shall exist for any third person who can establish that before the date of filing of the application, or if a priority is claimed, before the date of priority, he has in good faith commenced use within the Community, or has made serious and effective preparations to that end, of a design included within the scope of the protection of a registered Community design, which has not been copied from the latter.
 2. The right of prior use shall entitle the third person to exploit the design for the purposes of which its use had been effected, or for which serious and effective preparations had been made, before the filing or priority date of the registered Community design.
 3. The right of prior use shall not extend to granting a licence to another person to exploit the design.”
12.	An application for a CRD must contain an indication of the products in which the design is intended to be incorporated or to which it is intended to be applied (Article 36 (2)). However, once the design is registered it is protected not merely in relation to the products specified in the application, but also in relation to any product in which the design is used (Article 10). So if a design is registered following an application saying that it is intended to be applied to a widget, it will prevent anyone from making a sprocket. In the present case this means that although the application for the CRDs specified the intended products as “flatirons and washing, cleaning and drying equipment”, the registration will prevent anyone from using the design to make massage balls, dog toys, novelty golf balls, Christmas tree decorations, charm bracelets or anything else that an ingenious marketeer can think of. Nor does it matter whether the design is the same size as Green Lane’s own product. It could be half the size or a hundred times the size. Use of the design is prohibited.
13.	Now, suppose someone says that the CRDs ought not to have been registered because of some piece of prior art. Suppose that the prior art was “used in trade” and the only question is whether the use in trade of the prior art could not reasonably have become known in the normal course of business to “the circles specialised in the sector concerned”. Which sector is the relevant one? Is it (i) the sector corresponding to the product class indicated in the application for the CRD (ii) or the sector of the prior art?  
Text books and other materials
14.	The text books give different answers to the question. Mr Martin Howe QC, the author of Russell-Clarke & Howe on Industrial Designs, says that the relevant sector is the sector of the prior art (para 2-32). Mr David Musker, the author of Community Design Law, also says that the relevant sector is the sector of the prior art (para 1-062). The authors of Laddie Prescott & Vitoria The Modern Law of Copyright and Designs hedge their bets (para 44.30). They tentatively suggest that the relevant sector is a single sector comprising both the sector of the registered design and the sector of the prior art (although somewhat confusingly they refer to the latter as “the sector in which infringement is asserted”). They go on to suggest that a registration might be partially invalid in that it would not apply to certain commercial sectors, while remaining valid in relation to commercial sectors in which there was no prior art.
15.	The Regulation tracks the form of the Design Directive (97/71/EC of 13 October 1998). The UK government had the task of transposing the directive into domestic law. The Patent Office published a consultation paper to assist in that process. In paragraph 19 of the paper they noted the ambiguity and expressed the view that “the sector concerned” is the one relevant to the prior art.
16.	Dr Heather Lawrence, who appears for Green Lane, says that the relevant sector is only the sector covered by the product class specified in the registration. She says that this is supported by Laddie Prescott & Vitoria and that the contrary views are wrong. Mr Richard Hacon, who appears for the defendants, supports these views. 
17.	I do not think that Laddie Prescott & Vitoria say what Dr Lawrence says they say; and anyway for reasons that I will explain I disagree with the view that they do express. So I put that to one side as supporting her interpretation.
18.	Dr Lawrence says that the whole scheme of the Community Design legislation is intended to increase the protection afforded to designs and broaden the scope of that protection beyond the particular product for which the registration is made to cover any product to which the design is applied. That is undoubtedly correct; but it begs the question: which designs are entitled to this increased protection? She then says that normally any prior commercial design will be known or reasonably discoverable in its own field of application.  It follows that if “the sector concerned” is the prior art sector, any subsequent registration will almost inevitably be invalid.  This would render the exception in Article 7.1 virtually meaningless, and would dramatically curtail the scope of protection afforded by the Community Design rights. I do not consider that the hyperbolic conclusion follows from the premise. Dr Lawrence rightly stresses that the use of prior art in the context of community designs differs from its use in the field of patents. In the latter field, any prior publication or use, however obscure, can invalidate a patent. So the use of a home-made windsurfer by a young boy off Hayling Island for two summer seasons may invalidate a subsequently granted patent; as can a manuscript reposing somewhere in the vaults of the British Museum. Plainly this kind of use and publication would not be known or reasonably discoverable in any commercial sector. One view, therefore, of the purpose of the exception in Article 7.1 is that it was directed against obscurity rather than against confining the relevant commercial sector to that of the product classes specified in the registration.
19.	Dr Lawrence said, however, that her interpretation of Article 7.1 was supported by the travaux préparatoires which led to the making of the Regulation. It is true that in the Green Paper published by the European Commission paragraph 5.5.5.1 the Commission indicates that the relevant sector is that “of the marketable goods to which the design is intended to be applied”. However, the draft article then proposed was in very different terms to that which found its way into the eventual Regulation. Moreover, the Commission itself modified its own proposals and suggested that the test of novelty should be applied at a world-wide level. This proposal did not find favour with the Economic and Social Committee, which the Commission is obliged to consult. In their opinion of 6 July 1994 they said that the proposal to assess novelty at the world-wide level would be difficult to apply in many fields especially that of textiles. They therefore suggested a rewording of the article in terms which (slightly altered) made their way into the Regulation. In promulgating the revised Regulation the Commission prepared an explanatory memorandum. Commenting on the amendment suggested by the Economic and Social Committee, the Commission said:
“The Article has furthermore been amended in accordance with the wishes of the Economic and Social Committee through the introduction of what is commonly known as the “safeguard clause”. Its aim is to protect the design industry from claims that a design right is not valid because there was an earlier design in use somewhere in the world where the European industry could not possibly have been aware of it. The intention of this provision is to avoid the situation where design rights can be invalidated by infringers claiming that antecedents can be found in remote places or museums.”
20.	There are two points I should make about this explanatory memorandum. First, it treats the “design industry” (or “the European industry”) as a single industry and does not break it down into different commercial sectors, still less does it break it down into sectors delineated by product classes specified in a registration. Second, the intention revealed in the second sentence is directed against obscurity rather than against anything else. I do not, therefore, consider that taken as a whole the travaux support Dr Lawrence’s submission. It has been repeatedly said that in looking at travaux préparatoires to assist in interpretation “only a bull’s eye” counts: Effort Shipping v Linden Management [1998] AC 605; Dyson Ltd v Qualtex (UK) Ltd [2006] RPC 31; Nova Productions Ltd v Mazooma Games Ltd [2007] Bus LR 1032. Even if the Green Paper hit the target, it got no closer than the outer ring.
21.	I was also shown two decisions: one of the German Supreme Court and one of an Italian court. I did not find them of assistance as neither considered the point at issue.
Consequences of Green Lane’s interpretation
22.	There are a number of potential consequences of Green Lane’s interpretation which suggest that it is wrong. First, consider the form of the application. Suppose a designer produces a design of a product which can be used for a multitude of purposes or products, each of which is in a different product class. Call the classes A, B, C and D; and assume that circles specialised in one class do not know about designs in the other classes.  The design is both old and well-known in circles specialising in class D. If Dr Lawrence is right, then the registration will be invalid if the applicant for registration specifies all four classes (or class D alone); but it will be valid if he only specifies class A. Yet once registered, the registration gives him a monopoly extending across all four classes. So the canny applicant will specify the products to which the design is intended to be applied in the narrowest possible way, so as to avoid exposing his design to prior art, confident in the expectation that once the design has been registered he will obtain the wide protection given to him by the registration.
23.	Second, consider the consequences of registration. The use of the design in class D is old and well-known. But upon registration of a design specifying class A as the intended class of products, it becomes unlawful to use the design for products in class D without the consent of the holder of the registered design. It is common ground that the grant of intellectual property rights ought not to have the effect of making unlawful that which had previously been lawful. Dr Lawrence seeks to meet this by invoking Article 22. But Article 22 is very narrow. It protects a person who has himself begun use of a design before the filing date of the CRD or made serious and determined preparations to do so. So consider a person who operates within the field of Class D. He is well aware of the old design, but has not used or prepared to use it yet, although all his competitors have. Article 22 would not allow him to use it. But why should he not use an old and well-known design within his own field of operation?
24.	Take another example. A manufacturer of products within class D sells them through a distributor. Dr Lawrence would accept that the manufacturer can go on manufacturing and the distributor can go on distributing. But what if the manufacturer wants to change his distributor after the relevant date? The new distributor has not previously sold products to that design. Since the sale of products to the registered design is itself an infringement under Article 19 the new distributor cannot sell. He cannot bring himself within Article 22 because he has no prior use; and the manufacturer (who is probably within Article 22) is prohibited by Article 22.3 from granting the new distributor a licence to exploit the design. So if Dr Lawrence is right, the pre-existing business arrangements are frozen.
25.	Third, consider the situation as the period of protection is coming to an end. The original registration specified class A as the class of products to which the design was intended to be applied. It is in fact capable of being applied to classes B, C and D as well (although it has not yet been applied to class C products). As the period of protection comes towards its end, the proprietor of the registered design applies to register it specifying class C as the class of products to which it is intended to be applied. Prior art within class A, on Dr Lawrence’s interpretation, does not count (assuming that the circles specialising in the respective classes do not know about each other’s designs); so the registration is successful. The proprietor of the registered design thus extends his protection within class A by registering his design for class C. Yet this is contrary to Article 12 which limits the “total term” of a registered design to twenty five years.
26.	It seems most unlikely that these consequences were intended; and in my judgment an interpretation that does not produce them is more likely to be right. Mr Hacon’s interpretation does not have these consequences, because the design could not be registered in any class if the design is old and well-known in one or more classes or sectors.
The informed user
27.	Dr Lawrence supported her argument with a consideration of the role of the “informed user”. How the design appears to the “informed user” is the test whether a design has “individual character” for the purposes of Article 6. The informed user is referred to in recital (14) to the Regulation:
“The assessment as to whether a design has individual character should be based on whether the overall impression produced on an informed user viewing the design clearly differs from that produced on him by the existing design corpus, taking into consideration the nature of the product to which the design is applied or in which it is incorporated, and in particular the industrial sector to which it belongs and the degree of freedom of the designer in developing the design.”
28.	Dr Lawrence submits that the recital assumes that the informed user is a user of the product to which the design is applied, rather than an informed user of anything else. This is the assumption underpinning the judgment of HH Judge Fysh QC in Bailey v Haynes [2007] FSR 10; and was common ground between counsel in a case that I heard: Procter & Gamble Co v Reckitt Benckiser (UK) Ltd [2007] FSR 13. (Where the registered design is applied to one type of product, but the alleged infringement is a completely different product, it is not clear what it is that the informed user must use). But Article 7 is not dealing with the characteristics of the informed user. It is dealing with what the informed user is looking at. As Mr Hacon put it, Article 7 identifies the prior art. It is only once the prior art has been thus identified that the informed user can do his job. He said that HH Judge Fysh QC had conflated two separate concepts; and in my judgment there is force in that submission.
Unregistered designs
29.	As I have mentioned, community designs are of two kinds: registered designs and unregistered designs. Mr Hacon submitted that a consideration of how unregistered designs work supported his position. An unregistered community design is protected for three years from the date on which the design was first made available to the public within the Community (Article 11.1). Article 11.2 defines what is meant by making a design available to the public. It is essentially in the same terms as Article 7. However, precisely because the design is unregistered, there is no registration or application for registration to appeal to in deciding what counts as relevant prior art in assessing the novelty of an unregistered design. The relevant sector must therefore be (or at least include) the sector in which the design is actually made available to the public.  The date on which the design has been made available to the public is important for three reasons. First, that is the date by reference to which the novelty and individual character of the design is tested. Second, if it passes those tests it acquires protection from copying for three years (across all sectors) measured from that date. Third the design itself becomes prior art for the purposes of subsequent designs. One would expect these three events to happen at the same time.  They do if the ‘sector concerned’ is the same in all three cases. Call this sector A.
30.	If the design is subsequently used for a product in a different and unrelated sector (call this sector B), then if Dr Lawrence’s interpretation is right the design has not previously been made available to the public, because it had been made available to the public in a different and unrelated sector (sector A). Rather like Schrödinger’s cat which is simultaneously both dead and alive, the design has both been made available to the public and not been made available to the public at the same time. Again, this is unlikely to have been intended.
The Laddie Prescott and Vitoria solution
31.	I must now explain why in my judgment the solution of partial invalidity proposed by Laddie Prescott and Vitoria is erroneous. What they appear to contemplate is that a design may be valid as regards some sectors and invalid as regards others. The reasoning is founded on a reading of Article 25.6 (or its equivalent in the Directive) which says that if a design has been refused registration or been declared invalid, it may be registered in an amended form. The registration may be accompanied by a “partial disclaimer” by the holder of the CRD. But what this contemplates, in my judgment, is not that the whole design can be registered with a disclaimer of its application to certain product classes. Rather it contemplates that part of the design itself may be disclaimed. Any other reading would be inconsistent with Article 10 which does not allow for differentiation between different classes of product.
32.	Moreover, even assuming that Article 10 did allow for differentiation between different classes of product, the problem is still not cured. The effect of the disclaimer would be to narrow the scope of the registration.  But Articles 5 and 6 are concerned with designs in the prior art irrespective of product.  Since they cannot be rewritten, the problem remains.
Conclusion
33.	With the exception of the Green Paper, which is of marginal value, all the considerations I have discussed point in favour of Mr Hacon’s interpretation of Article 7. I conclude that it is the right one; and I therefore answer the preliminary issue by saying that the relevant sector is the sector that consists of or includes the sector of the alleged prior art. It is not limited to the sector specified in the application for registration. Fortunately I am not required to decide how to delineate a sector; and I do not do so.
Who is in the circle?
34.	Article 7 refers to “the normal course of business to the circles specialised in the sector concerned.” This raises the question: who is in the circle?  Mr Hacon submits that in principle it comprises all individuals who conduct trade in relation to products in that sector.  This would include those who design, make, advertise, market, distribute and sell such products in the course of trade in the Community. Dr Lawrence advanced no argument to the contrary.
35.	In those circumstances I accept Mr Hacon’s submission, which seems to me to be right. However, although I accept Mr Hacon’s submission in principle, there may be circles which, on particular facts, are more restricted than the general principle suggests. Whether this is so will depend on identifying and delineating the sector in question.