Has your intellectual property ever been stolen by another company? Grid Law founder David Walker helps entrepreneurs take legal action against brands and retailers lifting their trademarked ideas.
It’s always great to hear about small businesses who have successfully stood up for their rights and won a legal battle against a much bigger opponent. It shows what can be done and that others shouldn’t be put off by these “David versus Goliath” battles.
A recent example of this caught my eye when I read that Anthropologie, the US fashion and homewares giant, had apologised to an artist for selling imitations of her work without permission.
So, if you’re a small business owner and you find yourself in a similar situation, what should you do to defend your intellectual property rights?
For the purposes of this article, I’m going to assume that you’re the designer of a product and that you’ve taken the proper precautions to protect your intellectual property rights as a registered design. (A registered design protects the aesthetics of how a product looks and I talked about this in more detail in a previous article, “A guide to protecting your new ideas without spending a fortune in fees”.)
First, collect as much evidence as you can.
The offending item will be a key piece of evidence so you will need to obtain a sample. However, there is other evidence you will need too. For example, take photographs of your product in-store and screenshots of anywhere online that you see the retailer promoting and selling your product. This could be the retailer’s website, social media or even on other sites such as Amazon.
When you have obtained a sample, study it carefully.
The question the court will ask when considering whether or not the retailer’s product infringes your rights is:
“Does it produce a different impression on the informed user?”
This means you can still take legal action against the retailer if they are selling a similar product to your design. The retailer’s product doesn’t have to be an exact copy.
If the retailer’s product is a similar design, make a list of all the similarities and differences.
An important point to note here is that when you’re making this list, you must compare the infringing product to the registered design, not a product made to your design. Often there are differences between the design and the final product and it’s the images in the registered design that the infringement will be judged against.
Seek legal advice
Next, I strongly recommend you take legal advice so that you fully understand your rights. This is a complex area of law and you have to be careful not to make to make false allegations or groundless threats of intellectual property infringement. If you do, you could be committing an offence yourself so please don’t take to social media and “name and shame” the retailer.
If we are confident that you have a strong case and we have sufficient evidence to back up our arguments, we will send a letter of claim to the retailer. We will explain that you are the owner of the intellectual property rights, that we consider their product to be an infringement of your rights and that we want compensation from them for selling the product without permission.
There are two ways of calculating the compensation. You will either claim damages representing the losses you have suffered, or an account of profits. An account of profits is the amount of money the retailer has made from selling products made to your design without your permission. (You can’t claim both. You have to choose and either claim one or the other.)
When the retailer receives the letter of claim, you can expect them to fight back and deny that they are doing anything wrong. Don’t be put off by this and be confident in the evidence you have obtained.
In their defence, the retailer will usually raise three main arguments.
If the product isn’t an identical copy they will try to point out as many differences as possible. They will try to convince you that their product does produce a different impression on the informed user.
They will reject your claim
Next, they will try to claim that your registered design is invalid. For example, they may try to find other products that are similar to your design. One of the requirements for obtaining a registered design is that the design must be new. If they can find examples of similar designs that pre-date yours they will say that your registered design doesn’t fulfil this essential criteria and should be cancelled.
Alongside these arguments, the retailer may also try to put you off taking legal action by frightening you with the risk of having to pay their legal costs. They will say that they will spend a fortune defending the claim and when they are proved right they will try to recover their legal costs from you.
They may even take this a step further and say that they are going to make a “security for costs application”. Basically, this is an application to the court that says they don’t think you will be able to afford to pay their costs if you lose your claim and therefore they want you to give some sort of guarantee that you can. If you can’t give the guarantee, the court won’t let you proceed with your claim.
In reality, security for costs applications are rare and if you’re running a profitable business you should be able to successfully oppose any such application they make.
So, how can you resolve these disputes?
The good news is that the vast majority of disputes are resolved without taking legal action.
If you have the evidence to back up your claims the retailer should stop selling your products and should pay you compensation for all the products they have sold.
A strategy that I have found to be very effective is to offer the retailer a retrospective licence. If they like your design and it’s selling well, you give them permission to carry on selling your products.
In exchange, for you granting this licence and agreeing not to take legal action against them, they pay you a royalty for past and future sales.
Intellectual Property Enterprise Court
If you can’t settle the claim you will have to consider taking legal action in the Intellectual Property Enterprise Court (IPEC). The is a specialist court that deals with intellectual property infringement claims.
In the IPEC, the amount of damages you can recover is limited to £500,000 but if you act quickly, your potential losses shouldn’t be anywhere near this amount.
However, one of biggest advantages of starting a claim in the IPEC is that legal costs are, in the majority of cases, capped at £50,000. Although this is still a significant amount of money, losing a claim shouldn’t bankrupt you. Therefore, it makes legal action a real option for defending your rights if you cannot reach an amicable settlement with the retailer.
In these disputes, it’s important to act quickly to limit the damage being done to your business. So, if you’re the owner of a registered design or if you have any other intellectual property rights that you think have been infringed, feel free to get in touch with me at email@example.com. I will happily take a look at what’s happened and advise you of your rights.
You may also like to watch my webinar which covers some of these ideas in more detail:
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