EU Debates Design Protection Tack

LONDON – Political debate continues here over the best way to protect the design rights of European Union-based auto makers worldwide via a single initiative.

One European Commission proposal calls for a link between the EU’s existing Community Design system (that protects a manufacturer’s designs within the 25 EU member states) to a global design registration system run by the World Intellectual Property Organization (WIPO), a United Nations agency.

Taking into account that nine EU countries individually already are members of the WIPO system (including Germany and France), this joining of the global system would secure design-right protection for EU-based companies in 33 additional countries through one application.

These WIPO-protected markets include Indonesia, Singapore, Turkey and Ukraine, for example, but not China, the U.S. and Japan.

EU Internal Market Commissioner Charlie McCreevy is urging the EU Council of Ministers to push through the proposal as soon as possible.

“(This) will allow EU firms to safeguard valuable design rights with less bureaucracy, while at the same time encouraging them to trade with third countries in the knowledge that their design rights are protected,” he says.

There are key distinctions between design protection and other rights such as copyrights and patents.

A copyright is covered worldwide and belongs automatically to the creator from the moment of creation of original work, and generally protects intellectual property, such as an auto maker’s brands. It usually does not have to be registered or renewed.

A patent must be applied for and confers strict ownership for the inventor for a set period, with very tough penalties for infringement. Even an original idea that is never manufactured can be patented.

Design rights protect the appearance of a vehicle in whole or in part, as long as it is new and has individual character. This protection is granted only upon registration with individual governing bodies.

Given many large jurisdictions (such as the U.S.) have yet to sign up with the WIPO, protecting novel chassis or hoods can involve multiple registrations and fees in order to gain a sufficient international safety net.

Under the WIPO process (called The Hague System), manufacturers merely have to file a single application in one language and using one currency (Swiss francs) to register a design throughout all the participating countries.

This means a huge savings in cost and bureaucracy for car makers with international markets. It eliminates the need to have documents translated, to keep track of different renewal deadlines for individual countries and to pay a series of national fees to various foreign agents.

If a company wants to register changes and improvements to the original design, or renew design rights, it takes only one step.

Initial protection covers five years with an option to renew for two additional 5-year terms. Countries taking part in the scheme have the right to refuse protection, but only on strictly limited grounds and with a very tight procedure involved.

Design rights have been at the nub of several recent disputes between auto makers. General Motors Corp. took issue with Chery Automobile Co. Ltd.’s QQ small car, alleging it was a direct copy of the Daewoo Matiz.

In the U.K., the collapsed MG Rover group will neither confirm nor deny that, during aborted takeover talks with Shanghai Automotive Industry Corp. last year, it accidentally transferred design rights for all or part of its MG TF sports car to SAIC. MG Rover since has been taken over by China’s Nanjing Automobile Group.

These legal disputes can be complex and are hampered by the fact that copying a design is hardly a capital offense.

“The problem in the developed world is not a lack of regulation, but poor enforcement and very low penalties compared with the profits that can be made (by copying a design),” Mark Greven, who heads the intellectual property rights section of the ACEA (the European car makers’ trade association), tells Ward’s.