Unfair practices in the furniture market
A recent judgment of the Court of Appeal in Gdańsk resolving a long-running dispute between two manufacturers and suppliers of building and furniture accessories is worth a closer look because of the Court’s interesting interpretation of the law on industrial designs, unfair competition and copyright.
Judgment of the Court of Appeal in Gdańsk of 30th September 2020 (Case no. V AGa 74/19)
The case illustrates the complexity of intellectual property disputes, as well as the frequent persistence of infringers. The case also shows why it is so important to undertake adequate procedural measures at a right time in order to secure one’s interests. It may seem quite surprising that the plaintiff tolerated the infringement and the production of products similar to its own goods for many years. Probably, the plaintiff did not apply for an interim injunction to secure its claims, the issuance of which would have stopped the infringement immediately. Perhaps the reason of all this was the wrongful assumption that the industrial design invalidation proceedings before the Polish Patent Office (PPO) would be enough to stop the infringement.
The judgment also shows that the plaintiff did not pursue pecuniary claims, unless he did so in a separate process. That is why it is worth reminding that in the event of an intellectual property infringement it is extremely important to immediately stop unlawful activities, as well as seek monetary compensation for them.
Since 2002, the plaintiff sold various types of door handles incorporating an industrial design submitted for registration in 2003 and on a different design based on a product which constituted a creative work of industrial design created by one of its employees.
The defendant conducts similar business activities and had previously cooperated with the claimant. Since 2005, the defendant marketed products under similar names as well as produced them in violation of the claimant’s registered industrial design. The products were offered at a lower price, therefore the defendant took over a significant part of the claimant’s customers and employees. One of the claimant’s former employees provided the defendant with an industrial design. Then, in 2007, the defendant successfully registered the design in the Polish Patent Office.
In 2009, the plaintiff filed an opposition to the decision of the Polish Patent Office, which granted the defendant a registration right. The plaintiff succeeded in proving that he was the first to register that design and in 2011 the Polish Patent Office invalidated the defendant’s registration right. The defendant appealed against this decision to the Voivodship Administrative Court. However, both the administrative court of first instance and then the Supreme Administrative Court dismissed his claims.
At the same time, identical proceedings were conducted regarding an industrial design that was a work created by the claimant’s employee. According to the plaintiff, he was the holder of copyright to that design. The defendant registered the design in question as his own. In response to this, the plaintiff filed an opposition in the Polish Patent Office based on infringement of his copyright. The Polish Patent Office found that the design was indeed created by the claimant’s employee and invalidated the defendant’s registration right.
Despite losing all of the above mentioned proceedings, the defendant consistently violated the claimant’s rights by continuing to manufacture and sell products incorporating the claimant’s industrial designs.
In 2016, the plaintiff called on the defendant to refrain from actions violating his industrial property rights, copyrights and actions constituting an act of unfair competition. Subsequently, he brought a lawsuit to the Regional Court in Toruń. In 2018, the Court ordered the defendant to cease the production and marketing of the contested products, destroy the products that had been already manufactured and publish an apology on his website. The defendant appealed to the Court of Appeal in Gdańsk, which dismissed the appeal in the judgment of 30th September 2020. During the litigation, the defendant filed an application for invalidation of the plaintiff’s industrial design in the Polish Patent Office.
The court judgments
In the course of the litigation, the Regional Court did not accept the defendant’s motion to suspend the proceedings. The motion was based on the grounds that the proceedings regarding invalidation of the claimant’s industrial design were pending before the Polish Patent Office. The Court took into account that the PPO had already dealt with the disputed designs, and thus the proceedings initiated by the defendant were aimed solely at excessively prolonging the ongoing litigation. The defendant constantly challenged the claimant’s rights, even though it was clear from the previous decisions of the PPO regarding the disputed designs that the claimant was the rightful holder of the rights. Therefore, there was no need to reexamine the issues that had been already resolved by the PPO, as well as the administrative courts of both instances.
The accumulation of claims increased the plaintiff’s chances of winning the case and allowed him to obtain wider protection granted by the court:
1) Using the claimant’s industrial design to create its own design by the defendant constituted an infringement of copyright. The Court found that the claimant’s industrial design meets the requirements of the copyrighted work (i.e. creativity, individual character and determination) and classified it as an industrial design work;
2) The District Court had no doubts that the defendant had committed acts of unfair competition by imitating the ready-made product and misleading customers as to the identity of the producer or the product. The Court found that there was a possibility of misleading the customers due to the use of a similar product name together with a similar external appearance;
3) The Court of Appeal also found that the defendant violated the so-called decency clause, which is one of the principal rules of the Polish unfair competition law. Non-compliance with this rule can be declared if one acts against the commonly approved values. Issuing a judgment based on this rule requires axiological examination and application of non-legal social norms. We know that the parties have been conducting identical business activities and before the dispute started they had maintained close business relations, e.g. the plaintiff used to sell the defendant machines and specialized equipment used in manufacturing process. The defendant abused this cooperation in order to copy the claimant’s industrial design and take unfair advantage on the market. The Court also found that the defendant manipulated the facts and evidence in order to prevent revealing the truth which would harm his interests. The examples of the defendant’s manipulations include imprecise description of the door handle he was marketing, reluctance to indicate the designs according to which the door handles were produced or contradictory witnesses’ testimonies.
Taking into account the length of the dispute between the parties, the defendant raised an objection that the claims were time-barred by statuary limitation of claims. However, the Court did not agree with that and found that the production and sale of the products conducted by the defendant was a cyclical activity and new claims have arisen.
The last issue raised by the defendant was a request to admit the opinion of an expert in the field of industrial design in order to indicate the differences between the defendant’s product and the claimant’s product and to prove that there was no similarity that could mislead consumers between them. The court deemed it unnecessary and stated that the evidence already gathered and the Court’s life experience were sufficient to assess the scale of similarity. Moreover, the opinion of expert specialized in the field of design would not reflect the impressions of potential customers (so-called informed users).
The above description of the proceedings shows very briefly how the disputes concerning industrial designs can be resolved. We can observe the types of claims that can be pursued and the relevant laws governing them. Unfortunately, no images of the disputed designs were made publicly available. The facts in this case and the Court’s ruling indicate that they might have been nearly identical.
It is interesting why the plaintiff waited so long to initiate civil proceedings and take actions in order to prohibit infringements of his rights. The proceedings before the Polish Patent Office are not enough to stop the infringement. If the action is not brought on time the case may be dismissed due to statuary limitation of the claims or long-lasting acceptance of the infringement. The case at hand also illustrates the interdependence of civil and administrative proceedings concerning intellectual property rights. Currently, after recent amendment of the law, there is a possibility to bring a counterclaim for invalidation of an industrial design in a civil court. This reform is expected to speed up the proceedings. Last but not least, it is unknown whether the claimant applied for an interim injunction to secure its claims or whether he sought damages in separate proceedings. In a case like this, where infringement lasts for many years, the damages might have been quite high.
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