Thursday, 24 November 2011

Euro-injunction mechanism in Community designs: Samsung Galaxy Tab European ban partially lifted

Author: Séverine Mas, avocate

Apple Inc. v Samsung Electronics GmbH and Samsung Electronics Co. Ltd, Düsseldorf Tribunal of first instance (Landgericht), Germany, Press Release No 013/2011 of 9 September 2011 concerning case No 14 c O 194/11

Journal of Intellectual Property Law & Practice (2011) doi: 10.1093/jiplp/jpr181, first published online: November 23, 2011

The 14th Civil Division of the Düsseldorf Tribunal of first instance confirmed an interim decision preventing the German firm Samsung Electronics GmbH from selling the Samsung Galaxy Tab 10.1 in the whole of the European Union, on account of a potential infringement of a Community design registered by Apple. The ban was, however, restricted to the German territory for sales by Samsung Electronics Co. Ltd, based in South Korea.

Legal context

The court examined its authority to grant a European injunction in the case of a Community design infringement, in application of Articles 82 and 83 of the Community Designs Regulation (EC Regulation 6/2002), following two interim decisions rendered on 9 and 16 August by the same court.

Facts

In a preliminary injunction (9 August 2011), the Düsseldorf court of first instance prohibited the sale, import, export, and interim storage of the Samsung Galaxy Tab 10.1 in the whole of the EU except in the Netherlands, on the grounds that it potentially infringes Apple's Community design rights (Community design 000181607 for the iPad product).

However, the President of the Düsseldorf court announced on 16 August that execution of that decision was suspended. The announcement stated that the court did not have jurisdiction to grant a European-wide injunction forbidding a company based outside the European Union to commercialize its products in the EU. The ground stated for the suspension was that the court was asked to examine an interim matter and thus did not have such far-reaching powers.

The decision for the appeal filed by Samsung against the 9 August injunction, following the court hearing of 25 August, was rendered on 9 September.

The Landgericht maintained the injunction against Samsung Electronics GmbH, a German company, confirming the prohibition of selling the Samsung Galaxy Tab 10.1 in the EU, and in particular, the prohibition of producing, offering for sale, commercializing, importing, exporting, or storing the product for these purposes.

With regard to Samsung Electronics Co. Ltd, based in South Korea, the court has, however, limited the ban to the German territory. The European-wide ban was lifted.

Analysis

Competition is fierce in the tablet PC market, and registrations of IP rights are some means of obtaining a competitive advantage. The current context is part of a legal strategy between Apple products and Android-based smartphones and tablet PCs (Android is an open-source operating system created by Google, used by several manufacturers including Samsung).

The mechanism of the European injunction in favour of Community design owners allows Community design courts to prohibit the sale of a product potentially infringing a Community design, in the whole European Union territory, without examining the grounds for the claims (ie the validity of the design registered). As the German decision has not yet been published, we assume that the injunction was based on Article 85 of the Community Designs Regulation. The Regulation on Community designs requires that in proceedings for an alleged infringement action, the courts treat the Community design as valid (Article 85 of the Regulation). Validity can only be challenged through a counterclaim for a declaration of invalidity, or by way of counterclaim in so far as the defendant claims that the Community design could be declared invalid on account of an earlier national design right belonging to the defendant.

The Düsseldorf Landgericht's summary judgment of 9 August is an exceptional decision, given its scope and potential consequences. We should, however, bear in mind that the tribunal had no choice but to consider the design as valid. Acting on an interim matter, the court could not examine the grounds of the claims. It could only examine the existence of IP rights on which the claims were based.

This leads on to the validity of the Community design. Apple's registered Community design may be seen as so basic that the ‘individual character’ condition of Article 6 may be absent. In addition, the shape of the design can be considered being dictated by the functionality of a tablet PC (Figure 1).


Apple's registered design for a handheld computer

Design law requires that the form of a design not be solely dictated by its technical function (Article 8 of the Regulation). It is therefore questionable that a simple rectangular, flat geometric shape be registered as a Community design for a tablet PC. The shape in itself could be seen as being dictated by the functionality of the apparatus, which is to provide a tactile screen for interaction with the user.

In conclusion, it is possible that the design may be declared invalid in the future. The legal issue at stake would then fall under the realms of unfair competition rather than of industrial property rights.

Practical significance

A similar provision relating to trade marks allows national courts to grant Euro-injunctions in favour of trade mark owners (Article 98 of the Community Trade Mark Regulation). The extent of jurisdiction on Community design infringement depends on the international jurisdiction criteria stated in Article 82 of the Community Designs Regulation. Article 82(1) states that infringement proceedings
shall be brought in the courts of the Member State in which the defendant is domiciled or, if he is not domiciled in any of the Member States, in any Member State in which he has an establishment.
Article 85(2) states that if
the defendant is neither domiciled nor has an establishment in any of the Member States, such proceedings shall be brought in the courts of the Member State in which the plaintiff is domiciled or, if he is not domiciled in any of the Member States, in any Member State in which he has an establishment.
If the claimant or the defendant is domiciled or has an establishment in the Member State, the Community Design Court will have authority to grant a Euro-injunction based upon the Community Design Regulation, Article 83(1). If, however, the court is acting only so as to stop potential infringement in the Member State in which the act of infringement has been committed or is going to be committed—the forum loci delicti (Article 82(5))—it will not have the authority to grant a Euro-injunction (Article 83(2)).

In the present case, the defendants were Samsung Electronics GmbH (based near Frankfurt) and Samsung Electronics Co. Ltd (headquartered in South Korea). The reasoning behind the suspension of the execution of the original 9 August decision is that the court only had jurisdiction to grant a Euro-injunction towards Samsung's German defendant. With regard to Samsung Korea, the company is not viewed as an ‘establishment’ in the sense of the Regulation. This may be due to a problem of translation of the European Regulation into German. In the German version of the text, the term ‘establishment’ is translated as ‘Niederlassung’. This can mean either an independent company or a subsidiary.

In order for Article 82(1) to apply, Samsung Electronics GmbH would need to be considered a subsidiary of Samsung Electronics Co. Ltd (South Korea). This seems not to be the case. Due to the plaintiff's headquarters being situated in California, Article 82(2) could not be applied either.

The appropriate form of action in order to obtain a Euro-injunction would have been for Apple Inc. to have applied to the courts of Alicante in Spain, where the OAMI is situated (Article 82(3)).

Industrial property offices have a great responsibility in maintaining a healthy market, by being cautious before granting industrial property rights. The combination of Articles 83 and 85 of the Community Design Regulation creates a powerful instrument for corporations. Aggressive registration of questionable designs followed by summary injunctions seeking a European ban is an effective technique for eliminating competition.

In the case of abusive procedures, there is little in the way of compensation for victims if the design is subsequently invalidated. This current state of affairs may limit healthy competition and place a brake on innovation in the European Community market.

1 comment:

  1. Many thanks for a fascinating update. There will no doubt be a close investigation of the validity of the design. At this stage, I would merely comment that I think the question is whether it could be novel and have individual character. I do not think there is any suggestion that it was purely functional at its date of filing. There were then, and are now, many different shapes of screen that can be used. Apple may have picked a fairly basic one, but they are not monopolising the function in any sense and their product clearly sells on aesthetic as well as functional grounds. However, let's see what the courts say!

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