Australia and the United Kingdom recently agreed to the broad terms of a Free Trade Agreement, part of which seeks to enhance design rights. As a result, Australia has (finally!) agreed in principle to join the Hague Agreement on Industrial Designs.

What is the Hague Agreement?

The Hague Agreement establishes an international system (the Hague System) administered by the World Intellectual Property Organization (WIPO) which allows designers to seek design protection in many countries at once, with fees paid in one currency, through a single international application. For those familiar with trade marks, the Hague System for Industrial Designs provides a similar procedure to the Madrid Protocol. That is, a single international application applied through WIPO enables applicants to secure rights in multiple participating countries.

How can designers benefit from the Hague System?

Centralised Management of Design Portfolios

Under the current system, Australians can apply for registered designs in Australia and overseas. However, for overseas protection, applicants need to engage in each country of interest a local agent and file a registration application through the relevant national IP administration office . Unsurprisingly, this can be an expensive endeavour, incurring costs for official fees, red tape costs at filing, translations (for non-English speaking countries) and substantive examination, all required for each country.

The Hague System enables designers to file a single design application through WIPO that can protect their designs in (currently) 92 countries simultaneously. Advantageously, this mitigates some of the costs associated with separate national filings by replacing multiple applications (and procedures and formalities) with a single application that only requires a single translation be provided with an application. This can be particularly advantageous for applicants filing designs into multiple non-English speaking countries.

There may be less of a need to involve local attorneys, but a local attorney may be required when an adverse official report issues in connection with a design in a specific country. One drawback in filing a single design application through the Hague System is that the design application may not meet the specific design registration requirements in a specific country. For example, China and the US have very particular design drawing requirements that could normally be addressed prior to filing after consultation with a local attorney.

A Single Application with Simultaneous International Design Rights

The Hague System allows designers to access some of Australia’s key international trading partners. For example, Australian designers planning to launch their designs into the global export market can utilise the Hague System to secure rights in the United States of America, United Kingdom and Canada. Additionally, designers looking to manufacture their products overseas can access design rights in Viet Nam, Japan and Korea. A full list of the contracting parties is available here.

An Option to Defer Publication

The Hague System allows applicants to defer publication of their international design applications. Advantageously, Australian designers can utilise this provision of the Hague System to keep their designs secret for up to 30-months after filing. On the international stage, this may stand as a strategic advantage for some Australian applicants. For example, registered designs can be selectively published according to e.g. a product release schedule or ‘roadmap’. In this way, an applicant can be agile with their product portfolio, publishing their registered designs when most suitable, or in alignment with a broader marketing strategy.

Term of Protection

In joining the Hague System, Australia will need to extend the term of protection from 10 years to a minimum of 15 years. Currently, in Australia, designs proceed directly to registration with only a formalities check. There is no need to undergo a substantive examination process unless the design owner wants to enforce the design. It is likely that the Australian Designs Act will be revised to not only cater for the longer term of protection, but also provide an opposition system given the increase term of protection.

Partial Designs and Graphical User Interfaces

Australian designers will also see the introduction of protection for partial designs and virtual designs in the coming years as the UK-Australia Free Trade Agreement takes shape. For those unfamiliar with partial designs and virtual designs:

a partial design registration will allow an applicant to protect a part, i.e. a ‘signature feature’ of their whole design (or product); and

a virtual design registration will allow an applicant to protect screen displays, graphical user interfaces (GUIs) and screen icons.

The Hague System includes protection for partial designs and virtual designs. IP Australia deferred introducing protection for these types of design registrations in the recent round of Design Law reforms which will come into effect in March 2022. Although not part of the current program of reforms, movement towards the Hague System will force the Australian Government to afford protection to these types of designs in order to align with other jurisdictions such as the European Union, United Kingdom and United States of America.

What can Australian Designers expect from the UK-Australia Free Trade Agreement?

As a part of the UK-Australia Free Trade Agreement, Australia has committed to make all reasonable efforts to join the UK as a member of the multilateral Hague Agreement on Industrial Designs.

While an ‘Agreement in Principle’ was announced on 15 June 2021, the Free Trade Agreement is not expected to come into effect until at least 2022, allowing for final negotiations to be made and the required legislation passed by both Australian and UK Parliaments.

In the years to come, leading to the finalisation of the Free Trade Agreement, designers can expect to see further changes to design rights in Australia. Royal assent to the current reforms to the design rights system was given on 10 September 2021 and thus will come into force on 10 March 2022 for the substantive law changes. While it is unclear how the Hague System reforms will materialise in Australia at this stage, some of the current reforms are consistent with the provisions of the Hague System. For example, the reforms introduce a 12-month grace period for design registrations in Australia which will come into effect March 2022.

The legislative and system changes associated with these reforms will benefit designers looking to maximise protection in international markets and lead Australia to the international partnership of the Hague System.

The Designs Amendment Bill 2020 has passed through Parliament ushering in a wave of reform in Australia. Jennifer Wyndham-Wheeler looks at the changes and what they mean for you. 

The Designs Amendment (Advisory Council on Intellectual Property Response) bill 2020 (‘the Designs Bill’) was passed by both houses of Federal Parliament on 30 August 2021, ushering in a wave of reform in Australia. 

Initiated by a comprehensive review in 2019, the Designs Bill enacts the following changes as recommended by the Advisory Council on Intellectual Property and public consultation:

  • A 12-month grace period. The grace period will protect designers against inadvertent self-disclosure (i.e., publication or use) prior to filing a registered design. This provides flexibility for designers starting out with new products who are unfamiliar with the design system. Designers will no longer lose the ability to register a design for a product that they have self-disclosed within the preceding year. Another benefit may be to allow designers to test products in the market before filing designs and make more informed and strategic design filing decisions.

  • Infringement exemption for prior use. Third parties who start using a design before it is published on the designs register – i.e., during the grace period – are exempt from infringement. This change balances the rights of designers with third parties. Once a design is registered and published, then third parties are considered put on notice of those exclusive rights. Prior to that it seems unfair to punish third parties who have started using an identical or similar product to the design that they may very well have created independently. The third party is able to continue using, making, importing and selling products which are identical or similar to the design.

  • Registration of designs and removal of the publication option. The registration process is now simplified and more streamlined. A request for registration of the design may be made at filing or within 6 months from filing. If a request for registration is not made within the 6-month time period, then the design will automatically proceed to registration. Once the design is registered, publication occurs within a few weeks. The option to publish the design without registering it has been removed. For overseas applicants filing design applications into Australia (i.e., up to six months after an original (Convention priority) filing), the six-month period will have already elapsed and the design will register and publish shortly after filing.

  • Relief from infringement before registration. This reform is an extension of the current innocent infringer defence which prevents third parties infringing a design that they do not know is registered.  The extension also applies the innocent infringer defence to the time period between filing and registration which as previously mentioned can be a time period of up to 6-months. This reform is consistent with the policy of balancing the rights of designers and third parties. Again, where a design is not published on the Register then the competitor could not have known about the existing exclusive rights.

  • Formal requirements. Formal requirements are directed to rules regarding drawing requirements, the specification and information that may (or may not) be included in an application, such as scandalous material. Moving the formal requirements to a non-legislative instrument allows for greater flexibility in updating these requirements with changing technology.

  • Changes to the ‘informed user’ standard. The legal standard of the ‘informed user’ is used to assess the validity (i.e., newness and distinctiveness) of registered designs and the infringement of registered designs. The primary change is that the ‘informed user’ no longer needs to be a user of the product.

Now that the Designs Bill has been passed, it will be provided to the Governor-General for Royal Assent (which typically occurs quickly). Once Royal Assent is provided, some changes including the legal standard will have immediate effect, and some changes, most notably the grace period, will commence 6 months after Royal Assent.

Of the changes to design law summarised above, the introduction of the grace period will have real tangible benefit for designers by providing flexibility for inadvertent self-disclosure. In the longer term, IP Australia intends to explore further reform measures of the design rights system to better support innovation in Australia.

How can we help

If you have any queries as to how these changes may affect your own situation, do not hesitate to get in touch with Jennifer Wyndham-Wheeler, or your usual Griffith Hack contact. 

The federal budget demonstrates a commitment to research, innovation and technology – but to take full advantage, greater utilisation of Australia’s world class intellectual property (IP) system is required.

Treasurer Josh Frydenberg has handed down a 2021-22 federal budget that is focused on bolstering Australia’s economic recovery amid the fallout of the COVID pandemic. 

The broad-ranging budget places a significant emphasis on job creation and essential services, with childcare, aged care, infrastructure, education and training, small business, environment and housing figuring prominently.

But they weren’t the only winners. Technology companies, emerging industries, researchers, and start-ups can also look at last night’s announcement with a sense of optimism. Proactive measures to support innovation and business growth, and to address skills shortages, have been addressed, providing a once in a lifetime opportunity for Australia to technologically reposition itself on the global stage.

Of note, areas such as clean energy, artificial intelligence, digital economy, agribusiness, drone technology and technical skills-based training have all received substantial investment. Generous tax incentives also feature prominently, including the introduction of a “Patent box” aimed at reducing taxes on income from innovative research.

Key highlights in more detail

Patent box: Encouraging Australian medical and biotech innovation
Investment in Australian medical and biotech technologies is being supported by the introduction of a patent box. The patent box will reduce taxes on income from innovative research to encourage businesses to undertake their R&D in Australia and to keep the revenue that patents generate in Australia. 

From 1 July 2022, the patent box will tax income derived from Australian medical and biotech patents at a 17 per cent effective concessional corporate tax rate. Normally corporate income is taxed at 30 per cent or 25 per cent for small and medium companies. Only granted patents, which were applied for after the Budget announcement, will be eligible.

The Government will follow the OECD’s guidelines on patent boxes to ensure the patent box meets internationally accepted standards. The Government will also consult closely with industry on the design of the patent box to determine whether a patent box is also an effective way of supporting the clean energy sector.

This measure complements the Government’s $2 billion investment in the Research and Development Tax Incentive which was announced in the 2020‑21 Budget. The Government has asked the Board of Taxation to review the administrative framework of the R&DTI before the end of 2021.

Stimulating innovation in Australian businesses
The Government will allow taxpayers to self-assess the effective life of certain depreciating intangible assets for tax purposes, rather than being required to use the effective life currently prescribed by statute. This will apply to patents, registered designs, copyrights, in-house software, licenses and telecommunications site access rights.

Taxpayers will be able to bring deductions forward if they self-assess the assets as having a shorter effective life than the current statutory life. This change will reduce the cost of investment for business, and align the tax treatment of these intangible assets with the treatment of tangible assets. Taxpayers will continue to have the option to use the existing statutory effective life when depreciating these assets.

This will apply to eligible assets acquired following the completion of temporary full expensing, which has been extended and will now end on 30 June 2023.

Growing the Australian digital games industry
Australia’s digital games industry has been bolstered by a “digital games tax offset” that will cut the costs related to game development. Digital game developers will receive a 30 per cent refundable tax offset, capped at $20 million per year, for qualifying Australian games expenditure. The global digital games industry provides significant opportunities for Australia and this tax offset will make Australia an attractive destination for digital talent.

Why this budget highlights the value of strategic IP protection

Investment in commercialised sectors such as medical research, biotechnology and clean energy provides a timely reminder of the importance of strategic IP protection to take full advantage of these investments.

Australian governments have long strived to align Australia’s IP protection systems with the most robust in the world. The objective of several significant legislative changes has been to ‘support innovation by encouraging investment in research and technology in Australia and by helping Australian businesses benefit from their good ideas’.

But while Australia now has a world class IP system, not enough Australian businesses are using it. Recent evidence suggests that the Australian patent filings market is experiencing sluggish growth with both locals and foreign filers cutting back on their investment in Australian patents. Australia risks entering the post-pandemic period significantly lagging other countries when it comes to the generation of home-grown IP. Prioritising innovation now is key to assist in our economic recovery.

Summary

Australia’s 2021-22 federal budget presents an opportunity for businesses in Australia to invest in, protect, and maximise the value from R&D and innovation. With the global economy in a fragile state after a tumultuous 12 months, and with a strong knowledge economy, Australia is well-positioned to better establish itself as a major global player in the technology, innovation and commercialisation landscape. 

Our experts will provide ongoing in-depth analysis on specific topics featured in the federal budget. To stay up to date, subscribe to our email list. If you have questions for our team about the impact and opportunities of the federal budget, or strategic IP protection, please contact us at .

Whether you realise it or not, creative industries like design and fashion, are built entirely on intellectual property (think brand and design). 

Making informed decisions about intellectual property early-on maximises commercial opportunities and helps businesses drive a proactive strategy (rather than reactive).

Fast versus forever 

Fast fashion follows fashion trends which change rapidly and perpetuate the cycle of moving clothing designs from catwalk to store. Historically, designers believed that fast-paced fashion designs did not justify protection via registerable intellectual property rights. However, with the growing urgency towards balancing commercial gains with environmental impact, there has been a shift towards sustainable and timeless fashion. A rethink of intellectual property rights for fashion designers is therefore warranted.

Timeless fashion and innovative design is always on trend; think Burberry’s trench coat or Dolce & Gabbana’s body-con dresses. Protecting what is valuable in the timeless fashion and innovative design can be commercially worthwhile. Some creative endeavours, especially those starting out, are built entirely around one or two innovative designs. Such endeavours can benefit from careful consideration of registrable intellectual property rights before the designs hit runways or stores.

The fashionable take on IP 

Registrable intellectual property rights (e.g., designs, patents) are commonly viewed in the fashion and design industry as a costly exercise with little commercial benefit. This opinion may hold for fast fashion, but for timeless fashion and innovative design, the approach can erode brand value and create missed opportunities. Registrable rights are often an afterthought. With designs and patents, it pays to be proactive by considering a strategic intellectual property approach at the outset. This can give a business the edge it needs to distinguish itself in the market, while protecting the investment made in developing the design(s).

An excellent example is State of Escape – an Australian business whose reputation rests on a flagship product called the Escape Bag.

Toting the value of IP protection 

The Escape Bag is a simple, arguably timeless unique design; a perforated neoprene tote bag with sailing rope handles and accents. State of Escape has encountered a number of copycats and is open about its challenges.[1] State of Escape also seeks to enforce its IP rights. Recently, State of Escape pursued a potential infringer in the Australian Federal Court. Among other consumer protection/passing off laws, State of Escape relied on copyright. No registered designs had been filed to protect the Escape Bag design before the bag was publicly disclosed. 

In Australia, dual protection under copyright and design law is not permitted. Further, copyright protection is lost once a three-dimensional design embodying the artistic work is mass-produced or when a design is filed. State of Escape’s totes had been mass-produced, so they appeared to lose copyright. However, they sought to rely on a narrow exception to this rule which is made for “works of artistic craftsmanship”.

In the Australian Federal Court’s recent decision, the totes were not held to be “works of artistic craftsmanship”. As a result, the State of Escape bag did not enjoy copyright protection, and no infringement can therefore be claimed. If State of Escape had established copyright in the handbag, the Federal Court indicated that they would have found infringement.[2] Had State of Escape simply applied to register its Escape bag design (a relatively low-cost exercise, especially compared to its court costs) the dispute could have been avoided entirely. 

Designing down-under 

Registering a design for a 3D work prior to commercialisation is critical in Australia. Currently, a design must be applied for before being disclosed publicly. The Designs Amendment Bill 2020 which will be passed soon, includes a 12-month grace period for self-disclosure. This does not mean however, that designers should continue to be reactive. Instead, this will allow designers to test the market before filing a registered design.

Design law provides a registrable right in Australia and is a straightforward, clear-cut way to obtain design protection and enable the enforcement of design rights (such as handbags). Every business should seek comprehensive protection against wannabe copycats. This includes a considered use of both registrable and non-registrable IP rights. A holistic intellectual property strategy is integral at the outset and important to revisit and revise.


[1] https://ausfashioncouncil.com/council-of-textile-fashion-blog/2019/12/12/state-of-escape-talk-copycats; The Australian, “State of Escape wins injunction over copycat of its neoprene bags” 

[2]State of Escape Accessories Pty Ltd v Schwartz [2020] FCA 1606 (6 November 2020) at paragraph 134.