Thursday, March 20, 2014

Swatch Sues Target Over Watch Designs -and Problems with Designs in Australia

Swatch Light Painting (57940452)Swiss company Swatch Group SA filed a lawsuit against Target, alleging that the US-based discount retailer is illegally selling watches that copy the design of some of Swatch’s offerings, specifically, the “zebra” and “multi-color” watches. Swatch argues that the quality of the products being sold by Target is “inferior” to their version, and that continued sale of which could lead to consumer confusion and negatively impact upon Swatch’s sales.

Swatch alleges that they have advised Target of the alleged infringement, but the retailer continued selling the infringing products. According to the complaint, "by adopting the Zebra Watch trade dress and the Multi-Color Watch trade dress, defendants are unfairly competing [with Swatch].”

Swatch seeks an injunction on Target’s sale of the allegedly infringing products, along with an account of profits, and damages. Target has declined to discuss the case, although company spokesman Evan Lapiska is reported to have stated that Target's policy is "to respect the intellectual property rights of others and we expect the same from our vendors and partners."

The case is by no means unique. But in Australia, the copying of other's designs is an endemic problem. The operation of the Copyright Act works so that if a design of a watch, or a shoe, or jewellry, or any consumer item which could have been registered as a registered design under the Design Act, then copyright will not apply.

And if the consumer item has been industrially applied -essentially, commercialised - to the requisite extent anywhere in the world, then novelty in the design is deemed to be destroyed and the design is not capable of registration.

So, many designs of consumer items in Australia cannot be protected by the Designs Act nor the Copyright Act. (There is another option -a cause of action for misleading and deceptive conduct under the Competition and Consumer Act. But, put very simply, this requires a very high degree of reputation in the design.) A lot of businesses are not aware of this. Some Australian companies take advantage of this quirk (which to be fair is not unique to Australia) and sell products designed by third parties but which are not capable of protection by those third parties.

An ongoing review by the Australian Council on Intellectual Property (ACIP), a government advisory group, of the designs regime may result in a rectification of this problem.

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