Freedom to Operate Search for an Industrial Design
Industrial design is the process of conceiving, creating and developing concepts that optimize the appearance of products such as to add value. A good example of industrial is the aesthetic appearance of certain automobiles and consumer electronic goods such as mobile phones or portable computers which make the goods more desirable and appealing to the consumers. Industrial design also serves as a tool to differentiate your product from the host of competing products in the market by giving them a distinct look which is associated with value and a premium feel. The industrial design also conveys to the consumer the design language of a certain manufacturer with which they may associate and form a brand following around that aspect of the product.
Industrial Design and IPR
Industrial design as it is understood under the Indian law, therefore is the aesthetical aspect of the product which has an intrinsic economical value attached to it. There is also an association which the consumer form with that industrial design which further strengths the case for its economic significance. Therefore the protection of the industrial design as an asset is essential to ensure that the companies who developed the industrial design benefit from their work. By protecting the industrial design of the creator, the consumers are also protected since they can rest assured that the product which they are purchasing is the product from a certain producer of goods. This aspect also develops further and can be protected under Trademark Law as trade dress in addition to being protected as an Industrial Design. All Industrial Design applications are classified under the Locarno Classification System established by the Locarno Agreement (1968), is an international classification used for the purposes of the registration of industrial designs. India being a signatory of the Locarno Agreement (1968) also classifies products based on the classes as mentioned in the agreement. An Industrial Design registration is granted under any of the various classes provided in the international classification system. A registration obtained under the Industrial Design law in India is protected only in so far as the competing or infringing product also belongs to the same class. The creator of the Industrial Design is free to register his Industrial design in as many classes as he may choose and only upon such registration can the creator proceed to exclude any other persons from using said Industrial Design in those classes where registration is scored. All legal actions to prevent unauthorised users from using or benefiting from the Industrial Design are subject to the registration being granted to the creator in respect of the article of manufacture (product) bearing that industrial design.
Why Freedom to Operate or Clearance Search?
An Industrial design is granted for the aesthetic non-functional aspect of an object of manufacture. The requirements for the registration of an Industrial Design under Indian law are that the industrial design sought to be registered should not have any functional aspect associated with it. Further, the design itself should be novel and capable of being applied on an article of manufacture.
Once a registration for an Industrial Design is granted, the same remain valid for a period of 10 years with the option of renewal for a period of 5 years, During such time, the owner of the design registration has the right to commercially exploit his IPR at the exclusion of all others in the same class in which it is registered.
The consequences of infringing a registered Design is that the owner of the design can take action against the infringer under Civil law and injunctions in the nature of a Mareva injunction (asset freezing order), Anton Piller order (Search and seizure orders), Permanent/Perpetual injunction against engaging in the business of the registered industrial design as well as damages for infringement etc.
Legal action under the civil law can cause severe distress to the business of the infringer, especially if Mareva orders are obtained against the infringer.
A Freedom to Operate or Clearance Search is therefore essential to ascertain the possible risks of infringement in order to avoid being in a situation whereby there is even an unintended infringement on behalf of our clients.
In a Freedom to Operate or Clearance Search, our Attorneys perform a wide based and detailed search to identify all possible design registration and ascertain the risk each of them possess to the launch of a new product with that industrial design. A Freedom to Operate or clearance search is conducted to ensure that a specific design of an article has a clearance to be utilized, ensuring that there are no potential barriers and to avoid any chances of infringement.
Freedom to Operate or Clearance Search compliance is an essential aspect of manufacturing based businesses and we at Singhwal provide the most exhaustive and detailed search and legal opinion for our customers.
A detailed account of the various steps involved in the Freedom to Operate or Clearance Search process is as follows.
Once a clearance search in conducted on an industrial design the client gets a complete overview on relevant designs that may be of a threat to theirs. It also gives them an understanding of whether any modifications would be advisable for the design to have a clearance. Fighting infringement cases can be a big hassle, and it is always advisable to avoid the risk by being aware of the industrial design scenario with respect to the industrial design of the client.
Singhwal provides a detailed report based on different actions or modifications that the client can apply to obtain a clearance to use the design. There are some main aspects that should be kept in mind for conducting an Industrial Design clearance search. A Freedom to Operate or Clearance Search is restricted to only accepted and active Industrial Designs.
A Freedom to Operate or Clearance Search in most cases is restricted to the description of the figures for which protection is sought out for. The jurisdiction of interest is also a very important aspect to keep in mind while performing the search and conclusion. The time period from which the design protection dates back to are also very essential; in other words a time period of about 15 to 17 years from the date of the search is taken into consideration for the clearance search strategy.
This is because an Industrial Design protection is given for a period of 10 years which is extendable for an additional period of 5 years with payment of renewal fee. Therefore it is always advisable to keep a time duration of about 15 – 17 years. When conducting a clearance search we give more importance to the classification under which the design has been filed, the jurisdiction and the description of the main figures. The relevant results based on these aspects are collected and analysed to generate a detailed clearance search report.
These clearance Searches are provided mainly to give yourself a warranty/assurance regarding your design of interest being safe from infringement. Another aspect to keep in mind is that many of the Industrial Design applications which are still not published will not come to our notice and therefore in such cases, it is advisable to conduct a preliminary search every 6 month intervals.
Who should get a Freedom to Operate or Clearance Search?
If you’re a company which engages in manufacturing or products/goods where the design or aesthetical appearance of the product or goods has possible economic value.
If you’re a start-up entering into a market segment where there are established players such as automobile and consumer electronics where the likelihood of unintentional design infringement is higher given that those market segments are fairly high in IPR awareness and all players file Industrial Design registrations very aggressively.
If you’re a designer of a product under agreement of Contract for Service whereby the responsibility of the design which you provided as a service is entirely on you and you may be required to take full responsibility of any Industrial Design infringement action initiated against you by any competitor in the market. Taking a Freedom to Operate or Clearance Search likely can cause immense economic damage as well as damage to your reputation.
Freedom to Operate searches are also important if you’re an export based business. There is a serious possibility that the Industrial Design is registered in the country where it is meant to be exported. Having invested millions in production and logistics, there is a possibility that once the product hits the markets in this foreign country the competitors there could very well take legal action against before the local Courts of law. Therefore when the stakes are high, it is highly advisable to undertake an FTO for the specific countries in which business is proposed to be done.
Cases in India
There have been numerous disputes and cases where Industrial Design registration holders have identified competitors copying their design and infringing the registered Industrial Design. One the recent and prominent case is discussed to further drive home the benefits of a Freedom to Operate search before undertaking an new business venture or launching a new product.
M/S. Cello Household Products vs M/S. Modware India & Anr is a Design infringement suit before the Bombay High Court where “Modaware” was held to be prima facie infringing of the design registration held by “Cello” when Modaware entered the market with a bottle similar to the bottle already being sold in the market by Cello for which they also had design registration in their favour. Taking into account the fact that Modaware’s design of the bottle was prima facie similar to the design of the bottle originally sold by Cello, a single bench comprising of Justice Gautam Patel was pleased to pass interim orders against Modaware.
This could have been avoided if Modaware performed a Freedom to Operate or Clearance Search which would informed its management all about the Cello design registration and a work around could have been designed to be able to freely operate and launch Modaware’s bottle.
By investing in a Freedom to Operate or Clearance Search, Modaware could have successfully avoided the legal battle which in itself is a costly affair and to add to it could have also avoided the adverse orders which were granted by the Court against them. In avoiding the Freedom to Operate or Clearance Search Modaware ended up losing money which it invested in making necessary preparations to be able to manufacture and sell the bottles. These expenses include expenses towards designing and establishing a manufacturing line, actual production of the bottles, taxes paid on the product, logistic expenses incurred in transporting the bottles for sale in markets throughout India, payments towards advertising and other ancillary expenses. When weighed against the cost of a Freedom to Operate or Clearance Search, these expenses vastly outweigh the expenses caused due to illegally proceeding with manufacturing of the bottle.
Singhwal’s design team has successfully completed several Industrial Design Freedom to Operate searches in technology and subject matters across technology and industry domains. We have provided acted for our clients to perform in depth research and perform Freedom to Operate Searches across a wide range of business domains and have successfully come up with sound legal strategies and business inputs to be incorporated. These inputs have enable our clients to proceed without the risk of litigation or adverse action either by competitors through the Courts of law.