Intellectual property

In this chapter of our Annual Insurance Review 2020, we look at the main developments in 2019 and expected issues in 2020 for intellectual property.

Key developments in 2019

One of the most interesting IP decisions of the year came from the world of luxury beauty and retail.  Charlotte Tilbury successfully sued Aldi, for copyright infringement in relation to look-alike make-up products.

Traditionally brands have relied upon trade mark and/or passing off actions to protect against look-alikes.  A passing off case requires the brand to show that the copycat had made a misrepresentation as to the origin of the look-alike product, which causes (or is likely to cause) confusion to the average consumer. That was not the case here, as Aldi is open about its "like brands only cheaper" motto – nobody would have been confused thinking that the product (being sold at £4.99) was actually from Charlotte Tilbury.

Charlotte Tilbury therefore had to be creative. The lid of the Charlotte Tilbury palette contained an art-deco style starburst design, and there was a debossed design on the powder itself. Charlotte Tilbury progressed the claim as copyright infringement, alleging that the starburst design and the debossed design were artistic works and therefore protected automatically by copyright.

The Court agreed with Charlotte Tilbury and dismissed Aldi's counter-argument that the designs were too generic to attract copyright. Once copyright was deemed to subsist, it was simple for the Court to find that it had been copied – Aldi's designers admitted to having access to the Charlotte Tilbury designs and were unable to satisfy the Court that the similarities between the look-alike and the original were coincidental and a result of independent creations (i.e. not copied).

The case is important to brands looking to take-on copycats and/or fakes. Popular stores selling cheaper look-alikes can cause significant harm (monetary and reputational) to established and luxury brands. We expect to see an uplift in the number of copyright infringement claims being brought to combat look-alikes, together with an uplift in the use of the Shorter Trials Scheme which was implemented in this case.

What to look out for in 2020

We continue to await the final decision from the European Court of Justice (CJEU) in Sky v SkyKick. There was a time when it looked as though the UK could leave the EU without a Brexit deal, throwing into the air whether the CJEU would even deliver its decision to the UK Courts at all. The Attorney General's (AG's) Opinion, if followed, suggests that there could be significant ramifications for trade mark owners in 2020 – which will need to be navigated alongside the impact of Brexit.

The underlying case itself is an action by Sky alleging trade mark infringement against SkyKick (a global provider of cloud management software). SkyKick counterclaimed against Sky attacking the validity of Sky's trade marks on the basis that: (i) Sky's trade marks lacked the clarity and precision in terms of the specifications in which they were registered (e.g. a trade mark encompassing "computer software" was too broad); and (ii) Sky registered its trade marks in bad faith, because the specifications contained goods and services which were clearly never going to be utilised by Sky – the example frequently cited is the registration for cleaning products.

The AG Opinion has indicated that: (i) the trade marks did lack the clarity and precision required; and (ii) it can in certain circumstances be "bad faith" to register trade marks without any commercial logic or as part of a strategy to prevent third parties from using the mark.

The impact could be significant and see a number of brands' trade mark portfolios face validity challenges. In particular, we would recommend that Insurers offering pursuit cover take steps at the proposal stage to enquire as to which goods/services the marks are being used/have been used in, together with undertaking an assessment of the specificity of the specifications used.  

We also expect that Brexit generally will have a significant impact on the licensing of trade marks and other IP rights. Specifically, parties may use Brexit as an excuse to get out of unfavourable licensing deals – if that trend does develop, it seems inevitable that contractual disputes will follow.

Authored by Josh Charalambous.

Download our full Annual Insurance Review 2020 for more insights.