Intellectual property

In this chapter of our Annual Insurance Review 2021, we look at the main developments in 2020 and expected issues in 2021 for intellectual property.

Key developments in 2020

In last year's Annual Insurance Review, we mentioned an upcoming CJEU Judgment in Sky v Skykick.  Ultimately the CJEU diverged from the Attorney General's Opinion, finding that:

i. an EU trademark (EUTM) cannot be declared wholly or partially invalid on the grounds of lack of clarity and precision of goods and services; and 

ii. a lack of intention to use an EUTM in relation to registered goods and services can constitute bad faith if the applicant intended to undermine the interests of third parties or obtain an exclusive right. 

The case returned to the High Court with the Judge finding that Sky had registered trademarks in bad faith in respect of certain goods and services. He therefore limited the scope of Sky's registration to goods and services that Sky did use (or intended to).   

For businesses subject to infringement proceedings (and their insurers) the decision in Sky v Skykick provides another possible basis for defendants to bring counterclaims.  Commercial consideration should be given to whether it is in insurers' interests in certain circumstances to fund a counterclaim (which may otherwise not be covered) to put pressure on claimants by bolstering defences and creating better commercial leverage in any settlement discussions. 

2020 also saw the first UK Court decision (Response Clothing v Edinburgh Woollen Mill) applying the CJEU's heavily debated judgment in Cofemel v G-Star Raw, which suggested that there is a harmonised EU-wide definition of "work" for copyright purposes which is not restricted by any pre-specified categories and should not take into account any aesthetic considerations. 

This means that more functional items such as furniture, clothing and fabrics, which may traditionally only have benefitted from design right protection may now also have copyright protection.  We expect that more claims are likely to be brought for both registered design and copyright infringement (or indeed for copyright infringement where the registered design rights have expired).  It may also see claims for infringement which may have gone quiet in pre-action correspondence given a new lease of life for opportunistic claimants.

What to look out for in 2021 

With 2020 (and now 2021) dominated by references to COVID-19, it's back to the "B" word when it comes to significant developments on the horizon for IP rights holders (and their insurers). On 31 December the transition period ended and with effect from 1 January 2021 the UK Intellectual Property Office (UKIPO) automatically created corresponding UK rights for existing EUTMs and Registered Community Designs (RCDs). There are, however, potential pitfalls - prospective rights holders in the process of applying for an EUTM or RCD will need to apply to the UKIPO by 30 September 2021 in order to get an equivalent UK right. Moreover, rightsholders with existing EUTMs used predominantly in the UK and registered for more than 5 years will become vulnerable to revocation for non-use. It is likely that the IP challenges presented by Brexit will be a feature in future disputes. 

A case to watch out for in 2021 is a potential appeal to the Supreme Court in The Racing Partnership v Sports Information Services (TRP v SIS). The Court of Appeal was split on a number of the issues, but ultimately found that sports race day data had the necessary quality of confidence to establish a breach of confidence (although found that SIS had not received the information in circumstances imparting an obligation of confidence).

If the Supreme Court is asked to consider the decision of the Court of Appeal, we expect that the market will see a further uplift in breach of confidence claims pleaded alongside and as an alternative to database right infringement actions (particularly in spaces where data is live or near live).  We have reported in previous reviews on the increase in trade secrets and misuse of confidential information litigation, and insurers should expect the trend to continue.

Authored by Hannah Ridzuan-Allen and Alessandro Cerri.

Download our full Annual Insurance Review 2021 for more insights.