Gaining the upper hand against unjustified registered design takedowns

Sellers on online marketplaces such as Amazon are increasingly receiving takedown notices citing registered design infringement, only to look at the illustrations of the registered design and see a product which had been on sale for years before the filing date of the registered design. This article sheds light on how unjustified threats law allows the seller to not only get their listing reinstated, but claim compensation for their loss of earnings.

Our previous article summarised how if the online platform refuses to re-list a seller’s product without the consent of the registered design holder, we can apply for the UK Intellectual Property Office (UKIPO) to invalidate the registered design on behalf of the seller.

Invalidation

If we can supply evidence of a truly identical prior design, published on the right sort of website, and with a clearly-marked date long enough before the design was registered, an invalidation application will have a strong chance of success.

It is essential that the invalidation action itself is handled by experienced intellectual property specialists such as our attorneys. Most invalidation actions are handled by attorneys, but the UKIPO’s decisions are still littered with examples of failed invalidation actions from self-representing individuals who would have succeeded if they had not omitted essential parts of evidence.

Once a registered design has been invalidated, the seller is clear to have the takedown notice removed from the online platform such as Amazon, eBay, or Etsy.

Gaining the upper hand - unjustified threats actions

The invalidation process can take a while – eighteen months is not uncommon if the registered design holder files a defence. This leaves sellers significantly out of pocket due to a loss of sales of their de-listed product.

Fortunately, there is a way of claiming damages from the holder of the invalidated registered design, by filing an unjustified threats claim. The primary purpose of an unjustified threats court claim is to allow the seller to claim back a large proportion of the loss of profits during the time their product was de-listed.

The ability for anyone aggrieved by an Amazon takedown to sue for unjustified threats was affirmed by a recent Court of Appeal case between The NOCO Company v Shenzhen Carku Technology Co., Ltd [2023] EWCA Civ 1502 (“NOCO”).

The NOCO case resulted from an Amazon takedown alleging that a listed product infringed a patent. However, the patent was revoked for obviousness, and consequently the seller was able to counter-claim for ‘unjustified threats’ of patent infringement.

We consider that the NOCO judgment is relevant to registered design threats, and not only patent threats. This is because Sections 26-26F of the UK Registered Designs Act 1949 include unjustified threats provisions mirroring similar provisions in the Patents Act 1977. Furthermore, the NOCO case is not specific to Amazon, and it sets a precedent for other online marketplaces than Amazon, such as eBay or Etsy.

The amount of compensation may depend on the profits that the seller was previously making prior to the de-listing. The longer the invalidation process takes, the greater the loss of profits and therefore the more worthwhile it is to sue for unjustified threats.

Furthermore, the courts have the power to award the seller a large proportion of their legal costs, as well as incidental damages/costs such as delivery and storage costs of de-listed stock, court fees, and interest on damages or costs.

When we represent sellers, we generally start by threatening invalidation proceedings and unjustified threats proceedings, before filing for invalidation. We draw attention to the fact that the longer the listing remains offline, the greater the value of the unjustified threats counterclaim becomes. Sometimes, when we apply pressure in this way, the takedown will be withdrawn, especially if the holder of the registration seeks legal advice themselves and realises that they are genuinely on the back-foot.

If we are forced to start invalidation proceedings, we may reach out with another revised offer at an early stage, and remind the registered design holder again that their financial risks will only increase if they maintain the takedown.

If we reach invalidation and the takedown has still not been withdrawn, its former holder is now exposed with no obvious defence against an unjustified threats claim. Therefore, as soon as the invalidation action is concluded, we can make an updated offer, and it would be in the interests of the former holder to seriously engage with the offer to prevent the matter progressing any further.

Whether the registered design holder was a bully or simply ignorant of the law, they are generally unaware of unjustified threats law and the risks they are taking. Let this article be a warning to anyone wishing to harass or bully other Amazon sellers!

We can fight back on behalf of sellers of products which have been de-listed due to a registered design, patent, or registered trade mark. We can also assist with copyright takedowns although unjustified threats law does not presently apply to copyright.

Furthermore, we represent legitimate rights holders, file and maintain their IP rights, and help them to take action against actual infringers on these platforms. We never represent both sides in the same dispute.

If you have any questions with regards to this article or how Swindell & Pearson can help you and your business with intellectual property, please don’t hesitate to get in touch with the author Tim Gilbert or call +44 1332 367 051.