The U.S. Enters the International Design Frontier: The Ins and Outs of the Hague Agreement on Industrial Design

By: Trey Levie

I. Introduction

In our design-obsessed era, the way an object or product looks (its industrial design) is quickly becoming just as important as its functionality. The protection of those industrial designs is likewise increasingly essential to companies. Record judgments — sometimes in the hundreds of millions of dollars — have been handed down, based in large part on infringement of design patents. As a result, design patents have gained in popularity. For instance, the number of design patent filings has almost doubled since 2000. For consumer products companies, a robust, enforceable intellectual property portfolio now requires some portion dedicated to design patents.

With advantageous timing, changes in design law are taking place worldwide that may streamline and reduce the cost of applying for design patents, especially for U.S. applicants. As of May 13, 2015, the United States officially became a member of the Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs (Hague Agreement). Generally speaking, the Hague Agreement, administered by the World Intellectual Property Organization (WIPO), establishes a centralized procedure for global examination of design applications. U.S. applicants may now take advantage of this procedure.

II. Executive Summary

The international design application is not a one-size-fits-all application – there are tradeoffs. Generally, applicants seeking economical, large-volume protection in many countries (through the filing of a single application) and not as concerned about maximizing scope of protection in each country will find the Hague Agreement advantageous. Applicants, however, seeking to maximize protection in a select number of countries may benefit more from separate, direct applications in each country.

Some of the benefits under the Hague Agreement include:

• The international design application can be filed in English, thus eliminating translation costs
• If an application faces no objections or refusals in a designated country, the applicant can avoid the expense of retaining local counsel
• Simplification of management of a design patent by consolidating all maintenance fee payments with the WIPO
• All U.S. design applications filed on or after May 13, 2015, will benefit from an extra year of patent term

Applicants, however, will have to consider the related drawbacks:

• Requirement to file a single standardized application with drawings satisfying the legal standards or requirements in every designated country, which will likely raise initial drafting costs
• Due to conflicting standards in different countries, the applicant may have to settle for a middle-ground scope of protection that satisfies all the designated countries’ requirements

 III. Mechanics of the Hague Agreement

As of May 13, 2015, applicants in the United States that meet certain requirements will be able to file a single application with the WIPO or the United States Patent and Trademark Office (USPTO) to obtain design patent protection in multiple jurisdictions. At present, over 75 territories are members of the Hague Agreement, including the European Union, most European countries, and Japan. Other countries, such as Australia, Canada, and China, are not yet members of the Hague Agreement, but are expected to join in the future.

Under the applicable statutory provisions, only U.S. applicants may file an international design application with the USPTO as a receiving office for the WIPO. In other words, only U.S. nationals, or persons having a domicile, a habitual residence or a “real and effective” industrial or commercial establishment in the United States, will qualify as U.S. applicants under the Hague Agreement. Thus, entities with both a foreign and domestic presence may not be able to avail themselves of the USPTO as a receiving office. As a fall back, the Hague Agreement does allow non-U.S. applicants to file an international design application with the WIPO, whereby the applicant may designate the United States for examination.

The application can include up to 100 different designs, provided that all of the designs are in the same class of the International Classification of Industrial Designs. (The designs therefore will have to have some common subject matter.) The international design application is subject to a basic filing fee, a publication fee, excess page and word fees (determined on a country-by-country basis), and designation fees. If the application is filed in the USPTO, there is also a transmittal fee in the amount of $120 that must be paid to the USPTO.

Upon filing, an international design application is reviewed by the International Bureau for compliance with the formal requirements set forth under the Hague Agreement. Once a determination is made that the formal requirements have been satisfied, the International Bureau will register the design in the International Register, publish the international registration, and send a copy of the publication to each designated country. The application then undergoes the substantive process or examination in each designated country. It is important to note that the legal standards and requirements in each country — which inevitably vary — remain unchanged and still apply.

In the United States, for instance, the USPTO has set forth specific requirements for international design applications that designate the U.S. In particular, such international design applications designating the U.S. must identify the inventor(s), include a claim, and include an oath or declaration executed by the inventor(s). When undergoing examination by the USPTO, an international design application designating the U.S. will be subject to the same substantive requirements as a national design application filed directly in the USPTO.

IV. Advantages and Disadvantages

The advantages of the Hague Agreement for design applications are balanced by some potential pitfalls. These must be considered by practitioners and applicants to determine whether an international design application best meets an applicant’s needs.

a. Cost Savings

For most U.S. applicants, the biggest potential benefit is cost-savings. U.S. applicants, under the Hague Agreement, can expect significant cost savings by avoiding translation fees and to some extent foreign prosecution costs, such as retaining local counsel in each designated country. In addition, the WIPO will administer consolidated maintenance fees for all applications that are filed pursuant to the Hague Agreement. In particular, there is only one renewal deadline for each international registration, and renewal fees are paid to a single source, the International Bureau.

The international design application process also includes a streamlined process for changing or updating any information on file for an international design application (e.g., changing the inventor information or applicant name). No longer will patent owners be required to separately make administrative changes in every one of multiple jurisdictions. All changes or transfers in ownership only need to be filed with a single source, the International Bureau.

b. Provisional Royalties

International design applications filed under the Hague Agreement will publish. The applications designating the U.S. may entitle applicants to provisional royalties in the U.S. from that publication date. These “provisional patent rights” are available for utility patent applications already. Provisional royalties are not often collected for published utility applications because the published claims almost never issue without some changes. It is much more common, however, for design applications to issue without substantive amendments. Design patent holders therefore could capture much more benefit from publication. Applicants with products with short sales cycles (e.g., fashion) will find quick publication to be a boon to their portfolios. An applicant can request immediate publication (for no additional fee) when filing the international design application in order to accelerate these benefits. An applicant may also defer publication (for no additional fee) up to 30 months.

c. Term Extension

Not all of the benefits of the new rules under the Hague Agreement are solely directed to international design applications. For instance, the Hague agreement lengthened the term for all U.S. design patents. The Hague Agreement increased the patent term for U.S. design patents by a year – from 14 years to 15 years from issuance. This change also applies to standard U.S. design applications filed after May 13, 2015.

d. Pitfalls and Drawbacks

International design applications are not a panacea. Applicants should be aware of the limitations or drawbacks. For example, under the Hague Agreement, an applicant may file up to 100 designs in one application. In some countries, designs are only subject to a registration process with no substantive examination. Thus, the applicant’s multiple designs are typically merely made of record and then issued. In countries such as the United States, the designs are individually substantively evaluated. The applicants in these countries face the possibility of a restriction requirement (or its equivalent). The applicant is then forced to prosecute one or more divisional applications, one for each of the designs. Thus, the Hague Agreement does not present an end-run around individual country requirements.

Along those same lines, the local rules and legal standard of each country or territory will still apply to the international design application. Applicants therefore must prepare applications that adapt to the formalities for each country they expect to designate. This can raise preparation cost and, as some countries have formality requirements that are not directly reconcilable, the applicant may have to compromise the scope of protection of the issued design. For example, under the laws of the European Union, each design is limited to only seven “views,” or figures. The applicable rules in the U.S., on the other hand, require that a design contain a “sufficient number of views to constitute a complete disclosure.” Accordingly, in the U.S., a design may require more than seven views to meet the disclosure requirements of the USPTO, which is not allowed under European practice. In addition, the applicant will still need to retain local counsel if rejection or refusal is issued in any designated country.