EBay operates VeRO, which stands for Verified Rights Owner, a
system designed to let IP owners stop sales of goods in which they
have rights and which are being sold without their permission.
Campbell used VeRO to stop Quads4Kids selling its quad bikes
earlier this year, claiming that the sale of the bikes violated his
Community Design rights. Campbell had registered 16 Community
designs in February 2006, deferring the publication of those
claims. One of his designs was for a child's dirt bike.
Quads4Kids, wishing to resume its sales through eBay, took a
case against Campbell saying that his statements to VeRO were
groundless threats, actionable under the Community Design
Regulations of 2005. It asked for an interim injunction to prevent
Campbell from making any more threats.
The Regulations do not permit people who claim to be rights
holders to make threats which they cannot back up with legal
action. The law is designed to allow the threatened party to
challenge a supposed rights holder's rights in court, so that
baseless threats cannot be made.
"It is entirely wrong for owners of intellectual property rights
to attempt to assert them without litigation, or without the threat
of litigation, in reply," said the High Court judge, Judge Pumfrey,
in his ruling. "If somebody goes around saying, 'I will sue you for
infringement of patent unless you stop buying your goods from X',
then the natural response of anybody to whom that statement is made
was to stop buying the goods of X."
"You can't simply make a threat of infringement proceedings
without having a good basis for doing so," said John Mackenzie, a
litigation specialist with Pinsent Masons, the law firm behind
OUT-LAW. "It is a new example of a process for protecting IP but it
still falls within the groundless threats law."
Quads4Kids made the case to the High Court that, by using VeRO
to stop its sales of quad bikes, Campbell was making threats to
take proceedings against it for infringement of his Community
design rights. Pumfrey agreed.
"I consider that unsupported and unchallengeable allegations of
infringement of registered rights of this description are
potentially an exceedingly damaging abuse of registered rights," he
wrote. "I am satisfied there is arguably a threat in the
notification to eBay."
The case was further complicated by the fact that Campbell had
opted to defer publication of his Community design registration,
which he is entitled to do for up to 30 months. But the law also
says that if taking an action against a company, someone who has
deferred publication must show that the defendant has seen the
contents of the registered Community design.
The judgment was made quickly, said Pumfrey, because until there
was a judgment Quads4Kids would be prevented from selling through
eBay, and it was almost their most important sales period, the run
up to Christmas.
Mackenzie said that he did not believe that the case discredited
automatic enforcement procedures such as VeRO. "It would be going
too far to say that this damages automatic enforcement procedures,"
he said. "In this case the court is acting as a check on those
automatic systems."
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