Clarifications following the JURI meeting on 25 April 2023 at the European Parliament

16/05/2023

On 25 April 2023, the European Commission participated to a first debate within the JURI committee of the European Parliament on the revision of the Design Directive (COM(2022) 667) and the Design Regulation (COM(2022) 666).

Members from the European Parliament asked why the Commission proposed to impose a long transition period of 10 years in the Directive, which would exclude all existing products (cars, electronic appliances, and all other devices) from the scope of the EU repair clause in countries which do not have yet a national repair clause in place. In other words: one cannot benefit from cheaper repairs with the spare parts of their choice, unless if one purchases a brand new product.

The Commission answered that the transition period of 10 years on existing designs was required by CJEU case law and by the TRIPS International Agreement on intellectual property. Those arguments are factually wrong and misleading for the following reasons:

  • Intellectual property rights are an exemption to free trade intended to foster innovation. Yet, applying design protection on spare parts for which no design alternative is possible (such as automotive visible spare parts) is an abuse of the rule’s intent: instead of fostering competition, it leads to a product monopoly in the repair aftermarket.
  • The Court of Justice of the EU has already highlighted several times that intellectual property rights were subject to limitations when their use hamper or eliminate competition in secondary markets.[1]
  • The TRIPS International Agreement on intellectual property recognizes the possibility to provide “limited exceptions to the protection of industrial designs (…), taking into account of the legitimate interests of third parties.”[2]
  • The repair clause fully recognizes and preserves the manufacturer’s right to design protection on their products, to the sole exception of visible spare parts that are changed for repair purposes. It is already a fair and balanced compromise in itself, after decades of unfair monopoly practices from product manufacturers on visible spare parts, to their sole benefit and to the detriment of society at large (consumers, repairers, spare part producers and SMEs).
  • The Commission’s former proposal to revise the Design Directive in 2004, withdrawn in 2014, did not include such a transition period.

The European Commission’s impact assessment summary indicated that consumers could save between 340 and 544 million EUR annually with an EU repair clause that would ensure repair competition and lower repair prices.[3] The summary also recognizes that the proposed ten-year transition period will considerably limit the benefits of the EU repair clause for society, by reducing the annual saving gain for consumers down to 4 to 13 million EUR only, i.e. more than 50 times less than what a full EU repair clause can provide.[4]

The proposed ten-year transition period in Article 19(3) of the new Directive can (and should) be cancelled by the European Parliament and the Council of the EU. A shorter and flexible transition period of up to maximum three years would provide sufficient time for Member States to transpose the new Directive into national law, in line with the usual practice for Directives, while still being able to apply the EU repair clause on existing designs at an earlier date and no longer allow unjustified design protection on spare parts for existing products.

[1] Case C-63/97 – 23.2.1999, BMW/Deenik, [1999] ECR I-905; Case C 112/99 – 25.10.2001, Toshiba/Katun, [2001] ECR I-7934; Case C-228/03 – 17.3.2005, Gillette/LA Laboratories, [2005] ECR I-2337; Case C-59/05 – 23.2.2006, Siemens/VIPA, [2006] ECR I-2147. See also Riehle, “Immaterialgüterschutz in Sekundärmärkten”, commemorative paper for Karl Peter Mailänder (2006), 175 et seq.

[2] Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), Article 26(2).

[3] European Commission, Proposal for a Directive on the legal protection of design (recast), COM(2022) 667, summary of the impact assessment, page 5.

[4] Average 8.5 million EUR (range 4 to 13) in a “new designs only” scenario, compared to average 442 million EUR (range 340 to 544) in a “new and existing designs” scenario, i.e. reduction factor = 52 (based on the numbers provided by the European Commission in its Proposal for a Directive on the legal protection of design (recast), COM(2022) 667, summary of the impact assessment, page 5.)

Clarifications following the JURI meeting on 25 April 2023 at the European Parliament