D11.9 Protection and Compensation Arrangements

Date Published

Where a design ceases, there is a general public-interest expectation that the design has moved into the public domain and is available for all to freely use.

The primary effect of restoring a design is to re-establish the monopoly rights of the owner. However this is to the detriment to anyone who has taken definite steps to commercially use the design after the design had ceased. The detriment is not limited just to infringing products that a person might have sold or made – it also includes the cost of (for example) plant and equipment needed to manufacture the product, even if no product had been manufactured by the time of restoration.

Both the Designs Act 2003 and Designs Act 1906 include a mechanism to protect the interests of a person who has taken definite steps to commercially use a design after it had ceased. Conceptually, the protection is achieved by making the restoration of a Design something less than a full and complete restoration of all the owner’s rights. In particular, where a third party has taken definite steps to commercially use a design after it had ceased, that party accrues rights to use the design which are not lost to the design owner upon restoration.

It is important to recognize that the detriment to third parties arises from the mere fact of restoration. It is not dependent upon the reasons justifying the extension (including whether the restoration was indeed properly justified), nor upon whether the third party opposed the restoration or was successful in any such opposition - see Pacrim Trading Co Pty Ltd v Ford Motor Company of Australia Ltd. [2007] ADO 3, at  para 43.

The Designs Act 1906 provided an extension mechanism in S.27B that mirrored s 160 of the Patents Act 1952. [This arose from the Franki report (1973), which considered the prior practice of using regulation 51 to grant an extension to be unsatisfactory.] The mechanism included a protection and compensation provision by way of the grant of a licence upon application by the third party to the Registrar – with the design owner being able to oppose the grant of that license.

The Designs Act 2003 provides (in effect) a statutory licence requiring no application or other consideration before the Registrar. Any dispute about entitlement to the licence will likely only be dealt with in the context of infringement proceedings.

An entitlement to a licence (under either Act) is necessarily based on evidence. A third party being aware that a design has ceased should ensure there is an evidentiary basis supporting their entitlement to a licence in the event of the design being restored. While relevant evidence ought to be easy to gather at the relevant time, Pacrim Trading Co Pty Ltd v Ford Motor Company of Australia Ltd. [2007] ADO 3 involved a situation where the evidence to support the licence was manifestly deficient.


D11.9.1 Extensions granted under the Designs Act 2003

Under the Designs Act 2003 the following issues arise:

  • S.139 of the Designs Act 2003 applies to any extension granted under s.137 of the Act – even if the design was filed or registered under the 1906 Act.
  • The protection and compensation provisions apply if a design ceases to be in force because of a failure to do a relevant act – and is subsequently restored under s.138. They are not enabled as a result of an extension that is granted for a purpose that does not involve restoration of the design (for example, the period for filing a priority document – Reg 3.06(3));
  • There is no minimum period of extension before the protection and compensation provisions apply – an extension of a single day is (in principle) sufficient to enliven the protection and compensation provision.

This is in distinction to the regime in the Designs Act 1906, where the extension had to be for a period in excess of 3 months.

  • There is no express causative relationship between using the design commercially and knowledge of the fact that the design had ceased.

There is a question of whether a court would allow a person who has been infringing the design to rely upon their continued ‘infringement’ after the design had ceased as a basis to gain protection under s.139.


D11.9.2 Extensions granted under the Designs Act 1906

  • S.27B(7) of the Designs Act 1906, and regulations 29, 29A and 29B of the former regulations continue to apply with respect to any extension that was granted under s.27B of the 1906 Act – see regulation 12.04(2). [Note: the Registrar considers regulation 12.04(2) maintains the operation of the former provision in a manner enabling the making of a new application for a licence. In this regard, see Ford Motor Company of Australia Ltd v Stephen Campbell of All Crash Parts Pty Ltd [2006] ADO 1, and Pacrim Trading Co Pty Ltd v Ford Motor Company of Australia Ltd. [2007] ADO 3.]
  • The extension must have been for a period in excess of 3 months in order for the protection and compensation provisions to be enabled.
  • The license applicant must show a causative relationship between their availing themselves of the design, and knowledge of the fact that the designs had ceased. Pacrim Trading Co Pty Ltd v Ford Motor Company of Australia Ltd. [2007] ADO 3.
  • A request for a licence must be filed. There is no time limit for filling an application for a licence. The design owner has the right to oppose the application.
  • If a licence is granted, the Registrar is responsible for setting the terms of that licence.

Relevant precedent for the grant of a licence by the registrar are:

  • Harrison v Theo [1998] ADO 2  - license granted
  • Pacrim Trading Co Pty Ltd v Ford Motor Company of Australia Ltd. [2007] ADO 3 – license refused

A decision of relevance under the Patents Act 1990 (referred to in Harrison v Theo) is:

  • HRC Project Design Pty Ltd v Orford Pty Ltd [1997] APO 12; 38 IPR 121 – license granted.